KGI Asia Commentary

Hang Seng Index fell 132 points on Monday

Hang Seng Index opened 185 points lower and the decline intensified. It closed at 16,000 points before noon, down 333 points. The decline has narrowed significantly in the afternoon, and finally closed at 16,201, down 132 points, or 0.8%; the HSCEI fell 65 points, or 1.2%, to close at 5,532; the HSTECH fell 39 points, or 1.1%, to close at 3,666. The total trading volume of the market for the whole day was HK$98.73bn. Li Ning (2331) announced that it would purchase the entire commercial building of Henderson Land (0012) for HK$2.2bn. The former's stock fell 14.3%. Liu Qiangdong, chairman of JD.com (9618), said that the group's foundation is still there, but it was unable to stabilize the stock price, which fell 6.3% for the day. Fellow JD.com Health (6618) also fell 2.3%. The Macau government expects that the full-year gambling revenue will be better than expected. Macau's gambling stocks performed individually. Sands (1928) and Wynn (1128) rose 0.5% and 0.2% respectively, while Galaxy Entertainment (0027) fell 1.8%.

U.S. 10-year Treasury bond index sales had mixed results

The U.S. Treasury Department has just announced an auction of 10-year Treasury bonds with a total value of US$37bn. The high yield is 4.296% and the bid to cover is 2.53x, which is higher than six-auction average 2.49x. Overall the result was mixed while this bid to cover ratio was higher than average level. However, international buyer numbers were below the six-month average, while the tail was positive 1.4 basis points, higher than six-auction average 0.9 basis points. It reflects the demand for the 10-year Treasury note has still not recovered yet. FOMC meeting is coming in this week, and the market may be waiting for any insight from Powell after the post-meeting press conference.

All three major U.S. stock indexes recorded gains, with the DJIA rising 157 points or 0.4% to close at 36,404; the S&P 500 rising 18 points or 0.4% to close at 4,622; and the Nasdaq composite rising 28 points or 0.2% to close at 14,432.

U.S. one-year inflation expectations hit new low in 2021

This week, in addition to the last FOMC meeting in 2023, the market is also waiting for the Nov Consumer Price Index (CPI). Although the market believed that the current interest rate hike cycle is basically over, and the inflation figures reflect the timing and extent of rate cuts next year. According to a survey by the Federal Reserve Bank of New York, the one-year inflation expectation in the U.S. has dropped to 3.4%, a new low since April 2021. The expected fall in inflation reflects the fall in energy prices, especially the weakening international oil prices and the upcoming warm winter.

Hong Kong Stock Connect was recorded a net inflow of HK$5.59bn on Monday. Among them, Tracker Fund (2800) had the largest inflow, reaching HK$3bn; followed by Hang Seng China Enterprises (2828). Tencent (0700) recorded the largest net outflow of HK$190mn; followed by Meituan (3690).