KGI Asia Commentary
HSI fell 353 point on Tuesday
The Hang Seng Index fell 353 points or 1.8% to 19,184 on Tuesday. HSTECH fell 125 points or 2.8% to 4,374 and HSCEI fell 146 points or 2.2% to 6,587. Daily market turnover was HK$104.bn.
Dow falls more than 150 points
The Dow ended lower on Tuesday, but pared some losses, as bank stocks fell after credit rating agency Moody's downgraded the debt ratings of several U.S. banks amid concerns about profit pressure. The Dow Jones Industrial Average fell 0.5%, or 158 points, the S&P 500 lost 0.4% and the Nasdaq lost 0.8%. Big tech stocks such as Meta Platforms and Microsoft weighed on technology stocks as recent concerns about valuations and rising U.S. Treasury yields persisted. Shares of semiconductor equipment maker Novanta Inc fell more than 11% after it cut its annual guidance, expecting headwinds such as lower spending on IT infrastructure and a weakening Chinese economy to intensify in the second half of the year. Shares of Beyond Meat fell more than 14% after the company reported lower-than-expected second-quarter revenue due to lower demand for plant-based meat in the U.S. At the moment, 89% of S&P 500 companies have reported quarterly results, with about four-fifths of them beating Wall Street expectations, according to FactSet.
Moody's downgrades 10 U.S. banks
Moody's downgraded the ratings of 10 banks by one notch and put six banks, including US Bancorp and State Street, on downgrade watch. The ratings agency said “many banks’ Q2 results showed growing profitability pressures that will reduce their ability to generate internal capital. This comes as a mild U.S. recession is on the horizon for early 2024 and asset quality looks set to decline from solid but unsustainable levels, with particular risks in some banks’ commercial real estate (CRE) portfolios.”
Hong Kong Stock Connect had a net inflow of HK$7.3bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$2.2bn; followed by HSCEI ETF (2828). Li Auto (2015) recorded the largest net outflow at HK$0.23bn, followed by Kuaishou (1024).
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