Market Focus - The latest round of US tariffs has transcended traditional trade disputes, intertwining with geopolitical competition, industrial protectionism, and immigration policies, leading to increased global supply chain instability and market volatility [1] - Tariff policy uncertainty, such as sudden adjustments to "de minimis" policies, raises compliance costs for businesses and disrupts long-term commercial planning [1] - The impact of tariffs extends beyond the US-China trade conflict, affecting long-term allies like Canada, Japan, and Europe, prompting countries to reassess economic relationships and potentially leading to long-term changes in global trade patterns [1] Responses from Affected Countries - China has opted for a restrained response to leave room for future negotiations and may initiate high-level talks in the coming months [2] - Canada and Mexico successfully postponed the implementation of tariffs, with upcoming negotiations in March being crucial [2] - Europe has not been directly affected yet, but potential US tariffs on auto exports and the economic pressures in Germany and France complicate a unified response [2] - Japan is increasing investments in the US to mitigate trade frictions, although uncertainty regarding auto tariffs remains a core concern [2] Industry Impact - The new tariffs have profound effects on several key industries: - The technology sector, particularly semiconductors and artificial intelligence, faces risks of further supply chain fragmentation [2] - The automotive industry, especially manufacturers in Japan and Europe, is dealing with rising costs and supply chain disruptions [2] - The retail and e-commerce sectors are adjusting business models due to changes in tax exemptions for low-priced goods [2] - Tariffs on steel and aluminum are increasing production costs for aerospace, infrastructure, and machinery manufacturing [2] Market Reactions - The US stock market is challenged by dual pressures of economic slowdown and tariff uncertainties [2] - The Chinese market benefits from strong domestic demand and breakthroughs in the AI sector, showing resilience [2] - The European market remains relatively stable due to stable monetary policies and delayed tariff impacts [2] Fixed Income Market - The 10-year US Treasury yield is expected to fluctuate between 4.3% and 4.6%, with trade policy changes and economic data being key factors influencing market expectations [3] - In the fixed income market, yields have diverged, with most economies, including the US, seeing declines, while yields in China, Japan, Australia, and Switzerland have increased [4] Commodity Performance - Commodities have performed strongly, driven by geopolitical uncertainties and central bank demand, with precious metals prices significantly rising (gold up 7.0% and silver up 5.4%) [12] - The Chinese mainland and Hong Kong stock markets have outperformed global assets, with notable increases in indices such as the S&P/NY Mellon China ADR Index (+26.8%) and the Hang Seng Technology Index (+19.7%) [12] Market Sentiment - Overall market sentiment has shifted to neutral with a slight bearish inclination, as indicated by the "dumb money" and "smart money" indices being at neutral levels [13] - The put-call ratio for US stocks is approximately 0.63, suggesting a gradual return to neutral market sentiment [13] Economic Observations - The observation checklist for the US economy remains largely unchanged, with 8 indicators positive, 13 neutral, and 4 negative [14] - Positive changes are primarily driven by improvements in manufacturing and the ongoing repair of the yield curve inversion [14]

Investment Rating - The report maintains an "Outperform" rating for the company, with a target price raised from HKD 13.00 to HKD 14.00 [3][6][17]. Core Insights - The company reported a core profit growth of 6.8% for 2024, exceeding expectations by 7%, and maintained its interim dividend at HKD 0.81 per share, leading to a total dividend of HKD 1.08 for the year [1][3]. - Total revenue for 2024 increased by 6.2% to HKD 3.409 billion, supported by a 9.8% growth in retail rental income due to the opening of newly renovated luxury brand flagship stores [1][11]. - The company is optimistic about its transformation strategy, which includes attracting higher-paying tenants and optimizing tenant mix, particularly in its shopping malls [2][3]. Financial Performance Summary - The company achieved a net profit of HKD 35 million in 2024, a significant recovery from a loss of HKD 872 million in 2023, with a notable reduction in fair value losses on investment properties [1][11]. - The net debt increased by 2% to HKD 24.303 billion, resulting in a net gearing ratio of 51.1% [1][11]. - The financing cost decreased by 5.9% year-on-year, primarily due to exchange gains from the depreciation of the Renminbi [1][11]. Revenue and Profit Forecasts - Revenue forecasts for 2025 and 2026 have been adjusted upwards by 8.7% and 9.3%, respectively, reflecting the anticipated benefits from ongoing transformation initiatives [13]. - Core profit forecasts for 2025 and 2026 have also been revised upward by 7.7% and 9.5%, respectively [13]. Valuation Metrics - The company currently has a price-to-book ratio of 0.19 and an attractive dividend yield of 8.6% [3][11]. - The projected earnings per share for 2024 is HKD 1.90, with a price-to-earnings ratio of 6.6 [4][11].

Market Liquidity and Index Trends - The CCB International Hong Kong Market Liquidity Index and Hang Seng Index (HSI) cumulative difference has narrowed over the past month, indicating a potential market shift[1][4] - The Hang Seng Index has shown a recovery trend over the past month, supported by liquidity conditions[18] - The difference between the liquidity index and HSI reached 2 standard deviations last month, a level historically associated with market rebounds[20] Trading Volume and Market Activity - Hong Kong's average daily trading volume was approximately HKD 99.1 billion, down 3.1% month-over-month and 16.9% year-over-year[22] - The top 10 traded stocks accounted for 44.9% of February's total trading volume, down from 46.3% in January[24] Emerging Market Capital Flows - Taiwan recorded a net capital inflow of USD 8.6 billion year-to-date[30] - South Korea saw a net inflow of USD 9.0 billion year-to-date[33] - India experienced a slight net capital outflow year-to-date[28] Interest Rates and Currency Movements - The SOFR-HIBOR spread widened last month, with 1-month and 3-month spreads increasing to 0.81 and 0.90 percentage points respectively[93] - The Hong Kong dollar slightly depreciated against the US dollar, moving towards the upper limit of its trading band[92] ETF and Fund Flows - iShares MSCI Hong Kong ETF saw a reversal to net inflows last month[133] - Bond funds experienced net inflows, primarily into North American and global bond funds, while equity and mixed-asset funds continued to see outflows[140]