KGI Asia Commentary

Hang Seng Index fell 360 points on Wednesday

The Hang Seng Index fell 360 points or 2.1% to 16,993 on Wednesday. HSTECH fell 90 points or 2.3% to 3,910 and HSCEI fell 138 points or 2.3% to 5,818. Daily market turnover was HK$130.1bn.

Dow ends Wednesday near flat

Dow gave up some of its gains on Wednesday to end flat, but was still on track to rise sharply in November on renewed optimism that the economy will avoid recession and continued optimism that the Federal Reserve will cut interest rates early next year. The Dow Jones index rose 13.44 points to close at 35,430.42 points, an increase of 0.04%. The S&P 500 fell 0.09% to close at 4,550.58 points, and the Nasdaq fell 0.16% to close at 14,258.49 points. Major market indexes are almost closing in on the 2023 highs reached over the summer thanks to the November rally. To reach new closing highs in 2023, the Dow would need to rise around 0.5%. The S&P is about 0.8% below this year's closing high, and the Nasdaq is about 0.7% below this year's closing high. General Motors shares rose 9% as the automaker detailed plans to launch a $10 billion accelerated stock buyback program and raise next year's quarterly dividend by 33% as it looks to return "significant capital" to shareholders. Dollar Tree shares rose more than 4% after the company lowered its full-year sales forecast and said it was reviewing its Family Dollar business.

Fed Beige Book shows slowing US economy

On balance, economic activity slowed since the previous report, with four Districts reporting modest growth, two indicating conditions were flat to slightly down, and six noting slight declines in activity. Retail sales, including autos, remained mixed; sales of discretionary items and durable goods, like furniture and appliances, declined, on average, as consumers showed more price sensitivity. Travel and tourism activity was generally healthy. Demand for transportation services was sluggish. Manufacturing activity was mixed, and manufacturers' outlooks weakened. Demand for business loans decreased slightly, particularly real estate loans. Consumer credit remained fairly healthy, but some banks noted a slight uptick in consumer delinquencies. Agriculture conditions were steady to slightly up as farmers reported higher selling prices; yields were mixed. Commercial real estate activity continued to slow; the office segment remained weak and multifamily activity softened. Several Districts noted a slight decrease in residential sales and higher inventories of available homes. The economic outlook for the next six to twelve months diminished over the reporting period.

Following strong third-quarter GDP growth data, calls for a "soft landing" rise

Data released on Wednesday showed that the U.S. third-quarter gross domestic product (GDP) was revised to grow by 5.2%, which was better than the originally announced increase of 4.9% and higher than expected. Economic growth came mainly from revisions in government spending and investment in nonresidential construction. At the same time, the U.S. core personal consumption expenditures deflator (Core PCE) in 3Q23 increased by 2.3% from the previous quarter, which was lower than the 3.7% increase in the second quarter and lower than the preliminary estimates of 2.4%.

Hong Kong Stock Connect had a net outflow of HK$0.81bn on Wednesday, of which Meituan (3690) had the largest net inflow, reaching HK$2.88bn; followed by China Mobile (941). Tracker Fund (2800) recorded the largest net outflow at HK$2.95bn, followed by CSOP HS TECH (3033).