Key News

Asian equities were mixed overnight on light volumes in advance of US inflation data tomorrow, as Indonesia, Malaysia, and the Philippines were closed for market holidays.

It was quiet on the news front as Premier Li’s meeting with eight “economic experts and entrepreneurs” in order to “listen to opinions and suggestions on the current economic situation” garnered significant attention. Ministry of Finance Deputy Minister Liao Min had a Q&A with reporters on Janet Yellen’s China trip. Meanwhile, multiple workstreams within the China-US Economic Working Group will reconnect, including the PBOC and US Treasury, with multiple teams meeting around the World Bank and IMF meetings in Washington, DC in a few weeks. 

China will report March inflation data tomorrow, with estimates only at +0.4%, though Dalian hog futures gained +6.45% in March. Pork prices are a big component of China's CPI, leading me to believe CPI will “surprise” to the upside.

Growth stocks outperformed in both Hong Kong and Mainland China on light volumes, while NetEase gained +4.1% on new game approvals. Hong Kong’s most heavily traded stocks by value were Tencent, which fell -0.13% after buying back 3.28 million shares overnight, Alibaba, which gained +0.14%, Xiaomi, which gained +3.1%, Meituan, which gained +0.3% after buying back 3.99 million shares overnight, and HSBC, which gained +1.11%. 

The electric vehicle ecosystem, including battery makers and lithium producers, had a strong day as a government official stated that China’s electric vehicle production capacity is far from meeting demand.

Baidu was off -3.29% on an analyst price target reduction.

Southbound Stock Connect had a moderate day of net buying from Mainland China investors, who purchased $349 million worth of Hong Kong-listed stocks and ETFs. Growth stocks outperformed in China as well, as healthcare outperformed and Wuxi AppTec gained +1.76%. Foreign investors sold -$145 million of Mainland stocks via Northbound Stock Connect.

The Hang Seng and Hang Seng Tech indexes gained +0.57% and +0.98%, respectively, on volume that declined -16.96% from yesterday, which is 85% of the 1-year average. 348 stocks advanced, while 113 declined. Main Board turnover decreased -37.03% from yesterday, which is 66% of the 1-year average, as 14% of turnover was short turnover (remember Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). All factors were positive, as the growth factor and small caps outperformed the value factor and large caps. The top-performing sectors were Technology, which gained +2.6%, Health Care, which gained +2.4%, and Utilities, which gained +1.6%. Meanwhile, energy was down -0.42%. The top-performing subsectors were semiconductors, pharmaceuticals, and media. Meanwhile, food & beverage, household products, and energy were among the worst-performing subsectors. Southbound Stock Connect volumes were moderate as Mainland investors bought a net $349 million worth of Hong Kong-listed stocks and ETFs, including Tencent, Xiaomi, and China Mobile, which were small net buys. Meanwhile, CNOOC, HSBC, and China Hongqiao were small net sells. 

Shanghai, Shenzhen, and the STAR Board gained +0.05%, +0.82%, and +1.21%, respectively, on volume that decreased -14.39% from yesterday, which is 92% of the 1-year average. 3,560 stocks advanced, while 1,319 declined. The growth factor and small caps outperformed the value factor and large caps. The top-performing sectors were Health Care, which gained +1.48%, Technology, which gained +0.69%, and Materials, which gained +0.62%. Meanwhile, Energy fell -0.98%, Utilities fell -0.80%, and Real Estate fell -0.42%, to make up the worst-performing sectors. The top-performing subsectors were fine chemicals, packaging, and forestry. Meanwhile, energy equipment, precious metals, and oil & gas were among the worst-performing. Northbound Stock Connect volumes were moderate as foreign investors bought a net $145 million worth of Mainland stocks, including Zijin Mining, which was a large net buy, and Haier and CMOC, which were small net buys. Meanwhile, CITS, Zhongli Innolight, and TFC were small net sells. CNY was off slightly versus the US dollar. Treasury bonds rallied. Copper and steel were both higher.

Last Night's Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.23 versus 7.23 yesterday
• CNY per EUR 7.85 versus 7.84 yesterday
• Yield on 10-Year Government Bond 2.28% versus 2.28% yesterday
• Yield on 10-Year China Development Bank Bond 2.41% versus 2.41% yesterday
• Copper Price +1.18%
• Steel Price +1.51%