​EBC Markets Briefing | HK stocks take breather; US gas challenged $5 again

The Hang Seng Index firmed on Thursday as Wall St gained a solid footing overnight. The Russell 2000 was particularly strong although ADP showing an unexpected decline in November private payrolls.

The index is trading at roughly 12 times earnings. That compares with a multiple of 28 for the S&P 500 and 21 for the Nikkei 225, according to LSEG. A record HK$1.38 trillion was poured from Mainland China to the market.

Fund managers are picking Chinese industrial stocks and holding volatile tech shares, betting a two-year-old equities rally can withstand an economic rough patch in the year to come.

Amundi is neutral but draws a distinction between the "old China," where exporters and developers faced economic headwinds and "new China" where AI and biotech firms can expect earnings growth.

The next boost for Chinese stocks will come from earnings growth after this year's rally was driven by investors' willingness to accept higher valuations, according to BofA Global Research.

China's services activity expanded at its slowest pace in five months in November, as growth in new orders softened despite a boost from foreign demand, according to a private survey released on Wednesday.

The Hang Seng Index failed to hold above 50 SMA, a sign that the bullish run could have stalled. We see it retest 25,440 by the year end, and 27,000 will be closely watched by money on the sidelines.

Asset recap

As of market close on 3 December, among EBC products, Bristol-Myers Squibb shares led gains after the drugmaker delayed the results of a study testing its Cobenfy in patients with Alzheimer's disease psychosis.

Netflix took a heavy blow following a Reuters report said its largely cash bid for Warner Bros. Discovery would mainly fold HBO Max into Netflix, trimming consumer costs but adding few new subscribers.

US natural gas was earlier rejected by the psychological resistance of $5. Weather forecasts of colder-than-normal weather in the US, which will boost heating demand, have sparked fund buying of the asset.

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