Daily Investment Strategy
Recommended Stocks：Link REIT（823）
For Link REIT, its shopping malls primarily focus on daily necessities, which means its tenants' sales are highly correlated with Hong Kong's consumer staples sales, experiencing a smaller decline than the overall retail sector. With the U.S. interest rate cuts, there is a chance that the Hong Kong dollar may weaken, while the trend of Hong Kong residents going to mainland China is likely to stabilize, Link REIT's tenant sales are expected to improve from a low base, and the rental reversion rate for this fiscal year is expected to remain flat, better than earlier market expectations. Currently, Link REIT's dividend yield is quite attractive, and the potential inclusion in the Hong Kong Stock Connect will act as a short to medium-term catalyst. Hong Kong REITs do not have very strict requirements regarding the location of assets, allowing mainland investors to hold globally high-quality assets through Hong Kong REITs, which makes HK REIT an attractive option for mainland investors. The U.S. interest rate cuts have widened the spread between dividend returns of defensive pick and the yields of U.S. Treasury bonds. Also, the reduction in financing costs could support more acquisitions. Target price: $43; Stop- Loss price: $34..
Fed's Logan eyes more gradual rate cuts while further trimming the balance sheet
Dallas Fed President Logan said on Monday that she expects to gradually cut interest rates if the economy performs as expected. “If the economy evolves as I currently expect, a strategy of gradually lowering the policy rate toward a more normal or neutral level can help manage the risks and achieve our goals,” Logan said. Logan also said that reducing the balance sheet is part of normalization.
Hong Kong Stock Connect had a net inflow of HK12.4bn on Monday of which Tracker Fund (2800) had the largest net inflow, reaching HK$2.38bn; followed by SMIC (981). China mobile (941) recorded the largest net outflow at HK$0.35bn, followed by Alibaba (9988).
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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