KGI Asia Commentary

HSI fell 308 points on Friday

Hong Kong stocks opened 160 points lower on Friday, at 17,351 points, and fell 308 points, or 1.76%, to 17,203 points throughout the day; the H-Share Enterprise Index fell 129 points, or 2.1%, to 5,901 points; the Hang Seng Technology Index fell 132 points, or 3.3%, to 3,892 points. The total daily turnover of the market was HK$75.1 bn. Semiconductor Manufacturing International Corporation (981) and Hua Hong Semiconductor (1347) announced their results. The outlook for the fourth quarter was worse than market expectations, which put pressure on their stock prices, falling 6.8% and 15.8% respectively.

University of Michigan consumer confidence index fell in November

U.S. stocks closed higher on Friday. The Dow Jones index rose 391 points, or 1.15%, to 34,283 point; the Nasdaq rose 276 points, or 2.05%, to 13,798 points; the S&P 500 index rose 68 points, or 1.56%, to 4,415 points. All three major U.S. stock indexes recorded gains last week, with the Dow Jones Industrial Average rising 0.65%, the S&P 500 Index rising 1.31%, and the Nasdaq Composite Index rising 2.37%.

After Powell's hawkish remarks on Thursday, an official said on Friday that inflation could be lowered to the 2% target without further rate hikes, enhance the market expectations of federal interest rates will peak. The official pointed out that "although consumers spending is the main driver of the U.S. economy, but there are some signs that things are slowing down." and said that the labor market is currently slowing down and the pressure on wage growth is also easing, which may indicate that the state of equilibrium between labor supply and demand. Regarding consumer spending, the United States announced on Friday that the preliminary value of the University of Michigan's consumer confidence index for November was 60.4, lower than the expected 63.7 and the final October value of 63.8, the weakest level since May. The survey found that young people and lower-income Americans saw the largest declines in consumer confidence.

Moody's lowered U.S. outlook to "negative" from "stable"

Following Fitch's downgrade of the U.S. credit rating in August, Moody's on Friday lowered the outlook for the U.S. from "stable" to "negative" but maintained the highest investment grade rating of AAA. The U.S. faces losing its last highest investment grade rating. The chances of threats to credit ratings have increased. Moody's pointed out that the downgrade of the outlook is mainly affected by the expansion of the budget deficit and political polarization, and pointed out that high interest rates and the deficit are expected to account for about 6% of GDP, or even higher levels, which means that debt affordability will continue to pose a problem to the United States. The U.S. 10-year Treasury yield climbed back to 4.65% as markets took notice of the news.

Hong Kong Stock Connect with a net inflow of HK$4.331 bn on Friday, of which Tracker Fund (2800) had the largest inflow, reaching HK$1.38 bn; followed by Southern Hang Seng Technology (3033). Xiaomi Group (1810) recorded the largest net outflow of HK$470 mn, followed by Meituan (3690).