KGI Asia Commentary

HSI fell 115 points on Monday

The Hang Seng Index closed at 19,959, down 115 points or 0.6%. The HSTECH closed at 3,961, down 8 points or 0.2%. The HSCEI fell 31 points, or 0.5%, to 6,733. Market turnover was HK$96.4bn. There is a news that the Shenyang municipal government is considering acquiring 30% shares in Brilliance China (1114), whose share price rose 5.2% yesterday. Chilean Gov planned to nationalize the local lithium industry. Tianqi Lithium’s (9696), which holds local lithium mines, price fell 4.5%.

U.S. 1Q23 earnings result are off to a better start

As of April 21, 18% of the companies in the S&P 500 Index have announced their 1Q23 earnings results. Compared with the past two quarters, 76% companies’ actual earnings could beat market consensus, above the 10-year average of 73%. Meanwhile, companies reported earnings that are 5.8% above consensus, which is below the 10-year average of 6.4%. By sector, 5 out of 11 sectors reported YoY earnings growth, led by Consumer Discretionary and Industrials sectors.

The three major U.S. stock indexes performed differently. The DJIA rose 66 points, or 0.2%, to close at 33,875; the S&P 500 rose 3 points, or 0.1%, to close at 4,137; the Nasdaq composite fell 35 points, or 0.3%, to close at 12,037.

Chinese banks are expected to reduce deposit rate actively soon

There is a rumor that the Chinese regulator will actively guide local banks for the reduction of deposit rates soon. In order to solve the high savings rate in China and stimulate current consumption, some regional self-regulatory mechanisms require regional bank to reduce fixed deposit interest. If the rate cut is not large enough, they will be deducted points. It is estimated that some regional banks will need to follow. At the same time, banks are also required to limit the sales of high-interest structured deposits.