KGI Asia Commentary
HSI rose 626 points on Tuesday
The Hang Seng Index rose 626 points or 4.0% to 16,136 on Tuesday. HSTECH rose 204 points or 6.7% to 3,243 and HSCEI rose 256 points or 4.9% to 5,473. Daily market turnover was HK$128.0bn.
S&P 500 closes just below record high as corporate earnings continue to be released
Stocks rose on Tuesday as Wall Street assessed the latest batch of corporate earnings reports and the Federal Reserve's timeline for cutting interest rates. The S&P 500 rose 0.23% to close at 4,954.23 points, while the Nasdaq edged up 0.07% to close at 15,609.00 points. The Dow Jones Industrial Average rose 141.24 points, or 0.37%, to close at 38,521.36 points. Palantir Technology Inc surged nearly 31% after reporting fourth-quarter revenue that beat estimates, while Spotify Technology Inc rose nearly 4% after beating expectations and reporting a premium subscriber increase. However, technology stocks were dragged down by weakness in semiconductor stocks, with Nvidia, AMD and Rambus leading the decline. Rambus fell 19% after reporting fourth-quarter revenue. Meanwhile, Fed officials continued to reiterate that the central bank is in no rush to cut interest rates because there is still work to be done to get inflation down to its 2% target. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said the latest six or three-month inflation data showed that inflation was "basically" at target, though cautioned that it is "not all the way there yet."
Yellen says commercial real estate is a concern, but regulators are paying attention
U.S. Treasury Secretary Janet Yellen said that although losses in commercial real estate are concerning, U.S. regulators are working to ensure that the financial system's loan- loss reserves and liquidity levels are sufficient to cope. Yellen told lawmakers Tuesday in the first of two days of congressional testimony this week, that a number of factors " is going to put a lot of stress on the owners of these properties " She cited rising interest rates, rising vacancies due to shifts in work patterns caused by the pandemic, and a wave of commercial real estate loans coming due this year. she said in response to a question from Missouri Democrat Emanuel Cleaver. “I believe it’s manageable, although there may be some institutions that are quite stressed by this problem.”
Hong Kong Stock Connect had a net outflow of HK$6.8bn on Tuesday, of which China Telecom (728) had the largest net inflow, reaching HK$0.13bn; followed by Innovent Bio (1801). Tracker Fund (2800) recorded the largest net outflow at HK$6.3bn, followed by HSCEI ETF (2828).
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