Daily Investment Strategy
Daily focus：Meituan（3690）
Meituan's second-quarter 2025 results presented a dilemma of "increasing revenue but not profits." While total revenue increased 11.7% year-over-year to RMB 91.8 billion, operating profit plummeted 98.0% to just RMB 226 million due to increased rider subsidies and user incentives amidst intense competition. This strategy not only resulted in a 75.6% drop in operating profit from its core local business, but also saw losses from its new business widen by 43.1% due to factors such as overseas expansion, highlighting the cost of the company's strategic trade-off of short-term profits for market share.
The market is focused on Friday’s core PCE data
Recent U.S. Treasury yields have swung wildly after President Trump publicly announced the removal of Fed Governor Lisa Cook. That personnel move has heightened concerns over the Fed’s independence and the future path of monetary policy. The two-year yield plunged to 3.617%, and the ten-year yield fell back to around 4.24%, driving the yield curve’s spread to its widest level since April. Investors’ expectations for a September rate cut have risen sharply, with the CME FedWatch Tool indicating an approximately 87% probability. Meanwhile, the core PCE price index will be released this Friday, and labor market data will also be an important reference for Fed decisions. If inflationary pressures continue to ease and labor market growth slows, the Fed may be further compelled to ease policy in order to maintain financial stability and support economic growth.
On Wednesday, southbound Stock Connect recorded net inflows of HKD 15.37 billion, led by Tracker Fund of Hong Kong (2800) with net inflows of HKD 5.55 billion, followed by Hang Seng China Enterprises Index ETF (2828). On the other hand, Semiconductor Manufacturing International (0981) saw the largest net outflows of HKD 660 million, followed by Xiaomi Group (1810).
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.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.
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.
