KGI Asia Commentary

HSI fell 134 points on Friday

The Hang Seng Index opened 129 points lower at 19,920 points. The trend were volatile and once rose by as much as 69 points. The market closed fell 134 points or 0.7% to 19,916 points on Friday; China Enterprises Index fell 42 points or 0.6% to 6,795 point; the Hang Seng Technology Index rose 26 points or 0.6% to 4,225 point. The market turnover was HK$123 bn. Lenovo (992) continued to perform well and its share price rose 8.3% to HK$8.79. Tencent (700) rose 0.3% to HK$376.8 after the earning results. The highest price was HK$387.4.

Deutsche Bank's credit default swap basis rises, the market continues to worry about banks

Last Friday was another day of banking crisis panic. This time the focus was on investors worrying that Deutsche Bank (DB) is one of the potential crises after Credit Suisse (CS). The CDS basis of DB began to rise sharply, reflecting the market's concerns about the health of the European banking industry. Afterwards, the German Chancellor and the President of the European Central Bank spoke in an attempt to ease market concerns about Deutsche Bank. Deutsche Bank (DB) shares fell sharply narrowed to 3.1%. Even though the central banks of various countries pointed out that the country's banking system has sufficient liquidity, a series of banking incidents in European and American banks in recent weeks still cannot provide investors with confidence, and subsequent banking incidents will continue to bring greater volatility to the market.

U.S. stocks closed slightly higher on Friday. The Dow rose 132 points, or 0.41%, to 32,237; the Nasdaq rose 36 points, or 0.31%, to 11,824; the S&P 500 rose 22.27 points, up 0.56% to 3,971 points.

IMF calls for continued vigilance over banking problems

Regarding the serial liquidity problems of European and American banks, Georgieva, president of the International Monetary Fund (IMF), said on Sunday that the risks to financial stability have increased. Although the actions of developed economies have temporarily eased market pressure, the continued vigilance is still called for. It also said the IMF would closely monitor developments, especially for those in low-income countries with high debt levels.

Hong Kong Stock Connect had a net inflow of HK$ 6.15 bn on Friday, the Tracker Fund (2800) had the largest net inflow of HK$1.56 bn; followed by Tencent (700). SMIC (981) recorded the largest net outflow of HK$210 mn, followed by CNOOC (883).