KGI Asia Commentary

HSI rose 31 points on Monday

Due to bad weather, Hong Kong stocks opened at 2 pm yesterday. The Hang Seng Index ended the day up 31 points, or 0.2%, at 17,517; the HSTECH rose 9 points, or 0.2%, to 3,825; the HSCEI rose 24 points, or 0.4%, to 5,998. Today's market turnover was HK$46.8bn. The recent war between Israel and Palestine has once again led to a rise in oil prices. Today, oil-related assets such as F Samsung Crude Oil Futures ETF (3175) and CNOOC (883) rose 3.6% and 2.3%. As a safe-haven asset, gold was also driven by war factors. The SPDR Gold ETF (2840), which tracks the performance of gold prices, rose 1.7%, while Zijin Mining (2899) rose 3.7%.

Fed watched spike in long-term interest rates, which could signal pause in rate hikes.

Federal Reserve Vice Chairman Philip Jefferson said that although inflation is still too high, the authorities have noticed the recent surge in U.S. long-term Treasury yields pushed a higher borrowing costs and reduced liquidity in other asset markets. In addition, he also pointed out that a large amount of corporate debt was refinanced at very low interest rates during the epidemic. However, under the rate hike period, it will have to be refinanced at higher interest rates in the next few years, which may slow down the economy growth.

This year’s National Day box office in China fell short of consensus

China film industry stocks collectively fell yesterday, with the stock prices of Maoyan Entertainment (1896) and Alibaba Pictures (1060) falling by 6.7% and 3.6% respectively. The main reason is that the box office revenue during this year's Golden Week holiday was below than consensus. According to data from Maoyan Professional, the total box office during the National Day period increased by 83% YoY%. However, compared with before the epidemic, the box office this year only recovered to 60%, which makes the market question whether the domestic demand can be stimulated. However, tourism revenue during the National Day holiday this year is indeed higher than in 2019. Domestic tourism revenue this year was RMb753.43bn, 16% higher than in 2019, and the average revenue per person has also increased from RMb651.8 to RMb912.1. This may be explained that Chinese residents focus their consumption on travel expenses. It is believed that catering income can also increase in line with the tourism industry.

The net inflow of Hong Kong Stock Connect was HK$2.043bn, of which Meituan (3690) had the largest net inflow, reaching HK$684mn, followed by China Mobile (0941). Tencent (0700) had the largest net outflow, reaching HK$203mn, followed by Haitong International (0665).