KGI Asia Commentary

Hang Seng Index fell 34 points on Monday

Hang Seng Index opened 118 points higher and then fell 174 points at the mid-day. The decline narrowed significantly when the market resumed in the afternoon. It fell 34 points or 0.2% today to close at 17,525. The HSCEI fell 15 points or 0.3% to close at 6,025; the HSTECH rose 6 points, or 0.2%, to close at 4,031. The total daily turnover of the market was HK$75.91bn. It was reported that CCB (0939) held a meeting with six real estate companies including Vanke (2202) and Longfor (0960) on supporting financing needs. CCB's share price remained unchanged, while the share prices of other Chinese real estate stocks fell by between 3.1% and 11.4%. New World (0017), which earlier announced a bond buyback worth US$600mn It did not help stabilize its stock price, falling by 6.4% today.

Shenzhen’s property transaction fell slightly last week, policy effects not yet reflected

The Shenzhen Real Estate Agency Association announced the property transaction volume in the fourth week of November (20th to 26th), and the performance has not yet rebounded. The transaction volume of second-hand houses was recorded at 965 units, a decrease of 0.7% w/w. The association pointed out that despite the news that the down payment ratio of second properties has dropped and that several real estate companies have received financial support, the policy effects have not yet been reflected.

All three major U.S. stock indexes fell. The S&P 500 fell 8 points, or 0.2%, to close at 4,550; the DJIA fell 56 points, or 0.16%, to close at 35,333 and the Nasdaq composite fell 9 points, or 0.07%, to close at 14,241.

Chinese monetary policy implementation report may imply that infrastructure investment is no longer the core of policy

The PBOC released its third-quarter monetary policy implementation report. In addition to proposing to actively guide financial institutions to resolve the risk of local debt defaults, the report also proposed that the effectiveness of debt-driven economic growth will be reduced, and the need to accelerate economic transformation should be accelerated. We believe this report raises doubts about whether the Chinese government will re-consider infrastructure investment to stimulate the economy. The marginal benefits of urban and rural construction are gradually decreasing. We believed Chinese government will more focus on the high-end manufacturing, such as energy storage technology and semiconductor R&D.

Hong Kong Stock Connect was recorded a net inflow of HK$348mn on Monday, of which SMIC (0981) had the largest inflow, reaching HK$216mn; followed by CNOOC (0883). Tencent Holdings (700) recorded the largest net outflow of HK$405mn; followed by China Mobile (0941).