KGI Asia Commentary

2024.05.27 09:47

Hang Seng Index fell 259 points on Friday

The Hang Seng Index opened 104 points lower on Friday morning, opening at 18,742 points, and later extended its decline to 296 points. It fell 259 points, or 1.4%, to 18,609 points throughout the day; HSCEI fell 96 points, or 1.4%, to 6,605 points; the Hang Seng Technology Index fell 97 points, or 2.5%, to 3,799 points. The total market turnover for the whole day was HK$126.7 billion. Consumer stocks fell, with Li Ning (2331) and TopSports (6110) falling 6.1% and 7.5% respectively. Xiaomi (1810) reported better-than-expected results and raised its full-year car delivery target to 120,000 units, but its stock price fell 3.4%.

US stock index benefits from AI

U.S. stocks closed higher on Friday. The Dow rose 3.94 points, or 0.01%, to 39069.20 points; the Nasdaq rose 184.76 points, or 1.10%, to 16920.79 points; the S&P 500 index rose 36.87 points, or 0.70%, to 5304.71 point. The Nasdaq hit a record high. On a weekly basis, the Nasdaq rose 1.41% last week, marking its fifth consecutive weekly gain. The S&P 500 rose less than 0.1% this week, also recording its fifth consecutive weekly gain. The Dow Jones Industrial Average fell 2.35% this week, ending its previous five consecutive weeks of gains. The U.S. tech index continues to benefit from the growth momentum of AI performance, driving the rise of related sectors. Last Friday, Nvidia (NVDA) further broke through the new high and rose nearly 2.6%.

In terms of economic data, the final value of the University of Michigan Consumer Confidence Index in May was announced last Friday, which rose slightly by 1.7 percentage points from the initial value to 69.1. The decline in the confidence index slowed down slightly. The one-year inflation expectation has declined from the initial value, which was 3.5%, while the latest final value is 3.3%. The decline in inflation expectations will help support market consumer confidence, but it is necessary to note that if consumer confidence overheats, it will hinder inflation from falling.

Central Plains Leading Index CCL fell 1.43% on a weekly basis

Centaline Property announced that the latest Centaline City Leading Index (CCL) fell by 1.43% on a weekly basis, which was significantly larger than the weekly decline in previous weeks. It fell by 1.97% for four consecutive weeks. Compared with the index performance before the withdrawal of housing measures, it has only increased slightly by 0.69%. The CVI index of major bank valuations also fell sharply to 54.89 points, down 7.79 points from the previous value, reflecting the weakening of optimism about bank valuations on properties. The CSI index surveyed from the salespeople fell below 50, the dividing line between boom and bust, and the published value was 45.51. If it remains below 50 for a long time, it reflects that the current market conditions will put pressure on property prices.

The net inflow of Hong Kong Stock Connect on Friday was $2.51 billion. Among them, Bank of China (3988) had the largest inflow, reaching HK$580 million; followed by AKESO (9926). Meituan (3690) recorded the largest net outflow of HK$350 million, followed by Tencent (700).

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China Res Power
00836

In the first four months, the electricity consumption of the whole country increased by 9% yoy; in terms of industries, the electricity consumption of primary industry, secondary industry, tertiary industry and residents' usage increased by 10.1%, 7.5%, 13.5% and 10.8% respectively. In April, the electricity consumption of the whole society increased by 7% yoy. The National Energy Administration (NEA) of China recently published the "Targeted Help and Counterpart Support Work Points for 2024", deploying for the year's work objectives and key tasks. In 2024, the NEA will focus on four aspects of guidance to help revitalize the development. Firstly, it will accelerate the development of clean energy by promoting the construction of wind power and distributed photovoltaic, enhancing the power system adjustment capacity, and exploring new modes of energy development. Secondly, it will strengthen the energy supply infrastructure by consolidating and enhancing the ability to protect the power grid, making up for the shortcomings of people's energy use, and promoting the construction of heat sources for power supply. The news is a positive signal for the development of the new energy industry. As a leader in traditional thermal power, China Resources Power has at the same time strengthened its deployment of renewable energy in recent years. Total net generation of subsidiary power plants in Jan-April 2024 increased by 5.5% yoy to 65,362,078 MWh, among which, subsidiary wind farms increased by 8% yoy to 15,691,145 MWh, subsidiary photovoltaic plants increased by 191.4% yoy to 1,830,610 MWh. The group will continue to develop renewable energy in the future, and therefore is expected to have upsides for both profit and valuation. Target price: $25; Stop- Loss price: $20

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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