KGI Asia Commentary

HSI rose 211 points on Friday

Last Friday, the Hang Seng Index opened 86 points higher at 19,915 points, the daily increase expanded to 211 points or 1.1% to 20,040 point; the China Enterprises Index rose 60 points or 0.9% to 6,833 point; the Hang Seng Technology Index rose 35 points or 0.8%, to 4,233 point. The market turnover was HK$175.5 bn. China Communications Construction (1800) and China Railway Construction (1186) rose 4.5% and 5.5% respectively. BeiGene (6160) rebounded 6.1% after its stock price plummeted on Thursday.

Highly leveraged companies need to face the challenge of high interest rates

The three major U.S. stock indexes all recorded losses last Friday. The Dow Jones index fell 109 points, or 0.32%, to 34,299 point; the Nasdaq index fell 93 points, or 0.68%, to 13,680 point; the S&P 500 index fell 16 points, a decrease of 0.37%, to 4,410 point. In terms of weekly performance, all three major indexes closed up.

The Federal Reserve skipped raising interest rates but signaled that it will still raise interest rates twice this year. In addition, some investors expect the Fed to be close to finish raising interest rates. In addition, Powell also pointed out that it will still take several years to cut interest rates, said that companies with relatively high leverage in the United States will be tested by the painful reality of the high interest rates. Businesses need to adapt to operate in a market with a dwindling money supply.

Intensive introduction of automobile consumption subsidies

Following the release of the "Retail, Industrial and Fixed Asset Investment" data, the National Development and Reform Commission stated in a press conference last Friday that it will expand consumption, accelerate the implementation of major infrastructure projects, promote modern industries, reform key areas to attract foreign investment, expand youth employment channels and increase the income of urban and rural residents, and agricultural product supply guarantee to promote economic development. Among the above six directions, automobile consumption subsidies have been intensively introduced recently, including local measures such as the issuance of automobile consumption subsidies of RMB 2,000 to 4,000 in Shenyang and the maximum subsidy of RMB 33,000 for consumers in Shenzhen.

Hong Kong Stock Connect had a net outflow of HK$ 9.23 bn on Friday, of which PetroChina (857) had the largest net inflow of HK$125 mn; followed by Kuaishou (1024). Tracker Fund (2800) recorded the largest net outflow of HK$5.03 bn; followed by Hang Seng China Enterprises (2828).