KGI Asia Commentary

HSI rose 151 points on Monday

The Hang Seng Index opened 59 points lower and then rose 134 points to exceed 19,000. The HSI rose 151 points, or 0.8%, to close at 19,115 today; the HSCEI rose 42 points, or 0.6%, to close at 6,761; the HSTECH rose 56 points, or 1.4%, to close at 4,018. The total daily turnover of the market was HK$147.24bn. Chinese technology stocks generally rose, with Alibaba (9988) and Tencent (0700) rising 4.1% and 1.9% respectively. Ping An of China (2318) reduced its holdings in HSBC (0005). HSBC still rose 0.1% with the market today.

More economists expect rate cuts this September

Regarding the direction of U.S. monetary policy in 2H24, there is a clear gap between the expectations of FOMC members and economists. Some members have downplayed the market's expectations for a rate cut this year in recent statements, mainly because the cooling of inflation has not been as strong as expected. However, more economists still believe that interest rates will be cut starting in September this year. Nearly 2/3 of 108 economists polled by Reuters over the past week expected the Fed to start cutting interest rates in September, up from nearly half last month. More than half of the respondents believe there will be two interest rate cuts this year.

The three major U.S. stock indexes developed individually. Among them, only the Nasdaq composite rose 47 points, or 0.3%, to close at 16,388; the S&P fell 1 point, or 0.02%, to close at 5,221; the DJIA fell 81 points, or 0.2%, to close at 39,341.

One-year inflation expectations heat up in April

Currently, significant numbers of FOMC members had a hawkish stance and are skeptical about whether interest rates can be cut this year, while U.S. consumers also expect inflation to heat up. According to a survey by the Federal Reserve Bank of New York, U.S. consumers' expectations for inflation increased in April and will rise at an annualized rate of 3.3% in one year, the highest level since November last year. Previously, inflation expectations were only up and down 3%. At the same time, the health of household’s balance sheets has begun to show signs of deterioration, and the proportion of consumers who expected to be unable to repay their minimum debt in the next three months has reached pre-covid levels.

Hong Kong Stock Connect recorded a net inflow of HK$8.81bn on Monday, of which Tracker Fund (2800) had the largest inflow, reaching HK$2.86bn; followed by ICBC (1398). Tencent (0700) recorded the largest net outflow of HK$480mn, followed by Kuaishou (1024).