KGI Asia Commentary
HSI rose 158 points on Monday
The Hang Seng Index opened 65 points higher and expanded the rise to 158 points or 0.8% and closed at 19,108 points; the HSCEI rose 35 points or 0.6% to close at 6,463; the HSTECH rose 16 points or 0.4% to close at 3,840. The total daily turnover of the market was HK$99.9bn. Financial sector supported the market. HSBC (0005) and HSB rose 1.6% and 2.7% respectively. OPEC+ extended the production reduction. Saudi Arabia announced to cut daily production further 1mn barrels in July. CNOOC (0883) and PetroChina (0857) rose 0.5% and 0.8% respectively.
US ISM non-manufacturing index falls to 50.3 for May, lower than expected
Relatively sticky service inflation is expected to fall. The US ISM non-manufacturing index for May dropped unexpectedly to 50.3, a new low this year, below market expectations of 51.8 and last month's 51.9. Among them, the business activity production and new order indexes both fell, and the price index also hit a three-year low. The new orders index also slipped to 52.9 from 56.1 previously, implying that service providers have faced weaker demand. The decline in non-manufacturing ISM figures can let market to project a further decline in core PCE.
The three major U.S. stock markets all fell. Among them, DJIA fell 199 points or 0.6% to close at 33,652; the S&P 500 index fell 8 points or 0.2% to 4,273; the Nasdaq composite fell 11 points or 0.1% to close at 13,229.
Sales of new energy vehicles in China are accelerating on a monthly basis
The Mainland Passenger Federation estimates that the wholesale sales of new energy vehicles in May reached 670,000 units, an increase of 11% MoM. Compared with the sales of ~600,000 units in April and March, the sales in May showed a significant MoM growth rate of. In addition, the Passenger Federation predicts that the annual sales of new energy vehicles in 2023 will be 8.5mn, which is the same as last month's estimate. In addition, the State Council considered extending tax incentives for some new energy vehicles for a further four years, which included a purchase tax exemption for below RMb300,000 pure EV and plug-in hybrid vehicles. We expect that the growth of the new energy vehicle market will continue to exceed that of the overall auto market, and the sales of mid-priced EV will outperform.
Hong Kong Stock Connect had a net inflow of HK$10.9bn on Monday, among which Tracker Fund (2800) had the largest net inflow of HK$7.73bn; followed by Hang Seng China Enterprises (2828). China Construction Bank (0939) recorded the largest net outflow of HK$370mn; followed by CNOOC (0883).
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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