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On July 7th, Daiwa Securities released a research report stating that the latest channel inspections show that the retail sales value (RSV) of the sporting goods industry slowed quarter-on-quarter in the second quarter of this year, and the monthly volatility of RSV increased, further reducing the short-term predictability of Xtep (01368.HK). Meanwhile, the transformation of Xteps core brand will disrupt its wholesale business and require upfront investment, potentially diluting Xteps short-term revenue and profit margins. Although the Saucony brand can continue to maintain high growth, the core Xtep brand may face challenges from slower growth and increased competition. The bank lowered its earnings per share forecast for Xtep this year by approximately 12%, and reduced its target price from HK$5.2 to HK$3.9, downgrading its rating from "Outperform" to "Hold".Indian government officials said India will supply Indonesia with BrahMos cruise missile systems and Astra air-to-air missiles.Japans May coincident economic index rose 0.4% month-on-month, down from 1.3% in the previous month.Bernstein: Launches coverage research on SpaceX (SPCX.O) with an "Outperform" rating and a target price of $239.On July 7th, Citigroup issued a report stating that Kingboard Laminates (01888.HK) announced a price increase. Given the larger-than-expected increase, Citigroup raised its earnings forecast and target price from HK$120 to HK$130, maintaining a "Buy" rating. Citigroup believes the recent share price pullback was mainly due to fund rotation from higher-valuation AI hardware stocks to non-technology sectors, Metas sale of excess computing power, and the reduction of shares by its largest shareholder, Hallgain. However, Citigroup views this pullback as a buying opportunity. The bank indicated that subsequent catalysts include a higher-than-expected average selling price of electronic fiberglass cloth, a potential for a better-than-expected first-half profit warning, and the markets expectation of upward revisions to financial forecasts after the first-half results are released. Citigroup raised its 2026-2028 earnings forecasts by 11-12%, to RMB 9.607 billion, RMB 14.275 billion, and RMB 19.523 billion, respectively. Furthermore, the stock had previously been added to Citigroups upside catalyst watch list, expiring on August 2nd.

Asian Stocks Rise; China Plans to Relax COVID Measures; However, Concerns Remain

Aria Thomas

May 30, 2022 11:21

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China's relaxing of several COVID-19 restrictive measures and U.S. markets' greatest week since November 2020 before Monday's Memorial Day weekend sent Asia Pacific stocks higher on Monday morning.


The Nikkei 225 gained 2% by 10:24 p.m. ET (2:24 a.m. GMT), while the KOSPI gained 1.27 percent.


The S&P/ASX 200 increased 0.91 percent in Australia.


Hong Kong's Hang Seng Index rose 2.19 percent .


The Shanghai Composite rose 0.55 percent, while the Shenzhen Component rose 0.04 percent.


Both the S&P 500 and Nasdaq 100 contracts were higher, a possible indication that the rebound could continue. As institutional investors rebalance their portfolios in anticipation for the end of the month, the S&P 500 erased its May losses and ended a streak of seven straight weekly losses.


As the European Union (EU) failed to agree on a revised package of Russian sanctions in response to Russia's invasion of Ukraine on February 24, the dollar remained stable while the euro fluctuate. The U.S. holiday prevents the trading of cash Treasuries in Asia.


China recorded fewer cases of COVID-19 in both Beijing and Shanghai, encouraging the government to relax some restrictions in an effort to stimulate the economy.


After one of the worst starts to the year for global markets, the key question for investors is whether the bottom of the recent selloff is near. Investors have been buying the dip. Concerns continue, however, regarding stricter monetary policies from central banks, growing food inflation resulting from the conflict in Ukraine, and China's COVID-19 measures.


Bloomberg quoted Citigroup (NYSE:C) Australia head of investment experts Maheebeen Zaman as saying, "We are in the midst of a bear market rally."


Treasury yields are expected to peak in 2022, according to Zaman. "I believe the market will trade in a narrow range as investors try to determine how soon the next recession will arrive and how rapidly inflation will decline," he added.


As of Wednesday, the Fed will also begin reducing its $8.9 trillion balance sheet and will also print its Beige Book assessment on regional economic conditions. Presidents John Williams of the New York Fed and James Bullard of the St. Louis Fed will both speak at separate events on Wednesday, with President Loretta Mester of the Cleveland Fed discussing the economic outlook the next day.


Friday, the United States will release its May employment report, including non-farm payrolls. Tuesday will see the release of the Eurozone consumer price index, as well as China's manufacturing and non-manufacturing purchasing managers indexes.


Later in the day, EU leaders will convene in Brussels for a two-day extraordinary conference to discuss the war in Ukraine, defense, inflation, energy, and food security. The Food and Agriculture Organization of the United Nations will also release its monthly food price index on Friday, just as global supply concerns reach their peak.

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