KGI Asia Commentary

2024.06.26 09:47

Hang Seng Index rose 45 points on Tuesday

The Hang Seng Index rose 45 points or 0.3% to 18,072 on Tuesday. HSTECH fell 22 points or 0.6% to 3,655 and HSCEI rose 23 points or 0.4% to 6,464. Daily market turnover was HK$93.7bn.

NVIDIA rebound to drive NASDAQ close high

The S&P 500 and Nasdaq ended a three-day losing streak on Tuesday as Nvidia shares rebounded.Shares of chip-making giant Nvidia rebounded on Tuesday, sending the S&P 500 and Nasdaq higher after a sell-off a day earlier. The S&P 500 rose 0.39% to close at 5,469.30 points, and the Nasdaq rose 1.26% to close at 17,717.65 points. Both indexes ended a three-day losing streak. The Dow Jones Industrial Average fell 299.05 points, or 0.76%, to close at 39,112.16 points.

Nvidia shares rose about 6.7%. The stock fell more than 6% in the last trading day, its biggest one-day drop since a 10% drop on April 19. Several big tech stocks also rebounded after falling on Monday. Meta platform and Alphabet both rose more than 2%. SolarEdge Technologies shares fell 20.6% after the company announced plans to issue $300 million in new debt. Novo Nordisk shares rose 3.3% after the company won approval from Chinese regulators for its blockbuster weight-loss drug Wegovy. Volkswagen has announced a major investment plan in Rivian Automotive Company. News of the strategic partnership sent Rivian's shares up 36.3% in after-hours trading.

Fed's Bowman does not expect any interest rate cuts this year

Fed's Bowman warns there are upside risks to inflation. Fed Governor Bowman said she sees many upside risks to the inflation outlook and reiterated the need to keep borrowing costs high for some time. She said that given the risks and uncertainties in the economic outlook, she would remain cautious when considering future changes in policy stance. She does not expect any interest rate cuts this year. This week the market is mainly focused on the PCE inflation data to be released on Friday. The data is the Fed's preferred measure of inflation. The data is expected to show inflation cooled slightly in May but remained well above the Fed's 2% annual target.

Hong Kong Stock Connect had a net inflow of HK0.32bn on Tuesday, of which CCB (939) had the largest net inflow, reaching HK$0.38bn; followed by ICBC (1398). Tracker Fund (2800) recorded the largest net outflow at HK$0.58bn, followed by CNOOC (883).

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Huaneng Power
00902

Market statistics show that high temperatures during the year generally occur from July to August. Many regions in the mainland previously have successively issued high temperature warnings. This summer may usher in another "heat" wave. Along with the hot weather, investors can pay attention to the performance of power sector. According to historical data, the annual social electricity consumption peak is basically consistent with the occurrence of high temperature weather, both occurring in July-August. As industrial production improves this year, electricity consumption may further increase in hot weather. Driven by these two factors, the growth of electricity consumption this year may accelerate. The total electricity consumption of the whole society in China amounted to 775.1 billion kWh in May, up 7.2% YoY. To recap, Huaneng's 1Q24 net profit amount to RMB4.596bn, up 104% yoy, higher than market expectations. The strong performance is mainly due to the significant improvement in the coal fired business, benefiting from the decline in coal prices. The recent increase in coal prices in the mainland is limited, which is beneficial to the group's coal fired division. Positive factors remain, investors can continue to hold.

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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