Daily Investment Strategy
Recommended Stock：HSBC（5）
As we enter 2025, Donald Trump is going to return to the White House, and his policies on tax cuts and expanding the fiscal deficit are already impacting medium- to long-term U.S. Treasury yields. The spread between long and short-term government bond rates has widened. The relaxation of regulations and a lower interest rate environment will also benefit large banks through increased trading activity. Recent banking business activity shows that declining funding costs have led to varying degrees of growth in both equity and debt trading, boosting the overall scale of trading assets and enhancing the contribution of capital market revenue to the overall revenues. Among global banks, HSBC Holdings has solid fundamentals. In 3Q24, HSBC's pre-tax profit increased by $800 million to $8.5 billion compared to the same period in 2023, exceeding expectations, driven mainly by growth in wealth management and personal banking, as well as gains in foreign exchange, equities, and global debt market activities. HSBC maintains its guidance from July 2024, with an average tangible equity return target of around 15% for 2025, despite rate cut cycle in the US, indicating management remain confident towards its overall operations and performance. Target price: $84.
Trump’s tariff plan may be narrower than expected
Trump is reportedly considering an important adjustment to his tariff plans. Among the 11 sectors of the S&P 500, seven ended lower, while communication services and technology stocks rose by 2.13% and 1.44%, respectively. Despite the 10-year Treasury yield reaching its highest point since May, technology stocks continued to rise. Semiconductor manufacturers received a boost from Microsoft's plan to invest $80 billion in developing artificial intelligence data centers, as well as Foxconn's fourth-quarter revenue that exceeded forecasts. Market sentiment on Monday was also lifted by a Washington Post report stating that President-elect Trump’s tariff plan would be narrower than expected, focusing only on critical imports.
Hong Kong Stock Connect had a net inflow of HK$5.12bn on Monday of which Xiaomi (1810) had the largest net inflow, reaching HK$1.4bn; followed by China Mobile (941). Alibaba (9988) recorded the largest net outflow at $0.76bn, followed by HSCEI ETF (2828).
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.
The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.
