KGI Asia Commentary

2024.03.19 09:00

HSI rose 16 points on Monday

The Hang Seng Index closed at 16,737 today, up 16 points or 0.1%. The HSTECH reported at 3,594, up 44 points or 1.3%. The HSCEI rose 27 points, or 0.5%, to 5,848. The market turnover was HK$95.7 bn. HK property stocks were generally weak, with SHKP (0016) and Henderson Land (0012) falling 2.6% and 3.9% respectively. It was rumored that Alibaba (9988) sold Freshippo and RT-Mart to COFCO, but this was later officially denied. Alibaba's share price rose 0.1%.

Nvidia announced the various integration of AI is coming soon

On March 18th, AI market leader stock Nvidia (NVDA.US) held the annual artificial intelligence event GTC 2024. At the meeting, it released the latest AI GPU - B100. This new GPU uses the newly designed "Blackwell" architecture. Which will provide at several times the speed, and CEO Jensen Huang proposed the trend of integrating AI into everything, such as AI + medicine, AI + industrial design, etc. According to estimates from a market research study, the AI chip market size will increase by 25.6% from the previous year to US$67.1bn in 2024. In 2027, the market size will be more than double the size in 2023, reaching US$119.4bn.

All three major U.S. stock indexes recorded gains. The Nasdaq composite rose 130 points, or 0.82%, to close at 16,103; the S&P 500 rose 32 points, or 0.63%, to close at 5,149; the DJIA rose 75 points, or 0.2%, to close at 38,790.

BOJ may announce the end of YCC today

According to Japanese media reports, the BOJ may announce the end of the YCC today, raising short-term interest rates to a range of 0 to 0.1% and stopping the purchase of ETF assets. Although the BOJ has ended its negative interest rate policy, it is not expected to announce a balance sheet reduction at the same time. It is reasonable to choose to continue to purchase government bonds. After all, if bond interest rates rise sharply, Japan, a country with a high debt burden, will face financing pressure.

The net inflow of Hong Kong Stock Connect on Monday was HK$2.93bn, in which Xiaomi (1810) had the largest net inflow, reaching HK$330mn; followed by Kuaishou (1024). Li Auto (2015) recorded the largest net outflow of HK$290mn, followed by WuXi Biologics (2269).

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PetroChina
00857

The International Energy Agency (IEA) said global oil markets will be hit by a supply shortage this year rather than a glut as previously forecast, as OPEC+ is likely to continue production cuts in the second half of the year. The IEA also raised its forecast for global demand growth this year to 1.3 million barrels per day, reflecting a stronger U.S. economic outlook and increased fuel demand for container ships bypassing the Red Sea. Global oil demand is expected to reach a record 103.2 million barrels per day this year. The prospect of tighter supplies could go some way to helping offset ongoing concerns about a slowdown in oil demand this year, especially given the China's sluggish economic recovery and the lagged impact of high U.S. interest rates. At the same time, the oil sector can be benefited from the market value management of SOEs. The State Council previously announced that it will further study the inclusion of market value management in the performance assessment of the persons in charge of central SOEs. SOEs responded in affirmation. They vowed to actively carry out value management and value dissemination activities, and will adopt market capitalization management tools on a regular basis to safeguard company value and enhance shareholders' returns. By incorporating market value management into the KPI of state-owned enterprise management, it may promote Chinese oil stocks to continue to increase their dividend payout ratios in the future. Bloomberg predicts PetroChina to have a dividend yield of approx. 7% in 2024, showing the investment value of the stock. Target price: $7.6; Stop- Loss price: $5.7.

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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