KGI Asia Commentary

2024.02.16 09:00

Hang Seng Index rose 65 points on Thursday

The Hang Seng Index rose 65 points or 0.4% to 15,944 on Thursday. HSTECH rose 25 points or 0.8% to 3,223 and HSCEI rose 24 points or 0.5% to 5,410. Daily market turnover was HK$47.0bn.

S&P closes at record high

The S&P 500 closed at a record high on Thursday, led by a surge in energy stocks, which boosted sentiment after economic data showed signs of weakness in retail sales. The S&P 500 rose 0.58% to close at 5,029.73 points, and the Nasdaq rose 0.30% to close at 15,906.17 points. The Dow Jones Industrial Average rose 348.85 points to close at 38,773.12 points, an increase of 0.91%. Occidental Petroleum Corporation rose nearly 5%, pushing the energy sector overall higher after Warren Buffet's Berkshire Hathaway revealed late Wednesday it had raised its stake in the oil major by about 9% in Q4. Occidental Petroleum Corp. also reported quarterly results that beat Wall Street expectations, with production better than expected. Earnings season continues to paint a chaotic picture for corporate. Tripadvisor's revenue and profit beat estimates, sending its shares up 9%. On the other hand, Cisco shares fell 2% after the company announced layoffs and a weak sales outlook. Deere & Co. shares fell 5% after the agricultural machinery maker lowered its full-year profit forecast. On the economic data front, the labor market continued to show signs of strength, with initial jobless claims falling by 8,000 to 212,000 in the week ended February 10, beating expectations for a decrease of 1,000 and indicating continued strength in the labor market.

Consumer strength in doubt after retail sales fall more than expected

The U.S. Commerce Department said on Wednesday that retail sales fell 0.8% last month. That was larger than the 0.2% drop economists expected. This has raised concerns about the purchasing power of U.S. consumers under the weight of sticky inflation and high interest rates. U.S. Treasury yields subsequently fell.

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Trip.com
09961

Ctrip reported that the number of New Year's holiday travel bookings in Mainland China surged 168% year-on-year, while the number of outbound travel orders leapfrogged 388%. In terms of travel spending in high-end resort hotels and self-booked tours, the average per capita spending of tourists soared by varying degrees. As a recap of Trip.com's 3Q23 result, its quarter revenue was RMB13.75bn, up 99.4% yoy and 22.1% qoq. Adjusted net profit was RMB4.89bn, up 3.7 times yoy and 42.6% qoq. The third quarter spans the summer vacation period, which is the traditional peak tourism season, therefore recorded strong growth. Domestic tourism business continues to recover, with domestic hotel bookings increased by more than 70% compared to the pre- covid level for the same period in 2019. The outbound hotel and air reservations recovered to around 80% of the pre-COVID level for the same period in 2019, rising from the 60% in the previous quarter, and recorded a faster- than- peers recovery rate. As international flights gradually resume, Trip.com will continue to benefit from the industry recovery. Recent platform data shows that both domestic and foreign travel demand remains resilient. Trip.com's travel booking growth in the Asia-Pacific region is likely to be led by Singapore, Macau, Hong Kong and South Korea, as data shows the number of flights to these destinations is recovering faster than the overall average. Target price: $335; Stop- Loss price: $300.

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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