ETF Daily (08.10) | Market expectations for the Federal Reserve's interest rate cuts have significantly increased, gold ETFs have risen again, and the livestock sector has performed well

According to Zhitong Finance APP, overseas risk appetite has significantly recovered, and today all three major indices of the Hong Kong stock market closed higher. The unexpectedly weak U.S. employment data has raised expectations for interest rate cuts, leading to a renewed rise in gold ETFs; capacity reduction is approaching a critical point, strengthening "reversal" expectations, and all livestock ETFs closed higher. By the end of trading, the Hang Seng Index rose 1.05% to 25,937.49 points, with a total turnover of HKD 240.28 billion; the Hang Seng TECH Index rose 1.26% to 4,919.46 points. In terms of Hong Kong stock ETFs, among the products ranked by size, the Tracker Fund (02800) rose 0.99% to HKD 26.42; CSOP HS TECH (03033) rose 1.13% to HKD 4.82; Hang Seng China Enterprises (02828) rose 0.82% to HKD 88.7.

Industry Performance

1. The unexpectedly weak U.S. employment data has raised expectations for interest rate cuts, leading to a renewed rise in gold ETFs. By the end of trading, the gold stock ETF ChinaAMC (159562.SZ) rose 3.1% to RMB 2.36; the gold stock ETF Guotai (517400.SH) rose 3.08% to RMB 1.709; the gold stock ETF Yongying (517520.SH) rose 2.89% to RMB 2.173.

The U.S. non-farm employment data for July significantly fell short of expectations, leading to a notable increase in market expectations for Federal Reserve interest rate cuts. The expectation of declining real interest rates has become the core driver of the recent rebound in gold prices. Liu Tingyu from Yongying Fund stated that the ADP employment increase in July fell to its lowest level since the beginning of the year, combined with the advancement of the navigation agreement in the Strait of Hormuz leading to a drop in oil prices, the inflation and interest rate hike expectations that previously suppressed gold are loosening simultaneously. Gold prices have returned to around USD 4,300 per ounce, while the valuations of gold stocks remain at a relatively low range over the past decade, creating conditions for a double boost in performance and valuation.

2. Capacity reduction is approaching a critical point, strengthening "reversal" expectations, and all livestock ETFs closed higher. By the end of trading, the livestock ETF Yongying (159165.SZ) rose 3.66% to RMB 0.877; the livestock ETF Guotai (159865.SZ) rose 3.58% to RMB 0.549; the livestock ETF Penghua (159867.SZ) rose 3.33% to RMB 0.558.

By the end of the second quarter, the national breeding sow inventory was adjusted to 37.8 million heads, a year-on-year decrease of 2.63 million heads, approaching the Ministry of Agriculture and Rural Affairs' target of 37.5 million heads for normal retention. Pig prices have shown signs of stopping their decline; as of the week ending August 7, the average spot price of live pigs rose to RMB 10.36 per kilogram, ending three consecutive weeks of decline. Guangfa Securities believes that considering the current pig prices are still below the industry average cash cost, the financial pressure on the industry continues to accumulate, and it is expected that the breeding sow inventory will continue to decline. According to Mysteel data, the breeding sow inventory in July decreased by 0.62% month-on-month. Considering supply and demand trends and seasonal factors, the lowest point of this pig cycle may have passed, and the pig cycle is expected to gather strength for a reversal.

Institutional Views

Guoxin Securities pointed out that the Hong Kong stock market performed strongly on the previous trading day, with the Hang Seng Index rebounding significantly by 13.1% in July, recording the largest single-month increase this year, leading the global stock market against the trend during fluctuations. The Hang Seng TECH Index and the State-owned Enterprises Index also saw significant increases The market rebound is primarily driven by three resonating factors: valuation gaps, global capital rebalancing, and the AI narrative spreading from hardware to applications. At the same time, southbound funds saw a significant net inflow of 54.6 billion yuan, providing support for the market.

According to Guosen Securities' analysis, in terms of the macro environment, the U.S. faces funding pressure in Q3, including increased U.S. Treasury issuance and rising expectations for Federal Reserve interest rate hikes. Although corporate earnings have exceeded expectations, the funding environment is rebalancing towards high-concentration sectors, and after reaching new highs, U.S. stocks may shift to a period of volatility. Domestically, the monetary policy is set to "moderately loosen," providing a favorable liquidity environment, while external demand, especially the global AI investment cycle, has become an important driving force for the market.

ETF Trends

The N Hong Kong Stock Connect Internet ETF Huaan (520740.SH) debuted flat on its first day, closing at 0.995 yuan with a transaction volume of 55.8532 million yuan. The fund tracks the CSI Hong Kong Stock Connect Internet Index, focusing on the Hong Kong internet sector, with the top ten holdings including Alibaba-W (09988), Tencent Holdings (00700), Meituan-W (03690), and other leading Hong Kong internet companies