This week, Hong Kong stocks initially surged but then reversed course. The $HSI(HSI)$ rose 1.65% by the end of the week.
U.S. Economic Data Shakes Markets
On Tuesday night, the U.S. released its July CPI data, showing a 2.7% year-on-year increase, below expectations. This fueled market optimism about a potential Fed rate cut in September.
U.S. Treasury Secretary Janet Yellen commented that if May or June’s non-farm data had looked like this, the Fed might have already cut rates in June or July. She suggested a 50-basis point rate cut in September is now very likely.
However, shortly after, the U.S. July PPI data was released, showing a 3.3% annual rise, up from 2.3% the previous month, marking the biggest increase since February. On a monthly basis, PPI rose 0.9%, the highest since June 2022, well above expectations of 0.2%.
This shift in the PPI data led markets to scale back their expectations for a September rate cut.
Domestic Economic Concerns
In China, a series of economic indicators came out this week. July’s new RMB loans fell by 500 billion yuan, a sharp drop compared to the expected increase of 3 trillion yuan. This marks the first decline in loans since 2005 and the largest single-month drop since 1999.
In the housing market, July data showed that new home prices in 70 major cities fell 0.31% month-on-month, the largest drop in 8 months.
Retail sales, on the other hand, grew just 3.7% year-on-year in July, the lowest growth rate this year, as consumer demand weakened for items like home appliances and smartphones.
These negative data points caused Hong Kong stocks to face downward pressure.
Strong Earnings in Key Stocks
Despite the overall market pullback, individual stocks performed exceptionally well, especially in the tech and healthcare sectors.
$TENCENT(00700)$ ’s Q2 results exceeded expectations, and its stock briefly surpassed HK$600 per share.
$JD HEALTH(06618)$ posted revenue of 35.29 billion yuan in the first half of the year, up 24.5% year-on-year, and reported a 105.5% increase in operating profit, leading to a 12% rise in its stock price.
Next week, key reports from companies like $XIAOMI-W(01810)$ and $POP MART(09992)$ are expected, so keep an eye on their performance post-earnings.
Sector Performance
Technology and healthcare stocks led the gains this week. Energy stocks lagged behind, underperforming the broader market.
Southbound Fund continued its strong momentum, with a net inflow of HK$38.12 billion this week. Notably, on Friday alone, the net inflow reached HK$35.88 billion.
Major Events in Hong Kong Stocks This Week
1. $CATL(03750)$ halted operations at its Yichun lithium mica mine.
2. $AB&B BIO-TECH-B(02627)$ surged 158% on its debut, with its IPO receiving over 4,000 times oversubscription.
3.China and The U.S. issued a joint statement after their trade talks, suspending a 24% tariff for 90 days.
4. $EVERGRANDE(03333)$ announced it would be delisted from the Hong Kong stock exchange starting August 25.
5.New RMB loans decreased by 500 billion yuan in July, marking the first drop in 20 years.
6.The U.S. July CPI rose 2.7%, below expectations.
7. $TENCENT(00700)$ reported Q2 revenue of 184.5 billion yuan, up 15% year-on-year.
8. $PING AN(02318)$ increased its stake in $CPIC(02601)$ .
9. $JD.com(JD)$ reported a 22.4% YoY increase in Q2 revenue, totaling 356.66 billion yuan.
10. $NTES-S(09999)$ posted Q2 revenue of 27.9 billion yuan, up 9.4% year-on-year.
11. $INNOGEN-B(02591)$ debuted on the Hong Kong market with a massive 206% jump.
12.U.S. July PPI rose by 3.3%, cooling expectations for a September Fed rate cut.
13.In July, second-hand home prices in first-tier cities fell by 1.0%, widening the decline from last month.
14.July retail sales grew 3.7%, underperforming expectations.
Four Stocks Worth Attention Among Top Trading HK Stocks This Week
Top 2: $INNOGEN-B(02591)$ .The stock surged 206% on its debut after a 5364x oversubscription of its IPO. It’s a leading domestic GLP-1 innovation drug company.
Top 5: $AB&B BIO-TECH-B(02627)$ . The stock jumped 158% on its debut and rose an additional 31% the following day. At its peak, the stock soared 362% above its IPO price.
Top 6: $TENCENT(00700)$ .The tech giant posted better-than-expected Q2 earnings, leading to a HK$600 stock price peak, the first in 4 years.
Top 9: $JD.com(JD)$ . JD reported a 22.4% YoY increase in Q2 revenue, but also recorded an operating loss of 14.8 billion yuan.
Next Week's Hong Kong Stock Market Events
1.Next Friday evening, U.S. Federal Reserve Chairman Jerome Powell will give a speech at the Jackson Hole Symposium on the economic outlook and the Fed's policy framework.
2.Next Week, key earnings reports are expected from companies like $LI AUTO-W(02015)$ $XIAOMI-W(01810)$ $POP MART(09992)$ $KUAISHOU-W(01024)$ $BILIBILI-W(09626)$.
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