A Quiet Night for News
Hope all is well!
- Quiet night as markets digested yesterday and Friday’s large gains. Bloomberg Barclays added Chinese Treasuries and policy banks to the $52 trillion benchmarked to the Global Aggregate on Monday. Chinese bonds will account for $3.3 trillion/~6% of the index at full inclusion in 20 months.
The Hang Seng opened +0.59% but slid slight to gain +0.21%/+62 index points as volumes slipped -16% day over day though still above the 1 year average. There were 25 declining stocks and 24 gainers as AIA Group gained +1.14%/33 index points, HSBC +1.08%/31 index points while Ping An Insurance slipped -1.44%/-21 index points. Tencent +0.27%/8 index points announced a $5 billion bond sale tomorrow that will be denominated in US dollars. One broker noted that Tencent’s board will likely approve a 10% stock buyback at the company’s May 15 annual meeting. Within the MSCI China All Shares’ HK stock +0.02%, materials gained +0.83% following yesterday’s strong PMI release and a strong day for commodities, tech was +0.6% led by online gaming company Kingsoft+6.63% after several new games were approved. Staples was a standout to the downside falling -1.24% led lower by retailer Sun Art and several food and beverage stocks. Southbound Connect volumes were moderate in mixed trading as volume leader Tencent saw sellers outpace buyers as did #2 and #3 in volumes Geely Auto and Ping An.
The Shanghai & Shenzhen seesawed to a gain of +0.2% and +0.11% on strong volumes 2.5X the 1 year average on mixed breadth. The Shanghai was up +0.72% and down -0.17% in choppy trading. Several sub-sectors including food & beverage, agriculture and home appliances saw profit taking after recent strong performance. Within the MSCI China All Shares’ mainland stocks -0.22%, materials gained another 1% while staples -1.24% led by food & beverage names and communications -1.12%. Northbound connect volumes were elevated though off yesterday’s monster day in mixed trading that saw net buying by foreign investors. Volume leader Kweichow Moutai saw sellers outpace buyers while Ping An saw buyers outpace sellers.
Chinese sovereign wealth fund China Investment Corporation (CIC) named Peng Chun its new head. The former chairman of the Bank of Communications will oversea $941 billion.
Goldman Sach’s Hong Kong based strategist Kinger Lau said China’s mainland market could rise 25% over the next 12 months driven by MSCI’s China A Inclusion and an improving economy according to Bloomberg. Morgan Stanley’s Jonathan Gardiner has a 11% upside target.
- Yield on 1 Day Chinese Gov’t Bond 1.49%
- Yield on 10 Year Chinese Gov’t Bond 3.21%
- Yield on 10 Year China Development Bank Bond 3.68%
Commodities were mixed on the Shanghai & Dalian Exchanges w/Dr. Copper off -0.06%