KGI Asia Commentary

Hang Seng Index fell 83 points on Friday

The Hang Seng Index weakened last Friday. It opened 12 points higher at 15,404 points. It fell 83 points or 0.5% to 15,308 points; the H-Share Index fell 45 points or 0.9% to 5,127 points; Hang Seng Technology The index fell 46 points, or 1.4%, to 3,130 points. The total daily turnover of the market was HK$96.9 billion. NetEase (9999) was reported to have withdrawn its lawsuit against Blizzard software copyright case, and its stock price rose 1.3%. The China Passenger Car Association expects that the retail sales of new energy vehicles will decrease by 15.3% month-on-month this month, and electric vehicle stocks Leapmotor (9863) and Xpeng (9868) fell more than 4%.

U.S. 1-year inflation expectations continue to fall

U.S. stocks closed higher on Friday, with the Dow and S&P 500 hitting record highs. The Dow Jones Index rose 395.19 points, or 1.05%, to 37863.80 points; the Nasdaq Index rose 255.32 points, or 1.70%, to 15310.97 points; the S&P 500 Index rose 58.87 points, or 1.23%, to 4839.81 point. Last week, the Dow rose 0.72%, the Nasdaq rose 2.26%, and the S&P 500 rose 1.17%.

In terms of economic data, the University of Michigan consumer confidence index in the United States rose sharply to 78.8 in January, which was higher than market expectations of 70.1 and the previous value of 69.7. At the same time, the one-year inflation expectation further dropped to 2.9% from the previous value of 3.1%. It is a new low since the peak of inflation expectations in 2022. In addition, existing home sales in the United States in December fell 1% month-on-month to 3.78 million units, lower than market expectations of 3.82 million units. It was also the month with the lowest existing home sales performance in 2023.

Market expects interest rate cut delay to May

Last week, some Fed officials continued to be hawkish. Among them, San Francisco Fed President Mary Daly pointed out that more data is needed to prove that the inflation rate has returned to the 2% target. At present, it is still too early to cut interest rates. Moreover, the market also took into account that the current consumer confidence index continues to be high, and the market began to bet on delaying the interest rate cut to May, with a probability of 50.9%. The previous market expectation of an interest rate cut in March has dropped to 46.2%.

Hong Kong Stock Connect saw a net inflow of HK$1.03 billion on Friday, with China Mobile (0941) having the largest net inflow of HK$226 million, followed by Meituan (3690). Tracker Fund (2800) had the largest net outflow, reaching HK$510 million, followed by China Shenhua (1088).