Daily Investment Strategy
Hang Seng Index Rose 9 Points on Monday
China manufacturing PMI in July was only 49.1, which was worse than expected. Hong Kong stock market fell in the morning market. HSI dropped 272 points in the morning and hit a low of 19,883. In the afternoon, it completely recovered the lost ground. Finally, HSI closed at 20,165 for the whole day, up 9 points on Monday. HSTECH was at 4,324, down 7 points or 0.2%. HSCEI fell 8 points, or 0.1%, to 6,876. Market turnover was HK$114.9bn. The State Council announced that it will continue the policy of exempting the purchase tax of new energy vehicles. Today, the auto sector is collectively up, with Geely Automobile (0175) and NIO (9866) rising by 12.9% and 8.3% respectively. Alibaba (9988) was included in the list of scheduled delisting by the United States. The stock price closed down 3.8%.
US Stock Retreated on Monday
US ISM Manufacturing PMI was 52.8 in July which beat market expectation. However, China manufacturing PMI in July obviously slow down, investors concerned about the global recession risk. US stock market retreated on Monday, after the strong performance in the recent trading days. Of which, energy, financial and material sector performed weak.
The three major US stock index fell 0.1-0.3% respectively on Monday. Global economy slow down concern intensified, US treasury yield declined, 10 Year yield fell 7 basis points to 2.60% while 2 Year yield maintained at 2.90%. On the other hand, the economy slow down concern also impacted commodity price, oil price fell 4.8% to US$93.9 per barrel.
HK Stock will remain under pressure in the near term; Tencent Resistance at 10 Day SMA
China Caixin manufacturing PMI retreated to 50.4 in July, further reflected that China economy growth slow down. Besides, geopolitical tension sharply intensified which also not favor to Hong Kong stock. Hong Kong stock market likely to remain depress in the near term, Hang Seng Index will test the support at 20,000. Investors focus will eye on the corporate interim results including Alibaba (9988) and Cheung Kong group to be released on Thursday.
Hong Kong Stock Connect turned to net inflow of HK$3.3bn on Monday, of which, Tencent (0700) continued to record inflow, and further increased to HK$1.87bn. Besides, China H share index (2828) and Geely (0175) also recorded obvious net buy. In fact, owing to major shareholder reducing its stake gradually, together with overall weakness of China internet stocks, Tencent share price were under heavy pressure recently, short term resistance remained at 10 Day SMA (HK$324). On the other hand, HSBC(0005) second quarter result beat expectation, while its dividend payout ratio in 2023 is also higher than expectation, share price rose sharply after result announcement. However, global recession concern, as well as geopolitical risk might limit its share price short term upside room, resistance at HK$54.00.
Chua Tit Hong is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/ADO008/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.
