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[Chinese] 2024/8/30- Southern East England Regional Market Report

Market News
USA
Federal Reserve Chairman Powell said that the time for rate cuts has come.
Federal Reserve Chairman Powell on Friday explicitly supported the upcoming easing policy, stating that a further cooling of the job market would be unwelcome and expressing confidence that inflation can reach the target of 2%. "The time for policy adjustment has come. The direction is clear, and the timing and pace of interest rate cuts will depend on the data that will be released, the evolving outlook, and the balance of risks," Powell said in a speech at the Kansas City Fed's annual conference held in Jackson Hole, Wyoming.
[Pan Southeast Asia]
As the high interest rate policy to curb inflation is relaxed, investors are turning to the ASEAN market.
With the expectation of a US interest rate cut strengthening, investors are starting to turn to high-growth Southeast Asia to find markets that can benefit from moderate inflation.
Southeast Asian stock markets have surged to new highs since mid-August, with Indonesia's Jakarta Composite Index reaching a new all-time high last Wednesday. Malaysia's Kuala Lumpur Composite Index touched its highest level since December 2020 on Tuesday.
The interest rate differential between the US and Southeast Asian countries has narrowed, and the region's currencies have strengthened against the US dollar. Earlier this month, the Malaysian ringgit reached a 16-month high against the US dollar.
Southeast Asia's efforts to stimulate electric vehicle penetration and local manufacturing are seeing successful results.According to Bloomberg, passenger vehicle electric vehicle sales are projected to more than double by 2023, with many major Chinese electric vehicle manufacturers already having manufacturing plants in the region and more investments on the way.
【Asia Pacific】
After the drag of tech giants on Wall Street, Asian stocks traded narrowly, and the focus of this week shifted from the Fed's policy outlook to Nvidia's profit situation.
After earlier declines, the stock markets of Japan and South Korea rose slightly, while the Australian stock market edged up. Hong Kong futures opened weakly, and after the weakness of US tech stocks, the futures of US tech companies stabilized.
[China]
The proponent of the 'Dollar Smile Theory': A Fed rate cut could lead to a $1 trillion forex inflow into China, potentially driving the renminbi to appreciate by as much as 10%.
Stephen Jen, CEO of Eurizon SLJ Capital, believes that since the pandemic, Chinese companies may have accumulated over $2 trillion in overseas investments, stored in assets denominated in currencies with higher interest rates than the renminbi. He points out that when the Fed lowers borrowing costs, the attractiveness of dollar assets weakens, and with the narrowing of the yield differential between the US and China, it may stimulate the return of a 'conservative' $1 trillion funds to the domestic market.
The amount of stock buybacks in the Hong Kong stock market has increased by nearly 30% compared to the full year of last year, reaching a new historical high.
According to statistics from the Hang Seng Index Company in Hong Kong, as of August 16, 2024, the amount of stock buybacks by listed companies in the Hong Kong stock market during the year has reached HKD 164.8 billion, surpassing 29.8% of the total stock buybacks in 2023, setting a new historical high.
The amount of stock buybacks in the Hong Kong stock market in 2023 was HKD 126 billion, a year-on-year increase of 20.1%, setting a new historical high. The first eight months of this year have achieved a new high and have two main characteristics: first, large blue-chip companies are the absolute main force in stock buybacks; second, many companies have newly joined the buyback trend.
Among the three major Hong Kong stock indexes, eight companies listed in the Hang Seng Tech Index have conducted buybacks, all of which are actively participating in buybacks, with a buyback weight reaching 37%. The term "actively participating in buybacks" refers to companies that have exceeded the total buyback amount in 2023 since 2024.
The renminbi has continuously strengthened, wiping out all the declines so far this year.
On Thursday afternoon, both offshore and onshore renminbi against the US dollar rose above 7.10, with an intraday gain of over 300 points, reaching the highest level since December 29 last year. Analysts believe that considering the possibility of measures taken by the People's Bank of China to control the large fluctuations in the renminbi, it is expected to face pressure when it rises to the 7-7.05 range.
【Japan】
The recent rise of the yen has exceeded the yen level estimated by many Japanese companies' profit forecasts, increasing the risk of export reductions and hindering stock market recovery.
With clearer signals from the Bank of Japan and the Federal Reserve on monetary policy, the yen has risen 3.5% against the dollar since the end of July, and some analysts currently predict that the yen will reach 135 against the dollar by the end of the year.
This is higher than the average assumption of 144.77 shown in the latest quarterly Tankan survey of more than 9,000 Japanese companies conducted by the Bank of Japan. It is also stronger than the foreign exchange assumptions of major exporters such as Toyota and Honda.
Analysts estimate that for every 1 yen appreciation against the dollar, Japanese companies will experience a profit decline of 0.4% to 0.6%.
The Nikkei 225 index is expected to see the largest monthly volatility since 1990.
After a drop of 13% on August 5th, the difference between the high and low points of this month's Nikkei 225 index has expanded to 7,625 yen. This is the largest monthly volatility since August 1990, when the stock market plummeted following the burst of the economic bubble.
Although the volatility during these two periods may seem similar, the current fluctuation quickly subsided, indicating that the prospects may be different.
Tokyo's inflation rate is rising, supporting the Bank of Japan to continue its policy normalization.
Japan's Ministry of Internal Affairs and Communications announced on Friday that consumer prices in the capital, excluding fresh food, rose 2.4%, higher than the 2.2% in July and the consensus expectation of 2.2%. Nationwide inflation data will be released in September.
Company News
[China]
$TENCENT (00700.HK)$ China-produced video game "Black Myth: Wukong", supported by Tencent Holdings (0700.HK), reached 10 million units in sales in just 83 hours.Game Science, the developer, announced on social media platform X that the game was released on Tuesday and by Friday night Beijing time, it had reached this milestone. The highest simultaneous online users on PC and PlayStation platforms reached 3 million.
Ctrip Group (9961.HK) reported second-quarter revenue of 12.79 billion yuan, a 14% year-on-year increase; shareholders' net profit attributable to shareholders was 3.833 billion yuan, a significant growth of 507.45% year on year.
$XPENG-W (09868.HK)$ Xpeng (9868.HK) plans to produce electric vehicles in Europe to reduce tariffs.
The CEO of Xiaopeng Motors, a partner of Volkswagen, He Xiaopeng, stated in an interview with Bloomberg at the company's headquarters in Guangzhou, China on Thursday that they are in the initial stage of selecting a factory in the EU as part of their future localization production plans.
He mentioned that the company plans to establish production capacity in regions with 'relatively low labor risks,' and further added that Xiaopeng Motors also plans to establish a large datacenter in Europe, as efficient software collection is crucial for the intelligent driving functions of autos.
$JD-SW (09618.HK)$ JD.com (9618.HK) announced yesterday that its board of directors has approved a new $5 billion (39 billion HKD) share buyback plan, which will take effect in September, allowing the Chinese e-commerce giant to repurchase its stock over the next 36 months.
Morgan Stanley predicts that the new buyback plan from JD.com can support the stock price.
$MEITUAN-W (03690.HK)$ In the second quarter, Meituan (3690.HK) saw a significant increase in net profit to 11.35 billion RMB; adjusted net profit reached 13.6 billion RMB, exceeding expectations.
In the second quarter, net profit was 11.352 billion RMB, a growth of 142.1% compared to the same period last year, and EBITDA growth adjusted for non-IFRS standards was 95.2% compared to the same period last year, reaching 14.997 billion RMB. Adjusted net profit grew by 77.6% to 13.606 billion RMB, surpassing the upper limit of the range of 6 brokerage firms' expectations, which ranged from 10.14 billion RMB to 12.575 billion RMB.
In the second quarter, Meituan's revenue increased by 21% year-on-year to 82.251 billion RMB, also exceeding the expectations of 8 brokerages (ranging from 79.92 billion RMB to 80.898 billion RMB).
In the first half of 2024, Meituan's revenue reached 155.527 billion RMB, a growth of 22.9% compared to the same period last year. Net income increased by 107.8% to 16.72 billion RMB, with an EPS of 2.7 RMB. As of June 30, 2024, Meituan has repurchased approximately 0.222 billion Class B shares on the HKEX, involving 23.326 billion RMB.
$LI AUTO-W (02015.HK)$ Li Auto (2015.HK) announced that despite fierce market competition, the second-quarter revenue exceeded expectations with a year-on-year increase of over 10%, but the adjusted (Non-GAAP) net income was nearly halved. However, the company expects the profit margin to improve in the second half of the year as Li ONE production stabilizes, and third-quarter deliveries are expected to increase by over 40% year-on-year.
After years of investment without seeing results, Tencent (0700.HK) and $NTES-S (09999.HK)$ NetEase (9999.HK) are reconsidering their investments in the Japanese gaming sector.
According to sources, NetEase has downsized its Ouka studio in Shibuya, Tokyo to only a few employees and plans to close it. The studio was established in 2020, causing a sensation at the time, and later poached many veterans from well-known companies like Capcom and Bandai Namco.
Tencent—a much larger competitor than NetEase—is also reconsidering its investment pace and scale in Japan. They said the company has already withdrawn investment commitments for several new games.
【Japan】
$Toyota Motor (7203.JP)$ Toyota (7203.JT) is recalling some 2023 and 2024 Sequoia vehicles.Toyota is recalling certain 2023-2024 model Sequoia vehicles in North America, Central America, South America, and the Middle East. A total of about 45,300 vehicles are being recalled, with about 43,400 in the United States.
【Asia Pacific】
South Korean company Samsung SDI (005930.KP) announced on Wednesday that it has reached an agreement with General Motors to establish a joint electric vehicle (EV) battery factory in Indiana, USA. The Indiana factory will receive an investment of $3.5 billion and is expected to start production in 2027.
SK Hynix (000660.KP) has announced that it has developed the industry's first 16Gb DDR5 memory using its 1c node (sixth-generation 10nm process). It plans to begin mass production of 1c DDR5 within the year and start volume production next year. -20240829
It is reported that Samsung (005930.KP) is interested in Nokia's mobile network assets.
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