At the time of writing (3pm HKT), Hang Seng Index is down 3.46% on Monday (Sep 20) trading. The Hang Seng Property Index dropped nearly 7% to a 52-week low. Markets in Mainland China, Japan and South Korea are closed due to public holiday.Continue Reading
Does Technology Rally Have an Inflation Problem?
On 12 May, the Nasdaq fell 2.7%. Market participants pointed to the nearly 1% jump in April US consumer prices as the reason for the decline. Citi analysts highlighted the valuation pressures that have gradually emerged for US growth stocks as markets no longer assume a zero cash discount rate in perpetuity. And Citi analysts expressed our view that rates are likely to rise further when the full, new economic recovery gets underway across the world in the near future. But the mere fact that rates could rise does not spell the end of the rise of technology in the economy or doom tech share performance.Continue Reading
Assessing the Pullback in the Technology Sector
The technology sector is seeing some pressure after a rally that has surpassed expectations. COVID-19 cyclicals were more resilient, consistent with Citi analysts’ preference of rotating from growth to value stocks amid a cyclical recovery. Looking ahead, Citi analysts believe this is more likely a correction rather than the start of a broader downturn, as the cyclical recovery remains intact. Nevertheless, further volatility is expected due to the upcoming US Presidential election and ongoing pandemic. With US equity valuations at a historic high relative to others, investors could also look to diversify into non-US markets.Continue Reading
Asia Pac / EM Sectors
China’s IT Software Spending Remains Strong
Although COVID-19 may have had an impact, overall IT spending plans are expected to grow, with software getting more funds, while hardware and services less.Continue Reading
Is This Another “Dot Com” Bubble?
The ten most valuable stocks in the S&P 500 and the Russell 1000 benchmarks now account for 30% and 26% respectively of these market indices and the five largest have reached a record high share for modern times. However, Citi analysts believe this is not a “Dot Com” repeat.Continue Reading
Asia Pac / EM Sectors
An Aging China: Turning Adversity into Opportunity
China’s old age population share is likely to double from 12.6% to 26% in 2050 with total population likely peaking in the late 2020s then declining. From an equity strategy perspective, the aging population is like to lead to more divergent performance among sectors. In particular, healthcare, internet, consumer discretionary and insurance may benefit.Continue Reading