Daily Investment Strategy
HSI rose 1 point on Monday
The Hang Seng Index opened 64 points lower today and narrowed to a drop of 4 points in mid-day. The HSI closed at 19,537, down 1 point or 0.0%. The HSTECH closed at 4,499, up 2 points or 0.0%. The HSCEI rose 1 point or 0.0% to 6,734. Market turnover was HK$78.98bn. The rectification of corruption in the Chinese pharmaceutical industry has been started, and pharmaceutical stocks have fallen between 2.4% and 11.4% today. Property developer stocks were generally under pressure. Country Garden (2007) denied that the deputy mayor of Foshan City would lead a working group, and its share price fell 7.7%.
Fed officials may need to cut rates next year to keep real rates down
A Fed governor proposed a roadmap for the U.S. rate cuts. John Williams, President of the New York Federal Reserve Bank, believed that “data dependent” was still the key for rate hike. A rate cut could be considered in 2025 to ensure real interest rates do not rise further. At present, the 10 years real interest rate has fallen from a high of 2.05% to 1.424%, and the current level is at the level of 2018-19. In addition, Williams' remarks reflect that the Fed should not cut interest rates this year.
The three major U.S. indexes all recorded gains last night. Among them, the DJIA rose 407 points or 1.16% to close at 35,473; the S&P 500 rose 40 points or 0.9% to close at 4,518; the Nasdaq Composite rose 85 points or 0.61% to close at 13.994.
The Chinese auto market may set off another price war
The new energy vehicle market in China may set off a new round of price wars. According to domestic media reports, some new energy vehicle companies failed to achieve their sales targets in the 1H23. The price reduction discount covers more than 20 models, and the price ranges from RMb50,000 to RMb300,000. The concerns of car companies are not unreasonable. In July, the dealer inventory warning index rebounded again to 57.8%. Taking BYD as an example, the sales volume of vehicles in the first 7 months was 1.52mn units, which is about half of the annual sales target of 3mn units. Considering that the Chinese economy is still uncertain in the 2H23, it is expected that auto companies will cut prices and promote sales to lock in coming sales.
Hong Kong Stock Connect had a net inflow of HK$4.44bn on Monday, of which Tracker Fund (2800) had the largest net inflow of HK$1.57bn; followed by Hang Seng China Enterprises (2828). On the other hand, Tencent (0700) recorded the largest net outflow of HK$318mn; followed by Meituan (3690).
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.
The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.
