KGI Asia Commentary

HSI fell 26 points on Monday

Hang Seng Index closed at 21,164, down 26 points or 0.1%. HSTECH closed at 4,374, up 12 points or 0.3%. HSCEI rose 18 points, or 0.3%, to 7,144. Market turnover was HK$112.1bn. Link REIT (082) proposed a discount of nearly 30% for the "five-for-one" plan to raise about HK$18.8bn. The stock price fell 12.8% today. Wharf Real Estate (1997 announced a negative profit warning, the total revaluation loss more than doubled in the 1H22, and the stock price fell 2.9% when market closed.

market is being optimistic about the global outlook, said from IMF; the EU inflation forecast continued to be lowered

In 2023, the world's major economies are facing high uncertainty about whether inflation will continue to fall, but it is becoming more and more clear that the economy can maintain growth. IMF Director Kristalina Georgieva said that the market is now full of optimism, because the US economy may avoid recession, while China is reopening. Good news continued to come from the EU. The European Commission announced that it has lowered its forecast for the annual rate of inflation in the Euro zone this year from 6.1% previously expected to 5.6%. The inflation rate for next year is expected to be 2.5%, lower than the previous forecast of 2.6%, which is not far from 2% long-term inflation. As energy costs continue to fall, it is believed that the interest rate hike in the euro zone is expected to slow down, and follow the pace of the Fed’s rate hikes and maintain a high interest rate level.

The market expects that the upcoming inflation figures will continue to fall. The three major US stock indexes rose sharply. The Nasdaq index rose 173 points, or 1.48%, to 11,891, the S&P 500 rose 46 points, or 1.14%, to 4,137, and the Dow Jones rose 1.11%, to 34,245.

China the the U.S. representative may meet soon

When China and relations are once again tense due to the "Spy balloon’ incident", according to foreign media reports, US Secretary of State Blinken is considering meeting with Wang Yi, director of the Office of the Central Foreign Affairs Commission, during his attendance at the Munich Security Conference this week. After the Chinese balloon entered the U.S. airspace, Blinken postponed his planned trip to Beijing. Afterwards, the two countries began to blame each other. If the meeting can finally be implemented, it is believed that the risk of conflict between the two countries will be reduced, which will benefit the future trend of Chinese concept stocks.

Hong Kong Stock Connect had a net inflow of HK$3.19bn on Monday, of which Meituan (3690) had the largest net inflow of HK$731mn; followed by Tracker Fund (2800). HKEx (388) recorded the largest net outflow of HK$183mn, followed by ICBC (1398).