KGI Asia Commentary
Hang Seng Index Rose 34 Points Last Friday
The Hang Seng Index opened 143 points higher and opened at 20,717. The half-day upward trend was soften and the gains narrowed to 34 points, closed at 20,609 point. The H-Share rose 7 points to 7,106 point; the HSTECH Index rose 15 points to 4,597 point. Market turnover was HK$ 85.1 bn. Xtep (1368) fell 4.7% to HK$13.22 after discounted share placing by the shareholder. Yum China (9987) rose 1.1% to HK$373.8 after being interviewed by the Regulatory Authority over Pizza Hut's food safety issues.
US Stock Retreated last Friday
The U.S. services PMI fell to a 26-month low of 47 in July while composite index also fell to 47.5, reflecting US business activities entered into contraction period. Besides, Snap posted a weak quarterly sales growth, share price fell sharply last Friday, also triggered selling pressure on social media and tech stock. After the rally in the past few trading days, US stock retreated last Friday.
The three major US stock index fell 0.4-1.9% respectively last Friday, of which, the Nasdaq index suffered the most. On the other hand, the weak US PMI triggered concerns on US economic outlook, 10 Year US treasury yield fell 14 basis points to 2.77%. Besides, given economy outlook deteriorates as well as Libya resumes oil export, oil price fell 1.7% to US$94.7 per barrel.
HK Stock Market Short Term Outlook Sluggish; Policy Support Green Home Appliance
US and Europe continued to aggressively hike rate, while latest PMI data showed business activities slowed down sharply at the same time, which is not favor to global stock market. On the other hand, China homebuyer refuse to repay mortgage payment for unfinished property projects, as well as the epidemic rebound will also impact China stock sentiment. Hong Kong stock will consolidate today, Hang Seng Index initial resistance is 10 Day SMA(20,740).
Hong Kong Stock Connect net inflow further narrowed to HK$602mn last Friday, of which, Xtep(1368) and Tencent (0700) recorded most net inflow, while Wuxi Bio (2269) and China Mobile (0941) suffered most net sell. In fact, although southbound funds continue to net buy Tencent recently, but its share price just range trade, initial support at recent low of HK$321. On the other hand, China will launch measures to support consumption of green home appliances, related stocks such as market leader Haier Smarthome (6690) will be benefit, could accumulate during weakness.
Chua Tit Hong 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/ADO008/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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