KGI Asia Commentary

2024.09.05 10:00

Hang Seng Index fell 194 points on Wednesday

The Hang Seng Index closed at 17,457 points for the day, fell 194 points or 1.1%. The Hang Seng Technology Index reported at 3,482 points, fell 13 points or 0.4%. The HSCEI Index fell 69 points, or 1.1%, to 6,133 points. The market turnover was HK$96.9 billion.

 

U.S. stocks closed slightly lower

U.S. stocks ended slightly lower on Wednesday after a volatile session after job market data and comments from Federal Reserve officials bolstered the case for a rate cut. The S&P 500 fell 0.16% to close at 5,520.07 points, and the Nasdaq fell 0.3% to close at 17,084.30 points. The Dow Jones Industrial Average rose 38.04 points to close at 40974.97 points, an increase of 0.09%. Nvidia shares fell 1.7% after Bloomberg reported that the U.S. Department of Justice issued a subpoena to the chipmaker. Previously, Nvidia's stock price plunged more than 9% on Tuesday against the backdrop of a general decline in the semiconductor industry. Some big tech and chip stocks regained footing on Wednesday, with Advanced Micro Devices and Tesla rising about 3% and 4%, respectively. Meta Platforms, Marvell Technology, Broadcom and Qualcomm were higher. Stocks have rebounded from their lows as the so-called Treasury yield curve temporarily returns to normal. The 10-year Treasury yield was once equal to the 2-year Treasury yield and briefly moved higher.

 

US job openings fall to 3.5-year low in July

Data from the U.S. Labor Department showed that U.S. job openings fell to a 3-1/2-year low in July, indicating that the job market continues to slow down and may enhance the Fed's ability to start cutting interest rates at its meeting later this month. Raphael Bostic, president of the Federal Reserve Bank of Atlanta, said on Wednesday that the Fed cannot keep interest rates at too high a level for too long or it could cause too much harm to employment. He added that waiting until inflation has fallen back to the 2% target before cutting interest rates "would risk labor market disruptions that could inflict unnecessary pain and suffering."

Hong Kong Stock Connect had a net outflow of HK3.70bn on Wednesday of which Sinopec (386) had the largest net inflow, reaching HK$0.31bn; followed by CCB (939). Tracker Fund (2800) recorded the largest net outflow at HK$3.72bn, followed by HSCEI ETF (2828).

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Meituan reported revenue of RMB82.25bn in2Q24, with adjusted net profit of RMB13.6bn, exceeding market expectations. Both the core segment and new business segment showed significant improvement. The operating profit for the core local commerce segment was RMB15.23bn, a yoy increase of 36.8%, with an operating profit margin of 25.1%, up from 21.8% in the same period last year. The new business segment reported a loss of RMB1.31bn, significantly narrowing from a loss of RMB5.19bn in the previous year. Despite soft domestic consumption and intense industry competition, Meituan's market share has remained intact, and its unit economics (UE) have improved, instilling confidence among investors. In summary, the quarterly results exceeded expectations, and with a positive guidance, the stock price remains favorable in the short term. Target price: $128; Stop- Loss price: $108.

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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