KGI Asia Commentary
HSI rose 343 points on Monday
The Hang Seng Index closed at 19,971, up 343 points or 1.8%. The HSTECH closed at 3,925, up 51 points or 1.3%. The HSCEI rose 116 points, or 1.7%, to 6,780 points. Market turnover was HK$101.6bn. 3 more stocks are going to join HSI as members, who are China Resources Power (0836), Zijin (2899), JD Health (6618) and Ctrip (0996). Zijin, JD Health and Ctrip rose between 1.9% and 2.3%. Only China Resources Power shares fell 1.5%. KWG (1813), a mainland property developer, announced that it failed to pay the principal and interest of about US$120mn notes, and its share price fell 11.9%.
U.S. rate cut very little chance in 2023, and even a chance of a rate hike
There were two pieces of news yesterday that significantly reduced the chance of interest rate cut in this year. The first one is the President of the Federal Reserve Bank of Atlanta, Bostic, clearly stated that the Fed will not cut interest rates this year. If inflation does not decline rapidly, the Fed may consider to raise interest rates. The second news is that the U.S. consumer credit market is still extremely hot. The New York Fed announced that 1Q23 total U.S. consumer loans rose to a record high level of US$17.05tn. Compared with pre covid-19 stage, the loan volume increased by US$2.9tn. These two news items reflect that the Federal Reserve is still waiting the clear downward trend of inflation rate before the consideration of rate cut.
The three major U.S. indexes all recorded gains. The Nasdaq rose 80 points or 0.66% to close at 12,365; the S&P 500 rose 12 points or 0.3% to 4,136; and the DJIA rose 47 points or 0.14% to 33,348.
April electricity consumption in China rose by 8.3% YoY while fell by 6.4% MoM
To measure the degree of economic activity in China, apart from the official economic figures such as the PMI, social electricity consumption data is also one of the indicators. The National Energy Administration released the April electricity consumption data, in which the electricity consumption was 690.1bn kwh. Although it increased by 8.3% YoY, compared with the 736.9bn kwh in March, it fell by 6.4% MoM. This figure is consistent with the contraction of the manufacturing PMI in April.
Hong Kong Stock Connect had a net inflow of HK$1.65bn on Monday, of which Tencent Holdings (0700) had the largest net inflow of HK$1.19bn; followed by Meituan (03690). China Construction Bank (0939) recorded the largest net outflow of HK$520mn, followed by Li Auto (2015).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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