KGI Asia Commentary

2024.04.16 09:47

HSI fell 121 points on Monday

After opening 234 points lower, the Hang Seng Index fell 121 points, or 0.7%, to close at 16,600; the HSCEI fell 23 points, or 0.4%, to close at 5,856; the HSTECH fell 31 points, or 0.9%, to close at 3,442. The total trading turnover was HK$95.16bn. Zhaojin (1818) raised more than HK$1.7bn through a share placement at a discount of 9.7%, and its stock price fell 9.6%. Chow Tai Fook (1929)'s quarterly retail value increased by 12% yoy, but same-store sales in the mainland fell by 2.7%, and its stock price fell by 7.9%.

Bank of New York president says interest rate cut this year still possible

John Williams, chairman of the Federal Reserve Bank of New York, gave a speech yesterday. He did not agree that the recent inflation data was a turning point, and that the U.S will continue to grow at a solid pace, and consumer spending is driven by strong fundamentals. He believed that tightening monetary policy still needed, but the possibility of an interest rate cut this year should be existed.

All three major U.S. stock indexes recorded declines. The Nasdaq composite fell 290 points, or 1.79%, to close at 15,885; the S&P 500 fell 61 points, or 1.2%, to close at 5,061; the DJIA fell 248 points, or 0.65%, to close at 37,735.

U.S. retail sales beat market consensus

The U.S. March retail sales data has been released yesterday, which was overall better than consensus. Retail sales in March rose 0.7% MoM, beating market consensus of 0.4%. The previous value was revised up to 0.9%. Retail sales excluding automobiles increased by 1.1% MoM, significantly better than the expected 0.5%. The data showed that consumer demand was resilient and supported economic growth in the first quarter, but expectations of rate cuts may disappoint the market again. According to estimates from the interest rate futures market, most investors are betting the start of rate cut shall be September or November.

Hong Kong Stock Connect recorded a net inflow of HK$7.05bn on Monday, of which China Mobile (0941) had the largest inflow, reaching HK$580mn; followed by Tencent (0700). HKEX (0388) recorded a net outflow of HK$13.82mn.

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CRRC
01766

The Group is a leading rolling stock manufacturers and solutions providers in China. The fourth meeting of the Central Financial and Economic Commission mentioned reducing logistics costs for the whole society, optimizing and adjusting the transportation structure, and promoting the "road-to-rail" transportation of bulk goods such as coal and ore. In addition, it was mentioned to promote the application of new railway energy equipment. China currently has nearly 10,000 diesel locomotives undertaking transportation tasks. In particular, some industrial and mining enterprises are still using DC diesel locomotives from the 1950s and 1960s, which are highly polluting, energy-consuming and noisy. Therefore, there is a need of elimination and update. The National Railway Administration stated that it will improve and update the subsidy policy, accelerate the promotion and application of new energy locomotives, and strive to basically eliminate old diesel locomotives by 2027. Based on the preliminary calculation by the finance department of the Company, it is estimated that the net profit attributable to shareholders of the listed company for the first quarter of 2024 will reach RMB923 million to RMB1,046 million, with an increase by RMB308 million to RMB431 million as compared with that for the corresponding period of the previous year (the statutory disclosure data), representing a period- on-period increase of 50% to 70%. The preliminary results were slightly better than expected, and with the support of national policies, the stock still has upside potential. Target price: $5.3; Stop- Loss price: $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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