KGI Asia Commentary

Hang Seng Index fell 32 points on Friday

The Hang Seng Index opened 190 points higher at 15,756 points, the index once rose to nearly 347 points, but fell 32 points to 15,533 points on Friday. The H-Share Index fell 4 points, or 0.1%, to 5,219 points; the Hang Seng Technology Index fell 22 points, or 0.7%, to 3,044 points. The total daily turnover of the market was HK$103.1 billion. In terms of pharmaceutical stocks, WuXi AppTec (2359) planned to spend RMB 1 billion to repurchase A shares, falling 21% on the day. WuXi Biologics (2269) and WuXi XDU (2268) fell 20% and 16.7% respectively. In terms of technology stocks, Tencent (700) bucked the trend and rose 2.8% to HK$279.4.

U.S. nonfarm payrolls data for January far exceeded expectations

U.S. stocks closed higher on Friday, led by technology stocks. The Dow and S&P 500 reached new highs. The Dow Jones index rose 134 points, or 0.35%, to 38,654 points; the Nasdaq rose 267 points, or 1.74%, to 15,629 points; the S&P 500 index rose 52 points, or 1.07%, to 4,959 points. All three major stock indexes recorded gains this week. The Dow rose 1.43% for the week, the S&P 500 rose 1.38%, and the Nasdaq rose 1.12%. All three recorded gains for the fourth consecutive week.

U.S. economic data released on Friday once again cooled market expectations for an interest rate cut in March. The U.S. Bureau of Labor Statistics reported that total non-farm employment in the United States increased by 353,000 in January, compared with 333,000 in December last year. The increase is similar, which is the largest increase since January 2023. It is estimated to increase by 185,000, compared with the previous value of 216,000. The U.S. unemployment rate in January was 3.7%, expected to be 3.80%, and the previous value was 3.70%. The chance of keeping interest rates unchanged in March is 62%.

In addition, the University of Michigan's one-year inflation forecast is 2.9%, compared with the previous value of 3.1%; the consumer confidence index also continues to rise, rising to 79 from 69.7 last month.

Fed Governor Bowman warns against cutting interest rates too early

After the release of non-farm payrolls data that far exceeded market expectations, Federal Reserve Governor Michelle Bowman said she expected U.S. inflation continue to fall, but she also expressed concern about the upward pressure on prices brought about by rising wages, and warned against cutting interest rates too early. Bowman pointed out that lowering the policy rate too early could lead to the need for further interest rate hikes in the future, which would make it longer for inflation to fall back to 2%.

Hong Kong Stock Connect saw a net outflow of HK$3.98 billion on Friday, of which WuXi AppTec (2359) had the largest inflow, reaching HK$218 million; followed by WuXi Biologics (2269). Tencent Holdings (700) recorded the largest net outflow, at HK$1.18 billion; followed by Tracker Fund (2800).