[True Zoom Finance] July 24 Market Brief: NetEase releases highly anticipated game 'Blade Storm', Goldman Sachs reiterates Buy rating on the stock.
"Other Headlines: Reasons Behind NetEase's Rise | Reasons for Nongfu Spring's Stock Plunge"
Market Highlights
l Asian stocks fell, following U.S. markets. U.S. Treasury yields edged lower, while the dollar was little changed. WTI crude rose. Taiwan was closed due to a typhoon.
l $Hang Seng Index(00HSI.HK) The Hang Seng Index opened 0.2% lower, down 29.44 points to 17,439.92, marking a second consecutive day of declines for Hong Kong stocks. Meituan Dianping contributed the most to the index's drop, falling 1.6%. $CHOW TAI FOOK(01929.HK) Chow Tai Fook Jewellery Group Limited saw the steepest decline, dropping 5.6%. In early trading, 47 out of 82 stocks fell, while 27 rose; 3 out of 4 sectors declined, with commercial and industrial stocks leading the losses.
Options Summary
l SMIC and CNOOC are among the Hang Seng Index stocks with the lowest and highest put/call ratios, respectively.
l China Overseas Land & Investment Ltd.'s call open interest is 1.83 standard deviations above its 20-day average, while Nongfu Spring's open interest is 2.56 standard deviations above its 20-day average.
l Both call and put trading increased for Industrial and Commercial Bank of China.
l Link REIT trades 5 call options for every 1 put option, while Zhongsheng Group Holdings trades 100 put options for every 1 call option.
Key News
l NetEase rose 4.3% in Hong Kong on Wednesday, a day before the company's highly anticipated game "Blade Storm" was set to release. Goldman Sachs reiterated its Buy rating on the stock.
l According to Changjiang Securities, Q2 saw one of the largest redemptions in Chinese equity mutual funds since 2005, with over half of the top-performing products net sold by existing investors.
l Hong Kong stocks fell to their lowest level in nearly three months on Wednesday amid concerns over weak corporate earnings following Chow Tai Fook Jewellery Group's poor performance, while headwinds in the property sector intensified after recent pay cuts in financial services.
l Asian stocks declined on Wednesday after mixed U.S. earnings failed to boost investor enthusiasm, with hopes pinned on tech giants continuing to deliver massive profits after billions in AI investments.
l Nongfu Spring's shares plunged 7% in Hong Kong, hitting a record low, as a price war in its core bottled water business led to rating downgrades and target price cuts. Management held a business update meeting on Tuesday, per brokerage reports.
l Disappointing starts to earnings reports from the "Magnificent Seven" dragged U.S. futures lower. Alphabet fell after-hours as Sundar Pichai urged patience for AI investment payoffs. Tesla also dropped after missing Q4 profit estimates and delaying its Robotaxi unveiling to October.
l Visa's revenue fell slightly short of expectations, a rare miss, sending shares lower.
l Nvidia declined after Elon Musk said Tesla would "double down" on its Dojo supercomputer project.
l GIC reported its lowest exposure to Asia in over a decade, with U.S. and European assets growing.
l Dubai Air is in talks with Boeing and Airbus to upgrade its all-Boeing fleet.
l The executive behind Japan's $1.7 trillion stock rally says the rebound is just beginning. Hiromi Yamaji of Japan Exchange Group sees an opportunity to attract more Asian listings and become a regional hub.
l U.S. existing home sales fell 5.4% in June, more than expected, marking one of the slowest paces since 2010. Next up: New home sales may have partially reversed May's decline, with a possible 3.4% June gain. The Bank of Canada will cut rates at its second meeting.
l Economy: Eurozone PMI may edge up slightly this month, but the composite is expected to hold at 50.9. The UK composite PMI may have risen modestly to 52.6.
l The ECB may ask banks to set aside ~€7B for bad leveraged loans, about half its initial consideration, after lenders pushed back strongly.
l Eco: Over 90% of BOJ watchers see a risk of a rate hike next week, but only 30% expect one, per a survey. South Korea's home price sentiment index rose. Consumer confidence also improved.
l President Xi said China will strengthen energy cooperation with Russia, per CCTV.
l Apple is developing a foldable iPhone for potential 2026 release, The Information reported.
l Southwest Airlines is under FAA audit following recent flight safety incidents.
l More earnings: Texas Instruments rose after-hours as its quarterly outlook eased recession fears.
l Capital One set aside far more than expected in Q2 for loan losses.
l LVMH's growth slowed as China's slump weighed on luxury spending.
l Chart of the Day: Goldman advises selling European stocks with high China sales exposure. China's slowdown risks their share prices, valuations, and even jobs. Swatch's H1 China sales plunged 30%, forcing output cuts.
Today's FX & Commodity Focus
l The yen rose for a second day against the dollar on Tuesday after a senior Japanese politician's comments on policy normalization pressured the BOJ to keep hiking to support the currency.
l Oil prices rose in Asian trading Wednesday, recovering modestly from recent losses as industry data showed shrinking U.S. inventories, reinforcing expectations of near-term tightness.
Source: Goldhorse Capital Extramile
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