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On May 9, Morgan Stanley issued a report stating that although the price of Ideal Autos (02015.HK) new L series has not been adjusted, the configuration has been significantly upgraded, which is in line with market expectations overall. However, the market is still discussing whether it is enough to cope with the fierce market competition only through the configuration and autonomous driving (AD) upgrade of the new L series without adjusting the suggested retail price. It remains to be seen whether monthly sales can return to the average level of about 50,000 units in the second half of the year. Morgan Stanley believes that the current market price is about less than 20 times the 2025 forecast price-to-earnings ratio, and the risk-return of the stock is attractive, especially after the release of the new L series on May 8 and the launch of the BEV model this summer. Although weak first-quarter results may become a pressure in the short term, the market has made reasonable expectations for this.On May 9, HSBC Research published a report, expecting Xiaomi (01810.HK) to perform better than expected in the first quarter of this year, with net profit expected to increase 1.39 times year-on-year to RMB 10 billion, mainly driven by a 50% year-on-year increase in IoT revenue, strong electric vehicle sales, and improved profit margins of various businesses. The bank expects the gross profit margins of IoT and electric vehicles to increase from 20.5% and 20.4% in the fourth quarter of 2024 to 23% and 21.4% in the first quarter of this year, respectively, mainly due to higher pricing power and optimized product portfolio. The bank raised Xiaomis target price from HK$70.4 to HK$73.5, maintaining a buy rating; and raised net profit forecasts for 2025 to 27 by 7%, 4% and 4% respectively. It is expected that orders for the electric car SU7 in May will normalize to more than 30,000 units, compared with a peak of 80,000 units in March, and believes that the YU7, which will be launched in June, will boost electric vehicle sales in the third quarter of this year.On May 9, Nomura issued a report stating that Hua Hong Semiconductor (01347.HK) reiterated its neutral rating and raised its target price by 116% from HK$16.4 to HK$35.4 due to strong local demand. However, although the groups pricing conditions have improved, the fixed cost burden may still exist, so the neutral rating is maintained. The report stated that Hua Hong Groups first-quarter revenue was in line with its guidance target, and the gross profit margin of 9.2% was lower than expected. Nomura believed that this may be due to the depreciation of the new plant. Due to the continued demand momentum, management predicts that the second-quarter revenue will increase by 3.5% quarter-on-quarter. Although Hua Hong Semiconductor believes that the price of 8-inch wafer foundry is under pressure (no price reduction yet), due to the shortage of supply, the price of 12-inch wafer foundry is expected to continue to rise. Nomura also believes that this is a good sign for the overall price dynamics of mature node wafer foundry in Asia.On May 9, Swedens Nordic Bank pointed out that the Federal Reserve is waiting for more clarity as risks rise. Both trade policy and the economic outlook are seen as extremely uncertain, and the Federal Reserve wants to wait for clearer results. The market interpreted this information as slightly hawkish and further reduced the possibility of a rate cut at the June meeting. We agree with this change in the market, but expect the Federal Reserve to ultimately focus on supporting economic growth and ignore the temporary rise in inflation. If long-term inflation expectations remain within a controllable range and consistent with the inflation target, the Federal Reserve should be able to ignore the temporary inflation shock caused by tariffs. There is also a possibility that the short-term impact of tariff uncertainty on the economy will be greater than currently expected. But for now, the Federal Reserve believes that the move will have limited impact on the economy, and there are some signs of progress in trade negotiations. Inflation is still above target and is expected to start rising again due to tariffs.Commerzbank plans to apply to the European Central Bank and German financial institutions for the next round of share buybacks at the beginning of the third quarter.

Ahead of preliminary US S&P PMI data, the XAU/USD remains sideways below $2,000, according to our Gold Price Forecast

Alina Haynes

Apr 20, 2023 13:49

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In the early European session, the Gold price (XAU / USD) is exhibiting erratic movements near $1,994.00. The precious metal is in a state of indecision as investors await the release of preliminary S&P PMI data for the United States on Friday.

 

After violent swings influenced by the Federal Reserve's (Fed) Beige Book, the US Dollar Index (DXY) is showing signs of volatility contraction below 102.00. The declining trend of advances to consumer and business loans by U.S. commercial banks has intensified concerns of a recession in the U.S. economy, despite the fact that economic activity in 12 Fed districts remained virtually unchanged. To prevent a decline in asset quality, banks have tightened credit disbursement requirements.

 

In the meantime, S&P futures have recorded sizeable losses during the Asian session, as investors are wary of firms' comments regarding revenue guidance. The market anticipates that constrained credit conditions will impact the working capital management of cash-reliant companies, thereby affecting their output.

 

The market expects preliminary US S&P PMI data to reveal a Manufacturing PMI reading of 49.0, a decrease from the previous reading of 49.9. The Services PMI is anticipated to decrease to 51.5 from 52.6 previously reported.