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On April 2, DBS published a research report indicating that the recent share price of GCL Technology (03800.HK) is expected to largely follow the cyclical changes in polysilicon prices. In addition, the government may introduce policies to control production or even eliminate backward production capacity, which will become a catalyst for the share price. It is currently expected that GCL Technologys production will drop by 30% this year, and the average selling price of products is expected to increase by more than 10%, offsetting the impact of the decline in production. DBS maintains a buy rating on GCL Technology. Considering that the profit recovery is slower than expected, it lowered its profit forecast for this year from RMB 1 billion to RMB 61 million. It believes that the average selling price will rise and costs will fall, and the profit will rebound to RMB 1.7 billion next year. The target price is lowered from HK$1.35 to HK$1.3.On April 2, market research firm Omdia reported that the annual revenue of the semiconductor market surged by about 25% to $683 billion in 2024. This sharp growth was attributed to strong demand for AI-related chips, especially high-bandwidth memory (HBM) used in AI GPUs, which led to an annual growth rate of 74% in the memory field. After a challenging 2023, the rebound in memory helped boost the overall market. However, this record year masked an uneven performance across the industry. The data processing sector grew strongly, while other key sectors such as automotive, consumer and industrial semiconductors saw revenue declines in 2024. These struggles highlight the weak links in the originally booming market.On April 2, DBS published a research report indicating that the restructuring of Agile (03383.HK) is ongoing, and as a valuable overseas asset in which it holds 45% of the shares, A-Life (03319.HK) may be included in the overseas restructuring plan, and part of the outstanding overseas debts may be offset through credit enhancement or debt-to-equity swaps. Therefore, the restructuring of Agile will put pressure on the share price of A-Life in the near future. In addition, there is still uncertainty as to whether the uncollected receivables from third parties and related parties can be recovered. Considering the limited profit prospects, based on the downward revision of revenue and profit margin forecasts, DBS further lowered the profit forecast of A-Life for this year and next year by 21% to 25%, maintaining the hold rating, and the target price was raised from HK$2.6 to HK$3.Goldman Sachs Group Inc. expects the yen to climb to the bottom of the 140 range against the dollar this year as unease about U.S. economic growth and trade tariffs boost demand for the safest assets. Kamakshya Trivedi, head of global foreign exchange, interest rates and emerging market strategy at Goldman Sachs, said the yen would provide investors with the best currency hedging tool if the likelihood of a U.S. recession increases. Reaching the 140 level would mean a 7% increase from current levels, and the banks forecast is more optimistic than the median of 145 in the agencys survey of analysts. "The yen tends to perform best when U.S. real interest rates and U.S. stocks fall at the same time," Trivedi said.Hong Kong-listed auto stocks fluctuated upward, with Leapmotor (09863.HK) rising more than 9%, Geely Auto (00175.HK) rising nearly 5%, NIO (09866.HK) and Li Auto (02015.HK) both rising more than 1%.

The New Zealand dollar soared to a three-week high! Supported by two positives

Eden

Oct 26, 2021 10:52

On Thursday (October 14), the New Zealand dollar rose sharply against the U.S. dollar, hitting a three-week high. It is currently hovering above the 0.7030 area, boosted by the weakening of the U.S. dollar and expectations of interest rate hikes.


Multiple favorable factors helped the New Zealand dollar to continue the rebound from the 0.6910 support level after the US inflation data the previous day and the market rose for the second consecutive day on Thursday. At a time when the demand for the US dollar is weak, the stock market as a whole rises, and the continued risk appetite is favorable for risky currencies.

On Wednesday, the U.S. dollar appeared a typical "buy rumors, sell the facts" market. After the release of the US inflation data, it reversed the upward trend of this week to a 13-month high. The overall US CPI in September was actually 0.4%, an annual rate increase of 5.4%. The data was slightly higher than market expectations, but failed to stimulate dollar bulls.

Investors still seem to agree with the Fed’s inflationary rhetoric, as evidenced by the further decline in long-term U.S. Treasury yields. This is also another factor that suppressed the dollar's decline. Nevertheless, the expectation that the Fed will soon announce a reduction in the size of its debt purchases, as well as the expectation that the Fed may raise interest rates in advance, have helped limit the dollar's decline.

The minutes of the Fed's Federal Open Market Committee (FOMC) monetary policy meeting in September show that the Fed will continue to reduce bond purchases as planned later this year. In addition, more and more policy makers worry that inflation may continue, forcing investors to advance the possible interest rate hike from December 2022, which is already reflected in prices, to September 2022.

The strength of the New Zealand dollar is also supported by the lead of interest rate hikes by the Reserve Bank of New Zealand.

The Reserve Bank of New Zealand raised the official cash rate (OCR) by 25 basis points to 0.5% last Wednesday (October 6), in line with market expectations. The outside world generally believes that the interest rate hike is aimed at curbing the rise in inflation and cooling the overheated economy.

This is also the bank's first rate hike in seven years. The Reserve Bank of New Zealand is expected to raise interest rates by another 25 basis points to 0.75% in November, and will raise interest rates three more times next year. By August, the official cash rate will reach 1.5%, which is second to none among the world's major central banks.

However, Geoff Bascand, vice chairman of the Federal Reserve Bank of New Zealand, expressed concern on Thursday: New Zealand’s rapid economic recovery still faces risks from the new crown virus and “unsustainable housing prices”, so the financial sector needs to avoid taking too much. Debt.

Baskander said that the strong balance sheets of households, banks and the government have allowed the country to recover strongly and need to be protected.

He said in a speech: "We are still in a state of high uncertainty; the new crown epidemic still poses a risk to economic recovery, and we assess that housing prices are at an unsustainable level."

"We will take action when needed to ensure that the balance sheets of regulated financial institutions can withstand future pressures from the economy and financial system and avoid excessive exposure to vulnerabilities."

The upper resistance pays attention to 0.7052, 0.7081, 0.7103, and the lower support pays attention to 0.7000, 0.6979, 0.6934.

(New Zealand dollar against the US dollar daily chart)

At 21:24 GMT+8, the New Zealand dollar was quoted at 0.7033 against the U.S. dollar.

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