KGI Asia Commentary

2023.01.18 09:00

Hang Seng Index fell 169 points on Tuesday

The Hang Seng Index fell 169 points or 0.8% to 21,577 on Tuesday. HSTECH fell 6 points or 0.1% to 4,500 and HSCEI fell 36 points or 0.5% to 7,314. Daily market turnover was HK$126.7bn.

Dow closes down nearly 400 points, dragged by Goldman shares

The Dow fell 391.76 points, or 1.14%, to close at 33,910.85. The S&P 500 fell 0.2% to 3,990.97, while the Nasdaq Composite gained 0.14% to 11,095.11. Goldman Sachs Group Inc (GS) fell more than 6% after fourth-quarter results missed expectations amid rising costs, weakness in consumer banking and a 48% drop in investment banking revenue. Morgan Stanley (MS), however, rose nearly 8% after reporting better-than-expected fourth-quarter results, as record revenue from its wealth management business offset weakness in its investment banking business. Tesla (TSLA) rose 7.4% after Deutsche Bank "strongly" reiterated its buy rating on the company, predicting that recent price cuts could help underpin sales growth. Apple (AAPL) on Tuesday unveiled MacBooks with new, faster M2 Pro and M2 Max chips. Its shares rose 0.88%.

Data showed New York state manufacturing contracted sharply in January

The NY Empire State Manufacturing Index, which measures New York state activity, fell sharply to -32.9 in January, the worst data since the pandemic, due to a sharp drop in orders and stagnant job growth, indicating that factory activity across the country continues to be weak.

Fund managers cut U.S. stock holdings in January, BofA survey finds

Thirty-nine percent of investors surveyed said they were underweight U.S. equities, the highest level since October 2005, according to Bank of America's latest survey of global fund managers released Tuesday. At the same time, investors increased their preference for emerging markets and European markets. A net 26% of respondents said they were overweight emerging market equities, while a net 10% were overweight euro zone equities. Meanwhile, recession fears have receded on hopes that China's reopening will provide a boost to global growth this year, with expectations for growth in China hitting a 17-year high, fund managers said.

Hong Kong Stock Connect had a net inflow of HK$2.6bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$2.2bn; followed by HSCEI ETF (2828). CCB (939) recorded the largest net outflow at HK$0.46bn, followed by Tencent (700).

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CTG Duty- Free
01880

CTG Duty- Free is the largest travel retail operator in the world primarily focusing on sales of high-quality duty-free and duty-paid merchandise to domestic and international travelers and mid- to high-end customers. It operated about 200 stores, in more than 100 cities across more than 30 provinces, municipalities and autonomous regions in China. It also operates duty-free stores overseas covering airports, aircraft, borders, foreign ship supplies, passenger stations, railway stations, cruise ships and etc. During the first three quarter of 2022, the Company’s operations were greatly impacted by the persistent COVID-19 pandemic in China, resulting in a 45.48% decline in net profit attributable to its parent. However, as the mainland tourism industry continues to normalize, CTG Duty- Free will be directly benefited. At present, more than 70 traditional duty-free shops of CTG Duty- Free have resumed operations, and have launched multiple benefits such as discounts, combined sales, hoping to promote the recovery of the traditional duty-free market. Back in June 2021, the State Council promulgated 14th Five-Year Plan for Hainan which further outlines and promulgates the expansion of Hainan as a major transportation hub in order to increase passenger traffic and support the growth of the offshore market in the coming years. With the company's larger-scale Haikou International Duty Free City opened recently, the company's duty-free business potential in the Hainan market would be further unleashed. With the continuing risk of global recession, China can no longer depend on NX to boost its GDP, and therefore the investment theme for the year is expected to be focused on domestic consumption. Among the consumption sector, China Duty Free even has an offshore market duty-free consumption concept, and therefore we see its investment value to be even greater. Target price: $280; Stop- Loss price: $230.

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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