CKI Holdings: Reversal of High Interest Rates Lifts Investor Sentiment; Shares Attractive

CKI Holdings has been outperforming the Hang Seng Index since end-October 2023, as we believe its defensive attributes and the declining 10-year bond yields leave the group’s current 5.5% dividend yield looking more attractive. Cuts in U.S. interest rates also improve prospects for a stronger GBP and AUD versus the HKD, which lead to higher translated earnings. In addition, CKI’s earnings should look markedly better in 2024 on the potential reversal of its mark-to-market inflation hedge charges and the absence of any regulatory resets.