KGI Asia Commentary

HSI rose 94 points on Friday

The Hang Seng Index opened 78 points higher on Friday, closing at 20,423 points. The index turned down nearly 50 points at most, and recovered its lost ground throughout the day and rose 94 points to close at 20,439 points; It rose 4 points, or 0.1%, to 4,164. The market's full-day turnover totaled HK$ 108.4 bn. Sunac (1918) resumed trading on the second day, and its share price continued to fall by 7.4% to HK$1.89. Gold stocks continued to perform well as the market hoped that the Fed's interest rate hike pressure would ease. Zijin Mining (2899) and Shandong Gold (1787) rose 2.8% and 3.7% respectively.

U.S. banks post strong earnings, but retail disappoints

U.S. stocks closed down on Friday. The Dow Jones index fell 143 points, or 0.4%, to 33,886 points; the Nasdaq index fell 43 points, or 0.3%, to 12,123 points; the S&P 500 index fell 8 points, or 0.2% %, at 4,137 points.

Last Friday, a number of large banks announced their financial reports. Banks such as JP Morgan Chase, Citigroup, and PNC Financial all exceeded market expectations, driving the performance of the financial industry in S&P's 11 industry categories to rise by 1%. In addition, JPMorgan Chase CEO Jamie Dimon said that he should be prepared to maintain high interest rates for a longer period of time, and it is expected that more small banks may fail. In terms of future interest rate hikes, U.S. Treasury Secretary Yellen said that due to earlier bank failures, with the increase of bank cautiousness, there is a potential incentive to tighten lending, which may replace the need for further interest rate hikes by the Federal Reserve.

Even with the better bank results, retail sales data on Friday showed a larger-than-expected drop in retail sales as consumers cut back on purchases of cars and other staples, possibly suggesting the economy lost momentum towards the end of the first quarter. And the initial value of the University of Michigan's one-year inflation expectation in April rose from 3.6% to 4.6%, the largest increase since 2021, causing market concerns.

High-speed rail Labor holiday pre-sales show signs of being sold out in some popular areas

The Labor holiday is approaching, and air tickets and high-speed rail tickets are on pre-sale, focusing on domestic travel. According to Ctrip data, as of April 14, the price of domestic one-way flights is 20% higher than that of the previous Spring Festival holiday, which is higher than the same period in 2019. up to 54%. On the other hand, Saturday (15th) is the first day of pre-sale of high-speed rail during the Labor holiday. At present, some popular areas such as Shanghai-Nanjing and Guangzhou-Shanghai have begun to show signs of being sold out. Release on the demand for tourism, which could benefit consumption.

Hong Kong Stock Connect had a net inflow of HK$ 3.35 bn on Friday, among which China Mobile (941) had the largest net inflow of HK$580 mn, followed by SMIC (981). Tracker Fund (2800) recorded the largest net outflow of HK$300 mn, followed by China Construction Bank (939).