KGI Asia Commentary
Hang Seng Index rose 376 points on Monday
Hong Kong stocks rose yesterday after US regulators announced that they would guarantee deposits at Silicon Valley Bank and Signature Bank, and it was rumored that the Fed may postpone interest rate hikes in March. The HSI rose 436 points or 2.3% in mid-day, and then fell back slightly. The HSI closed at 19,695, up 376 points or 1.9%. The HSTECH closed at 3,891 points, up 109 points or 2.9%. The HSCEI rose 144 points, or 2.2%, to 6,590 points. Market turnover was HK$145.2bn. Traditional blue chips performed well today. AIA (1299) rebounded 3.6% to HK$84.5. HKEx (0388) rose 1.9% to HK$324.4. Bilibili’s (9626), included in Hong Kong Stock Connect, share price rose 10.7%.
A large amount of money inflow to the U.S. treasury
The Silicon Valley bank crisis has caused investors to lose confidence in the U.S. regional banks, and they are worried that the liquidity will have problems. The stock prices of many regional banks plummeted and fell to suspension immediately after the market opened. First Republic (FRC.US) plummeted 67% to be traded halt, although it has announced that it has obtained additional funds from the Federal Reserve (Fed) and JPMorgan Chase (JPM.US). Risk aversion in the market surged, and a large amount of money switched to the U.S. treasury. The yield on the 10-year T bond jumped from about 3.9% to 3.52%. Meanwhile the liquidity problems of these regional banks are mainly caused by the Fed’s sharp interest rate hike in the past year, the market has completely given up the possibility of the Fed raising interest rates by 50bps in March, and the market estimates that there is a 72.3% probability of raising interest rates by 25 basis points only.
Only the Nasdaq Composite rose among three major U.S. indexes. Nasdaq closed at 11,188, up 49 points or 0.45%; the D&J index fell 90 points or 0.28% to 31,819; the S&P 500 indx fell 5 points or 0.15% to 3,855.
U.S. consumer inflation expectations fall to two-year low
The U.S. will announce Feb CPI YoY% tonight (HK time). This figure is believed to directly affect the Fed's interest rate hike in March. The latest survey by the Federal Reserve Bank of New York shows that consumers' one-year inflation expectations fell to 4.2%, the lowest level since May 2021. It was also lower than 5% in Jan. Most consumers believed that gasoline prices would continue to fall, which drive lower inflation level.
Hong Kong Stock Connect had a net inflow of HK$344mn on Monday, among which China Mobile (0941) had the largest net inflow of HK$1.12bn; followed by Tencent (0700). Tracker Fund (2800) recorded the largest net outflow of HK$1.75bn; followed by Hang Seng China Enterprises (2828).
Wen Kit Kenny is a SFC licensed person accredited to KGI Group to carry on regulated activities (for details, please refer to:https://apps.sfc.hk/publicregWeb/indi/AJF244/details). He and/or his associate do not have any financial interest in the recommended issuer or new listing applicant.
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