KGI Asia Commentary

2024.03.22 09:00

Hang Seng Index rose 320 points on Thursday

The Hang Seng Index rose 320 points or 1.9% to 16,863 on Thursday. HSTECH rose 31 points or 0.9% to 3,582 and HSCEI rose 101 points or 1.7% to 5,905. Daily market turnover was HK$118.0bn.

Dow closes more than 250 points higher

The S&P 500 closed at a record high on Thursday as stocks continued to rise. The day before, the Federal Reserve continued to signal that it would cut interest rates three times this year. The Dow Jones Industrial Average rose 269.24 points to close at 39,781.37 points, an increase of 0.68%. The S&P 500 index rose 0.32% to close at 5,241.53 points, and the Nasdaq index edged up 0.20% to close at 16,401.84 points. On Thursday, the U.S. Department of Justice and 16 states filed a lawsuit against the technology giant Apple, accusing it of illegally monopolizing the smartphone market. Apple's stock price fell more than 4%. Shares of Micron Technology soared 14% to a record high after the chipmaker posted a surprise profit and forecast strong revenue for the current quarter as demand for its memory chips used in artificial intelligence computing surges. Reddit surged on its first day of trading on Thursday, closing up 47% that day and opening at $47, much higher than its IPO price of $35.

U.S. economic data continues to show strength

The prospect of rate cuts and the resilience of the U.S. economy boosted risk appetite after Federal Reserve officials maintained their forecast for three rate cuts this year. On the economic front, data continues to show a strong labor market. In the week ending March 16, the number of people applying for unemployment benefits for the first time in the United States was 210,000, down from the previous 212,000. The forecast is 215,000. At the same time, the US March S&P Global Manufacturing Purchasing Managers Index preview value was 52.5, higher than the previous 52.2. The predicted value is 51.7.

Hong Kong Stock Connect had a net inflow of HK4.7bn on Thursday, of which Tencent (700) had the largest net inflow, reaching HK$1.62bn; followed by BOC (3988). ICBC (1398) recorded the largest net outflow at HK$0.21bn, followed by CNOOC (883).

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Swire
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The underlying profit was driven by the post-COVID surge in demand for travel. Apart from having a huge impact on the Cathay group, it also benefitted HAECO, Swire Properties’ retail operations and Swire Hotels. Swire Properties continued to grow in 2023. The division’s attributable recurring underlying profit for the year was HKD5,942mn, a 2% increase on 2022’s profit of HKD5,844mn. Since the removal of pandemic restrictions and the full reopening of the border, there has been a significant improvement in foot traffic, while retail sales strongly exceeded levels seen before the pandemic. Meanwhile, Cathay Pacific’s strong turnaround is the key driver of Swire Pacific’s outstanding performance in 2023. The Cathay group’s attributable profit was HKD9,789mn compared with 2022’s restated loss of HKD6,623mn. Cathay Pacific announced that the group has achieved its target set for the end of 2023, with passenger flights returning to 70% of pre-pandemic levels. Overall, the FY23 recurring underlying profit of the Group rose 175% to HKD10,449mn, beating expectation. Investment value of the stock remain. Target price: $76; Stop- Loss price: $61.4.

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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