“Golden Week and US Interest Rates: Impact on Hong Kong and Mainland Markets”

After the long holiday in Hong Kong, the stock market reopened today. The focus is on the interest rate meeting in the United States this month. One more factor in the Chinese and Hong Kong markets is the May 1st Golden Week consumer market. Hong Kong stocks were weak in April, and traditionally reported poor in May. However, the market is currently trading below 20,000 points, and there is a chance for a rebound if it falls again.
US stocks stabilized before the interest rate meeting. Last week, the Dow and the S&P 500 rose 0.9%; the Nasdaq rose 1.3%. Accumulated in April, the Duo index rose 2.5%, the best monthly performance since January; the index rose 1.5%; the Nasdaq rose 0.04%. The recent release of steady U.S. employment data provided no surprises, if not surprises.
Golden Week Travel Figures in the Mainland

On the eve of May 1st, the Hong Kong stock market attempted to regain the 20,000-point mark but retreated without success. It rose slightly by 54 points and closed at 19,894 points. For the week and the whole month, the Hang Seng Index lost 181 points and 505 points respectively. The stock market trend improved slightly before the long holiday. During the 5.1 period, there were more than 200 million trips in the mainland, which exceeded the number before the epidemic. Even if it is not revenge tourism, the accumulated consumption power is quite strong, which will have a positive effect on stimulating China’s economic growth in the second quarter. The number of tourists coming to Hong Kong has also increased. It is believed that the consumption power is not as good as before. This is believed to be because the mainland market is still in the process of recovery. Before the holiday, Nine Properties (1997), a shopping mall stock, rose 2% to close at 45.1 yuan. Tsim Sha Tsui has a busy flow of people. It is not ruled out that the stock price may try to reach its high level this year.

This Golden Week is the first Golden Week since the epidemic spread last year. For the first time in three years, Hong Kong will celebrate the festival without epidemic restrictions. The governments of the Mainland and Hong Kong are vigorously promoting consumption. Gourmet coupons and cheap theater tickets, although these discounts are not a big deal, but they can play a psychological role and create an atmosphere. The SAR has experienced deficits in the past few years, and it is impossible to recruit real troops. It is hoped that it can play a leading role in organizing activities to cooperate with publicity.

The local economy has been hit by the epidemic for three years, and many companies have not recovered. Even if the social operation returns to normal, they may not have the courage or strength to invest first. Therefore, it is regarded as a touchstone. Judging from the preliminary figures from the mainland media, the number of people traveling this long holiday is quite strong, and the momentum seems to be going well.

Traditionally, the focus of speculation on May Day is mostly casino stocks or consumer stocks, but the stock market is dominated by expectations. When everyone has this idea, speculators will change their tactics. Before the Golden Week of this year, free travelers flocked to Hong Kong, and the hotel rooms were full. The price of three- and four-star hotels soared from a few hundred yuan before the epidemic to 2,000 or 3,000 yuan. However, hotel stocks did not respond. It has been pointed out that part of the reason for the high hotel prices is that the hotel has lost talent in the past three years, and now there is not enough manpower to reopen all the rooms, so there is no business to do, resulting in high house prices, but the industry has not fully benefited. But in fact, less than 80% of the rooms are opened. This explanation is believed to be only a small part of the reason. Another thing that few people mention is the high interest rate, which has a depressing effect on hotel stocks or real estate trusts that are slow to return funds. Of course, if the market can continue to heat up, the industry will eventually benefit.

The recent data released by the mainland shows that the recovery is at least in line with expectations, if not exceeding the standard. HSBC Global has raised its 2023 full-year economic growth forecast from 5.6% to 6.3%, and expects consumption in the Mainland to reach double-digit growth throughout the year. The bank believes that consumption is the main driving force for the economic recovery in the Mainland, and domestic tourism has generally recovered. It is expected that consumption in the Mainland will reach double-digit growth this year. With the support of a series of policies, the real estate market is also gradually seeing light. Among them, the domestic housing sales data in March returned to positive growth for the first time since mid-2021. HSBC expects that real estate investment will grow again in the second half of this year, supported by the recovery of consumer confidence and the loosening of policies.

From a company perspective, Ping An Insurance (2318) and AIA (1299) saw their first-quarter results last week. After customs clearance, business activities increased. Business has bottomed out after last year’s low tide, giving it a chance to pick up this year. As for mainland banking stocks which have just announced their first-quarter results, they were basically flat. ICBC (1398), the largest of the four major banks, was the only one to record a decline in revenue, with a drop of 3.5%, and its profit was roughly flat. Little changed, with flat earnings. China Merchants Bank (3969) first quarter net profit increased by 7.8% year-on-year; Bank of Communications (3328) first quarter net profit increased by 5.6%; Postal Savings Bank of China (1658) first quarter net profit increased by 5.2% year-on-year. good.
The most difficult time for domestic banks is about to pass

The bank is known as the mother of all industries and can best reflect the honor and disgrace of the economy. Earlier data pointed out that in the environment of low loan interest rates and high deposit interest rates in the Mainland, the net interest margin of banks has fallen. Can’t catch up. Looking forward to the second quarter, the mainland’s economic recovery has begun to emerge. The central government intends to lower deposit interest rates and guide funds out of deposit accounts. This approach can not only reduce bank costs, but also boost economic enthusiasm. In addition, the mainland’s real estate market has recently bottomed out. It is estimated that the most difficult time for the Bank of China is about to pass.

Finance, banking, and the business environment are closely related. Just as the U.S. tightened its water pipes, regional banks began to have troubles. The market estimates that the First Republic Bank, whose deposits have shrunk sharply, may be inseparable from being taken over by the government. If the data from the 5.1 Golden Week in the mainland is satisfactory, the mainland banks and insurance stocks may still have a chance to catch up.
Jin Riku