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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%.

As the likelihood of an aggressive Fed direction decreases, the US Dollar Index rises again toward 104.60

Daniel Rogers

Aug 11, 2022 12:05

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On Wednesday, the US dollar index (DXY) dropped significantly as the US Consumer Price Index fell (CPI). As the prospect of a major rate hike by the Federal Reserve (Fed) in September diminished due to a sharp slowing in price pressures, the DXY collapsed like a house of cards. When the asset broke through the consolidation formed between 106.00 and 106.80, it fell to 104.64. Despite the temporary pause, the market's downward trend will continue.

Normalized CPI drops 60 basis points

Inflation in the United States for the year was reported at 8.5%, which was less than the 8.7% predicted and 9.1% reported in the preceding report. An annual reduction in inflation of this magnitude in July, brought on by a dramatic drop in oil prices, sent a strong signal of market fatigue to participants. Without a doubt, the Federal Reserve (Fed) will announce further rate hikes; but, the Fed's long-term hawkish stance will take a major hit.

There will be sustained confidence in the market.

After taking a number of policy tightening steps, including raising interest rates and halting the bond-buying program, Fed policymakers heave a sigh of relief. In order to put capital into risk-perceived assets, investors have been waiting for a month with strong employment data and a significant drop in price pressures. It's likely that your desire to take risks will last for a longer period of time in the future.