KGI Asia Commentary

2023.12.20 09:00

Hang Seng Index fell 124 points on Tuesday

The Hang Seng Index fell 124 points or 0.75% to 16,505 on Tuesday. HSTECH fell 23 points or 0.6% to 3,708 and HSCEI fell 42 points or 0.74% to 5,593. Daily market turnover was HK$76.6bn.

S&P 500 near record high

The S&P 500 ended higher on Tuesday and is now near a record high as stock market gains extended beyond technology stocks as interest rate cut optimism remained dominant. The S&P 500 rose 0.59% to 4,768.37 points. With Tuesday's gains, the index only 0.6% away from its all-time closing level, a level set in January 2022. The Dow Jones Industrial Average rose 251.90 points to 37557.92 points, an increase of 0.68%. The Nasdaq rose 0.66% to 15,003.22 points. This is the first time since January 2022 that it has closed above 15,000 points. Stocks were led higher by raw materials and energy, which were supported by rising oil prices even as the United States announced plans to expand the size of a naval task force to protect shipping through the Red Sea. Materials sector stocks such as Mosaic Corp (MOS), FMC Corp (FMC) and Freeport McMoRan Copper and Gold Corp (FCX) rose after commodity prices including copper rose sharply and the market continued to bet that interest rate cuts would boost economic growth and metal demand.

Thomas Barkin was open to rate cuts

Federal Reserve Bank of Richmond President Thomas Barkin welcomed the fall in inflation in an interview with Yahoo Finance on Tuesday, but did not say how it would affect his expectations for the central bank's interest rate policy next year. "I think we're nicely positioned now with a 3% inflation rate moving down, and a 3.7% unemployment rate staying relatively steady," said Barkin, who will have a vote on the Federal Open Market Committee (FOMC) next year. He declined to say he agreed to a rate cut but suggested he would be open to a rate cut if the economy performed as expected.

Hong Kong Stock Connect had a net inflow of HK$1.27bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$0.75bn; followed by Easy Buy (1797). Meituan (3690) recorded the largest net outflow at HK$0.35bn, followed by Tencent (3690).

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Bosideng
03998

The Group’s 1H23/24revenue amounted to approx. RMB7,471.7mn, representing an increase of 20.9% yoy. The branded down apparel business remained the biggest revenue contributor of the Group, and recorded revenue of RMB4,939.7mn, accounting for 66.1% of total revenue, representing a yoy increase of 28.1%. The OEM management business recorded revenue of RMB2,042.9mn, accounting for 27.3% of total revenue, representing a yoy increase of 7.8%. The gross profit of the Group increased by 20.9% to RMB3,733.5mn in the first half of FY2023/24. GPM of the branded down apparel business decreased by 2.4ppts to 61.2%. Although the GPM of the branded down apparel business segment has declined, it is the largest business unit of the group and its GPM is higher than that of the OEM processing management business and diversified apparels business, the Group's overall GPM is the same as that of the same period last year, approx. 50.0%. Profit attributable to equity shareholders of the Company increased by 25.1% to RMB918.6mn. As a renowned operator in the PRC with down apparel brands, the Group has brands include Bosideng, Snow Flying, Bengen, etc. Coupled with the fact that cold winter can boost sales, the share price momentum of Bosideng may get stronger. Target price: $4; Stop- Loss price: $2.97.

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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