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Commodity Prices Ignite Hong Kong Stocks

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Key News

Asian equities had a mixed night following the US’ equities mixed performance yesterday. Hong Kong and South Korea outperformed while Taiwan and India underperformed. Remember Hong Kong’s Q1 GDP data was reported after yesterday’s close, gaining +7.8% year-over-year while March retail sales grew +20.1% year-over-year. China and Japan, the two biggest equity markets regionally, are closed until Thursday in addition to Northbound and Southbound Stock Connect (the Hong Kong trading venues for foreign investors to access the Mainland market and Mainland investors the Hong Kong market). It was quiet overnight as commodity prices lifted mining, precious metals, rare earth, nonferrous metals, steel, iron, and cobalt-related stocks in Hong Kong.

Yesterday, the Wall Street Journal reported that Fidelity Investments cut the value of its investment in Ant Group to $144B versus last August’s valuation of $295B.

Utilizing data from (formerly C-trip), Reuters reported that Chinese vacations this week are expected to be 200mm versus 2019’s 195mm. This travel will be focused domestically rather than internationally, with Hainan Island, China’s Hawaii, appearing to be a strong beneficiary. Hat tip to our friend Brian for pointing this out.

Online employment company 51job (JOBS US) is trading up pre-market as Bloomberg announced a private equity firm wants to buy it for $79.05 a share versus yesterday’s close of $61.33.

CNH has depreciated versus the US $ to 6.4878 which is -0.017. Looks like a risk-off day in the US.

The Financial Times had a good article on the EU Emissions Trading System that “put a cost on carbon dioxide for some of the most highly polluting industries from power generation to aviation”, which reached an all-time high of 50 euros a ton. The article gives an optimistic view of the price. This is a new asset class for investors, though US policies and China’s carbon credit allowance market coming online in the coming months should raise awareness for investors. 

H-Share Update

The Hang Seng opened lower but grinded higher, closing up +0.7% as volume shrank -5%, which is just 57% of the 1-year average. The 200 Chinese companies listed in Hong Kong within the MSCI China All Shares Index gained +0.48%, led by materials +5.2%, energy +2.98%, utilities +1.91%, industrials +1.8%, and staples +1.21%, while financials and communication were off -0.24% and -0.39% respectively. Hong Kong’s most heavily traded by value were Ping An, which fell -0.78%, Tencent, which was off -0.4%, China Construction Bank, which fell -0.82%, Meituan, which fell -0.48%, Alibaba Hong Kong, which rose +0.63%, Fosun Pharma, which was off -0.08%, ICBC, which dropped -0.6%, AIA, which gained +1.66%, COSCO Shipping, which was up +6.49%, and Xiaomi, which gained +1.43%. 

A-Share Update

Mainland markets will be closed until Thursday.