KGI Asia Commentary
HSI fell 96 points on Monday
The Hang Seng Index opened 44 points lower at 18,846. The market closed 96 points or 0.5% lower at 18,794; The HSCEI fell 22 points or 0.4% to 6,372; the HSTECH fell 7 points or 0.2% to 3,873. The market turnover was HK$ 83.8bn. Power stocks rallied today, China Resources Power (0836) rose 5.9%, China Power (2380) rose 4.9%, and China Longyuan Power (0916) rose 2.7%. So as the power equipment stocks, Goldwind Technology (2208) rebounded 10.7% to HK$5.37.
IMF thinks market is too optimistic about rate cut in this year
MF Vice President Gita Gopinath believed that the market is too optimistic about the decline in inflation. Although nominal inflation has begun to fall, the “super core” inflation is still on the high level. Thus, central banks may be forced to continue rate hike. Financial markets may experience greater volatility once the market expectation does not match. In fact, the Bank of Canada has suddenly raised the interest rate by 25bps to 4.75% in June, and the market expects it to remain unchanged. We expect core inflation is still sticky in 2H23 and the chances of rate cut is low. We should expect the high interest rate environment will maintain in this year.
The three major U.S. stock indexes all recorded losses. The Nasdaq composite performed the worst, falling 156 points or 1.16%, closing at 13,335 points; the S&P 500 fell 19 points or 0.45%, closing at 4,328 points; the DJIA fell slightly by 12 points or 0.04%, closing at 33,714 points.
Chinese property market sales during holiday weaker than expected
In the last week, the HSI performed weakly and fell for five trading days in a row. The main reason was that the central government’s large-scale economic stimulus program did not happen. The weak sentiment in Chinese property market was still continued during Dragon Boat Festival holiday. According to statistics from the China Index Academy, the market performance in sample cities during the Dragon Boat Festival holiday was flat, and sales fell short of expectations. The transaction of 1st hand property increased by ~20% compared with the previous year. Compared with the period in 2019, the transaction area during the Dragon Boat Festival this year was still about 10% lower.
Hong Kong Stock Connect had a net inflow of HK$3.19bn on Monday. Among them, Tracker Fund (2800) had the largest inflow, reaching HK$1.36bn; followed by Tencent Holdings (0700). Industrial and Commercial Bank of China (1398) recorded the largest net outflow of HK$250mn; followed by SMIC (0981).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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