I. Performance of Global Equity Indices (in US dollars) Source：Bloomberg, 2024/05/06-2024/05/12 II. Key Market Themes i. Favored by capital and entering the market in haste, how much further can the Hong Kong stock market rise? •In the past month, the Hong Kong stock market has shown a remarkable increase, with both the Hang Seng Index$恒生指数(HSI)$ and the Hang Seng Tech Index $恒生科技指数(HSTECH)$ significantly outperforming other major global stock indices. Regarding this, opinions in the market vary. From a valuation perspective, the Hong Kong stock market is currently in a relatively low range. The forward price-to-earnings ratios (P/E ratios) of the Hang Seng Index and the Hang Seng Tech Index are 8.9 and
I. Performance of Global Equity Indices (in US dollars) Source：Bloomberg, 2024/04/29-2024/05/05 II. Key Market Themes i. Powell denies rate hike option, US economy unexpectedly cools, capital markets regain confidence •In May, the FOMC decided to continue maintaining the current interest rates unchanged. Additionally, Powell's remarks once again leaned dovish, explicitly stating that "the current position is well positioned, and the next rate adjustment is unlikely to be a hike"; not only that, he also played down concerns about recent wage increases, stating that "the Fed does not target wage inflation, but rather price inflation". •Regarding the economy, Powell stated that the current US economy still maintains a robust 3% growth, being quite healthy and completely unrelated to "stagflat
I. Performance of Global Equity Indices (in US dollars) Source：Bloomberg, 2024/04/22-2024/04/28 II. Key Market Themes i. When the GDP falls short of expectations while the PCE remains high, the specter of "stagflation" looms over the United States once again •Last Wednesday, the United States released quarterly economic data, with actual GDP growing by 1.6% year-on-year, falling below expectations, while the core PCE for the quarter surged by 3.7%, far exceeding expectations. Concerns about "stagflation" emerged in the market, suggesting that the United States may face an economic recession while interest rates remain high, posing the most unfavorable situation for pricing various risk assets, with the yield on ten-year US Treasury bonds jumping by over 6 basis points. •However, on the fol
I. Performance of Global Equity Indices (in US dollars) Source: Bloomberg, 15/04/2024-21/04/2024 II. Key Market Themes i. US Retail Exceeds Expectations Again, Fed Officials Speak Intensively, Market Adjustment Volatility Intensifies •In March, US retail sales rose by 0.7% month-on-month, exceeding the market's expectation of 0.3%. At the same time, the month-on-month growth rate for February was revised up from 0.6% to 0.9%. This reflects the continued strong consumption by US residents and confirms the resilience of the US economy. •Recently, Powell reiterated in a public speech that "the economy is robust, labor force is strong, and the decline in inflation lacks data support, so there is currently no sufficient confidence to cut interest rates." This time, Powell also clearly sided wi
I. Performance of Global Equity Indices (in US dollars) Source: Bloomberg, 25/03/2024-31/03/2024 II. Key Market Themes i. The U.S. Core PCE Aligns with Expectations; Powell Reiterates “No Rush to Cut Rates” •Recently, the U.S announced its Core Personal Consumption Expenditures (PCE) data for February, which showed a 0.3% MoM increase, aligning with market expectations and avoiding a consecutive "punch" to the markets. •In the meantime, during a speech at the Federal Reserve Bank of San Francisco, Powell reiterated his stance of "no urgency to cut interest rates." He also stressed that "the latest data is not as strong as it was in the second half of last year, and more data is needed to support the inflation eventually returning to 2%." •We believe that the PCE data and Powell's statemen