KGI Asia Commentary
HSI fell 260 points on Friday
The Hang Seng Index opened 52 points lower on Friday, at 16,159 points, and the day's decline widened to 260 points, or 1.6%, to 15,952 points; the H-Share Index fell 108 points, or 1.9%, to 5,360 points; the Hang Seng Technology Index fell 124 points, or 3.7%, reported 3,186 points. The total market turnover was HK$131.6 billion. In the Mainland, 115 domestically produced online games received approval this month, but Tencent (700) followed the market and retreated 2.7%. Last Friday, Lenovo (992) suffered a 9.2% share price fall after an article in the US Newsweek stated that the US government offices should ban the use of Lenovo computers.
PCE continued to slow in December
U.S. stocks closed mixed on Friday. The Dow rose 60.30 points, or 0.16%, to 38109.43 points; the Nasdaq fell 55.13 points, or 0.36%, to 15455.36 points; the S&P 500 fell 3.19 points, or 0.07%, reported 4890.97 points. Last week, the S&P 500 index rose 1.06%, the Dow rose 0.65%, and the Nasdaq rose 0.9%. All three major stock indexes posted gains for the third consecutive week. In terms of sectors, chip stock Intel released disappointing first-quarter guidance, and its stock price closed sharply down 11.9%.
In terms of economic data, the personal consumption expenditures price index (PCE), which the Federal Reserve focuses on, rose 0.2% month-on-month in December, in line with market expectations. Excluding food and energy factors, core PCE increased by 2.9% year-on-year, slightly lower than market expectations. The lower-than-expected growth rate strengthens the market's view that subsequent inflation trends will continue to slow down, and at the same time increases the possibility of a soft landing for the economy, causing the market to reduce its bets on the Federal Reserve's interest rate cut in March. Market focus turns to next week's Federal Reserve's January monetary policy meeting.
Industrial enterprise profit decline narrows to 2.3% in 2023
On Saturday, the National Bureau of Statistics announced that the profits of industrial enterprises fell by 2.3% year-on-year, 2.1 percentage points narrower than the decline in the first 11 months; while the year-on-year growth rate of revenue expanded by 0.1 percentage points from the first 11 months to 1.1%; The operating profit margin for the year was 5.76%, a slight decrease of 0.06 percentage points from the first 11 months. The overall operating profit margin continued to rebound but was still lower than 2022’s level.
Hong Kong Stock Connect saw a net inflow of HK$2.15 billion on Friday, of which Tracker Fund (2800) had the largest inflow, reaching HK$1.33 billion; followed by Hang Seng China Enterprises (2828). WuXi Biologics (2269) recorded the largest net outflow of HK$264 million, followed by China National Offshore Oil Corporation (883).
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