Understanding the Market | Tech stocks perform well as the Federal Reserve's interest rate cuts boost market sentiment, Tencent hits a new high in over four years before earnings

Zhitong
2025.08.13 03:26
portai
I'm PortAI, I can summarize articles.

The performance of tech stocks is impressive, with Tencent Music rising 15.52% and Bilibili rising 5.68%. The U.S. July CPI data came in lower than expected, and the market anticipates a probability of over 90% for the Federal Reserve to cut interest rates in September. Changcheng Securities believes that the weakness of the Hang Seng Tech Index is not a long-term trend, and the cost-effectiveness of the tech sector is becoming prominent. Tencent will release its Q2 2025 financial report, and Citigroup expects stable performance, with a year-on-year increase of 4.9% in non-GAAP net profit

According to Zhitong Finance APP, technology stocks performed well in the early trading session. As of the time of publication, Tencent Music-SW (01698) rose 15.52% to HKD 102; Bilibili-W (09626) rose 5.68% to HKD 186; Alibaba-W (09988) rose 4.46% to HKD 121.8; Baidu Group-SW (09888) rose 3.43% to HKD 87.55; Tencent (00700) rose 3.49% to HKD 579.

On the news front, the U.S. July CPI remained flat year-on-year at 2.7%, lower than the expected 2.8%, while it rose 0.2% month-on-month, in line with market expectations. The core CPI for July rose 3.1% year-on-year, higher than the expected 3%, reaching a new high since February; after the data was released, the market expected the probability of the Federal Reserve cutting interest rates at the September meeting to exceed 90%. Great Wall Securities pointed out that the relative weakness of the Hang Seng Technology Index is not a long-term trend. Firstly, the strong dollar situation may not last, as the significant downward revision of U.S. non-farm payrolls in July has completely ignited expectations for a rate cut by the Federal Reserve in September. Secondly, the rotation pattern of the technology sector is likely to materialize: the current dynamic PE of the Hang Seng Technology Index is only 21.87 times, highlighting its cost-effectiveness. With the acceleration of AI commercialization and the verification of mid-term performance, growth attributes will re-attract funds.

It is worth noting that Tencent will release its Q2 2025 financial report today. Citigroup expects Tencent's Q2 performance to be stable, estimating that non-GAAP net profit will rise 4.9% year-on-year to HKD 60.1 billion, with revenue and profit expected to meet or exceed the consensus expectations of the bank and the market, and the gaming business has potential upside due to contributions from new games and deferred revenue. Citigroup anticipates that entering Q3 2025, Tencent's gaming business will support stable revenue due to strong seasonal factors, new game releases, and content upgrades, and expects Tencent to highlight the latest developments and updates on AI models (such as the Hunyuan 3D world model) and new features of Yuanbao, as well as the new game pipeline, WeChat search momentum, and macro outlook

Source: Zhitong The copyright of this article belongs to the original author/organization.
The views expressed herein are solely those of the author and do not reflect the stance of the platform. The content is intended for investment reference purposes only and shall not be considered as investment advice. Please contact us if you have any questions or suggestions regarding the content services provided by the platform.