Zhitong decision-making reference︱The Hang Seng Index returns to a weak pattern and funds are repositioned around performance

[Editor-in-Chief Views the Market]

The Hang Seng Index failed to hold the half-year line, and all moving averages fell below and returned to a weak pattern.

Over the weekend, the China Securities Regulatory Commission made a positive announcement: it lowered fund stock trading commission rates and lowered the upper limit of fund managers’ securities trading commission distribution ratios. In principle, it protects the interests of investors and is negative for securities companies. I hope the Hong Kong stock market can reduce stamp duty. Also: To support leading mainland enterprises in the industry to list in Hong Kong, the China Securities Regulatory Commission will deepen cooperation with Hong Kong and adopt 5 measures to further expand and optimize the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism, help Hong Kong consolidate and enhance its status as an international financial center, and jointly promote capital in the two places The market develops collaboratively. Only when liquidity is invigorated and the market is heated up will it be conducive to IPO.

The negative news cannot be ignored. The U.S. House of Representatives passed a bill that allows Biden to confiscate frozen Russian assets in U.S. banks and use them to aid Ukraine; at the same time, the U.S. House of Representatives also officially passed a TikTok-related bill requiring China Technology company ByteDance is divesting TikTok or the app will be banned from the United States.

U.S. stocks also broke under the bad news. Last Friday, the Nasdaq crashed and fell by more than 2%. The Nasdaq and S&P 500 fell for six consecutive days, setting a losing streak since October 22. In terms of giants, AI leader Nvidia It fell 10%, the largest daily drop since March 2020, and the total market value evaporated by more than US$200 billion in one day. This week, U.S. technology giants Tesla, Meta, Microsoft, and Google, which account for 40% of the market value of the S&P 500, and four of the seven giants, will announce their financial reports. Poor performance will continue to put pressure on Hong Kong stocks.

It is expected that the Hong Kong stock market will continue to be affected by performance disclosures this week, and funds will be repositioned around performance. At the same time, the conflict between Iran and Israel will continue to cause disturbances. Gold, oil and gas, shipping, etc. are expected to fluctuate repeatedly; in addition, on April 19, the founding meeting of the Chinese People's Liberation Army Information Support Force was held grandly at the Bayi Building in Beijing. The military industry sector is expected to be catalyzed.

【Golden Stocks of the Week】

COSCO Shipping Energy (01138)

As geopolitical tensions continue to intensify, oil shipping risk premiums continue to increase. Iran is an important oil-producing country. It has previously threatened to close the Strait of Hormuz, which may cause the risk of crude oil supply interruption in the short term or stimulate the rush to ship and store oil. If the strait is closed, downstream demand countries will turn to the U.S. Gulf, West Africa, South America and other long-term In terms of shipping distance from China, demand for nautical miles per ton is rising again.

The capacity utilization rate of the oil transportation industry has reached a threshold. Supply and demand will continue to improve in the next few years, and the rise and persistence of the economy will exceed expectations. The company's tanker fleet ranks among the largest in the world and its structure continues to be optimized, which will fully benefit from the rising economy.

The 2024Q1 off-season will not be dull, supply and demand are expected to continue to improve in the next few years, and the company continues to demonstrate its fleet and operating advantages, and the profit center may accelerate its rise: global VLCC is likely to shrink in 24 years, and environmental regulatory sanctions will become stricter or may accelerate the elimination of old ships, demand Growth is expected; traditional energy is resilient, trade restructuring continues under anti-globalization, and the Atlantic region may increase production or continue to extend shipping distances.

In 2023, the company's dividend rate will be increased to 50%, with a dividend rate of approximately 5%. In 2023, the company will implement equity incentives for senior executives to demonstrate its confidence in the upward trend and will help demonstrate profitability flexibility and improve market value management.

【Industry Observation】

Disturbances in global mine supply have continued recently, with copper prices rising to RMB 79,000/ton.

First, Zambian copper mines were warned of power outages by the national power company. Zambia relies on hydropower for 85% of its electricity and is currently facing rolling blackouts caused by persistent dry weather. Zambia's National Power Company said it planned to require mining companies to cut their electricity demand by up to one-fifth. Zambia is one of the top ten copper-producing countries in the world, accounting for about 3.6% of the world's copper mine production, and will produce about 700,000 tons of copper in 2023.

Second, the operating license of SMM’s Sossego copper mine is suspended. SMM released that Vale and the Brazilian state of Pará said that a local court in Brazil once again suspended the operating license of the company's Sossego copper mine, which will produce 67,000 tons of copper in 2023.

Third, the Q1 output of Antofagasta, the world's leading copper company, fell by 11% year-on-year. Antofagasta announced that the company's 202401 production was 130,000 tons, -11% year-on-year and -32.4% month-on-month, mainly due to lower grades and increased ore hardness, as well as mine planning and maintenance and cleaning activities.

Everbright Securities recently raised the domestic demand for home appliances in 2024 by 286,000 tons. At the same time, assuming that the growth rate of domestic air-conditioning production in 2025 is 4% (the original forecast is 0%), the global refined copper supply and demand balance sheet will increase from 2/-140,000 tons in 2024/2025. The tons are adjusted to -390,000 tons/-640,000 tons, and the gaps are increased by 410,000 tons and 500,000 tons respectively (and the 2023 annual reports and 2024 production guidance of some mines are updated). The gaps account for approximately 1.4% and 2.2% of global demand.

Everbright Securities believes that copper prices need to rise to US$12,000-14,000/ton to stimulate potential supply growth. If the maximum cash cost can be considered to be profitable, copper prices are expected to rise to US$14,500/ton. Currently, the copper industry is in tight supply and demand in the downstream sector exceeds expectations. Copper prices have entered a very high price-demand elasticity zone, and subtle demand changes will bring about The rapid jump in copper prices. The copper industry will enter a shortage in 2024, and the shortage will further expand in 2025; theoretically, subsequent prices are expected to rise and exceed the cash cost of all existing production capacity, which is expected to rise to US$14,500.

At present, overseas markets continue to trade the logic of rising inflation expectations brought about by the recovery of the manufacturing industry. We first saw the reaction of this logic in precious metals, and then at this stage, began to switch from gold to copper with intensity. Hong Kong stocks focus on China Molybdenum (03993), Zijin Mining (02899), Jiangxi Copper (00358), and Minmetals Resources (01208).

[Data viewing]

Data released by the Hong Kong Stock Exchange shows that the total number of open positions in the Hang Seng Index futures (April) is 141,400 contracts, and the net number of open positions is 45,185 contracts. The Hang Seng Index futures settlement date is April 29, 2024.

Judging from the distribution of bull and bear stocks in the Hang Seng Index, at 16224 points, the bear stock intensive area is close to the central axis, and Hong Kong stocks have short selling momentum. Geopolitical risks have risen sharply, and the U.S. dollar index is high. Judging from historical experience, every time the United States enters a cycle of high interest rates and strong exchange rates, emerging markets will face tremendous pressure. The Hang Seng Index had a bearish week.

[Editor’s remarks]

Minsheng Strategy said over the weekend that petroleum, petrochemicals, non-ferrous metals and coal began to enter the top ten weighted industries, which may be a landmark event. The current resource market's valuation return is beginning. The so-called mean regression means that it needs to return above the mean, otherwise the mean is not the mean. The author believes that this point of view has reference significance. In addition, the absolute prices of gold, copper, oil, etc. are of little significance for investing in related stocks. This type of stocks does not reflect the issue of room for price increases, but the issue of whether high prices can be sustained. Under the supply cycle, commodity prices may be far more sustainable than before.

The silent IPO market finally has some heat. This week, Chabaidao, Tianjin Jianfa, and Mobvoi will be listed on Tuesday and Wednesday. There may be profit opportunities in new and dark markets, so pay more attention.

[Disclaimer] This VIP information product is for communication and discussion purposes only and does not constitute any investment advice. Unauthorized reproduction is strictly prohibited.