Key News

Asian equities were lower in quiet trading despite a decline in the US dollar overnight, as India was closed for Holi, the Hindu festival of Colors, Love, and Spring.

Hong Kong and Mainland China bounced around the room: falling at the open and rallying mid-day, only to slide back into the red.

Hong Kong and Mainland China-listed technology stocks underperformed. A Financial Times article was cited as the culprit. The article stated that Chinese government agencies will curtail purchases from AMD and Intel. China accounts for 15% of the revenue of the former and 27% of the latter. Wouldn’t this be a gift for China-based semiconductor companies, which were an underperformer today? Coincidentally, AMD’s CEO Lisa Su is not only in China for the China Development Forum but is also meeting with Ministry of Commerce Head Wang Wentao.

Premier Li spoke at the China Development Forum in Beijing, where he provided an honest assessment of the challenges facing China’s economy while offering increased access and clarity on China’s data rules for foreign companies. AMD’s Su has been joined by Apple’s Tim Cook, Qualcomm’s Cristiano Amon, Micron’s Sanjay Mehrotra, AstraZeneca’s Pascal Soriot, Standard Chartered’s Bill Winters, Aramco’s Amin Nasser, BMW’s Oliver Zipse, Siemens’ Roland Busch, Rio Tinto’s Jakob Stausholm, Moller-Maersk’s Vincent Clerc, Nestle’s Mark Schneider, Deloitte’s Sharon Thorne, Bridgewater’s Ray Dalio, Danone’s Antoine De Saint-Affrique, Pfizer’s Albert Bourla, Danaher’s Rainer Blair, Proctor & Gamble’s Jon Moeller, Hong Kong Exchanges’ Laura Cha, Abbott Lab’s Robert Ford, Blackstone’s Stephen Schwarzman, etc., at the event.

It is interesting that Ant Group’s CEO remains on the agenda. Businesspeople appear to be getting along just fine with one another.

Medical contract research organization Wuxi Biologics gained +7.52%, and Wuxi AppTec gained +4.86% on news that Representative Mike Gallagher, co-head of the House Select Committee on the Chinese Communist Party and originator of the Biosecure Act, will retire from Congress in April. While Gallagher’s shoes of chief China basher will surely be filled, there was little media explanation on why he is leaving. I suspect it is because he is not a Trump supporter and would face a fall primary challenge. Forbes is reporting that Gallagher will join cybersecurity firm Palantir.

Janet Yellen will be visiting China next month, according to Politico.

Hong Kong’s most heavily traded stocks by value were Meituan, which gained +5.72% after crushing Q4 results Friday; Tencent, which pulled an inverse James Bond to fall -0.07%; Alibaba, which fell -0.99% (an inverse Wayne Gretzky), Hong Kong Exchanges, which fell -2.77%, and Ping An Insurance, which fell -2.39%, after Friday’s weak Q4 results.

Baidu gained +2.55% on Apple’s use of their AI on Chinese iPhones.

Southbound Stock Connect saw a swing in ETF redemptions from Mainland investors, including the Hong Kong Tracker ETF, which saw a significant outflow. Mainland China was off despite $722 million worth of net buying via Northbound Stock Connect. While the National Team’s two favorite ETFs had below-average volume today, their volume did pick up in the last half-hour of trading, which could be an indication of the resumption of purchases.

The Hang Seng and Hang Seng Tech indexes fell -0.16% and -0.54%, respectively, on volume that fell -16.91% from Friday, which is 115% of the 1-year average. There were 185 advancers compared to 300 decliners. The Main Board short turnover declined -51% from Friday, which is 113% of the 1-year average, as 17% of turnover was short turnover (remember Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The growth factor posted a positive return, while the value factor posted a negative return, and large caps “outperformed” (i.e. fell less than) small caps. The top-performing sectors were Materials, which gained +2.78%, Real Estate, which gained +1.33%, and Health Care, which gained +1.03%. Meanwhile, Technology fell -2.36%, Utilities fell -0.99%, and Financials fell -0.96%. The top-performing subsectors were raw materials, energy, and consumer durables, while insurance, semiconductors, and diversified financials were among the worst-performing. Southbound Stock Connect volumes were high as Mainland investors sold a net -$811 million worth of Hong Kong-listed stocks and ETFs, including CNOOC, China Hong Qiao, and Xiaomi, which were small net buys. Meanwhile, the Hong Kong Tracker ETF had a large net sell, and the Hang Seng Tech ETF had a moderate net sell.

Shanghai, Shenzhen, and the STAR Board fell -0.71%, -1.86%, and -1.58% on volume that declined -4.83% from Friday, which is 119% of the 1-year average. 1,197 stocks advanced, while 3,729 declined.  The value factor posted a positive return, while the growth factor posted a negative return as large caps “outperformed” (i.e. fell less than) small caps. The top-performing sectors were Real Estate, which gained +2.16%; Energy, which gained +1.06%; and Utilities, which gained +0.34%. Meanwhile, Communication Services fell -2.99%, Technology fell -1.87%, and Health Care fell -0.64%. The top-performing subsectors were construction machinery, precious metals, and building materials. Meanwhile, cultural media, leisure products, and education were among the worst-performing. Northbound Stock Connect volumes were moderate as foreign investors bought a net $772 million worth of Mainland stocks, including CATL, Wuliangye, and Kweichow Moutai. Meanwhile, Sikon, Zijin Mining, and Citic were small net sells. CNY and the Asia Dollar Index appreciated versus the US dollar. Treasury bonds fell. Copper and steel were both off.

Last Night's Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.81 versus 7.81 Friday
• CNY per EUR 7.21 versus 7.23 Friday
• Yield on 1-Day Government Bond 1.35% versus 1.35% Friday
• Yield on 10-Year Government Bond 2.32% versus 2.31% Friday
• Yield on 10-Year China Development Bank Bond 2.45% versus 2.43% Friday
• Copper Price -0.12%
• Steel Price -0.39%