KGI Asia Commentary

HSI rose 8 points on Monday

The Hang Seng Index opened 73 points lower and then rose 161 points. However, it turned down 14 points before mid-day. Volatility continued to narrow afternoon, rising 8 points or 0.05% to close at 16,732; the HSCEI rose 5 points or 0.09% to close at 5,868; the HSTECH fell 6 points or 0.2% to close at 3,444. The total daily turnover of the market was HK$99.87bn. Gold mining stocks continued to perform well, with Shandong Gold (1787) and Zhaojin (1818) rising 4.7% and 6.5% respectively, while Zijin (2899) closed down 0.1%. Fujian Province introduced incentive and subsidy policies to promote automobile consumption, and BYD (1211) rose 2.1%.

German industrial production growth accelerated

As manufacturing in the world's major economies begins to return to expansion, industrial production in Germany, as the Europe's largest industrial nation, also recorded monthly growth. Data from the German Federal Statistical Office show that after excluding seasonal factors, Germany's industrial production rose by 2.1% MoM in February 2024, compared with a rise of 1.3% in January. The upward trend has accelerated significantly. Production expansion mainly benefited from the automobile manufacturing industry and the chemical industry, which recorded increases of 5.7% and 4.6% respectively.

The three major U.S. stock indexes trended individually, with the Nasdaq composite rising 5 points or 0.03% to close at 16,253; the DJIA falling 11 points or 0.03% to close at 38,892; and the S&P 500 falling 1 point or 0.04% to close at 5,202.

U.S. one-year inflation expectations flat

U.S. inflation expectations continue to remain flat. According to a survey by the Federal Reserve Bank of New York, the one-year inflation expectation remained stable at 3% in March, while the three-year inflation expectation rose to 2.9%, from 2.7% last month. One-year inflation expectations have continued to fall since reaching a peak in late 2022, but in the past two months consumers have believed that inflation is difficult to fall more deeply, which may reflect the continued rise in oil prices and high expectations for new job vacancy. High interest rates and the exhaustion of the excess savings created are putting pressure on households. In March, the proportion of household who believed that the minimum debt repayment ratio would not be reached in the next three months rose to 12.9%, the highest level since the beginning of the epidemic.

Hong Kong Stock Connect recorded a net inflow of HK$4.75bn on Monday, of which Tencent (0700) had the largest inflow, reaching HK$260mn; followed by CNOOC (0883). SMIC (0981) recorded the largest net outflow of HK$250mn, followed by Huaneng Power (00902).