Breakfast | Hong Kong stocks' overbought level hits a year-and-a-half high, Tesla to invest $10 billion in AI training and reasoning

Good morning! A wonderful day starts with making money.

Today, the Tokyo Stock Exchange in Japan is closed for Showa Day.

Overnight and This Morning Market Update

In the Asian session, US stock index futures opened slightly higher on Monday.

Important economic data and events for this week are as follows:

Tuesday: China's official manufacturing PMI for April; Caixin manufacturing PMI for April in China. Amazon and AMD will release their financial reports.

Wednesday: ADP employment report for April in the US; final value of global manufacturing PMI for April in the US; ISM manufacturing PMI for April in the US; JOLTs job openings for March in the US; construction spending for March in the US. Mainland China, Taiwan, Hong Kong, South Korea, France, Germany, and Italy stock markets are closed.

Thursday: FOMC interest rate decision by the Federal Reserve in the US; Federal Reserve Chairman Powell will hold a press conference on monetary policy. The Hong Kong Stock Exchange will operate as usual, but trading between the Mainland and Hong Kong will be closed. Apple and Shell will release their financial reports.

Friday: Unemployment rate and non-farm payroll data for April in the US.

Saturday: FOMC permanent voters, New York Fed President Williams, and Fed Governor Lael Brainard will deliver speeches; Berkshire Hathaway will hold its shareholders' meeting.

Additionally, as usual, China will hold a political bureau meeting related to economic work at the end of April.

Last week, the Dow rose by 0.67%, the S&P 500 index rose by 2.67%, and the Nasdaq rose by 4.23%. Hong Kong stocks performed strongly, with the Hang Seng Index rising for 5 consecutive days, up 8.8% for the week; the Hang Seng TECH Index rose by 13.43% for the week; and the Hang Seng China Enterprises Index rose by 9.1% for the week. The total market turnover on Friday reached HKD 157.242 billion.

Blue Chips and Hot Stocks

Chinese Premier Li Keqiang met with Tesla's CEO Elon Musk. Li Keqiang stated that China's vast market will always be open to foreign businesses. China will continue to work on expanding market access and strengthening service guarantees to allow enterprises from all countries to invest in China with peace of mind. Musk expressed that Tesla is willing to further deepen cooperation with China and achieve more win-win results.

Tesla: Will continue to deepen its presence in China and accelerate the implementation of clean energy and autonomous driving technology.

On April 1st, there was a price increase, followed by a price decrease on the 21st for Tesla. Regarding Tesla's price changes, Lei Jun commented: "They raise or lower prices within 21 days, very responsive to market conditions. I admire that."

Xiaomi denied rumors of planning three SUV models: the news is not true. Earlier reports claimed that Xiaomi had started developing a new platform for SUVs, which will use a range-extending hybrid powertrain and target family vehicles. The three models will compete with the Li Auto L7, L8, and L9, with a price range lower than Li Auto's products.

AIA Group: Will add USD 2 billion to its existing share buyback plan, increasing the total to USD 12 billion.

EVE Energy: Expects the global large storage market to maintain a growth rate of 30%-50% throughout the year.

Zhongtong Bus: Net profit for the first quarter was RMB 423.845 million, a year-on-year increase of 105.08%.

CAAM: Six companies including BYD, Li Auto, Lotus, Zotye New Energy, Tesla, and Nio have 76 vehicle models that meet four safety requirements for automotive data processing.

Media: The Hong Kong Stock Exchange may launch Chinese government bond futures contracts in the third quarter

Chips and Artificial Intelligence

Musk: Tesla will invest about $10 billion in AI training and inference this year.

Tongyi Qianwen released the open-source 110 billion parameter model Qwen1.5-110B, becoming the first series with a billion-level open-source model.

Virtual Currency

In the early Asian market, Bitcoin fell by $500 in the short term, with the latest price at $63,000 per coin.

Macro: Taking You Around the World

"Federal Reserve Megaphone" Nick Timiraos: In the debate over whether and when the Fed will cut interest rates, another important debate is unfolding: in the long term, where will interest rates go? The key to the issue lies in the neutral interest rate. Speculation about the rise of the neutral interest rate may lead the Fed to postpone rate cuts.

Among the 230 S&P 500 index component stocks that have reported earnings, about 81% of companies have exceeded Wall Street expectations. If this trend continues, it will be significantly higher than the average level of 75% over the past 10 years. The S&P 500 index is likely to achieve profit growth for the third consecutive quarter, with the earnings reports of tech giants significantly driving the market.

Hong Kong Financial Secretary Paul Chan stated that the Hong Kong government will announce the first-quarter GDP estimate next week, which is expected to fall within the annual economic growth forecast range, reflecting Hong Kong's economy's moderate growth for the fifth consecutive quarter.

Huaxi Securities believes that the improvement in liquidity is the direct factor driving the current rise in the Hong Kong stock market. On the one hand, the rapid depreciation of the yen has led to a shift in global fund allocation from the Japanese stock market to undervalued Hong Kong stocks; on the other hand, southbound funds continue to flow into Hong Kong stocks. In addition, some overseas investors have seen improvements in the fundamentals of real estate.

CICC believes that the funding situation is the main driver behind the unexpectedly large rise in Hong Kong stocks. The current overbought level of Hong Kong stocks has reached a new high since January 2023. The proportion of short selling transactions has rapidly declined. The Hang Seng Index near 18,000 is also a key resistance level, with sentiment being overextended. There has been little change in macroeconomic fundamentals and corporate profit changes, and short-term rotational funds still face external pressure, with fundamental improvements awaiting policy efforts.

Chinese Premier Li Keqiang: We must vigorously develop intelligent connected new energy vehicles to promote the high-end, intelligent, and green upgrading of the automotive industry.

Chengdu: Housing transactions across the city will no longer require qualification review