【Zhenzhuo Institutional View】US employment data disturbs market, Stock Connect sees divergent fund flows on Tuesday

The latest employment data released by the U.S. unexpectedly showed weakness, sparking concerns about a hard landing of the economy. Although the non-farm payrolls in November slightly exceeded expectations, the unemployment rate suddenly rose to 4.6%, hitting a new high since 2021. While this macroeconomic signal has strengthened market expectations for the Fed rate cut in 2026, shifting the focus from "fighting inflation" to "protecting employment," it also challenges the "bad news is good news" trading logic. The market is currently in a sensitive period where the speed of economic recession and the intensity of policy easing are being weighed. If the data further deteriorates, the risk of downward revisions in corporate earnings may outweigh the benefits of liquidity easing, and funds may continue to flow out of the energy and cyclical sectors in the short term, turning to the bond market for defensive allocation.

Southbound Stock Connect recorded a net inflow of HKD 0.08 billion on Tuesday, with $XIAOMI-W(01810.HK) seeing the largest net inflow of HKD 0.63 billion, followed by XPeng (09868.HK). On the other hand, $BABA-W(09988.HK) recorded the largest net outflow of HKD 0.63 billion, followed by China Mobile (00941.HK).

Source: KGI Securities