KGI Asia Commentary
Hang Seng Index rose 258 points on Tuesday
The Hang Seng Index rose 258 points or 1.4% to 19,258 on Tuesday. HSTECH rose 94 points or 2.5% to 3,965 and HSCEI rose 80 points or 1.2% to 6,549. Daily market turnover was HK$102.4bn.
S&P 500 jumps more than 1%, as regional banks surge
Stocks rose on Tuesday, with traders turning optimistic about the outlook for the financial sector after U.S. Treasury Secretary Janet Yellen reassured against further banking crises. The Dow Jones Industrial Average rose 316.02 points, or 0.98%, to end at 32,560.60. Meanwhile, the S&P 500 gained 1.30% to end at 4,002.87. The Nasdaq Composite gained 1.58% to close at 11,860.11. Regional banks rallied on Tuesday, led by First Republic up nearly 30 percent after falling 47 percent the day before. The SPDR Regional Bank ETF (KRE) rose nearly 6%. Other regional banks including U.S. Bancorp (USB), Comerica Inc (CMA) and KeyCorp (KEY) were all sharply higher, with KeyCorp up more than 9%. Energy stocks, meanwhile, rose more than 3%, helped by gains in oil prices as investors’ concerns over a banking crisis that could spread globally eased, while shares of Exxon Mobil Corp rose. Wall Street is focusing on the path of monetary policy tightening announced by the Federal Reserve. Investors are now expecting a slower pace of Fed tightening given the banking crisis.
Yellen says U.S. government is willing to take further steps to guarantee bank deposits are safe
“The steps we took were not focused on aiding specific banks or classes of banks. Our intervention was necessary to protect the broader U.S. banking system,” Yellen said. “And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion.” Following the collapses of SVB and Signature, the Treasury, Federal Reserve and FDIC launched a two-pronged initiative to allow banks to meet their short-term borrowing needs. One is the Bank Term Funding Program, which provides one-year loans backed by safe securities at full face value, and the other expands the Fed's discount window. Yellen noted that regulators will study whether more oversight is needed to prevent similar situations in the future.
Hong Kong Stock Connect had a net inflow of HK$1.01bn on Tuesday, of which Tencent (700) had the largest net inflow, reaching HK$1.2bn; followed by Wuxi bio (2269). HSCEI ETF (2828) recorded the largest net outflow at HK$1.02bn, followed by CSOP HS TECH (3033).
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