KGI Asia Commentary

Hang Seng Index rose 461 points on Friday

The Hang Seng Index opened 188 points higher on Friday, at 18,020 points, and the index performance further expanded throughout the day to rise by 461 points, or 2.6%, to 18,293 points; the HSCEI Index rose by 160 points, or 2.5%, to 6,532 points; the Hang Seng Technology Index rose by 85 points, or 2.3 points. %, reported at 3,782 points. The total daily turnover of the market was HK$119.4 billion. Benefiting from the rising expectations of interest rate cuts, Hong Kong real estate stocks performed well. The share prices of CK Asset (1113) and Swire Properties (1972) rose 5.5% and 4.3% respectively. Leasing related stocks also performed well, with Link REIT (823) rising 6.4%.

Russell 2000 extends Thursday's performance

U.S. stocks closed higher on Friday. The Dow Jones index rose 247.15 points, or 0.62%, to 40,000.90 points; the Nasdaq index rose 115.04 points, or 0.63%, to 18,398.45 points; it rose 30.81 points, or 0.55%, to 5,615.35 points. point. All three major U.S. stock indexes recorded gains last week, with the Dow Jones rising 1.59%, the Nasdaq rising 0.63%, and the S&P 500 rising 0.55%.

The market is currently paying attention to financial industry earnings results and signs of sector rotation. Judging from the bank results that have been released so far, revenue generally exceeded expectations, but net interest income growth seemed to be under pressure. In addition, market funds gradually shifted from technology stocks to low valuation cyclical stocks including real estate and banks. At the same time, small-cap stocks also benefited from rising market expectations for interest rate cuts, pushing the Russell 2000 Index to continue Thursday's performance. It closed up 1.24% on Friday.

In terms of economic data, according to data released by the U.S. Bureau of Labor Statistics on Friday, final demand PPI increased by 0.2% monthly in June and 2.6% annually, which was slightly higher than market expectations, but did not dampen market expectations for an interest rate cut in September. According to FedWatch Tool reflects a 90% chance of interest rate cuts.

China's trade surplus expands

Last Friday, China announced import and export data for June. Exports increased by 8.6% year-on-year, which was better than market expectations of 8%. Imports fell by -2.3% year-on-year, which was lower than market expectations of 2.8%. Due to the unexpected drop in imports and the continued rise in export performance, the trade surplus expanded to US$99.05 billion in June, which was the third consecutive month that the surplus expanded and was better than the performance in the same period last year.

The net inflow of Hong Kong Stock Connect on Friday was HK$171 million. Among them, Industrial and Commercial Bank of China (1398) had the largest inflow, reaching 490 million Hong Kong dollars; followed by Xiaomi (1810). Meituan (3690) recorded the largest net outflow of HK$320 million, followed by China National Offshore Oil Corporation (883).