KGI Asia Commentary

Hang Seng Index fell 182 points on Wednesday

The Hang Seng Index closed at 17,692 points for the day, down 182 points or 1.0%. The Hang Seng Technology Index reported at 3,445 points, down 55 points or 1.6%. The HSCEI Index fell 80 points, or 1.3%, to 6,225 points. The market turnover was HK$93.9billion.

S&P 500 ends lower, chip stocks lead tech lower

The S&P 500 closed lower on Wednesday, with tech stocks sliding ahead of chipmaker Nvidia's quarterly results. The Nasdaq fell 1.12% to close at 17,556.03 points, and the S&P 500 fell 0.6% to close at 5,592.18 points. The Dow Jones Industrial Average fell 159.08 points, or 0.39%, to close at 41,091.42 points. Wall Street is watching Nvidia closely to gauge the sustainability of broader tech and artificial intelligence deals. The semiconductor giant is scheduled to report earnings after the market close, and its shares have soared more than 150% in 2024, raising questions about how much room the stock has room to rise. On Wednesday, Nvidia shares fell 2.1%, driving a 1.3% decline in the information technology sector. Other technology stocks also fell on Wednesday, including "Magnificent Seven" peers Amazon and Alphabet, which both fell more than 1%. Artificial intelligence server supplier Super Micro Computer Inc. said it would postpone the release of annual results. The company's stock price fell 19%, which also dragged down the semiconductor sector. The announcement came just a day after short seller Hindenburg pointed to a number of problems with SMCI, including accounting issues and problems exporting equipment to Russia and a Chinese entity that has been placed on the U.S. government's watch list. Shares of PVH, the apparel giant that owns brands such as Calvin Klein and Tommy Hilfiger, fell more than 6% after reporting a drop in sales in the second quarter. Shares in retail chain Bath & Body Works fell 7% after the chain cut its annual sales forecast, pointing to weakening demand for its pricey products such as perfume and scented candles amid stubbornly high inflation. Fran Horowitz, chief executive of apparel retailer Abercrombie & Fitch, warned that although the company raised its annual sales forecast, "the environment is increasingly uncertain" as the macroeconomic situation worsens, sending the company's shares down 16%. Kohl's shares ended slightly higher after the department store reported second-quarter profit that exceeded expectations and raised its annual profit forecast, helped by strict cost control and inventory reduction. Shares of Chewy, an online pet supplies retailer, rose 11% after the company reported strong second-quarter earnings that beat expectations. Cryptocurrency-related stocks came under pressure after Bitcoin fell below $60,000.

Nvidia shares fall despite results and guidance beat

Nvidia reported Wednesday better-than-expected Q2 results, and the chipmaker announced a $50B stock buyback program. NVIDIA fell more than 6% in afterhours following the report. Non-GAAP earnings per diluted share was $0.68, up 11% from the previous quarter and up 152% from a year ago. Quarterly revenue amounted to $30.0 billion, up 15% from Q1 and up 122% from a year ago. Both beating estimates. The stronger quarterly results were supported by a 154% yoy surge in data center revenue.

Hong Kong Stock Connect had a net inflow of HK2.66bn on Wednesday of which CSOP HS TECH (3033) had the largest net inflow, reaching HK$0.69bn; followed by Nongfu Spring (9633). Tencent(700) recorded the largest net outflow at HK$0.6bn, followed by Zijing Mining (2899).