Key News
Asian equities were largely higher on a quiet night, as Japan outperformed. Several markets were closed regionally for Eid al-Adha, the “Feast of Sacrifice”, which is the second most important of the two main holidays celebrated in Islam.
Mainland China and Hong Kong were lower in morning trading as May industrial profits were down -12.6% year-over-year, though better than April’s -18.2%. A potential US export ban weighed on Nvidia, and US semiconductor stock weakness spilled over into AI and semiconductor stocks in Mainland China. CNY was weak versus the US dollar, closing at 7.24 CNY per USD. Despite these headwinds, both Mainland China and Hong Kong were able to rise and limit losses.
Electric Vehicles outperformed as Xpeng was up +11.18%, Li Auto was up +2.76%, and NIO was up +7.18% as the sector benefits from top-down government support. President Xi’s meeting with New Zealand’s Prime Minister included commitments to foreign companies operating in China.
Hong Kong’s most heavily traded stocks by value were Tencent, which fell-1.52%, Alibaba, which fell -1.29%, Meituan, which gained +0.71%, and JD.com, which fell -1.22%. Southbound Stock Connect did a U-turn from yesterday with a net +$933 million of net inflow. Yesterday, we mentioned government media personality Hu Xijin bought stocks yesterday and added them today. This is interesting as Shanghai sits just below the 3,200 level while Shenzhen closed just above the 2,000 level. These are levels that the “national team” would likely be a buyer at, which would help put a floor in the market through strong buying but also psychologically. At a Mainland finance conference that received attention in financial media, an economist noted that historically money supply and stock equity move together, though thus far, year to date, that has not been the case. It could be time for stocks to get moving higher!
The Hang Seng and Hang Seng Tech gained +0.12% and +0.75% on volume -13.49.% from yesterday, which is 69% of the 1-year average. 256 stocks advanced, while 221 declined. Main Board short turnover increased +2.43% from yesterday, which is 74% of the 1-year average, as 18% of turnover was short turnover. Value and growth factors were off, while large caps outpaced small caps. The top sectors were tech +1.31%, utilities +1.12%, and energy +0.71%, while healthcare -0.98%, communication -0.95%, and materials -0.6%. The top sub-sectors were auto, consumer durables, and technical hardware, while pharma, media, and household products were the worst. Southbound Stock Connect volumes were light as Mainland investors bought $933 million of Hong Kong stocks, with Tencent, Meituan, and Kuaishou light/moderate net buys.
Shanghai, Shenzhen, and STAR closed flat/0.0%, -0.44%, and -0.31% on volume +5.31% from yesterday, which is 97% of the 1-year average. 1,993 stocks advanced, while 2,511 stocks declined. Value factors outperformed growth factors as large caps outpaced small caps. The top sectors were utilities +1.15%, energy +0.89%, and staples, while communication -2.04%, tech -1.62%, and real estate -0.97%. The top sub-sectors were land transportation, forest, and coal, while computer hardware, software, and communications equipment were the worst. Northbound Stock Connect volumes were light/moderate as foreign investors sold -$562 million of Mainland stocks, with Kweichow Moutai a moderate/large net sell, Longi Green Energy a small net sell, and Foxconn a small net buy. CNY fell -0.28% versus the US dollar to 7.24 from yesterday’s 7.21, with the Asia dollar index off -0.32%. Treasury bonds rallied while copper was off and steel was up.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.24 versus 7.21 yesterday
- CNY per EUR 7.93 versus 7.90 yesterday
- Yield on 10-Year Government Bond 2.66% versus 2.67% yesterday
- Yield on 10-Year China Development Bank Bond 2.81% versus 2.82% yesterday
- Copper Price -0.48% overnight
- Steel Price +0.38% overnight
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