Shares

Markets shine, is tech back and Daigou dead?

Equities 6 minutes to read
Jessica Amir

Market Strategist

Summary:  Why the Australian market and Australia dollar are looking hotter and bullish. Daigou is dying, what does this mean? Biden threatens more sanctions on Russia and action against China. The Yen remains under pressure. And why look at, but be cautious of Australian tech and China tech stocks, as gains might be short lived.


Co-written by Market Strategists Jessica Amir in Australia, Redmond Wong in Hong Kong, Charu Chanana in Singapore.

What’s happening in equites that you need to know?

  • The Australian share market (ASX200) pushed up 0.5% (to 7,375 points) today, not only opening above its 200 day average, but moving to its highest level since January 19, and making a beeline for setting fresh highs and chasing back towards its all-time high. The ASX this week, is being fueled by Tech index rising 4.1%, the Mining sector rising 3%, Energy up 2%. So what’s next? From a technical perspective, it looks like the ASX200 could gain more ground (as indicated by the moving averages, the MACD and RSI). The fundamentals suggest the market could be also pricing in the ASX200 will rise this year, despite, record inflation and interest rates rises. The market thinks earnings per share (EPS) growth of 17% will come. The ASX energy sector itself it touted to generate 61% EPS growth over 12 months, the mining sector 33% EPS growth. Quite feasible and this is supporting the ASX higher given it's made up of 30% commodity stocks. However the ‘market’ (consensus) expects the Australian tech sector to generate 860% EPS growth. Wow. We think that is not realistic for the tech sector and advocate for selective buying into tech. If you do buy into tech, consider profitable stocks, those with dominate/growing market share and those that are growing their earnings. That's the secret sauce for share price growth. But remember, most of Australia's tech stocks in the ASX200 don't make profits, except Xero (XRO), WiseTech (WTC), Appen (APX), Altium (ALU) and REA Group (REA) to name a few).   
  • In Asia, Hong Kong’s Hang Seng (HSI.I) and China’s CSI300 (000300.I) Hang Seng Index rose 1.8%. Hang Seng TECH Index (HSTECH.I) was up more than 4%. Chinese tech stocks led the charge higher.  Xiaomi (01810) announced 4Q21 results beating consensus and a HK$10 billion buyback.  Xiaomi rose more than 9%. Bilibili (09626) was up 15%. Meituan (03690), Alibaba (09988) and Baidu (09888) were 4% to 7% higher. Anta Sports (02020) reported slightly better than consensus revenues and earnings but operating margins declined due to higher marketing expenses.  Anta’s share price was little changed. In A shares, CSI300 was 0.7%.  New energy names were among the best performers.

What you need to consider

  • Daigou trade is dying. If you have ever bought or sold shares are infant milk formula businesses like, A2 Milk (A2M) Or Bubs Australia (BUB) you probably know, they were thriving when Chinese borders were open. However, as borders are shut, we’ve seen the death of Daigou trade, and thus their shares have stumbled. However, some businesses are adapting to different models, for example Swisse vitamins stepped up to sell more products to major supermarket chains. So it could be worth watching Procter & Gamble (PG) that has major brands on supermarket shelves all over the world and does not rely on sales to China via Daigou (where Chinese expats buy goods to send back to China).
  • Evergrande: In a conference call to investors, China Evergrande (03333), Evergrande Properties Services (06666) and China Evergrande  New Energy Vehicle (00708) updated investors about the progress in the group’s restructuring plan and suggested that the group aimed at coming up with a plan by the end of July 2022. 
  • Biden threatens more sanctions on Russia and action against China. New sanctions against Russia has sent the oil prices soaring again ahead of the meeting between the EU and NATO leaders in Brussels on Thursday. Risk of secondary sanctions on China is also sending risk waves in Asia even as most countries maintain a neutral stance but are still closely tied to China.
  • Yen remains under pressure. A significant hawkish shift in Fed’s stance since its first hike of the cycle last week is weighing on the Japanese Yen (JPY). USD/JPY touched a fresh 6-year high of 121 this morning as central bank policies diverge and yields differentials rise. Key resistance ahead at 125 but this could go anywhere in the near term as noted by our FX strategist John Hardy in a piece titled “The Fed is chasing a runaway train.”

Trading ideas

  • AUD USD is looking bullish. We’ve been speaking about the Australian dollar looking bullish and today the Aussie hit its highest level in almost five months, 74.61 US. The reason the Australia dollar is rallying is because its commodities are increasingly being sought after. Australia is the world’s largest iron ore mining country, equal biggest LNG exporter, 3rd biggest uranium producer, 4th biggest coal nation, 5th biggest copper and lithium producer, and 6th biggest wheat and other grains exporter. And all these commodity prices are rising and this supports Australia’s trade balance hitting another record high.
  • Australian tech. As above, the global, and Australian tech sector is rallying. The Australian tech sector has been in a bear market (down 25%) from its November high. However the technical indicators, suggest the tech sector could continue to rally up. We urge caution here. Why? Remember its quarterly rebalance time, so fund managers have to compulsorily buy into Aussie tech before end of quarter, given it's down the most this year, out of all the sectors on the ASX. This means, you could expect gains to be short lived. So expect higher highs in tech, before the tech sector slows down ahead of rates rising. However if you are trading short term, watch Block (SQ2) which earns most of its money from Bitcoin, you could also look at accounting software business Xero (XRO), software logistics giant WiseTech (WTC), or have a look at an Australian tech ETF like ATEC, all of which are making green tracks this week. 
  • China Tech Stocks: Share buybacks have bolstered investor sentiment in Chinese Internet stocks, and supported the policy triggered rally that started last Wednesday. From here, it may be advisable to take some money from the table and trim risks.

Earnings to watch

In Hong Kong & mainland China:

  • Mar 23: AAC (02018), China Mobile (00941), CIMC Enric (03899), Fosun (00656), Geely (00175), Haidilao (06862), Kingsoft (03888), Tencent (00700), Trip.com (TCOM)
  • Mar 24: BAIC Motor (01958), China Life (02628), China Overseas Property (02669), China Resources Beer (00291), NIO (09866)
  • Mar 25: Greentown Service (02869), Longfor (00960), Meituan (03690)


Quarterly Outlook

01 /

  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

  • Equity Outlook: Will lower rates lift all boats in equities?

    Quarterly Outlook

    Equity Outlook: Will lower rates lift all boats in equities?

    Peter Garnry

    Chief Investment Strategist

    After a period of historically high equity index concentration driven by the 'Magnificent Seven' sto...
  • FX Outlook: USD in limbo amid political and policy jitters

    Quarterly Outlook

    FX Outlook: USD in limbo amid political and policy jitters

    Charu Chanana

    Chief Investment Strategist

    As we enter the final quarter of 2024, currency markets are set for heightened turbulence due to US ...
  • Macro Outlook: The US rate cut cycle has begun

    Quarterly Outlook

    Macro Outlook: The US rate cut cycle has begun

    Peter Garnry

    Chief Investment Strategist

    The Fed started the US rate cut cycle in Q3 and in this macro outlook we will explore how the rate c...
  • Commodity Outlook: Gold and silver continue to shine bright

    Quarterly Outlook

    Commodity Outlook: Gold and silver continue to shine bright

    Ole Hansen

    Head of Commodity Strategy

  • FX: Risk-on currencies to surge against havens

    Quarterly Outlook

    FX: Risk-on currencies to surge against havens

    Charu Chanana

    Chief Investment Strategist

    Explore the outlook for USD, AUD, NZD, and EM carry trades as risk-on currencies are set to outperfo...
  • Equities: Are we blowing bubbles again

    Quarterly Outlook

    Equities: Are we blowing bubbles again

    Peter Garnry

    Chief Investment Strategist

    Explore key trends and opportunities in European equities and electrification theme as market dynami...
  • Macro: Sandcastle economics

    Quarterly Outlook

    Macro: Sandcastle economics

    Peter Garnry

    Chief Investment Strategist

    Explore the "two-lane economy," European equities, energy commodities, and the impact of US fiscal p...
  • Bonds: What to do until inflation stabilises

    Quarterly Outlook

    Bonds: What to do until inflation stabilises

    Althea Spinozzi

    Head of Fixed Income Strategy

    Discover strategies for managing bonds as US and European yields remain rangebound due to uncertain ...
  • Commodities: Energy and grains in focus as metals pause

    Quarterly Outlook

    Commodities: Energy and grains in focus as metals pause

    Ole Hansen

    Head of Commodity Strategy

    Energy and grains to shine as metals pause. Discover key trends and market drivers for commodities i...
Disclaimer

The Saxo Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-hk/legal/disclaimer/saxo-disclaimer)

None of the information contained here constitutes an offer to purchase or sell a financial instrument, or to make any investments. Saxo does not take into account your personal investment objectives or financial situation and makes no representation and assumes no liability as to the accuracy or completeness of the information nor for any loss arising from any investment made in reliance of this presentation. Any opinions made are subject to change and may be personal to the author. These may not necessarily reflect the opinion of Saxo or its affiliates.

Saxo Capital Markets HK Limited
19th Floor
Shanghai Commercial Bank Tower
12 Queen’s Road Central
Hong Kong

Contact Saxo

Select region

Hong Kong S.A.R
Hong Kong S.A.R

Saxo Capital Markets HK Limited (“Saxo”) is a company authorised and regulated by the Securities and Futures Commission of Hong Kong. Saxo holds a Type 1 Regulated Activity (Dealing in Securities); Type 2 Regulated Activity (Dealing in Futures Contract); Type 3 Regulated Activity (Leveraged Foreign Exchange Trading); Type 4 Regulated Activity (Advising on Securities) and Type 9 Regulated Activity (Asset Management) licenses (CE No. AVD061). Registered address: 19th Floor, Shanghai Commercial Bank Tower, 12 Queen’s Road Central, Hong Kong.

Trading in financial instruments carries various risks, and is not suitable for all investors. Please seek expert advice, and always ensure that you fully understand these risks before trading. Trading in leveraged products may result in your losses exceeding your initial deposits. Saxo does not provide financial advice, any information available on this website is ‘general’ in nature and for informational purposes only. Saxo does not take into account an individual’s needs, objectives or financial situation. Please click here to view the relevant risk disclosure statements.

The Saxo trading platform has received numerous awards and recognition. For details of these awards and information on awards visit www.home.saxo/en-hk/about-us/awards.

The information or the products and services referred to on this site may be accessed worldwide, however is only intended for distribution to and use by recipients located in countries where such use does not constitute a violation of applicable legislation or regulations. Products and services offered on this website are not directed at, or intended for distribution to or use by, any person or entity residing in the United States and Japan. Please click here to view our full disclaimer.

Apple, iPad and iPhone are trademarks of Apple Inc., registered in the US and other countries. AppStore is a service mark of Apple Inc. Android is a trademark of Google Inc.