Daily Investment Strategy
Hang Seng Index closed on Monday
The Hang Seng Index was closed for one day due to the public holiday yesterday.
Survey finds housing crisis most affecting U.S. financial stability
The US Federal Reserve releases its semi-annual financial stability report, which is surveyed by market participants, academics, and researchers. When it comes to the most dangerous factor in the U.S. financial system, three-quarters believe it is related to the collapse of the commercial property market, compared with only half of those surveyed in the previous survey. Such factor is caused by the Federal Reserve's high interest rate policy. Combined with the fact that Cleveland Fed President Loretta Mester just emphasized that the authorities will keep interest rates at a high level for a long time and may even need to increase interest rates this year. Although she does not have the right to vote in FOMC this year, such comments made by the committee members may reflect that Fed has a strong attitude towards high interest rate policies.
The three major U.S. stock indexes had different trends. Only the Nasdaq composite rose 34 points, or 0.27%, to close at 13,018; the S&P 500 fell 7 points, or 0.17%, to close at 4,217; the DJIA fell 190 points, or 0.25%, to close at 32,936.
Huijin’s increase in ETF holdings may create a bottom for A-shares
Yesterday, the Hong Kong stock market was closed due to holiday. Meanwhile, A-shares continued to perform weakly yesterday. The Shanghai Composite Index fell for the fourth consecutive day, only 54 points away from the "measures bottom" in October last year. Huijin announced that, after increasing its holdings in the four major banks, it bought ETFs and will continue to increase its holdings in the future. Compared with the earlier purchases of the four major domestic bank stocks, purchase of ETFs is more effective to support stock market. Although the sentiment of Chinese economy, especially the real estate market, is still sluggish, if the mainland sets up stabilization funds (like those of foreign countries), it will have a postive impact on the A stock market. However, investor should aware that the scale must be similar to the over one trillion RMB in 2015.
Hong Kong Stock Connect had a net outflow of HK$1.87bn on Thursday, of which Meituan (3690) had the largest inflow, reaching HK$500mn; followed by SMIC (0981). Tracker Fund (2800) recorded the largest net outflow of HK$517mn; followed by CNOOC (0883).
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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