KGI Asia Commentary

2024.04.29 09:47

HSI rose 366 points on Friday

The Hang Seng Index rose 366 points or 2.1% to 17,651 on Friday. HSTECH rose 163 points or 4.6% to 3,718 and HSCEI rose 149 points or 2.4% to 6,269. Daily market turnover was HK$157.2bn.

S&P 500 posts best week since November

The S&P 500 rose on Friday for its best week since November, as stronger-than-expected earnings from Microsoft and Alphabet revived investor optimism about a bull market in technology stocks led by artificial intelligence. The Dow Jones Industrial Average rose 153 points, or 0.40%, the S&P 500 rose 1%, and the technology-heavy Nasdaq rose 2%. The S&P 500 rose 2.7% for the week, ending three consecutive weeks of losses. Shares of Google parent Alphabet rose 10% to a record high as the tech giant reported stronger-than-expected first-quarter earnings on strong demand for its new artificial intelligence products. Alphabet also announced its first dividend of 20 cents per share. Microsoft shares rose 2% as strong demand for artificial intelligence products also helped the company report stronger-than-expected first-quarter earnings. Among chip stocks, Intel Corporation fell more than 9% after the company reported lower-than-expected first-quarter sales and a weaker forecast for the current quarter. Snap shares rose 27% after the social media company reported stronger-than-expected first-quarter earnings while also providing an upbeat outlook. Exxon Mobil Corp. rose nearly 3% after the company reported lower-than-expected first-quarter results, hurt by lower refining margins and lower natural gas prices.

Core PCE rose 2.8% in March from a year earlier, higher than expected

Data released on Friday showed that the personal consumption expenditures price index rose 0.3% month-on-month in March, basically in line with expectations. It rose 2.7% year-on-year, compared with expectations of 2.6%. Excluding the volatile food and energy components, core PCE rose 0.3% month-on-month in March, in line with expectations, and rose 2.8% from the same period last year, higher than the 2.7% expected. The market reacted tepidly to the data, with U.S. stocks opening higher. U.S. Treasury yields fell slightly. Futures traders are slightly more optimistic about the possibility of two rate cuts this year, according to FedWatch.

Hong Kong Stock Connect had a net inflow of HK1.17bn on Friday, of which BOC (3988) had the largest net inflow, reaching HK$0.87bn; followed by Kuaishou (1024). Meituan (3690) recorded the largest net outflow at HK$0.76bn, followed by HSBC (5).

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HKEX
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Although there is a decline on an annual basis, HKEX recorded improvement on a quarter basis. Compared with 4Q23, revenue and other income in 1Q24 was up by 7 per cent, attributable to higher trading and clearing fees from higher volumes across all markets, and the non-recurring losses on the valuation of the Group’s unlisted equity investments of $246 million recorded in 4Q23. In terms of transaction volume, cash market Headline ADT was $99.4 billion in 1Q24, 9 per cent higher than 4Q23, but 22 per cent lower than 1Q23. Recent initiatives announced by the China Securities Regulatory Commission, such as the expansion of eligible ETFs and the inclusion of Real Estate Investment Trusts in Stock Connect, the addition of RMB-denominated stocks in Southbound Stock Connect, as well as supporting leading Mainland companies to list in Hong Kong. Although these measures may not have a great impact in the short term, there maybe stimulating effect on the average daily trading volume when the market sentiment further improves. Target price: $290; Stop- Loss price: $225.

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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