KGI Asia Commentary

HSI fell 387 points on Tuesday

The Hang Seng Index fell 387 points or 2.1% to 18,456 on Tuesday. HSTECH fell 111 points or 2.6% to 4,193 and HSCEI fell 136 points or 2.1% to 6,396. Daily market turnover was HK$101.5bn.

Dow ends lower as Treasury yields surge

The Dow ended lower on Tuesday, dragged down by rising U.S. Treasury yields, but gains in energy stocks capped losses as oil prices climbed after major producers agreed to extend oil production cuts. The Dow Jones Industrial Average fell 0.6% to 195 points, the Nasdaq fell 0.1% and the S&P 500 fell 0.4%. Energy stocks rose more than 1% after Saudi Arabia detailed plans to extend production cuts until the end of 2023, while Russia said it would extend a 300,000 barrels per day export cut until the end of this year. On the other hand, Airbnb and Blackstone Group were in rally mode, with both stocks set to be added to the S&P 500 on September 18.

Fed Governor Christopher Waller agrees the central bank can ‘proceed carefully’ on interest rates

Federal Reserve Governor Christopher Waller said on Tuesday that the latest round of economic data will buy the Fed some time to decide whether it needs to raise interest rates further to control inflation. Waller is generally considered one of the more hawkish members of the FOMC. While he was encouraged by recent reports on price trends, he said they also showed the Fed's ability to keep interest rates on hold until it is sure inflation is under control. According to CME Group tracking of futures pricing, the possibility that the Federal Reserve will not raise interest rates at its September 19-20 meeting is almost certain. However, there is more than 40% chance of a rate hike from October to November, indicating some uncertainty.

Hong Kong Stock Connect had a net inflow of HK$11.9bn on Tuesday, of which Tracker Fund (2800) had the largest net inflow, reaching HK$5.8bn; followed by CSOP HS TECH (3033). SMIC (981) recorded the largest net outflow at HK$0.68bn, followed by Li Auto (2015).