KGI Asia Commentary

Hang Seng Index rose 154 points on Tuesday

The Hang Seng Index rose 154 points or 0.8% to 20,485 on Tuesday. HSTECH rose 10 points or 0.2% to 4,248 and HSCEI rose 56 points or 0.8% to 6,950. Daily market turnover was HK$126.8bn.

Markets await upcoming inflation data

The S&P 500 ended flat on Tuesday as investors are waiting for key inflation data due later in the week. The S&P was little changed at 4,108.94, down 0.004%. The Dow Jones Industrial Average rose 98.27 points, or 0.29%, to 33,684.79. Meanwhile, the Nasdaq Composite fell 0.43% to 12,031.88. Cyclicals outperformed the broader market, even as tech lagged. Energy stocks led gains in the S&P 500, with the sector up about 0.9%. Technology stocks underperformed the broader market index, with the information technology sector down 1%. Among individual stocks, shares of used-car retailer CarMax rose 9.6% after the company reported a better-than-expected quarterly profit. Shares of biotech company Moderna fell 3% after it said it would delay production of its flu vaccine. JPMorgan Chase, Citigroup, Wells Fargo and First Republic Bank will officially kick off their quarterly earnings season on Friday. Elsewhere, shares of big tech companies bounced off their lows but remained mostly under pressure, with Microsoft down 2% amid concerns over whether regulators will scrutinize services that generate artificial intelligence such as ChatGPT. Baidu and ADRs of Alibaba Group, which are launching artificial intelligence-generated services, also closed lower.

China’s both TSF and RMB loans growth were more than expected

The People's Bank of China (PBOC) announced that, in March 2023, the aggregate financing to real economy amounted to RMB5.38 trillion, representing a YoY increase of RMB707.9 billion and beating the market expectation of RMB4.5 trillion. China's RMB loans expanded by RMB3.89 trillion, which was RMB749.7 billion more than the loan growth in the year-ago period and ahead of the market forecast of RMB3.3 trillion.

IMF cuts GDP forecasts

In the short term, the International Monetary Fund expects the global economy to grow by 2.8% this year and 3% in 2024, slightly lower than the forecast released by the organization in January. The new estimate is that this year and next will be cut by 0.1 percentage points. “The anemic outlook reflects the tight policy stances needed to bring down inflation, the fallout from the recent deterioration in financial conditions, the ongoing war in Ukraine, and growing geoeconomic fragmentation,” the IMF said in the same report. Looking at some of the regional breakdowns, the IMF sees the U.S. economy growing 1.6 percent this year and the euro zone 0.8 percent. However, the UK is expected to contract by 0.3%. China's GDP is expected to grow by 5.2% in 2023, and India by 5.9%.

Hong Kong Stock Connect had a net inflow of HK$2.16bn on Tuesday, of which Sensetime (20) had the largest net inflow, reaching HK$0.58bn; followed by WuxiBio (2269). Tencent (700) recorded the largest net outflow at HK$1.47bn, followed by Yankuang Energy (1171).