Q4 GDP grew 10bps above estimates but lower than in Q3: Per the final estimate, the U.S. economy
grew 2.4% y/y in Q4, 10bps above estimates and below 3.1% y/y growth in Q3. Personal spending grew
4% y/y, the highest since Q1 2023, driven by a 6.2% y/y rise in spending on goods and a 3% y/y rise in
spending on services. Government expenditure rose 3.1% y/y. Fixed investments contracted 1.1% y/y,
while residential investment grew 5.5% y/y2
Author: gundaboina saikiran
China Upgraded to a Confirmed Uptrend
Key takeaways:
- We upgraded China to a Confirmed Uptrend after CSI 300 index saw a follow-through-day on a Day 39 rally attempt. The index gained 2.43% on much higher volume. The CSI 300 has trended upwards mildly along its rising 100-DMA (3,920, -2.2%) after it plunged in early January, with next support at its 50-DMA (3,880, -3.2%). Next resistance is at the December high (4,098, +2.3%) and then November high (4,201, +4.8%).
- The rally was driven by consumer sectors, mainly as the government will announce consumption stimulus measures next Monday. Our conviction increases as major indices retook all held up constructively above all key moving-averages. We advise investors to take an active approach to adding risk. Stay disciplined and focus on stocks with strong technical and fundamental profiles.
- Actionable idea in our Focus List includes Ningbo Tuopu Group (NTG.CN), Shennan Circuits (LZV.CN), BYD (BYD.CN), Yantai China Pet Foods (YPF.CN) and Gambol Pet Group (GPG.CN).
BYD Buy Call Reiteration
Key Takeaways:
- We reiterate our Buy call on BYD after the company announced it will launch its automated driving tech solutions in the press conference on February 10. The company plans to equip the navigation on autopilot (NOA) system on 60% of its EVs sold in 2025 including those below RMB 100K.
- We expect BYD’s launch of the NOA function will enhance its advantages in the EV market, especially in the lower-priced segment, lending support to sales growth.
- The stock bounced off its 50-DMA on heavy volume (+289%) and was approaching the October high. BYD’s Hong Kong leg also advanced 11.5% on heavy volume (+254%) and is Actionable now. BYD Electronics (BYDE.HK), an electronic components producer, controlled by BYD Group, surged 19.6% on Thursday and is extended.
Won Global View
The U.S. market remains in a Confirmed Uptrend. The S&P 500 was up 1.7% last week and made a new all-time high before closing
just below December 2024 highs. The Nasdaq also rose 1.7% and closed about 1% off December 2024 all-time highs. Support for both
indices is at the rising 21-DMA, 2% below current levels. The distribution day count remains at six on each index, after one expired on
each on Friday (January 24) after market close but each also picked up a new one on Friday.
European Weekly Summary
Key points from this week’s report:
Please refer to the attached PDF for the full report.
- European indices accelerated their upward momentum and moved higher last week. Germany, Spain, and Norway clocked new highs during the week while the U.K. and Sweden closed ~1% off 52-week highs. Sweden, Italy, France, and Austria regained their 50-DMA. Germany and Spain were upgraded to a Confirmed Uptrend, while Ireland was moved to a Rally Attempt. Norway was moved to Under Pressure. To remain constructive, we would like to see the momentum persisting with broader participation.
- Sectors closed mostly positive last week. Cyclicals (+4.9%) led the gain, followed by Technology (+3.8%) and Retail (+3.3%). Capital Equipment, Financial and Transportation gained 2% – 3%. Energy closed 2% lower, while Utility declined 0.5%. On our rotation graph, leading over 26-weeks, Financial is showing further strength while Retail, and Capital Equipment are exhibiting negative short-term momentum. Technology and Cyclicals also continued to exhibit positive short-term momentum. On the other hand, short-term momentum among Staples, Transportation, Materials and Health Care deteriorated further.
- European Focus List Update: We didn’t add or removed stocks from our European Focus List last week. Actionable names include Nemetschek (NEMX.DE), Galderma Group (GALD.CH), Inditex (IND.ES), and Technogym (TGYM.IT).
- Sector Score Cards: outside of our Focus List, the following top-rated names fundamentally through our lens are showing improving technical characteristics and are actionable: Ferrovial (FERC.SE), Moonpig (MOON.GB), Adyen (ADYE.NL), Beazley (BEZ.GB), Wise (WISE.GB), Zalando (ZALX.DE), Watched of Switzerland (WOSG.GE), Pandora (PND.DK), and Poste Italiane (PST.IT).
Aggressive Entry in ICICI Bank
Key points:
- Buy ICICI Bank as the stock is up more than 6% this week after the bank reported its Q2 FY25 results. Strong improvement in efficiency ratio and lower-than-expected credit costs compared to peer group were a positive surprise in the quarter. It has been the best-performing Indian bank over the last year, with the highest loan and deposit growth in recent quarters. The stock rebounded from the support at its 50-DMA (INR 1,252; -6%) on strong volume. Accumulate positions here for an early entry. It is forming the right side of a stage-two flat base with an ideal pivot of INR 1,362 (+2%).
- Strong fundamental profile: EPS Rank 90 and SMR Rating of A, supported by expanding margins and ROE.
- Good technical setup: RS Rating has improved significantly over the last two weeks, indicating outperformance. Up/Down Volume ratio of 1.6 and an Acc/Dist Rating of A- indicate good demand for the stock.
- The stock has been the best performer among Indian large cap private banks over the last year.
Emerging APAC Financials
Overview
• We are positive on select financial IGs in the emerging APAC markets.
• Southeast Asian Banks
˚ Key emerging market central banks have already begun to ease monetary policy rates. This would support
growth in the region.
˚ Southeast Asian banks, particularly in Indonesia, the Philippines, and Thailand, are expected to see solid loan
growth and favorable capex cycles, fueled by declining inflation rates and rate cuts, making them standout
performers in the financial sector.
• Capital Market Infrastructure Stocks
˚ Key Asian emerging markets like India (+26%), Taiwan (+45%), and South Korea (+10%) have performed well
over the last year, driven by increasing retail participation, positive economic prospects in the wake of rate cuts
and declining inflation.
˚ Debt levels and budget deficits of countries in the emerging market APAC region are also much lower than that
of the U.S., making them less risky. In 2023, the U.S. debt-to-GDP ratio was 123%. This was more than double
the debt-to-GDP ratios of Southeast Asian countries, which ranged from 37–62%.
Select Ideas from the Goldman Sachs Communacopia & Technology Conference
Key points from this report:
- The following select ideas are showing near term relative strength while displaying good O’Neil Fundamental ratings and rankings: ADSK, ANET, CSCO, FLEX, FTNT, GWRE, IBM, MRVL, MTCH, NOW, NTNX, NVDA, NWSA, RDDT, T, TXN, UBER, VZ, Z.
- The following select ideas are showing near term technical weakness with poor O’Neil Ratings and Rankings: AMAT, AMD, PINS, PSTG, SMCI, WDC.
O’Neil Energy/Material Weekly
FL- Stock Linde India (BOC.IN) was up 3% today, this is after the company signed an agreement with Tata Steel to acquire industrial gas supply assets at the Kalinganagar Phase 2 expansion project, including two 1800 TPD Air Separation Units (ASUs). Under the agreement, Linde India will take over the two ASUs currently being constructed, with funding sourced internally. This acquisition will boost Linde India’s production capacity to 9,730 TPD (+37%), making it the world’s largest single-site ASU. The stock is bouncing off its 200-DMA (-6%) and continues to trade below its 50-DMA (+7%). RS line has been in a downtrend, with an RS Rating of 32 and Acc/Dist Rating of B-.
U.S. Economic Summary
Q1 +DP experienced a downturn, missing estimates cy 90cps: As per the first estimate, the U.S. economy
grew 1.6% on an annualized basis in Q1 2024, compared to 3.4% in the previous quarter and 90 bps below
the estimates of 2.5%. Hhis was the lowest growth since H1 2022. Hhere was a slowdown in consumer
spending due to declining goods consumption and non-residential investments. Hhere was a minimum rise
in government spending and exports, but imports were higher. Private inventories declined on a quarterly
basis, while residential investment grew in double digitsG
