KGI Asia Commentary

HSI fell 173 points on Friday

The Hang Seng Index opened 72 points higher and closed at 19,320 points, but the uptrend unable to continue. It fell 173 points or 0.9% to 19,075 points throughout the day; the H-Share Index fell 88 points or 1.3% to 6,541 points; the Hang Seng Technology Index fell 105 points or 2.4%, to 4,273 points. The market turnover was HK$ 96.6 billion. Driven by the results, Alibaba (9988) stock price rose 1% to HK$95.3. On the other hand, Country Garden (2007 fell by 5.8% to HK$0.98, new record low.

U.S. July PPI data beat market expectations

The three major U.S. stock indexes were mixed on Friday. The Dow Jones index rose 105 points, or 0.30%, to 35,281 points; the Nasdaq index fell 93 points, or 0.68%, to 13,645 points; the S&P 500 index fell 5 points, down 0.11% to 4,464 points. Among them, the Nasdaq and the S&P 500 both recorded their second consecutive weekly losses.

In terms of economic data, the United States announced last Friday that the producer price index (PPI) in July rose 0.8% year-on-year, higher than the market's expected 0.7% and the previous value of 0.1%. July PPI rose 0.3% month-on-month. Excluding food and energy, the core PPI rose 0.3% month-on-month, which economists were expected both data to increase by 0.2%. The increase in PPI data in July exceeded market expectations, which may be a signal that future inflation data will rise again, thus consolidating expectations that Fed policymakers will continue to take a hawkish stance, leading to U.S. stocks closed down on Friday.

China's social financing data weaker than expected

In terms of China and Hong Kong, after the market closed last Friday, the People’s Bank of China released financial statistics and social financing data for July, which showed that the scale of new RMB loans and the scale of social financing in July were both low and below market expectations. RMB loans increased by 345.9 billion yuan, a year-on-year decrease of 349.8 billion yuan; social financing scale increased by 528.2 billion yuan, a year-on-year decrease of 270.3 billion yuan.

Hong Kong Stock Connect had a net inflow of HK$ 7.18 bn yuan on Friday. Among them, Tracker Fund (2800) had the largest inflow, reaching 2.06 billion Hong Kong dollars; followed by Hang Seng China Enterprises (2828). Li Ning (2331) recorded the largest net outflow of approximately HK$70 million.