Daily Investment Strategy

Hang Seng Index fell 359 points on Friday

The Hang Seng Index closed at 16,945 points for the day, down 359 points or 2.1%. The Hang Seng Technology Index reported at 3,385 points, down 90 points or 2.6%. TheHSCEI Index fell 111 points, or 1.8%, to 5,974 points. The market turnover was HK$100.502 billion.

The continued rise in unemployment rate triggers "Sahm’s Rule"

U.S. stocks closed sharply lower on Friday, with the Dow Jones Industrial Average falling 610.71 points, or 1.51%, to 39737.26 points; the Nasdaq Composite Index falling 417.98 points, or 2.43%, to 16776.16 points; the S&P 500 Index falling 100.12 points, or 1.84%, to 5346.56 points. All three major U.S. stock indexes recorded losses last week, with the Dow Jones Industrial Average falling 2.11% for the week, the Nasdaq Composite Index falling 3.35%, and the S&P 500 Index falling 2.08%. In terms of individual stocks, Intel announced earnings guidance worse than expected and a large-scale layoff plan, and its stock price plummeted 26%.

Berkshire Hathaway announced its results and 10-Q report last week and disclosed that the company continues to reduce its holdings in Apple, a major holding of its investment portfolio, from 790 million shares to 400 million shares, reducing its holdings by nearly half. It has accelerated compared with the previous quarter. In terms of cash levels, cash reserves at the end of the second quarter were US$276.9 billion, another record high, and cash reserves at the end of the first quarter were US$189 billion. Buffett also said in May that he was in no rush to spend money "unless we think what we are doing is very risky and can make a lot of money."

In terms of economic data, last Friday the United States released non-farm payroll that caused the market to fear that the economy is gradually entering a recession. Non-farm employment increased by 114,000 in July, which was far lower than market expectations of 176,000 and the adjusted 179000 in June. The unemployment rate also rose from 4.1% to 4.3%, higher than market expectations. The continued rise in the unemployment rate triggers the recession indicator of the "Sahm Rule".

Market expectations for interest rate cuts this year have risen sharply

After the release of non-farm data, traders betting on a 90% chance that the Federal Reserve will cut interest rates by 50 basis points in September, and increased their bets on an interest rate cut in 2024, which is now expected to be 111 basis points. Citigroup and JPMorgan Chase are expected to reduce rate by 50 basis points each in September and November, and by 25 basis points in December.

Hong Kong Stock Connect saw a net outflow of HK$1.9 billion on Friday, of which Xiaomi (1810) had the largest inflow, reaching HK$490 million; followed by China Construction Bank (939). Tracker Fund (2800) recorded the largest net outflow of HK$2.92 billion; followed by Hang Seng China Enterprises (2828).