KGI Asia Commentary
Hang Seng Index fell 173 points on Monday
The Hang Seng Index rose 44 points to 17,858 points in the morning but turned down 75 points or 0.4% in mid-day. The decline intensified after noon, with the HSI closing at 17,640 points yesterday, down 173 points or 1.0%. The HSTECH reported at 3,811 points, down 68 points or 1.8%. The HSCEI fell 66 points, or 1.1%, to 6,049. The market turnover was HK$73.79bn. Mobile phone components stock Sunny (2382) rose 1.0%, but BYD Electronics (0285) and Q Tech (01478) both fell 3% and 6.7% respectively. Automobile stocks generally fell, with BYD (1211) and Li Auto (2015) falling 1.2% and 3.6% respectively
U.S. Treasury Secretary Yellen insisted in “Higher for longer"
In addition to Federal Reserve officials supporting the "Higher for longer" monetary policy, yesterday U.S. Treasury Secretary Yellen said that high interest rates in the United States are likely to continue. The current economic situation in the United States is good. As far as the fiscal situation is concerned, the current ratio of U.S. federal debt to GDP is about 98%, and interest expenses are still within control. Earlier weak auctions of U.S. 10-year and three-year Treasury notes reflected investors' need for higher coupons return to compensate for future market fluctuations and actions by the Federal Reserve.
All three major U.S. stock indexes recorded gains. The Nasdaq composite rose 160 points or 1.2% to 13,567; the S&P 500 rose 45 points or 1.06% to 4,373; the DJIA rose 314 points or 0.93% to 33,984.
Macau’s third-quarter gaming revenue still relies on mass gaming
According to official data from Macau, total gaming revenue in the third quarter of this year was 48.81bn patacas, a YoY increase of 7.8x, and recovered to approximately 70% compared with the same period in 2019. The mass gaming revenue was 37.05bn, which has exceeded the 30.58bn in 3Q19. However, VIP room gaming revenue still has not improved much. In the third quarter, VIP room revenue was 11.77bn. Although it increased 9.19x YoY, it recovered less than 40% compared with before the epidemic. We believe that VIP gaming will no longer be able to return to pre-epidemic times, and gaming revenue will be difficult to return to pre-epidemic times based on mass market revenue alone.
Hong Kong Stock Connect saw a net inflow of HK$4.057bn on Friday, of which Tracker Fund (2800) had the largest inflow, reaching HK$1.40bn; followed by Meituan (3690). CNOOC (0883) recorded the largest net outflow of HK$210mn; followed by Xpeng Motors (9868).
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