The threat of inflation continues. In June, the world's major central banks began to implement monetary tightening policies. After US inflation hit a 40-year high, the Federal Reserve decisively raised interest rates by 75 basis points, bringing the federal funds rate to 1.5% to 1.75%. After exceeding market expectations, the Bank of England and the Swiss National Bank raised interest rates one after another, the latter being the first time in 15 years. Even the European Central Bank, which is least equipped to raise interest rates because it is on the front line of Russia's invasion of Ukraine, announced that it will stop buying bonds from 1 July. However, the inflation problem cannot be solved by raising interest rates for one and a half times. Analysts have generally expected the Federal Reserve to continue raising interest rates by 0.75% next month, and other economies that are more equipped to raise interest rates will continue to fight inflation. Unless the Russian-Ukrainian war ends suddenly, the strength of currencies such as the US dollar, Canadian dollar and Swiss franc is expected to remain roughly constant through the 4^th quarter. GBP, EUR and JPY will remain weak, so investors can go with the flow.

In terms of geopolitics, the G7 of the seven industrialized countries agreed to ban the purchase of Russian gold in response to the war in Ukraine. They also imposed a price ceiling on Russian oil exports to G7 countries so as to hit the economy of Russia. In addition, the NATO summit at the end of last month was also attended by a number of non-NATO member states, which caused panic among countries that were not "included". On the one hand, Russia which were sanctioned sells a lot of oil to economically backward countries. After facing the first overseas debt default in more than a hundred years after being kicked out of SWIFT, it is more eager to find reliable allies and hold a BRICS summit (China, Russia, India, Brazil and South Africa) to compete with each other. In the future, there may be opportunities to form two factions led by the United States and other developed countries, and the Sino-Russian alliance. The Alliance System of the Allied and Allied countries for more than a century is the long-term cause of the First World War. We hope to learn from history and not to repeat the same mistakes.

The world is gradually becoming divided, and even the United States has some signs of instability. The US Supreme Court overturned the Democratic-backed abortion rights for women in June, stimulating demonstrations across the country and causing approval rating of the President, Biden down to just 36%. In fact, public debates in American politics are increasingly focused less on the substance than on "political motives and identity". No matter which party dominates the government, it has to face a strong opposition. Coupled with the pressure of economic recession facing the United States in the future, it will be even more difficult for the US stock market to have a good trend in the future. US stocks continue to be week. The resistance of the Dow, S&P 500 and Nasdaq are at 33,250, 4,180 and 12,320 respectively. Do not be too optimistic if they are not determined to rise above.

The disaster of the currency market continued in June. Bitcoin once fell to US$17,611 before recovering, and it recovered slightly to $21,443 at the time of writing. It has fallen by nearly one-third compared with US$31,792 at the end of May. Smaller cryptocurrencies are even worse. In the middle of the month, many large companies related to cryptocurrencies were in trouble, and then there were news of the theft of cryptocurrencies held by startups. No matter how optimistic cryptocurrency investors are, they must “wake up” temporarily. At present, the market has obviously lost confidence and the motivation of capital inflows. The short-term outlook is still quite pessimistic. The trend of interest rate hikes by major central banks continues, and the market's demand for dollars remains. Thus, for cryptocurrencies that cannot generate cash flow, It is not ideal to invest at present. Even if you want to enter the market, it is better to choose only exchange-traded products.

The trend of Hong Kong stock is stronger than that of US stocks, and the cumulative decline in the first half of the year has always been too large. If readers follow last month's advice, there should be some gains. However, reaction in the market is relatively incomplete, and the uptrend is still limited that subject to the resistance mentioned earlier at 22,523. Although economy in the mainland has not seen much improvement, it is gradually supported by favorable policies. In the short term, the "benefits" brought by President Xi's coming to Hong Kong will still be on the strong side of Hong Kong stocks. Therefore, if there is money on investment, you should make a decisive move. Ideally, you can recover a lot of the losses in the first half of the year. The valuations of the constituent stocks of the HSI and HSCEI remain relatively cheap, and it’s good to enter the market. The trend of the Hang Seng Technology Index is relatively strong, but it seems to bounce after the decline is too large. For the time being, don't be too optimistic on it. Investors can choose to enter the market with a more diversified strategy.

Since the strategy needs to be dispersed, I recommend several stock classes this time for your reference. First, the shares that have no direct relationship or even a negative relationship between business and economic cycle, such as infrastructure stocks and the education stocks that the economic poor makes more people go to school. Among which the largest China Education Holdings (0839) is the most stable. Second, products are seasonal and demand is strong in the third and fourth seasons, such as shipping stocks. The other is beer stocks. In particular, the growth of Budweiser Asia Pacific (1876)'s business in South Korea and India will make up for the loss of business in the mainland. Moreover, this year is the year of World Cup year. Traditionally, sales of beer are much higher than non-World Cup years. Budweiser Asia Pacific has become the official global trade sponsor of the World Cup, and sales are expected to be further stimulated. Third, the products sold are famous brands, which make customers less sensitive to price due to their high unit price. The best ones are famous brands whose production bases and financial reporting currencies are in relatively depreciated countries. Among them, Prada (1913) is the most ideal. The product itself has the ability to continue to raise prices. The continued rise in US dollars will further increase its gross margin. Thus, it is also an ideal choice.

Kay Ho (CE No.: ANV293)

Acer King Capital Hong Kong Limited

Statement: The author is a licensee of the 1st, 4th, and 9th types of licenses of Securities and Futures Commission, SFC. Acer King securities Limited and Acer King Capital Hong Kong Limited are affiliated companies of Hantec Group and were invited to contribute articles in Hantec Group's monthly newsletter. The writing does not represent the position of Hantec Group. As the author does not personally hold the above-mentioned shares, investors should exercise caution when buying or selling relevant securities and investment instruments.