Key News
Asian equities were mostly higher overnight except for Thailand as Hong Kong was flat overnight.
All sectors were higher on the Mainland overnight, based on the constituents of the MSCI China All Shares Index. The Mainland market has lagged Hong Kong significantly in recent sessions. Why the divergence? I think local investors are waiting for some more indications of stimulus from the Third Plenum, which starts on Monday.
The “official” consumer price index (CPI) and producer price index (PPI) for China will be released tomorrow. The expectation is for CPI to rise due to sharp increases in pork prices, while the PPI is expected to fall, perhaps on slowing external demand.
Internet stocks mostly reversed declines from yesterday as Tencent and NetEase were higher. Meituan fell though, despite buying back more than 4 million shares yesterday. Bilibili outperformed internet names, gaining +3.51%, on continuing momentum from the short-video platform’s positive first quarter results. Alibaba was slightly higher by nearly +1% while JD.com fell -0.78%.
Ping An fell as the mega bank and fintech investor considers another convertible bond offering of above $2 billion.
Top government strategist Wang Huning said that China must bolster “internal circulation” including consumer spending in a vague but promising statement ahead of the Third Plenum meetings.
Goldman strategists noted that they are increasingly bullish on China small cap stocks due to low valuations, liquidity, and compelling industry composition. Meanwhile, the National Team is rumored to be getting involved in small cap index ETFs, as the China Southern 1000 ETF saw elevated turnover.
The Hang Seng and Hang Seng Tech indexes closed flat and +0.96% higher, respectively, on volume that increased +6% from yesterday. Mainland investors bought a net $45 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Information Technology, which gained +2.14%, Materials, which gained +1.18%, and Industrials, which gained +0.85%. Meanwhile, the worst-performing sectors were Energy, which fell -1.45%, Utilities, which fell -1.32%, and Real Estate, which fell -0.55%.
Shanghai, Shenzhen, and the STAR Board all closed higher by +1.26%, +1.74%, and +2.51%, respectively, on volume that increased +25% from yesterday. The top-performing sectors were Information Technology, which gained +3.77%, Consumer Discretionary, which gained +1.90%, and Financials, which gained +1.37%. Meanwhile, the worst-performing sectors were Health Care, which gained +0.12%, Energy, which gained +0.23%, and Consumer Staples, which gained +0.48%.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.27 versus 7.27 yesterday
- CNY per EUR 7.87 versus 7.87 yesterday
- Yield on 1-Day Government Bond 1.24% versus 1.24% yesterday
- Yield on 10-Year Government Bond 2.27% versus 2.29% yesterday
- Yield on 10-Year China Development Bank Bond 2.36% versus 2.38% yesterday
- Copper Price -0.17%
- Steel Price +0.09%
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