Key News

Asian equities did not experience a miracle comeback like US markets yesterday as markets were a sea of red with investors taking a risk-off posture driven by Russia/Ukraine conflict fears and tomorrow’s Fed meeting. Only India and the Philippines managed positive returns while South Korea and China were off more than -2%. Mainland China had a rough night on seasonal weakness too as Shanghai fell -2.58%, Shenzhen fell -3.31%, and the STAR Board was off -2.35% in advance of the Chinese New Year.

The Hang Seng Index was off -1.67% as volume increased +17.82% from yesterday which is 91% of the 1-year average while breadth on the broad Hang Seng Composite had only 31 advancing stocks and 451 decliners. Ouch. The Hang Seng Index did stay above the 24k level. Hong Kong internet stocks were weak as Tencent -0.6%, Meituan -3.01%, and Alibaba -1.93%. Reports of JD.com’s fintech unit JD Technology (formerly JD Digits) listing in Hong Kong didn’t spare the stock as it slid -2.97% in Hong Kong. Mainland investors bought the dip as both Tencent and Meituan were net buys via Southbound Stock Connect in one of the few positives today. While every sector was off in Hong Kong, healthcare was the worst performer -3.21% on chatter regarding China’s drug procurement program expanding.

Mainland China had a rough day on the broader Russia/Ukraine and Fed fears though we are experiencing seasonality weakness in advance of Chinese New Year’s as Shanghai -2.58%, Shenzhen -3.31%, and STAR Board -2.35%. Volume was up +8.31% from yesterday which is 89% of the 1-year average while breadth saw only 239 advancers and 4,121 decliners. Even bonds sold off today as investors raised cash for the holiday. Foreign investors pulled -$564mm from Mainland equities overnight in advance of the week-long holiday next week. The Ministry of Commerce noted consumption should pick up in 2022 which I believe could be a key theme for the year.

Last Night’s Exchange Rates, Prices, & Yields

• CNY/USD 6.33 versus 6.33 yesterday
• CNY/EUR 7.13 versus 7.15 yesterday
• Yield on 10-Year Government Bond 2.70% versus 2.68% yesterday
• Yield on 10-Year China Development Bank Bond 2.98% versus 2.97% yesterday
• Copper Price -1.84% overnight