Daily Investment Strategy
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Bank of China (3988): ranks among the top in the industry in terms of assets and loan/deposit scale. The bank's core revenue has been robust recently, with total loans growing by 8.1% year-on-year. Driven by a gradual stabilization of net interest margin, net interest income grew by 7.8% year-on-year, laying a solid foundation for core profitability throughout the year. Looking ahead, with the recovery of export trade momentum and the advancement of RMB internationalization, Bank of China's demand for cross-border settlement will continue to grow. In summary, Bank of China is actively developing its non-interest and overseas business, with robust core revenue and an expected dividend yield of 4.8% to 5.0%, exhibiting excellent defensive characteristics.
Divergent pattern of weakening domestic demand and a rebound in industrial output.
May saw a divergence between weakening domestic demand and a rebound in industrial output. In retail, total retail sales fell 0.6% year-on-year, marking the first negative growth this year, with discretionary consumption such as automobiles, home appliances, and the real estate supply chain remaining sluggish. In investment, fixed asset investment contracted further in May, declining by 12.1%, with real estate investment experiencing a wider drop. Overall infrastructure and manufacturing sectors weakened, with only the electronics manufacturing industry bucking the trend and rising due to AI demand. In contrast, industrial value added rebounded to 4.5%, mainly supported by strong growth in high-tech capital goods such as integrated circuits and industrial robots. Currently, the overall market recovery remains highly dependent on infrastructure investment and the momentum of the AI industry.
On Tuesday, net inflows into Hong Kong stocks via the Stock Connect program totaled HK$3.463 billion. The Tracker Fund of Hong Kong (02800) saw the largest inflow at HK$2.35 billion, followed by Kingboard Laminates (01888) with a net inflow of HK$1.7 billion. Tencent Holdings (00700) recorded the largest net outflow at HK$1.64 billion, followed by Alibaba-W (09988) with a net outflow of HK$1.63 billion.
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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