【True Insight Hong Kong Stock Experts】US stocks showed mixed performance on Thursday, with the Dow Jones performing well.
Hong Kong Stock Market Trends and Analysis
U.S. stocks showed mixed performance on Thursday, with the Dow Jones Industrial Average performing well and recording a solid gain. The S&P 500 and Nasdaq once hit record highs, but tech stocks later retreated, causing both indices to close lower. The U.S. dollar strengthened, and the 10-year Treasury yield rose to 4.26%. Gold prices climbed, and oil prices also performed well. Hong Kong's pre-market ADRs were generally lower, suggesting a weak opening for the local market. Mainland stocks fell yesterday, with the Shanghai Composite Index fluctuating and closing down 0.4%. Trading volume in Shanghai and Shenzhen remained light. Hong Kong stocks were mixed, with the weakening RMB putting pressure on the market. The "China Special Valuation" theme showed strength, providing support at lower levels, but overall trading volume stayed subdued. Investors are awaiting more policy details, and with overseas markets also fluctuating, the index is expected to move between 18,000 and 18,800 points in the near term.$Hang Seng Index(00HSI.HK)
Industry News
As mainland consumers become more cautious, some well-known luxury brands are offering significant discounts to prevent inventory buildup. Balenciaga, owned by French luxury giant Kering, offered an average discount of 40% for three out of the first four months of this year. On Tmall, the number of discounted products more than doubled, accounting for over 10% of the platform's inventory in the first four months. In the same period last year, Balenciaga only discounted in January, with an average discount of about 30%, and in the first four months of 2022, there were no discounts at all. Other luxury brands like Givenchy (owned by LVMH), Italy's Versace, and Britain's Burberry are also offering discounts on Tmall, with some cuts exceeding 50%. This highlights the challenges international luxury brands face in mainland China. Previously, these brands emphasized exclusivity and value retention, typically clearing inventory discreetly through private sales or outlets. However, with the mainland middle class—the backbone of the global luxury market—becoming more frugal, many now wait for discounts or skip purchases altogether. This forces brands to rely less on this vast market for revenue and profit growth. While discounts help clear inventory in the short term, frequent markdowns can make brands seem too accessible and alienate high-spending VIP clients. With mainland consumer sentiment unlikely to improve soon, luxury brands' sales performance may remain under pressure, and discounting could continue.
Independent Stock Analyst
Guo Jiayao CFA
The author and related parties do not hold the aforementioned stocks
Date: Friday, June 21, 2024
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