KGI Asia Commentary

2024.08.26 10:00

Hang Seng Index fell 29 points on Friday

 

The Hang Seng Index's on Friday fell 29 points, or 0.1%, to 17,612 points; the China National Index fell 5 points, or 0.1%, to 6,219 points; the Hang Seng Technology Index fell 39 points, or 1.1%, to 3,469 points. The total daily turnover of the market was HK$78.7 billion.

 

U.S. new home sales beat expectations in July

 

U.S. stocks closed higher on Friday. The Dow Jones index rose 462.30 points, or 1.14%, to 41175.08 points; the Nasdaq index rose 258.44 points, or 1.47%, to 17877.79 points; the S&P 500 index rose 63.97 points, or 1.15 points. %, reported 5634.61 points. All three major U.S. stock indexes recorded gains last week, with the Dow rose 1.27% for the week, the Nasdaq rose 1.4%, and the S&P 500 rose 1.45%.

 

In terms of individual stocks, asset prices immediately reflected this major change as Powell announced the start of an interest rate cut cycle. Technology investment stocks were popular, with NVIDIA, Tesla and TSMC all recording gains. The Russell 2000 also had a good day, rose 3.2% on Friday.

 

In terms of economic data, the annualized number of new home sales in the United States in July was 739,000, compared with expectations of 625,000. The previous value was revised from 617,000 to 668,000. In July, the annualized monthly rate of new home sales in the United States was 10.6%, which far exceeded the expected 1%. The previous value was revised to 0.3% from -0.60%. Building permits in July were 1.406 million, higher than market expectations of 1.396 million, but lower than the previous value of 1.454 million.

 

Powell says the time has come for policy adjustments

 

Powell sent the strongest signal yet for a rate cut at Friday's Jackson Hole meeting. He pointed out that the time for policy adjustment has arrived. Confidence in inflation heading towards 2% has increased. Also says “We do not seek or welcome further cooling of the labor market.” In the future, if the U.S. labor market cools faster than expected, it will prompt the Federal Reserve to cut interest rates faster and more significantly.

 

The net inflow of Hong Kong Stock Connect on Friday was HK$2.73 billion. Tracker Fund (2800) had the largest inflow, reaching HK$1 billion; followed by Ping An of China (2318). Haier Smart Home (6690) recorded the largest net outflow of HK$124 million; followed by Tencent Holdings (700).

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The group achieved strong performance across all markets, with 11 markets recording double-digit new business value growth, including the top five business segments. Specifically, Mainland China, Singapore, and the Hong Kong segment led with growth rates of 36%, 27%, and 26%, respectively, in NBV. Management expressed optimism about the Hong Kong insurance market, also indicated strong insurance demand from Mainland Chinese visitors to Hong Kong and is confident that MCV business demand will not weaken in the second half, with strong business performance expected. The group's target for the compound annual growth rate (CAGR) of post-tax operating profit from 2023 to 2026 is 9% to 11%, reflecting confidence in the future business growth prospects. Overall, AIA's results have exceeded expectations, and the management's guidance is positive.  Target price: $62; Stop- Loss price: $49.8.

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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