Today's Market Review: US Dollar and US Treasury Yields Rise, Hang Seng Index Plunges, Chinese Banking and Insurance Stocks Face Selling Pressure.
The US benchmark 10-year bond yield rose above 4.7 basis points last night, reaching a 16-year high. The US dollar index also rose above 107. Hong Kong stocks opened lower today after the long Mid-Autumn Festival and National Day weekend. The US Congress passed a temporary funding bill to avoid a government shutdown. The market is concerned about whether the Federal Reserve will maintain high interest rates for a longer period of time. The Dow Jones Industrial Average and the Nasdaq both fell 0% overnight.
The yield on the US 10-year Treasury bond rose above 4.7 basis points last night, reaching a 16-year high. The US dollar index also rose above 107. In Hong Kong, the stock market opened lower today (October 3) after the long Mid-Autumn Festival and National Day weekend. The US Congress passed a temporary funding bill to avoid a government shutdown. The market is concerned about whether the Federal Reserve will maintain high interest rates for a longer period of time. The Dow Jones Industrial Average and the Nasdaq Composite fell 0.2% and rose 0.7% respectively overnight. At the time of writing, the yield on the US 10-year bond was at 4.677 basis points, the US dollar index rose to 107.01, the US dollar approached the 150 level against the Japanese yen, and the latest Dow futures rose 45 points or 0.13%, while the Nasdaq futures rose 0.14%. During the National Day holiday, the A-share market in mainland China will be closed from last Friday (September 29) until this Friday (October 6), and will resume trading on October 9. Caixin China's manufacturing PMI for September fell to 50.6, lower than expected, while Caixin China's services PMI for September fell to 50.2, hitting a new low for the year. The Hang Seng Index opened lower by 263 points and the decline widened. It fell 596 points to 17,212 points before rebounding. It closed down 478 points or 2.7% at 17,331 points. The H-share index fell 199 points or 3.2% to 5,949 points, and the Hang Seng Tech Index fell 103 points or 2.6% to 3,817 points. The total turnover of the market for the day was HKD 86.121 billion. The Shanghai and Shenzhen-Hong Kong Stock Connect trading was suspended and will resume next Monday (October 9). CICC (02800.HK) fell 2.7% for the day, with a turnover of HKD 12.563 billion, while Huaxia Heng ESG (03403.HK) fell more than 2.8% with a turnover of HKD 6.9 billion. Hong Kong Exchanges and Clearing (00388.HK) fell 2.3%, while AIA (01299.HK) rose against the trend by 0.9%. After New World Development (00017.HK) announced its annual results, its stock price fell 5.2% for the day. [Over 1,400 stocks fell, pressure on Chinese bank stocks] Internet stocks weakened, with Tencent (00700.HK) falling 1.8% to close at HKD 300.6, Alibaba-SW (09988.HK) falling 2.9% to close at HKD 83.1, and Meituan-W (03690.HK) falling 4% to close at HKD 110. Chinese bank stocks were under pressure, with ICBC (01398.HK) falling 4.8%, and CCB (00939.HK) and Bank of Communications (03968.HK) falling 4.1% and 4.6% respectively. In addition, Ping An Insurance (02318.HK) fell nearly 4.8%, and China Life Insurance (02628.HK) fell 4.4%. HSBC Holdings (00005.HK) fell to HKD 59.95 at one point and closed down nearly 1.3% at HKD 60.9 for the day. Morgan Stanley issued a technical opinion report, predicting that HSBC's stock price will outperform the industry in the next 30 days, with a probability of 70% to 80%. The target price is HKD 72.2, with a "buy" rating. The bank expects HSBC's third-quarter results, which will be announced on the 30th of this month, to remain robust, with stable quarterly revenues and controlled credit costs, but there may be additional provisions for Chinese commercial real estate. HSBC is expected to continue implementing its share buyback plan. [Stocks fell by 1,400, real estate stocks declined] The main board of the Hong Kong stock market turned weak today, with a ratio of 8 to 35 for the rise and fall of main board stocks (compared to 29 to 13 the previous day), and 1,492 stocks fell (a decrease of 3.6%); 1 stock rose and 79 stocks fell among the Hang Seng Index constituents, with a ratio of 1 to 99 (compared to 90 to 9 the previous day); the market recorded short selling of HKD 15.278 billion today, accounting for 20.185% of the turnover of shortable stocks, which was HKD 75.689 billion (compared to 19.634% the previous day). Real estate stocks declined, with China Evergrande Group (01918.HK) falling by 6.9%, Longfor Group (00960.HK), China Overseas Land & Investment Ltd. (03377.HK), and Shimao Property Holdings Ltd. (00813.HK) all falling by 6.5% to 6.7%, and Country Garden Holdings Co. Ltd. (02007.HK) falling by 4.4%. Evergrande Group (03333.HK) and Evergrande Property Services Group Ltd. (06666.HK) resumed trading, with Evergrande Group surging by 28.1% and Evergrande Property Services Group falling by 3.4%. According to data from CRIC, mainland China's 35 listed real estate developers sold RMB 295 billion in September, which was lower than market expectations and lower than the average monthly sales of RMB 377 billion in the first half of the year. This is partly because most of the relaxation measures were announced in mid-September. Although the sales figures increased by 21% on a monthly basis, they still fell by 26% on a yearly basis and 12% in the first nine months of the year. The bank pointed out that the focus of real estate policies has slightly shifted to allow for some degree of price elasticity in order to promote transactions. Compared with the policy relaxation period from October 2014 to December 2015, the current round of policy relaxation in second-tier cities is faster and more extensive. Some buyers are waiting for new measures, such as lowering the minimum mortgage interest rate and relaxing restrictions on purchases in suburban areas of first-tier cities. Sales in September only saw slight growth and need to be further evaluated until November to truly reflect the effectiveness of the policies. (wl/da)