KGI Asia Commentary

HSI rose 323 points on Monday

The Hang Seng Index opened 171 points higher and then rose 263 points at mid-day. The rally intensified afternoon, with the HSI closing at 17,778 today, up 323 points or 1.9%. The HSTECH reported at 4,077, up 97 points or 2.4%. The HSCEI rose 128 points, or 2.2%, to 6,103. The market turnover was HK$106.37bn. Li Auto (2015) and WuXi AppTec (2359) announced that they were included in the HSI constituents, and their stock prices rose by 2.4% and 3.5% respectively. Chinese financial institutions were called to support Chinese developers to raise equity financing in capital market. Sunac China (1918) and Agile (3383) rose 5.9% and 3.8% respectively.

BOE urges against the early expectations of interest rate cuts

Some officials from the US Fed warned that market should not expect the Fed to cut interest rates too soon. For now, BOE Governor Bailey said on Monday that it is still too early to consider cutting interest rates and that if inflation becomes more sustained. The BOE announced at its latest interest rate meeting that it would keep interest rates unchanged for the second time in a row. The annual rate of the UK Consumer Price Index (CPIH) in October was 4.7%, compared with 9.6% in the same period last year, down nearly half from Oct 2022. However, it should be noted that Restaurant and hotel, Recreation and culture and other goods and services were still sticky. The sum of the three has reached an annual rate of 2.29%, which is still higher than the 2% inflation target. This reflects the situation in the UK is like the United States, the stickiness of service spending makes it difficult to end the high interest rates period in a short run.

All three major U.S. stock indexes recorded gains, with the Nasdaq composite rising 159 points or 1.13% to 14,284; the S&P 500 rising 33 points or 0.74% to 4,547; and the DJIA rising 203 points or 0.58% to 35,151.

Chinese Gov might introduce further policies to protect high-quality real estate companies

According to foreign media reports, Chinese regulatory agencies are drafting a whitelist of real estate developers to further improve financing support for developers. City rumors include 50 state-owned and private developers on the list. Compared with the "systemically important high-quality real estate companies" at the beginning of the year, the number of real estate companies in this whitelist has been expanded. The regulatory agency requires that the financing growth rate obtained by private developers on the list shall not be lower than the average level of the entire industry. Combined with the lower-than-expected fixed investment growth rate announced earlier, the market is worried about the cashflow tightened problem of private developers, especially current property sales have not stabilized. We should concern the sales of first-hand housing in November may not be bottom out.

The net inflow of Hong Kong Stock Connect on Friday was HK$6.11bn on Monday. Among them, Xpeng Motors (9868) had the largest net inflow, reaching HK$346mn; followed by SMIC (0981). Tracker Fund (2800) recorded the largest net outflow of HK$2.3bn; followed by Tencent (0700).