KGI Asia Commentary
HSI rose 302 points on Monday
The Hang Seng Index opened 249 points higher and continued its upward trend. The HSI closed at 17,966 for today, up 302 points or 1.7%. The HSTECH reported at 4,098, up 161 points or 4.1%. The HSCEI rose 129 points, or 2.1%, to 6,182. The market turnover was HK$115.19bn. It is rumored that Vanke (2202) held a meeting with financial institutions to discuss operating conditions and bond price fluctuations. Mainland property stocks generally performed well, with share prices rising between 5.8% and 20.8%. For mobile phone related stocks, Sunny Optical (2382) and Cowell (1415) rose 5.3% and 3.4% respectively.
U.S. credit supply and demand continue to decline
U.S. interest rate hikes continue to be reflected in the credit market, but their intensity is weakening. According to the latest quarterly survey from the Fed, the U.S. banking industry has kept tightening the lending standards for customers in the third quarter, while customer borrowing demand continued to decline due to the high interest rate environment. The survey interviewed several banks and found that 35% of the respondents had tightened their customers' lending standards, a decrease from 50% in the previous quarter. Nearly half of the respondents said the weakening in demand for loans was most evident among small businesses.
All three major U.S. stock indexes recorded gains. The Nasdaq composite rose 40 points, or 0.3%, to close at 13,518; the S&P 500 rose 7 points, or 0.2%, to close at 4,365; the DJIA rose 34 points, or 0.1%, to close at 34,095.
Implication of Vanke’s major shareholder’s injection of liquidity
Recently, the stock and bond prices of Vanke (2202) have experienced great fluctuations, making the market worried about whether Vanke will be the next to collapse. Yesterday, Vanke's major shareholder Shenzhen Railway Group stated that it was still optimistic on Vanke and announced to inject RMb10bn into Vanke to undertake some of the company's urban renewal projects in Shenzhen. This move brings two implications to the market. The first is that Shenzhen Railway gave actual support to Vanke, which could help stabilize market sentiment. The second is that the renewal projects it undertakes generally have higher returns longer investment period. Vanke wants to sell projects to cash out. This move may reflect that the industry leader may have liquidity problems. We should concern that the sluggish real estate sales in China have already affected the top companies in the industry.
Hong Kong Stock Connect recorded a net inflow of HK$835mn on Monday, of which Tencent (0700) had the largest inflow, reaching HK$1.42bn; followed by Meituan (3690). CNOOC (0883) recorded the largest net outflow of HK$570mn; followed by China Mobile (0941).
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.
The materials contained herein are provided by KGI Asia Limited ("KGI") for information only. While such materials are based on or derived from sources believed to be reliable, KGI makes no representation or warranty (express or implied) as to their accuracy or reliability. Neither the information nor the opinions expressed herein constitute, or are to be construed as, an offer or invitation or solicitation of an offer to buy or sell any securities or investments. KGI and its officers, employees, agents and affiliates may have interests in the securities or investments covered herein and accept no liability whatsoever for any loss or consequence whatsoever (whether direct or indirect) resulting from any use of or reliance by you on such materials.