Daily Investment Strategy
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Tencent (0700): The company delivered robust 4Q25 results with double-digit growth in revenue and profit. Management guided that AI investment in 2026 will double, and while this front-loaded spending may temporarily cause revenue to outpace profit growth, the resilient core gaming and social businesses provide ample cash flow to fund this transformation. By integrating next-generation models to foster a decentralized agentic AI ecosystem, Tencent is successfully evolving its social leadership into intelligent productivity, securing its competitive moat and driving long-term incremental earnings growth.
Federal Reserve maintained its interest rate unchanged
US inflationary pressures remain thorny, influenced by higher-than-expected February PPI (3.4%) and rising core PPI. The Federal Reserve maintained its interest rate unchanged, and its latest dot plot released a strong hawkish signal: the median interest rate in 2026 will remain at 3.4%, implying only one rate cut throughout the year; moreover, 14 out of 19 officials expect only one rate cut or no rate cut at all, with long-term interest rate forecasts even revised upwards to 3.1%. Powell clearly stated that he is "in no hurry to cut rates," postponing market expectations for the first rate cut to the end of the year. Rising US Treasury yields and a stronger dollar have significantly suppressed gold and highly valued tech stocks. In the short term, the market is expected to maintain high-level fluctuations under the dual pressure of "higher and longer" interest rate expectations and the Middle East situation, and a conservative approach is advisable.
Hong Kong Stock Connect saw a net inflow of HK$1.217 billion on Wednesday, with Alibaba-W (09988) seeing the largest inflow at HK$1.536 billion; followed by Xiaomi Group-W (01810). SMIC (00981) recorded the largest net outflow at HK$774 million, followed by Tencent Holdings (00700).
Leung Kai Tong 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/ADU276/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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