In today’s briefing:
- HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms
- TSMC (2330.TT; TSM.US): 1Q25 Outlook, TSMC Will Use 2nm in 4Q25, and Production Will Occur in 1Q26.
- LG CNS IPO: Valuation Insights
- Apple’s $4 Trillion Milestone: What Challenges Lie Ahead in 2025?
HSTECH Index Rebalance Preview: One Constituent Change & US$884m Trade
- The review period for the March rebalance of the Hang Seng TECH Index (HSTECH INDEX) ended on 31 December.
- There could be one constituent change in March. With capping changes, that could lead to a one-way turnover of 2.6% resulting in a round-trip trade of HK$6.88bn (US$884m).
- Horizon Robotics (9660 HK) is also a potential inclusion to the HSCI Index in March, though inclusion in Southbound Stock Connect will only come through in May.
HK Connect SOUTHBOUND Flows (To 3 Jan 2025); SB Buys InfoTech, Financials, Energy, Telecoms
- SOUTHBOUND gross trading activity was quite light the last two weeks of the year. Non-SB trading of HK was even lighter. Net buying was strong.
- Net buying on tech was VERY big but not on Alibaba Group Holding (BABA US) (small positive) or Meituan (3690 HK) (largest outflow).
- Financials and High Div SOEs are back on the menu. SOUTHBOUND has been a Very Big Percentage of traded volume.
TSMC (2330.TT; TSM.US): 1Q25 Outlook, TSMC Will Use 2nm in 4Q25, and Production Will Occur in 1Q26.
- After the peak of 4Q24, Taiwan Semiconductor (TSMC) – ADR (TSM US)‘s revenue will see a decline of about -5% QoQ in 1Q25.
- TSMC is expected to use 2nm technology in 4Q25, and we believe Advanced Micro Devices (AMD US) and Apple (AAPL US) could present products around 1Q26.
- TSMC could be set to announce its 2nm production plans, expansion into the US, Germany, and Japan, mature technology quotations, and the Capex budget for 2025.
LG CNS IPO: Valuation Insights
- LG CNS (LGCNSZ KS), the IT service unit of LG Corp (003550 KS), seeks to raise up to US$837 million through a primary/secondary offering.
- We previously discussed the IPO in LG CNS IPO: The Bull Case and LG CNS IPO: The Bear Case.
- We examine the syndicate’s valuation methodology. Our analysis suggests that LG CNS is attractive in the IPO price range. We would participate in the IPO.
Apple’s $4 Trillion Milestone: What Challenges Lie Ahead in 2025?
- Apple’s spectacular 2024 has positioned it as a behemoth in the technology sector, with its stock climbing 30% compared to the S&P 500’s 23% gain.
- It closed the year at $250 per share, giving the company a valuation exceeding $3.8 trillion, just shy of the $4 trillion milestone—a feat no company has achieved.
- This growth was driven by new product launches, including the revolutionary Apple Vision Pro, advancements in AI with Apple Intelligence, and record-breaking revenue of $94.9 billion for the September quarter.
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