KGI Asia Commentary

HSI fell 117 points on Friday

The Hang Seng Index opened 106 points higher on Friday at 19,850 points, and  fell 117 points, or 0.6%, closed at 19,627 point; The H-Share Index fell 32 points or 0.5% to 6,664 points; the Hang Seng Technology Index rose 11 points or 0.3% to 3,874 points. The market's full-day turnover was HK$ 102.8 bn. JD.com (9618) rose 7% to HK$144.8 after the announcement of its results. SMIC (981) rose 0.2% to HK$20.2 after the results. China Hongqiao (1378) fell 6.9% to HK$6.86, the worst performing blue chip.

Dow, S&P 500 fall for second straight week as debt ceiling might escalate political confrontation

U.S. stocks closed down on Friday. The Dow Jones index fell 9 points, or 0.03%, to 33,301 points; the Nasdaq index fell 44 points, or 0.35%, to 12,285 points; the S&P 500 index fell 7 points, a drop of 0.16%, to 4,124 points. In terms of weekly performance, the Dow and S&P 500 fell for the second consecutive week, while the Nasdaq rose for the third consecutive week. In terms of economic data, the initial value of the University of Michigan's consumer confidence index in May in the United States was 57.7, an expected 63, and the previous value was 63.5.

In addition, the market is still worried about the development of debt ceiling negotiations. The Congressional Budget Office CBO said that if it can survive June 15, the United States is likely to avoid a default before the end of July, but the lack of available funds in the first two weeks of June is still a "significant risk." Some market analysts pointed out that the two parties in Congress have reached a consensus, and political confrontation may intensify before a deal is negotiated.

Debt Ceiling Agreement Undecided, Officials May Raise the Debt Ceiling for Short-term measure

During the weekend, U.S. Treasury Secretary Yellen pointed out in an interview that the Biden administration and Republicans in Congress are making progress on debt limits and believe that an agreement will eventually be reached. According to sources, the Democrats have softened their attitude, as they might accept the establishment of limits on federal government spending. But the final decision is still undecided, and some officials also pointed out that even if no agreement is reached in the next few weeks, Congress may pass a short-term bill to raise the debt ceiling.

Hong Kong Stock Connect had a net outflow of HK$ 580 mn on Friday, among which SMIC (981) had the largest net inflow of HK$ 280 mn; followed by CNOOC (883). China Mobile (941) recorded the largest net outflow of HK$390 mn; followed by Agricultural Bank of China (1288).