Key News
Asian equities were mixed overnight on light volumes in advance of US inflation data tomorrow, with Indonesia, Malaysia, and the Philippines closed for holiday.
It was quiet on the news front as Premier Li’s meeting with eight “economic experts and entrepreneurs” in order to “listen to opinions and suggestions on the current economic situation” garnered significant attention. Ministry of Finance Deputy Minister Liao Min had a Q&A with reporters on Janet Yellen’s China trip. Multiple workstreams within the China-US Economic Working Group will reconnect, including the PBOC and US Treasury, with multiple teams meeting around the World Bank/IMF meetings in Washington DC in a few weeks.
China will report March inflation data tomorrow, with estimates only at +0.4%, though Dalian hog futures gained +6.45% in March. Pork prices are a big component of China’s CPI, leading me to believe CPI will “surprise” to the upside.
Growth stocks outperformed in both Hong Kong and Mainland China on light volumes, while NetEase gained +4.1% on new game approvals. Hong Kong’s most heavily traded by value were Tencent -0.13%, who bought back 3.28 million shares overnight, Alibaba +0.14%, Xiaomi +3.1%, Meituan +0.3%, who bought back 3.99 million shares overnight, and HSBC
HBA
+1.11%.
EV/battery/lithium had a strong day, with a government official stating China’s electric vehicle production capacity is far from meeting demand. Baidu was off -3.29% on an analyst price target reduction. Southbound Stock Connect had a moderate day of net buying from Mainland China, with $349 million of net buying. Growth stocks outperformed in China as well, as healthcare outperformed and Wuxi AppTec gained +1.76%. Foreign investors sold -$145 million of Mainland stocks via Northbound Stock Connect.
The Hang Seng and Hang Seng Tech gained +0.57% and +0.98%, respectively, on volume -16.96% from yesterday, which is 85% of the 1-year average. 348 stocks advanced, while 113 declined. Main Board turnover decreased -37.03% from yesterday, which is 66% of the 1-year average, as 14% of turnover was short turnover (remember Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). All factors were positive, with the growth factor and small caps outperforming the value factor and large caps. The top sectors were tech +2.6%, healthcare +2.4%, and utilities +1.6%, while energy was down -0.42%. The top sub-sectors were semis, pharmaceuticals, and media, while food/staples, household products, and energy were the worst. Southbound Stock Connect volumes were light/moderate as Mainland investors bought $349 million of Hong Kong stocks and ETFs with Tencent, Xiaomi, and China Mobile small net buys, while CNOOC, HSBC, and Chinahongqiao were small net sells.
Shanghai, Shenzhen, and STAR Board gained +0.05%, +0.82%, and +1.21% on volume -14.39% from yesterday, which is 92% of the 1-year average. 3,560 stocks advanced, while 1,319 declined. The growth factor and small caps outperformed the value factor and large caps. The top sectors were healthcare +1.48%, tech +0.69%, and materials +0.62%, while energy -0.98%, utilities -0.80%, and real estate -0.42% were the worst. The top sub-sectors were fine chemicals, packaging, and forest, while energy equipment, precious metals, and oil/gas were the worst. Northbound Stock Connect volumes were moderate as foreign investors bought $145 million of Mainland stocks, with Zijin Mining a large net buy, Haier and CMOC small net buys, while Cits, Zhongli Innolight and TFC were small net sells. CNY was off small versus the US dollar. Treasury bonds rallied. Copper and steel were both higher.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.23 versus 7.23 yesterday
- CNY per EUR 7.85 versus 7.84 yesterday
- Yield on 10-Year Government Bond 2.28% versus 2.28% yesterday
- Yield on 10-Year China Development Bank Bond 2.41% versus 2.41% yesterday
- Copper Price +1.18%
- Steel Price +1.51%
Read the full article here
