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<Research>JPM Suggests Taking Profits on Some HK Utilities on Uncertainties in US Rate Cuts
Recommend 11 Positive 15 Negative 16 |
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JPMorgan recommended investors to take profits on some Hong Kong utilities, as the sector has outperformed the HSI by 5% YTD and 7% since 2H25. The outperformance is mainly driven by the spillover effect from the rally of Hong Kong-relates stocks such as local banks and developers. However, the broker believed that there is uncertainties in the path of US rate cuts, and the average dividend yield of Hong Kong utilities is only 4.4%, with a yield spread of about 30 bps over US treasury yield of approx. 4%. JPMorgan downgraded CLP HOLDINGS (00002.HK) and HK & CHINA GAS (00003.HK) to Neutral due to limited room for dividend increases, with target prices raised to $74 and $7.6, respectively. The broker's top pick is CKI HOLDINGS (01038.HK). While its dividend yield of 4.1% is not particularly high, JPMorgan saw room for the Company to raise dividends as its UK and Australian businesses benefit from a weak USD and regulatory reset. Therefore, the broker elevated its target price from $58 to $69, with rating at Overweight. AASTOCKS Financial News Website: www.aastocks.com |
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