Key News

Asian equities were mixed overnight ahead of US inflation data, which came in ahead of estimates, as Hong Kong outperformed significantly.

Fitch lowered its outlook for China’s credit conditions from stable to negative overnight, following a similar move by S&P in December. Hong Kong-listed stocks did not care, gaining around +2%. It is important to note that China’s credit rating remains the same at Fitch: A+. Also, ratings agencies always use 6-months to 1-year trailing data in making their decisions. As such, this reflects the difficult year for real estate companies and local government finances in 2023.

NIO continued its rise, gaining nearly +5% overnight on fresh data from the China Association of Automobile Manufacturers (CAAM) showed that March new energy vehicle sales were up +35% year-over-year.

China will report inflation and credit data tonight. Expectations are surprisingly low for the consumer price index (CPI) especially given the recent rise in pork prices. New loan data will also be important as it will give insights into how stimulus and rate cuts are leading to more lending. The impact year-to-date has been light.

Xi Jinping is reported to be meeting with former president of Taiwan Ma Ying-Jeou in Beijing. The Taiwan-based politician is a member of the Kuomintang (KMT) party, which today tends to be relatively dovish on relations with Beijing. Taiwan’s parliament is currently deadlocked between Beijing doves and hawks.

Alibaba shares gained on rumors that Jack Ma sent a memo to company staff, praising the management’s current strategy. JD.com announced massive subsidies for video content creators. The stock rose overnight, suggesting that investors are no longer wary of increased spending on subsidies and applaud the push to increasing live streaming and video content to compete with Douyin, China's TikTok that now offers E-Commerce.

The Hang Seng and Hang Seng Tech indexes gained +1.85% and +2.12%, respectively, on volume that increased +29% from yesterday. Mainland investors sold a net -$911 million worth of Hong Kong-listed stocks and ETFs. The top-performing sectors were Consumer Discretionary, which gained +3.53%, Utilities, which gained +3.44%, and Materials, which gained +2.86%. Meanwhile, the worst-performing sectors were Information Technology, which fell -0.22%, Health Care, which fell -0.09%, and Real Estate, which gained +0.11%.

Shanghai, Shenzhen, and the STAR Board all closed lower by -0.70%, -1.74%, and -1.85%, respectively, on volume that increased +4% from yesterday. Foreign investors sold a net -$525 million worth of Mainland-listed stocks. The top-performing sectors were Energy, which gained +1.21%, Utilities, which gained +1.20%, and Materials, which gained +0.18%. Meanwhile, the worst-performing sectors were Real Estate, which fell -3.53%, Information Technology, which fell -2.46%, and Communication Services, which fell -1.85%.

Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.23 versus 7.23 yesterday
• CNY per EUR 7.80 versus 7.85 yesterday
• Yield on 1-Day Government Bond 1.49% versus 1.44% yesterday
• Yield on 10-Year Government Bond 2.30% versus 2.28% yesterday
• Yield on 10-Year China Development Bank Bond 2.42% versus 2.41% yesterday
• Copper Price +0.66%
• Steel Price +0.36%