KGI Asia Commentary

HSI rose 222 points on Monday

The Hang Seng Index rose 136 points in the morning and fell 24 points in mid-day. However, it rose again in the afternoon, and the gains expanded before the market closed. The HSI closed at 17,426 today, up 222 points or 1.3%. The HSTECH reported at 3,981, up 88 points or 2.3%. The HSCEI rose 88 points, or 1.5%, to 5,989. The market turnover was HK$75.2bn. Chinese platform stocks all recorded increases in gross merchandise volume (GMV) on “Double 11” shopping festival. The share prices of platform stocks such as Alibaba (9988), JD.com (9618) and Kuaishou (1024) increased by between 1.3% and 4.9%. Xiaomi (1810)'s Mi 14 series of mobile phones was reported to have sold nearly 1.45mn units on the 10th day of its listing, and its stock price rose 1.1%.

U.S. fiscal deficit in October is lower than expected; recent short-term Treasury bond auction performance remains attractive

The U.S. Treasury Department announced that the fiscal deficit in October was US$67bn, a YoY decrease of 24%, and the market forecast was US$65bn. This is mainly due to the rise in taxes to a record high and the deferral of expenses payable, which helps the problem of high interest expenses caused by the recent high interest rates on U.S. Treasury. Previously, the Treasury Department announced the scale and tenor of bonds issued in the coming year. In response to the high 10 years treasury yield, Gov planned to reduce the issuance of long-term bonds and switch to short-term bonds. Observing the results of the recent 26-week Treasury bill auctions result, the bid to cover ratio since October has fluctuated between 2.70x and 2.91x. Such auction results showed U.S. debt is still attractive in the market.

For the three major U.S. stock indexes, only the DJIA recorded gains. The DJIA rose 54 points or 0.16% to close at 34,337; the Nasdaq Composite Index fell 30 points or 0.22% to 13,767; the S&P 500 Index fell 3 points or 0.08% to close at 4,411.

Mainland’s new loans beat consensus in October

China social finance data for October were released recently, showing that the increase in social financing was RMb1.85tn, which was lower than market expectations of RMb2.33tn. In terms of structure, the scale of government debt financing exceeds RMb1.5tn, which is the most important contribution to social financing. RMB loans increased by RMb738.4bn, higher than market expectations of RMb655bn. In terms of sectors, household loans decreased by RMb34.6bn, of which short-term loans decreased by RMb105.3bn, and medium and long-term loans increased by RMb70.7bn. The weak demand for personal credit reflects the recent reduction in existing mortgage interest rates has not yet influenced stimulating residents' consumption activities. However, the increase in medium- and long-term loans represents a rebound in mortgage loans, reflecting the narrowing of the decline in real estate sales in October.

Hong Kong Stock Connect saw a net outflow ofHK$2.0bn on Monday, of which Kuaishou (1024) had the largest inflow, reaching HK$130mn; followed by Tencent (0700). Tracker Fund (2800) recorded the largest net outflow of HK$1.80bn; followed by Meituan (3690).