The Economic Times Correspondent, October 5 - The US economy added 29,000 non-farm payroll jobs in September, far below the market expectation of 84,000, significantly weakening the expectation of a rate hike at the end of the month. Interest rate futures now indicate the probability of a rate hike by month-end has dropped to about 22%. During the mainland's National Day holiday, northbound trading remained suspended. Prior to this, the Hang Seng Index had fallen below 24,000. Despite the positive US data, the index still dropped over 100 points early this morning, hitting a new low since July 8. Tech stocks were generally weak, but Alibaba (09988) turned upward mid-session, supporting the Hong Kong market from further declines. The Hang Seng Index closed the morning session at 23,952, down 20 points or less than 0.1%. The Hang Seng China Enterprises Index stood at 8,030, up less than one point. The Hang Seng Tech Index rose 11 points, or 0.3%, to 4,169. Notably, today marks the second day of suspension for Stock Connect, with morning session turnover on the main board shrinking to HK$54.6 billion.
*Nie Zhenbang: Awaiting northbound flow return to repair gap*
Although the market's expectation for a US rate hike in October has somewhat cooled, bond markets remain highly risky, with the 10-year US Treasury yield currently at 5.252%. Nie Zhenbang, Chief Analyst at Highsong Securities & Finance, told The Economic Times Correspondent that surging bond yields in Europe and the US have triggered global stock market sell-offs. The Hang Seng Index's sharp drop last Friday (October 2) was mainly due to selling pressure on heavyweight international financial stocks such as HSBC (00005) and AIA (01299). With the absence of northbound funds, the market's support has weakened. Only after the return of northbound flows will heavyweight stocks receive sufficient buying support to drive the Hang Seng Index higher.
Nie Zhenbang expects the Hong Kong market to remain relatively weak over the next two trading days. However, given the US non-farm payroll data came in far below expectations, cooling rate hike expectations and improving external investor sentiment, there appears to be limited appetite for massive capital outflows from equities. Therefore, the 23,800 level could provide solid support. Whether the broader market can stage a clear rebound will likely depend on the reopening of Stock Connect this Thursday (October 8), when stronger support may emerge, potentially filling the gap left by last Friday's sharp pullback. Resistance is seen around 24,300 points.
*'Windfall tax' impact limited to sentiment*
UK Chancellor John Healey will unveil his first budget on October 28. Reports suggest the government is considering imposing a 'windfall tax' on banks to boost fiscal revenue, a move strongly opposed by some in the banking sector. Bank stocks with UK operations, such as Standard Chartered (02888), have seen selling pressure over the past two trading days, falling 7.6% cumulatively and currently trading at HK$225.8. HSBC dropped 1.1% in the morning session to HK$147.8, continuing to trade below the HK$150 level.
Nie Zhenbang noted that the news has not yet been confirmed, and in the short term, market analysts are unlikely to revise earnings forecasts for these stocks downward. Therefore, the recent share price declines are driven more by sentiment than actual business damage, suggesting limited downside potential. Additionally, as these stocks were previously trading at high levels, many investors took the opportunity to offload positions on the news.
Nie Zhenbang believes Standard Chartered has performed slightly better than HSBC, with its share price still near early-July levels. He expects support between HK$215 and HK$220 to be relatively strong. If the stock can stabilize sideways within this range, investors may consider phased accumulation. HSBC, as a heavyweight with active trading, faces relatively stronger selling pressure, and its current price has retreated to mid-June levels. Investors should watch whether it can hold above HK$145. If it does, it may help drive a rebound in the international financial sector. (am)
*Nie Zhenbang: Awaiting northbound flow return to repair gap*
Although the market's expectation for a US rate hike in October has somewhat cooled, bond markets remain highly risky, with the 10-year US Treasury yield currently at 5.252%. Nie Zhenbang, Chief Analyst at Highsong Securities & Finance, told The Economic Times Correspondent that surging bond yields in Europe and the US have triggered global stock market sell-offs. The Hang Seng Index's sharp drop last Friday (October 2) was mainly due to selling pressure on heavyweight international financial stocks such as HSBC (00005) and AIA (01299). With the absence of northbound funds, the market's support has weakened. Only after the return of northbound flows will heavyweight stocks receive sufficient buying support to drive the Hang Seng Index higher.
Nie Zhenbang expects the Hong Kong market to remain relatively weak over the next two trading days. However, given the US non-farm payroll data came in far below expectations, cooling rate hike expectations and improving external investor sentiment, there appears to be limited appetite for massive capital outflows from equities. Therefore, the 23,800 level could provide solid support. Whether the broader market can stage a clear rebound will likely depend on the reopening of Stock Connect this Thursday (October 8), when stronger support may emerge, potentially filling the gap left by last Friday's sharp pullback. Resistance is seen around 24,300 points.
*'Windfall tax' impact limited to sentiment*
UK Chancellor John Healey will unveil his first budget on October 28. Reports suggest the government is considering imposing a 'windfall tax' on banks to boost fiscal revenue, a move strongly opposed by some in the banking sector. Bank stocks with UK operations, such as Standard Chartered (02888), have seen selling pressure over the past two trading days, falling 7.6% cumulatively and currently trading at HK$225.8. HSBC dropped 1.1% in the morning session to HK$147.8, continuing to trade below the HK$150 level.
Nie Zhenbang noted that the news has not yet been confirmed, and in the short term, market analysts are unlikely to revise earnings forecasts for these stocks downward. Therefore, the recent share price declines are driven more by sentiment than actual business damage, suggesting limited downside potential. Additionally, as these stocks were previously trading at high levels, many investors took the opportunity to offload positions on the news.
Nie Zhenbang believes Standard Chartered has performed slightly better than HSBC, with its share price still near early-July levels. He expects support between HK$215 and HK$220 to be relatively strong. If the stock can stabilize sideways within this range, investors may consider phased accumulation. HSBC, as a heavyweight with active trading, faces relatively stronger selling pressure, and its current price has retreated to mid-June levels. Investors should watch whether it can hold above HK$145. If it does, it may help drive a rebound in the international financial sector. (am)
