Key News

Asian equities were mixed overnight on continued Middle East tensions though Mainland China’s Shanghai and STAR 50 indexes outperformed.

Mainland indexes began the session lower but gained ground throughout the day as Shanghai closed above +1%. Northbound Stock Connect saw the highest inflow since mid-March, over $1 billion, reversing the net outflow from Friday. All sectors were positive though defensive and value sectors were outperformers.

Hong Kong’s markets were broadly lower though defensive and value sectors saw gains.

The State Council issued “9 Key Points” to improve China's capital markets, a rare document to come out of the State Council, which usually does not comment on markets. Among the measures are initiatives to control the supply of IPOs, encourage companies to pay dividends and improve their corporate governance, and encourage bank and trust products to allocate more to equities.

Financials were sharply higher on an announcement from Central Huijin Investments that the state-linked entity will increase its holdings of Mainland bank stocks.

Apple supplier Sunny Optical fell -3.53% in Hong Kong as Apple reported that iPhone shipments were down -10% year-over-year globally in the first quarter. Japan reported a decline in machinery orders and industrial production, following similarly weak export data from China. Although the US economy appears not to be slowing as quickly as the Fed had anticipated, globally the story could be a little different, as indicated by lower export and iPhone shipment data. China's export decline in March is likely not unique to the country and is being reflected elsewhere. Time for domestic consumption to take the reins!

Mainland-listed CRRC gained +11% on positive profit guidance along with other major railway and railway equipment manufacturers. Remember the bond issuance for infrastructure from last year? It appears the impact of that stimulus is now being felt in the equity market.

The Hang Seng and Hang Seng Tech indexes both closed lower by -0.72% and -0.92%, respectively, on volume that declined -10% from Friday. Mainland investors bought a net $890 million worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect. The top-performing sectors were Energy, which gained +1.80%, Industrials, which gained +1.08%, and Financials, which gained +0.47%. Meanwhile, the worst-performing sectors were Communication Services, which fell -1.67%, Health Care, which fell -1.63%, and Consumer Discretionary, which fell -1.20%.

Shanghai, Shenzhen, and the STAR Board diverged to close +1.26%, -0.30%, and +1.69%, respectively, on volume that increased +23% from Friday. Foreign investors bought a net $1.1 billion worth of Mainland-listed stocks via Northbound Stock Connect. The top-performing sectors were Energy, which gained +3.26%, Industrials, which gained +3.18%, and Consumer Staples, which gained +2.73%. Meanwhile, the worst-performing sectors were Real Estate, which gained +0.73%, Consumer Discretionary, which gained +0.94%, and Materials, which gained +1.18%.

Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.24 versus 7.24 Friday
• CNY per EUR 7.71 versus 7.70 Friday
• Yield on 1-Day Government Bond 1.44% versus 1.48% Friday
• Yield on 10-Year Government Bond 2.28% versus 2.28% Friday
• Yield on 10-Year China Development Bank Bond 2.39% versus 2.40% Friday
• Copper Price +0.01%
• Steel Price +0.11%