Zhitong Decision Reference | Expected to enter the bottom-finding stage this week

[Editor’s Market View]

The current market is quite weak, with too many unexpected bearish news affecting sentiment, including Tencent (00700) being listed on the CMC list, causing the Hang Seng Index to adjust directly to the half-year line position.

Last Friday night, the U.S. non-farm payroll data for December exceeded expectations, with an expected 160,000 and an actual 256,000, significantly surpassing expectations. This directly led to changes in the Federal Reserve's interest rate cut path. Bank of America, Citigroup, and Goldman Sachs have all lowered their forecasts for further interest rate cuts by the Federal Reserve. Originally, the expectation for a rate cut in January was not high, and now it has spread to a rather pessimistic outlook for the entire year.

This week, the Hong Kong stock market faces several major shocks: first, the U.S. stock market's breakdown due to non-farm data will raise pessimistic sentiment; second, the U.S. Supreme Court will announce the debate results on the TikTok ban this week. Market expectations seem not very optimistic, and if the original ruling is maintained, confidence will be further undermined. Additionally, the U.S. CPI report to be released this Wednesday will have a significant impact on the market; if inflation accelerates again, it will trigger negative expectations.

China will also release several important data this week, such as December foreign trade data, other economic data for December, and annual GDP, etc. It remains to be seen whether these data can provide a positive counterbalance.

On the positive side, from mid to late January, many regions will enter the "Two Sessions" period, mainly observing the GDP growth rates and related industrial plans formulated by various regions.

The Ministry of Finance reassured the market: According to the needs of macroeconomic counter-cyclical regulation, the fiscal deficit rate will be increased in 2025, and the scale of the deficit will increase significantly. After the deficit rate is raised, more fiscal space can be utilized to expand the scale of fiscal expenditure and strengthen counter-cyclical adjustments.

Overall, it is expected that this week will enter a bottom-seeking phase. In terms of hotspots, after Musk announced the robot plan, OpenAI is also actively laying out, with the latest recruitment for its robot team underway. The OpenAI team will independently develop sensors and computing components, driven by AI models developed by OpenAI. Related concept stocks are worth paying attention to. Additionally, discussions about Greenland are heating up, particularly around its rich mineral resources, such as rare earths, so rare earths and other resource-related stocks are also expected to attract speculation.

[This Week's Golden Stock]

TCL Electronics (01070)

The company's Thunderbird brand has launched a new AI photography glasses product, Thunderbird V3, priced at 1,799 yuan, expected to officially go on sale on January 10. The Thunderbird V3 is similar to Meta's AI glasses Ray-Ban in terms of hardware like the camera and AI large model experience, but Ray-Ban's pricing is between 299-379 USD. In comparison, the Thunderbird V3's price of 1,799 yuan may offer a better cost-performance advantage.

The Thunderbird brand's smart glasses business is rapidly expanding, and the company holds an 11.5% stake in Thunderbird Innovation, whose AI glasses business has a leading market share and is expected to fully benefit from the AI industry explosion. The company plans to launch a new smart glasses product, X3Pro, in Q2 2025, which is expected to feature a 0.36cc optical engine, low rainbow pattern optical waveguide, equipped with mass-produced myoelectric wristbands, and a peak brightness of 5000 nits, making the product's competitiveness worth looking forward to. On the industry side, the global TV market has strong demand for high-end large-screen products, and industries such as photovoltaics and AR/XR are growing rapidly, suggesting that AI glasses may develop rapidly in the future Domestic home appliance trade-in benefits from national subsidies, the industry returns to growth, and large screens drive improvements in the competitive landscape.

In the third quarter of 2024, TCL's global TV shipments saw a significant year-on-year increase of 19.7%, reaching 7.49 million units. As of the first three quarters of this year, TCL's global TV shipments totaled 20.01 million units, with a year-on-year growth rate of 12.9%. The company's mid-to-high-end products continue to be favored by the market, with year-on-year growth rates for TCL quantum dot TVs and TCL Mini LED TVs in the first three quarters of this year at 61.1% and 162.8%, respectively. Overseas, the company has made breakthroughs in the North American market channels and rapidly increased its market share in Europe through decades of layout. The company's long-term profitability improvement is promising, and it is expected to continue to meet the net profit growth targets of equity incentives.

【Industry Observation】

Overseas major companies continue to increase capital expenditures, and the AI wave continues to rise. Microsoft: In Q3 2024 (FY25 Q1), capital expenditures reached $14.923 billion, a year-on-year increase of 50.48% and a quarter-on-quarter increase of 7.57%; including assets obtained through finance leases, total capital expenditures for 2403 are approximately $20 billion, a year-on-year increase of 78.6%. The company expects to invest about $80 billion in building artificial intelligence data centers in FY25.

Amazon: Capital expenditures for 2403 reached $22.620 billion, a year-on-year increase of 81.26% and a quarter-on-quarter increase of 28.38%; in the first three quarters of 2024, cash capital expenditures plus equipment finance lease investments totaled $51.9 billion. The company expects total capital expenditures for 2024 to reach about $75 billion, with more funds allocated to AWS in 2025.

Google: Capital expenditures for 2403 reached $13.061 billion, a year-on-year increase of 62.15% and a quarter-on-quarter decrease of 0.95%. In 2403, the company announced a data center investment plan exceeding $7 billion, with nearly $6 billion planned for the United States. At the same time, the company expects capital expenditures for 2404 to be on par with 2403, with further increases in capital expenditures in 2025.

Meta: Capital expenditures for 2403 reached $8.258 billion, a year-on-year increase of 26.21% and a quarter-on-quarter increase of 1.04%; including assets obtained through finance leases, total capital expenditures for 2403 are approximately $9.2 billion, a year-on-year increase of 36.1%. The company expects total capital expenditures for 2024 to be between $38 billion and $40 billion (higher than the previous guidance of $37 billion to $40 billion) and expects capital expenditures in 2025 to continue to grow significantly.

Overseas cloud computing vendors continue to increase capital expenditures, and the AI industry chain trend is expected to continue upward. Institutions are optimistic about AI applications as a new generation of productivity tools being commercialized in the B-end, with OA/ERP as the entry-level platform expected to benefit first. Key stocks to watch in Hong Kong include Kingsoft Cloud (03896), Kingdee International (00268), and ZTE Corporation (00763).

【Data Monitoring】

According to data released by the Hong Kong Stock Exchange, the total number of open contracts for the Hang Seng Index futures (January) is 113,679, with a net open position of 37,603 contracts. The settlement date for the Hang Seng Index futures is January 27, 2024.

From the distribution of bullish and bearish positions in the Hang Seng Index at the 19,064 point level, the concentrated area for bullish certificates is close to the central axis, as the Hang Seng Index continues to seek a bottom. The market is re-pricing the impact of the U.S. interest rate path, and the U.S. dollar index continued to strengthen last week, approaching the 110 mark The basic data from the United States has basically dispelled the market's hopes for interest rate cuts in the first half of the year. The Hang Seng Index is bearish this week.

[Editor's Note]

The Hong Kong stock market's year-end rally usually comes from a total volume logic drive: expectations for domestic policy improvement, upward revisions of earnings expectations, and marginally loosening liquidity. Structurally, it often presents characteristics of "consumer goods performing first, high elasticity in growth stocks." Against the backdrop of high fluctuations in U.S. Treasury yields and a phase of stabilization in the RMB exchange rate, a barbell strategy remains relatively prudent: balancing domestic demand with high dividends + technology growth.

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