KGI Asia Commentary

2024.08.16 10:00

Hang Seng Index fell 4 points on Thursday

The Hang Seng Index closed at 17,109 points for the day, fell 4 points or 0.0%. The Hang Seng Technology Index reported at 3,384 points, fell 11 points or 0.3%. The HSCEI Index rose 10 points, or 0.2%, to 6,035 points. The market turnover was HK$87.9 billion.

 

S&P 500 extends gains, boosted by signs of strengthening economy

U.S. stocks rose on Thursday as encouraging consumer and employment data helped ease recession fears and investors regained confidence in the economy. The Dow Jones Industrial Average rose 555 points, or 1.4%, the S&P 500 rose 1.6%, and the Nasdaq Composite rose 2.3%. Retail giant Walmart, seen as a bellwether for retail demand, announced its second-quarter earnings on Thursday, exceeding analysts’ expectations. The company's shares rose nearly 7%, driven by strong e-commerce growth and improving profit margins. Network equipment giant Cisco Systems reported better-than-expected fourth-quarter earnings and announced a restructuring plan, sending the company's shares up more than 6%. Shares of the cosmetics company soared 11% after Buffett's Berkshire Hathaway announced it would increase its stake in Ulta Beauty. Nike shares rose 5% after prominent activist investor Ackman's Pershing Square announced it was taking a stake in the sneaker retailer.

 

Retail sales show consumer resilience

U.S. retail sales increased more than expected in July, showing resilience in consumer activity and easing concerns that the U.S. economy is about to slip into recession. Retail sales rose 1% in July, beating expectations for a 0.4% increase. Retail sales excluding automobiles increased 0.4% month-on-month, also beating expectations of 0.1%. In other economic news, initial jobless claim totaled 227,000, a decrease of 7,000 from the previous week and lower than the estimate for 235,000.

Hong Kong Stock Connect had a net inflow of HK6.6bn on Thursday of which Tracker Fund (2800) had the largest net inflow, reaching HK$2.56bn; followed by Tencent (700). Meituan (3690) recorded the largest net outflow at HK$0.21bn, followed by CNOOC (883).

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China Mobile's earnings growth has been steady, and its dividend yield remains attractive. In 1H24, China Mobile's operating revenue reached RMB546.7bn, up 3.0% yoy, while net profit amounted to RMB80.2bn, up 5.3% yoy. The "Second Curve" digital transformation revenue reached RMB147.1bn, up 11.0% yoy, accounting for 31.7% of telecommunications service revenue, an increase of 2.4 ppts from the same period last year. The interim dividend for 2024 is expected to be HK$2.60 per share, up 7.0% yoy. China Mobile's FY25E dividend yield of 7.54% remains attractive. Target price: $82; Stop- Loss price: $66.

Wen Kit Kenny 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/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.

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