KGI Asia Commentary

2024.06.14 09:47

Hang Seng Index rose 174 points on Thursday

The Hang Seng Index rose 174 points or 1.0% to 18,112 on Thursday. HSTECH rose 47 points or 1.3% to 3,739 and HSCEI rose 62 points or 1.0% to 6,421. Daily market turnover was HK$107.3bn.

Chip stocks drive Broadcom higher, S&P hits record high

The S&P 500 index rose on Thursday, setting a record close for the fourth consecutive session, as traders focused on more data that suggested inflationary pressures may be easing. The S&P 500 rose 0.2% to close at 5,432.40 points, a record high; the Nasdaq rose 0.3%, but the Dow Jones Industrial Average fell 65 points, or 0.2%. Shares of chipmaker Broadcom rose more than 12% after the company reported bumper earnings and raised annual guidance amid growing demand for artificial intelligence. The company also announced a 10-for-1 stock split. Tesla's stock price rose nearly 3%. Tesla CEO Musk said on social media that shareholders supported his $56 billion compensation plan and said that the company's registration location would be moved from Delaware to Texas.

Mild PPI data helps rate cut expectations

The U.S. producer price index unexpectedly fell in May, with monthly PPI falling 0.2% last month after rising 0.5% in April. The year-on-year increase slowed to 2.2% from 2.3% in April. Initial jobless claims jumped to a 10-month high last week, boosting financial market hopes that the Fed will begin cutting interest rates in September.

Hong Kong Stock Connect had a net inflow of HK3.99bn on Thursday, of which BYD (1211) had the largest net inflow, reaching HK$0.59bn; followed by CNOOC (883). HKEX (388) recorded the largest net outflow at HK$0.02bn, followed by SMIC (981).

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Lenovo
00992

During the fiscal year, the Group encountered a setback of 8% in revenue and 37% in net profit, primarily driven by broad market weaknesses in the first half of the period under review. However, demand momentum accelerated in the latter half of the year. In the fourth fiscal quarter, the Group experienced a robust recovery, with sales grew by 9%. NI grew by 118% yoy to USD248mn. The strategic cooperation framework agreement signed with the Saudi Sovereign Wealth Fund will open up the Middle East and Africa (MEA) market. Most of the countries in the MEA region are developing countries, and there is a huge demand gap in infrastructure, computing power and enterprise services. The MEA Region continues to see strong growth momentum fueled by an increasing number of large-cap projects and its strong economies, with the region’s IT and Business Services market size expected to reach US$38 billion by 2027, according to estimates by the International Data Corporation. The cooperation is expected to effectively provide overseas growth opportunities for the Company's ISG and SSG. Target price: $12.5; Stop- Loss price: $10.

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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