Market NewsConflict situation inflationary pressure on US stocks fears of recession drag on Hang Seng Index
Jason Chan Wai-cong / uSMART Director of Research graduated from the School of Business Administration, City University of Hong Kong, majoring in Economics and Finance and obtained the (CFA) Professional qualification of Chartered Financial analyst with more than 13 years of experience in Hong Kong stock research and asset management.
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Us stocks continued to sell off, with three major indices falling more than 2 per cent to 3 per cent, risk aversion to the war between Russia and Ukraine and escalated sanctions in Europe and the US, and recent sharp increases in crude oil and food prices fuelled fears of hyperinflation and the global recession. There is still no sign of easing in the Russian-Ukrainian incident after three rounds of negotiations. Even though the two sides indicated that they would continue to negotiate a ceasefire agreement after the third round of negotiations, it is expected that the ceasefire agreement is still far from being reached, and there are still great differences with the consensus of Ukraine on the four major demands put forward by Russia, including demilitarization, the inclusion of neutrality in the constitution, recognition of the independence of the Crimean Peninsula, and the sovereign independence of Udentonetsk and Luhansk. In addition, European and American countries are continuing to discuss how to strengthen sanctions against Russia.Do not rule out the plan of the United States to unilaterally ban Russian oil imports to strengthen sanctions, and Russia has even threatened to cut off natural gas supplies to Europe through the Nord Stream 1 pipeline in response to previous sanctions, prompting European gas futures to continue to rise. It was up 60% on Monday. Under the condition that there is no concession between NATO, Russia and Ukraine,In the short term, global stock markets still have to face continued high volatility. Hong Kong stocks opened high at 24:00 today, rebounding about 200 points before continuing to bottom, closing down 291 points at 20,765, with a turnover of about $170.7 billion. The Hang Seng Index fell 3.2% to 4382 points. The latest work report of the people's Procuratorate proposes to strengthen anti-monopoly and anti-unfair competition justice and guide the healthy development of capital norms, orIt is suggested that there may not be much room for deregulation this year, and it is expected that technology stocks will still be under pressure in the short term. On the whole,Hong Kong stock market conditions still have a number of negative factors unabated, the Hang Seng Index has lost the previous "pneumonia floor" temporary support, into a serious oversold, RSI has fallen by about 20% of the serious oversold level, coupled with a number of falling cracks before, once the Russian-Ukrainian incident took a turn for the better, do not rule out actions to make up for cracks and short positions. In addition, the two national sessions in the mainland are still being held.It has been reported that it is proposed that the pension fund should be allowed to go south to buy shares through the Hong Kong Stock Connect, which may attract more capital from North Water once it is done, which will bring a positive catalyst for the rebound in the short-term market conditions of Hong Kong stocks. On the contrary, once the situation in Russia and Ukraine worsens again, Hong Kong stocks will also be frustrated. Short-term market developments in Russia and Ukraine are expected to have the following scenarios: 1) the Russian side has been unable to capture for a long time, and the war situation has become relatively disadvantageous, will the chances of a truce be increased in the future? 2) in the face of rising inflation and the crisis of energy shortage in the European Union, can NATO have the conditions to further strengthen sanctions and ban Russian energy exports? 3) will the war between Russia and Ukraine be expanded to include NATO's participation in the war and the outbreak of a large-scale war? It is expected that scenario 1 and 2 will help ease the market conditions, while the author expects that the possibility of scenario 3 is relatively low, and there will be no insurance for Hong Kong stocks in the event of the emergence of scenario 3.
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Unified Enterprise (0220) announced last night that its annual income rose 10.8% year-on-year, food and beverage business rose 1.1% and 17.3% respectively, and net profit fell 7.7% year-on-year, indicating that income and net profit rose 11.6% and 16.5% respectively in the second half of last year compared with the same period last year, but it was affected by higher prices of raw materials such as palm oil, flour and PET, coupled with higher transportation prices. The gross profit margin fell to about 30.1% in the second half of last year, down 4.9 percentage points from the same period last year and 4.7 percentage points from the previous month.It is expected that the price of raw materials will continue to rise as a result of the war between Russia and Ukraine this year. It is expected that Russian-Ukrainian wheat exports account for about 25% of the world's wheat exports. Ukraine is also the world's largest exporter of sunflower oil. The local war has hindered the production and export of wheat and vegetable oil. The rise in wheat and vegetable oil prices has indirectly led to a rise in the prices of products such as flour and palm oil. Domestic futures prices of palm oil have risen by more than 40% since the beginning of the year. Although Uni-President raised the prices of some products in January this year, raising the retail price of instant noodles by about 12%, if the price of raw materials continues to rise sharply this year,It does not rule out that the company may raise prices again in the second half of this year to offset the rising pressure on raw materials. Last year, the company continued to record high growth with the high-end layout of "Tangda people", and the compound growth rate of income over the past five years maintained double-digit growth.It is expected that the high-end strategy will continue to be implemented this year to increase the price of the overall product portfolio. In addition, operating costs were well controlled last year, and the proportion of sales and marketing expenditure to revenue decreased by 1.6 percentage points year-on-year. The dividend ratio increased from 100% to 120%, reflecting the company's abundant cash flow. On the whole, during the conference call, the management did not say that there would be another price increase in the short term, but only tended to reduce marketing expenses. It is expected that the management is aware of the fierce market competition this year, coupled with the weak consumer market in the mainland, a hasty price increase will weaken product sales and market competitiveness, which limits the room for short-term price increases.Therefore, in the first half of this year, due to the visible rising pressure on raw material costs, gross profit margin is expected to be under pressure in the first half of this year, so we will not pay attention again until the price of raw materials falls or the company releases the notice of price increase. In addition to Unification, the share prices of instant noodle companies such as Master Kang (0322) and Riqing (1475) have all fallen.In the face of rising raw material costs, shares that have previously been fried and raised prices should be avoided.
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Geely (0175) sold 78500 units in February 2022, an increase of about 2% over the same period last year and a sharp decrease of about 46% from the previous month, mainly affected by the shortage of (ESP) chips in the car body electronic stability system and the Spring Festival holiday. Sales of new energy vehicles rose 7.25 times year-on-year, but fell 19% from the previous month to 14500 units. Among them, the market-focused pure electricity brand, Polar Krypton, fell 17.3% from the previous month to only 2916 units, with sales falling for the second month in a row.It is expected that due to the lack of chips and the decline of subsidies, it is expected that after the two sessions, the Government will have any concrete policies to support the sales of new energy vehicles in the mainland this year, and whether its high-end new energy vehicles can break out of the industry in the face of fierce competition this year. Geely outperformed its peers such as BYD (1211) in February, and its sales were similar to those of the joint venture Guangzhou Automobile (2238). GAC's sales rose 36% year-on-year in February, down 40% from the previous month, and GAC Ean, the main brand of new energy vehicles, fell 47% from the previous month. In addition, Geely went to Russia through a factory in Belarus to produce and sell cars, accounting for about 2% of its sales last year.Local sales are expected to be significantly affected this year, and the devaluation of the rouble is expected to record losses in the local car business, and the sharp fall in share prices is expected to reflect only part of the concern. The automotive industry as a whole will face renewed supply chain instability, renewed shortage of automotive chips, and rising prices of commodities and raw materials, including recent sharp increases in palladium, lithium, nickel and copper. Palladium used in gasoline engines has soared 66% this year, while prices of power battery raw materials such as lithium, nickel and copper have risen sharply this year. For example, the price of battery-grade lithium carbonate has risen by about 65% so far this year. LME copper has risen more moderately. It has risen about 7.5% year-to-date, while the price of LME nickel has soared, more than doubled today (8gamble 3) and nearly tripled year-to-date. In the face of the unstable supply of raw materials,Power battery production is expected to be affected this year, the surge in battery raw materials has greatly increased the cost of bicycle batteries for new energy vehicles. If ternary lithium batteries are required to use nickel, the cost pressure is even greater. It is expected that the gross profit margin of low-end new energy vehicles will be encroached on. Low-end new energy vehicles, such as Wuling Hongguang MINIEV, Great Wall Ola Black Cat and White Cat, may sell one plane at a loss. The above negative factors are short-term,Coupled with the weakening of domestic consumer demand, the automobile business environment will become more pessimistic this year. In the short term, we will be concerned about whether auto companies can raise prices, whether the development of the situation in Russia and Ukraine can be eased, and the expected decline in energy and commodity prices will lead to a significant rebound in auto stocks.
Jaco Yuan Yongjie / uSMART Director of Investment Consulting graduated from Northumbria University, majoring in international business management with 10 years of research and operation experience in Hong Kong stocks and US stocks, and is good at forecasting stocks and markets using various analytical methods and macroeconomic environment analysis.
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The situation between Ukraine and Russia continues to be tense, the risk aversion of funds is heating up, and the price of gold has exceeded 2000 US dollars. The three major indexes of US stocks fell again. The Dow closed down 797 points at 32817; the index fell 2.95% to 4201, the biggest one-day decline since October 2020; and the tech-heavy Nasdaq fell 3.62% to 12830. All three indexes hit an one-year low. To sum up,Us stocks are now likely to enter a period of stagflation.DistensionConcept stocks, such as oil and daily necessities, basically do not have any investment opportunities in other sectors. If the US stock falls below the January low, a bigger adjustment is still to come. Investors do not want to pass.PointsEnterprising.
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Yuzhou preferred notes default, coupled with Evergrande's subsidiary assets were frozen, so that the inner housing-related shares fell sharply. In addition, the tense situation of Ukraine and Russia has also increased the selling pressure on Hong Kong stocks. The Hang Seng Index closed today at 20765 points, down 291 points, with a total turnover of 170.5 billion, similar to that of the previous trading day. Shares rose only 23% today, reflecting the bad trend of Hong Kong stocks. To sum up, today's large turnover of Hong Kong stocks fell below 21000 points, and there was no rebound.Reflect that the situation is very bad. The next support level will fall back to 20000. In terms of plates,Infrastructure, raw materials, communicationDistensionConcept stocks can be viewed as a higher line, technology stocks, inner rooms and biopharmaceutical stocks should not be touched at all.
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