KGI Asia Commentary

HSI rose 162 points on Monday

The Hang Seng Index opened 321 points higher, and the upward trend could not be sustained. The HSI closed at 20,078 today, up 162 points or 0.8%. The HSTECH closed at 4,549, up 83 points or 1.9%. The HSCEI rose 90 points, or 1.3%, to 6,899. Market turnover was HK$182.56bn. Today, Haidilao (6862) released a positive profit warning today. The share price rose nearly 12.2% to HK$21.85. In addition, a strong market also drives high-beta stocks to perform well, such as JD.com (9618) and Meituan (3690), which rose 4.2% and 2.7%.

Investors await U.S. nonfarm payrolls

There was no important economic data released in the United States yesterday, and the market is waiting to see the nonfarm payroll released on Friday. The market expects an increase of 184,000, compared with 209,000 last month. If the number of new payrolls can fall back to less than 200,000, this figure will be the lowest in nearly two years since April. Especially, the U.S. was experienced a regional bank crisis during March and April. Therefore, it means that the pressure on the labor market is gradually relaxing, which can provide evidence for the Fed to pause interest rate hikes.

The three major U.S. indexes all recorded gains. The DJIA rose 100 points or 0.28% to close at 35,559; the Nasdaq composite rose 29 points or 0.21% to 14,346; the S&P 500 rose 6 points or 0.15% to close at 4,588.

Hong Kong's 2Q23 GDP growth below consensus

Hong Kong’s economic growth in 2Q23 was significantly lower than expected. The Census and Statistics Department released a preliminary estimate that the GDP growth grew by 1.5% YoY, which was worse than the market’s expected growth of 3.5%, while the growth rate in 1Q23 was 2.9%. The problem is that 2Q22 in Hong Kong was under serious lockdown. The GDP fell by 1.4% YoY during that period, so this year should have the advantage of a low base. Analyzing the components in Hong Kong’s GDP growth, the decline in exports is still the main reason. Total exports of goods fell by 15.3% YoY. Under the uncertain European economy, it is difficult for Hong Kong’s exports in the 3Q23 to rebound significantly. Meanwhile, local consumption is also reduced to 8.5% in the second quarter; domestic investment also declined by 1% YoY due to credit contraction.

Hong Kong Stock Connect had a net outflow of HK$5.96bn on Monday, of which Kuaishou (1024) had the largest net inflow of HK$573mn; followed by Meituan (3690). On the other hand, Hang Seng China Enterprises (2828) recorded the largest net outflow of HK$3.84bn; followed by Tracker Fund (2800).