KGI Asia Commentary
Hang Seng Index rose 390 points on Monday
China official June manufacturing PMI index beat consensus, and Hong Kong stocks performed well yesterday. The HSI rise above 19,000 points at the opening and continued its upward trend. The HSI closed at 19,306, up 390 points or 2.1%. The HSTECH closed at 4,054, up 143 points or 3.7%. The HSCEI rose 165 points, or 2.6%, to 6,590. Market turnover was HK$89.7bn. The China EV sector is generally positive. The share prices of Li Auto (2015), XPEV (9866) and NIO (9866) rose between 8.1% and 16.5%, while BYD (1211) rose 4.5%.
ISM manufacturing PMI continued to contract in June
One of the leading indicators continue to point out the weak manufacturing with a poor outlook in the US. In June, the US ISM manufacturing PMI continued to decline, with the index falling to 46 from 46.9 in May. This data was worse than the consensus of 47.2, indicating that the outlook for June continued the contraction. The new orders index improved to 45.6 from 42.6, while the employment index fell to 48.1 from 51.4, showing a decline in employment in the sector.
US stock market was only half-day opened yesterday. The three major indexes all recorded rise yesterday. The Nasdaq rose 28 points or 0.21% to close at 13,816; the S&P 500 rose 5 points or 0.12% to close at 4,455; the DJIA rose 10 points or 0.03% to close at 34,418.
The weak sales of the top 100 developers in China reflect that market sentiment has not recovered
The property market in China has not recovered significantly after normalization. According to the data from the China Index Academy, the total sales of the top 100 developers in the 1H23 will be RMb3.57tn, a slight increase of 0.1% YoY. Considering that the major cities were locked down in the last year, the current investment sentiment reflects the Chinese residents' expectation have not improved much. On a monthly basis, sales in June fell 19% MoM (after seasonal adjustment), indicating that the overall property market is weak.
Hong Kong Stock Connect had a net outflow of HK$2.03bn on Monday, among which ICBC (1398) had the largest net inflow of HK$432mn, followed by China Construction Bank (0939). Tracker Fund (2800) recorded the largest net outflow of HK$2.38bn; followed by Hang Seng China Enterprises (2828).
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