CGS International April 30, 2025

Market Pulse: Navigating US Economic Signals and Trade Tensions

Overnight market activity saw Wall Street traders cautiously extending the recent stock rebound. Despite concerns over slowing economic growth and the ongoing impact of tariff disputes on corporate earnings, investors displayed a degree of optimism. The S&P 500 marked a significant six-day advance, rising 7.5% – its best performance over such a period since March 2022. This occurred even as weak consumer confidence and labor data surfaced, and several major companies withdrew earnings guidance due to trade war uncertainties under President Donald Trump.

Market sentiment earlier took a hit amid these uncertainties and added pressure from Trump’s threat to dismiss Federal Reserve Chair Powell. Nevertheless, a segment of bullish investors is driving the equity comeback. One prevailing theory suggests a fear of missing out (FOMO) on the initial stages of a market recovery, drawing parallels with historical US market rebounds. Furthermore, growing expectations that the Federal Reserve might cut interest rates to stave off a potential recession are potentially building a case for renewed risk-taking.

However, challenges remain. After a period of comfortable growth last year, the US economy showed signs of slowing at the beginning of 2025. Factors contributing to this include waning consumer activity and a widening trade deficit, suggesting a significant economic impact during the first quarter. Amidst this backdrop, investors continue to show a preference for short-dated Treasuries, anticipating a further deceleration in US economic activity.

Champion REIT (CREIT): Recent Rally Questioned Amid Office Headwinds

Champion REIT (CREIT) has demonstrated notable share price strength year-to-date (YTD), surging 26%. This performance surpasses the gains seen in Link REIT (up 17% YTD) and the Hang Seng Property Index (up 22% YTD).

Despite this outperformance, analysts express skepticism regarding its justification. Key points include:

• Privatisation Unlikely: The likelihood of privatisation by major shareholder Great Eagle is considered low. This view is partly based on CREIT’s valuation, which trades at a 56% discount to Net Asset Value (NAV), compared to a steeper 62% average discount for its peers, making it relatively expensive.
• Challenging Office Outlook: The significant outperformance is deemed unjustified given the difficult environment forecast for Hong Kong’s office sector. Negative rental reversions are anticipated for the fiscal years 2025 (FY25F) and 2026 (FY26F).
• Recommendation: Consequently, the recommendation for CREIT is reiterated as Reduce. The target price (TP) has been slightly increased to HK\$1.53, which corresponds to an estimated FY25F Distribution Per Unit (DPU) yield of 9.02%.

Goldwind Science & Technology (2208 HKG): Technical Indicators Signal Renewed Buying Opportunity

Last Price: 5.61 HKD

Company Overview: Goldwind Science & Technology Co., Ltd. specializes in manufacturing wind generation equipment. Its operations include producing wind turbines, components, generation sets, and other related equipment. The company is also involved in wind farm development and photovoltaic product manufacturing.

Analyst: CHUA Wei Ren, CMT

Following a previous analysis dated December 2, 2024, Goldwind Science & Technology experienced a loss after breaching the stop-loss level of HK\$4.90. However, recent price action indicates strong bullish momentum, prompting a re-initiation of a Technical Buy recommendation on the stock.

Key Technical Pointers:

• Pattern Breakout: The stock price has successfully broken out of an expanded falling wedge formation, a typically bullish reversal pattern.
• Corrective Wave Completion: The corrective wave structure appears likely complete, evidenced by a strong rebound from the 100.00% Fibonacci expansion level of a prior wave (AB).
• Ichimoku Cloud: The Ichimoku indicator is currently generating a bullish signal.
• Stochastic Oscillator: This momentum indicator has confirmed an oversold condition and has formed a bullish divergence, suggesting waning downward momentum and potential upside.
• Rate of Change (ROC): The 23-period ROC has crossed above the zero line, indicating positive momentum.
• Directional Movement Index (DMI): The DMI confirms strong bullish strength in the current trend.
• Volume: Trading volume remains in a phase of healthy expansion, supporting the price move.

Technical Levels:

• Entry Price(s): 5.61, 4.90, 4.60 HKD
• Support 1: 4.91 HKD
• Support 2: 3.75 HKD
• Stop Loss: 4.27 HKD
• Resistance 1: 96.75 HKD
• Resistance 2: 116.00 HKD
• Target Price 1: 7.50 HKD
• Target Price 2: 9.00 HKD
• Target Price 3: 11.00 HKD
• Target Price 4: 12.40 HKD

Report Disclosures and Framework

This report has been prepared by CGS International and is intended for informational purposes. The information is based on data believed to be reliable at the time of issue, sourced from public information, market data, and CGS International research. However, CGS International does not guarantee the adequacy, accuracy, completeness, or fairness of the information and opinions contained herein and is not obligated to update the report. Past performance is not indicative of future results. Investments can lose value.

This report is general and does not consider individual investment objectives or financial situations. It is not an offer or solicitation to buy or sell securities. Investors should conduct their own evaluation and consult professional advisors before making investment decisions. CGS International, its affiliates, directors, and employees may hold positions in the securities mentioned, conduct business with the companies covered (including investment banking services), and may have agreements related to research production.

The analyst(s) responsible for this report certify that the views expressed accurately reflect their personal opinions and were prepared independently. Analyst compensation is not directly tied to specific investment banking transactions or recommendations. Information barriers are in place to manage conflicts of interest.

Significant Financial Interests: As of April 28, 2025, CGS International reported no proprietary positions in the securities covered in this report. As of April 30, 2025, the analyst(s) and their associates reported no personal interest in the securities covered.

Recommendation Framework

• Stock Ratings:
  • Add: Total return expected to exceed 10% over 12 months.
  • Hold: Total return expected between 0% and 10% over 12 months.
  • Reduce: Total return expected to fall below 0% over 12 months.
  • Total return = % difference (target price vs. current price) + forward net dividend yield. Horizon: 12 months.
• Sector Ratings: Based on market cap-weighted absolute recommendations of stocks within the sector (Overweight: Positive, Neutral: Neutral, Underweight: Negative).
• Country Ratings: Relative positioning recommendation versus benchmark (Overweight: Above-market weight, Neutral: Neutral weight, Underweight: Below-market weight).

Rating Distribution (Quarter Ended March 31, 2025)

Based on 551 companies under coverage.

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