KGI Asia Commentary
Hang Seng Index fell 296 points on Tuesday
The Hang Seng Index fell 296 points or 1.6% to 17,670 on Tuesday. HSTECH fell 42 points or 1.0% to 4,055 and HSCEI fell 94 points or 1.5% to 6,087. Daily market turnover was HK$89.6bn.
Big tech ended higher as Treasury yields fell
U.S. stocks ended higher on Tuesday, supported by gains in big technology stocks, as bond yields fell, even as Federal Reserve members signaled a rate hike was still on the table. The Dow Jones Industrial Average rose 56 points, or 0.2%, setting its longest winning streak since July last year. The Nasdaq rose 0.90%. The S&P 500 rose 0.3%, marking its seventh consecutive trading day of gains, its longest winning streak since November 2021. Uber Technologies' quarterly earnings missed expectations, but gross bookings (transaction value) on its app came in higher than expected, sending the company's shares up nearly 4%. Datadog shares rose 28% after the cloud computing infrastructure company raised its annual guidance and reported third-quarter results that beat Wall Street expectations. Quarterly results from Disney, Wynn Resorts and Occidental Petroleum are due this week.
ECB prompts banks to factor in further fall in house prices
On November 7, European Central Bank President Enria said that euro zone banks should consider the risk of further declines in real estate prices when formulating capital provisions and plans. The European Central Bank has raised interest rates the most and for the longest time in a row, reaching a record high, which has put pressure on the European real estate market. As real estate prices have fallen in several countries, especially Germany. “The current higher interest rate environment could put further downward pressure on office and house prices, making it harder for commercial property owners and households to service their debt,” Enria told the European Parliament.“Banks should account for these risks in their provisioning practices and capital planning.”
Market eyeing on Powell's speech this week, and U.S. treasury yield continue to retreat
Investors continued to digest comments from a Fed governor hinting at the possibility of further interest rate hikes in the future. Federal Reserve Governor Michelle Bowman said on Tuesday that she still expects the Fed "will need to increase the federal funds rate further to bring inflation down to our 2 percent target in a timely way." But the market shifted focus to Powell's speech this week. Powell will deliver speech on Wednesday and Thursday. Futures markets expect the Fed to keep rates on hold again at its December meeting.
Hong Kong Stock Connect had a net inflow of HK$9.56bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$3.74bn; followed by HSCEI ETF (2828). SMIC (981) recorded the largest net outflow at HK$0.1bn, followed by Meituan (3690).
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