KGI Asia Commentary
Hang Seng Index rose 125 points on Monday
The Hang Seng Index rose 306 points in the morning and then narrowed to a rise of only 60 points to 16,012. The HSI rose 125 points or 0.8% to close at 16,077; the HSCEI rose 48 points or 0.9% to close at 5,408; the HSTECH rose 17 points or 0.5%, closing at 3,203. The total daily turnover of the market was HK$100.12bn. Chinese concept stocks listed in Hong Kong continued to rise today, with China Tower (0788) rising 8.5%. Guangdong Investment (0270) issued a profit warning, mainly reduced by the impairment of property assets, the company's full-year profit dropped by approximately 35%, and its stock price fell by 10.2%.
HKAA’s new retail bond issuance forecast
The HKAA's first retail bond was listed on February 6, with a coupon rate of 4.25%. Compared with the return to maturity of the HKAA's listed bonds, the coupon rate currently provided is believed to be a reasonable level. We expected that the bond price will be stable on the first day. Investors could consider purchasing it when below 100%. Considering the rates cut in this year, the chance of bond prices rising in the future is high. For short-term investors, if the bond price rises rapidly to 102%, the corresponding return to maturity will be similar to HK Gov bond. It is believed that this may reach an overbought situation.
All three major U.S. stock indexes recorded gains. The Nasdaq composite rose 172 points, or 1.12%, to close at 15,628; the S&P 500 rose 36 points, or 0.76%, to close at 4,927; the DJIA rose 224 points, or 0.59%, to close at 38,333.
U.S. blue-chip corporate bond sales hit record high
As the market expects that the Fed will begin to cut interest rates by the middle of this year at the latest, the U.S. large-cap corporate bond market is also the first to recover. According to Bloomberg, U.S. blue-chip corporate bond sales reached US$176bn in January, breaking the record of US$175bn in January 2017 with the ten-year high. We believe that large cap companies have a competitive edge and lower financial costs. The stocks and bonds of large cap companies are still outperforming this year.
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.
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