{Economic Daily, October 30} Overnight, U.S. bonds continued to be sold off, with the 10-year Treasury yield peaking at 5.296%, a 19-year high, and the 30-year Treasury yield reaching 5.618%, a 24-year high. However, New York Fed President Williams stated that the Fed still has time to observe data before deciding on a rate hike, causing rate hike expectations to ease slightly. The Hong Kong stock market was lackluster ahead of the holiday, with main board turnover at HK$88.8 billion. Nevertheless, northbound funds bought HK$4.1 billion net ahead of the long holiday, moderating the market's decline. The Hang Seng Index opened more than 100 points lower this morning but did not break below the 24,300 level, rebounding with northbound support to close the morning session at 24,513, still down 10 points. The Hang Seng China Enterprises Index stood at 8,188, up 9 points or 0.1%. The Hang Seng Tech Index was at 4,243, down 6 points or 0.2%.
*Ng: Expect average daily turnover of Hong Kong stocks during National Day holiday to be only around HK$10 billion*
Despite persistently high U.S. bond yields, New York Fed President Williams' comments overnight eased rate hike concerns, with interest rate futures indicating that the Fed's chances of a 25-basis-point rate hike versus no hike by the end of October have returned to 50:50. Asian equities rebounded this morning, but Hong Kong stocks remained weak ahead of the National Day long holiday. After fluctuating in the morning, the Hang Seng Index's turnover remained below HK$10 billion. Wu Lixian, securities strategist at Everbright Securities International, told the Economic Daily that northbound funds have recently become the main support for Hong Kong stocks. After northbound flows paused last Friday (25th), turnover dropped to just over HK$10 billion. Since then, even with northbound flows resuming this week, average daily turnover has remained low. He expects turnover to stay around HK$10 billion per day over the coming week with northbound funds absent.
Therefore, considering the continued high external bond yields, Wu Lixian expects Hong Kong stocks to lack upward momentum, with the Hang Seng Index likely to find stronger support around 24,300. In the absence of northbound funds, Hong Kong stocks have historically seen some minor speculation during the National Day holiday, but he noted that such moves are easily driven by small capital flows due to weak trading volumes. He expects a similar situation this year, but given the current external sentiment, major Hong Kong stocks are unlikely to show strong buying interest, limiting any speculative gains.
*Subsidy policy利好 already priced in; awaiting results from golden September and silver October*
Ahead of China's National Day, new measures to boost the property market were introduced, with a nationwide policy starting tomorrow to subsidize interest on home purchase loans, reducing interest burdens on commercial personal housing loans for families buying their first home. However, after being speculated by 'Spring River Ducks' yesterday, some property stocks softened this morning. Wu Lixian believes the news is positive, but the short-term benefits have clearly been absorbed, leaving little room for further upward speculation. He explained that the密集 issuance of supportive policies is not purely related to National Day. One practical reason is to roll out incentives at the end of the third quarter to focus efforts on boosting fourth-quarter real estate sales, particularly stimulating the 'golden September and silver October' season, targeting mass-market residential property sales.
Under the policy, the maximum loan amount eligible for subsidy per household is RMB 1 million, meaning a maximum interest saving of RMB 50,000. Wu Lixian believes the RMB 50,000 discount is negligible in terms of housing sales and will not significantly boost home-buying intent. However, the saved interest expenses could be more helpful for domestic demand, which he believes is one of the official considerations behind the policy. Still, he admitted that the actual effectiveness depends on economic data performance. If the three major drivers of growth continue to move slowly, it will be difficult to benefit related sectors. He preliminarily estimates that domestic demand stocks will still face consolidation pressure in the fourth quarter. (hc)
*Ng: Expect average daily turnover of Hong Kong stocks during National Day holiday to be only around HK$10 billion*
Despite persistently high U.S. bond yields, New York Fed President Williams' comments overnight eased rate hike concerns, with interest rate futures indicating that the Fed's chances of a 25-basis-point rate hike versus no hike by the end of October have returned to 50:50. Asian equities rebounded this morning, but Hong Kong stocks remained weak ahead of the National Day long holiday. After fluctuating in the morning, the Hang Seng Index's turnover remained below HK$10 billion. Wu Lixian, securities strategist at Everbright Securities International, told the Economic Daily that northbound funds have recently become the main support for Hong Kong stocks. After northbound flows paused last Friday (25th), turnover dropped to just over HK$10 billion. Since then, even with northbound flows resuming this week, average daily turnover has remained low. He expects turnover to stay around HK$10 billion per day over the coming week with northbound funds absent.
Therefore, considering the continued high external bond yields, Wu Lixian expects Hong Kong stocks to lack upward momentum, with the Hang Seng Index likely to find stronger support around 24,300. In the absence of northbound funds, Hong Kong stocks have historically seen some minor speculation during the National Day holiday, but he noted that such moves are easily driven by small capital flows due to weak trading volumes. He expects a similar situation this year, but given the current external sentiment, major Hong Kong stocks are unlikely to show strong buying interest, limiting any speculative gains.
*Subsidy policy利好 already priced in; awaiting results from golden September and silver October*
Ahead of China's National Day, new measures to boost the property market were introduced, with a nationwide policy starting tomorrow to subsidize interest on home purchase loans, reducing interest burdens on commercial personal housing loans for families buying their first home. However, after being speculated by 'Spring River Ducks' yesterday, some property stocks softened this morning. Wu Lixian believes the news is positive, but the short-term benefits have clearly been absorbed, leaving little room for further upward speculation. He explained that the密集 issuance of supportive policies is not purely related to National Day. One practical reason is to roll out incentives at the end of the third quarter to focus efforts on boosting fourth-quarter real estate sales, particularly stimulating the 'golden September and silver October' season, targeting mass-market residential property sales.
Under the policy, the maximum loan amount eligible for subsidy per household is RMB 1 million, meaning a maximum interest saving of RMB 50,000. Wu Lixian believes the RMB 50,000 discount is negligible in terms of housing sales and will not significantly boost home-buying intent. However, the saved interest expenses could be more helpful for domestic demand, which he believes is one of the official considerations behind the policy. Still, he admitted that the actual effectiveness depends on economic data performance. If the three major drivers of growth continue to move slowly, it will be difficult to benefit related sectors. He preliminarily estimates that domestic demand stocks will still face consolidation pressure in the fourth quarter. (hc)