KGI Asia Commentary

Hang Seng Index fell 150 points on Friday

The Hang Seng Index opened 179 points higher on Friday, at 18,409 points, but fell 150 points, or 0.8%, to 18,079 points; the HSCEI Index fell 70 points, or 1.1%, to 6,392 points; the Hang Seng Technology Index fell 62 points, or 1.6% to 3,690 points. The quarterly review of the MSCI index came into effect, and the total market turnover rose to HK$191.7 billion. AKESO (9926) stock price surged 37.5%, driven by news of significant clinical trial benefits. Alibaba Health (241) shares hit a new high this year and then softened, fell 8.6%. In addition, the share price of coal stock China Shenhua (1088) reached a new high, rose 1.2% to HK$37.95.

US April PCE data met expectations

U.S. stocks closed mixed on Friday. The Dow rose 574.84 points, or 1.51%, to 38686.32 points; the Nasdaq fell 2.06 points, or 0.01%, to 16735.02 points; the S&P 500 index rose 42.16 points, or 0.81%, reported 5277.64 points. All three major stock indexes recorded losses last week, with the Dow fell 0.96%, the Nasdaq fell 1.1%, and the S&P 500 fell 0.51%.

Last Friday, US index managed to recover it loss at market close, mainly because the rate cut expectation change. Last Friday, the United States announced that personal consumption expenditures (PCE) in April rose 0.3% month-on-month and 2.7% year-on-year, both in line with market expectations; while core PCE rose 2.8% year-on-year, in line with expectations and rose 0.2%, MoM, was lower than market expectations of 0.3%. The inflation data did not move against the 2% target set by Fed, send positive signal to the market. In addition, in terms of personal income and expenditure growth in the United States, income increased by 0.3% month-on-month, in line with expectations, while expenditures fell by 0.2% month-on-month, lower than market expectations of 0.3% and the previous value of 0.7%, might indicate consumption slowed down.

China’s PMI index has mixed results

China's PMI index released last Friday was mixed, with the manufacturing PMI falling back to the contraction range to 49.5, lower than market expectations and the previous level. Among them, new orders, new export orders and orders on hand are all in the contraction range, reflecting the current issue of insufficient or unstable market product demand, which will put pressure on subsequent revenue growth for manufacturer. For the non-manufacturing PMI was also lower than market expectations, recorded 51.1, but it still remained in the expansion range and only fell slightly by 0.1 from the previous value, the component of service PMI, the service industry business activity index was 50.5, compared with the previous value of 50.3. It continues to hover on the edge of the dividing line between boom and bust, but still with improvement. As the July summer holiday gradually approaching, the service PMI index in June may rise further.

Hong Kong Stock Connect saw a net inflow of HK$9.9 billion on Friday, of which Tencent Holdings (700) had the largest inflow, reaching HK$1.87 billion; followed by China Mobile (941). CSOP Hang Seng Technology ETF (3033) recorded the largest net outflow of HK$300 million; followed by Agricultural Bank of China (1288).