Week in Review

• Asian equities were mixed but mostly lower this week though the Shanghai Composite managed a gain of +1.52% while the Hang Seng lost -3%.
• It was a big week for economic releases as China announced Q1 GDP growth above 5%, beating most estimates, while retail sales increased by only +3%, lower than estimates, though online retail sales increased +12%.
• German Chancellor Olaf Scholz was in China this week to discuss diplomatic efforts over Ukraine and trade relationship priorities, a positive sign as he is the latest in a long list of European leaders to visit China over the past year.
• JD.com confirmed its massive share repurchase program will involve purchases of at least $2.5 billion worth of shares through 2027.

Friday’s Key News

Asian equities were mixed overnight as China markets declined though Mainland held up better than Hong Kong, which has been a theme of late. Israel striking Iran means global traders went risk off overnight, though US equities are slightly up this morning.

Real estate developer Vanke is said to be seeking a buyer for its Singapore-based logistics company in order to raise cash to stave off a default. Venke is in a “last man standing” position as Evergrande and other developers have already been ordered to liquidate their assets. Real estate was lower in both Hong Kong and Mainland China overnight.

Semiconductor stocks fell on Taiwan Semiconductor Manufacturing (TSMC) lowering its outlook for 2024. Demand for chips is waning in terms of consumer demand for electronics. TSMC also cited geopolitical uncertainties for lowering its outlook. However, Generative AI continues to drive significant demand for higher-tier chips.

The China Securities Regulatory Commission (CSRC) reiterated efforts to make it easier for technology companies to list overseas. However, the press conference did not prevent the slide in technology stocks overnight in Hong Kong.

Mainland investors bought the dip in Hong Kong in size overnight, to the tune of nearly $1 billion.

Energy was the top-performing sector in both Hong Kong and Mainland China as value sectors outperformed growth.

The Hang Seng and Hang Seng Tech indexes both closed lower by -0.99% and -2.35%, respectively, on volume that increased +11% from yesterday. Mainland investors bought a net $949 million worth of Hong Kong-listed stocks and ETFs. The top-performing sectors were Energy, which gained +1.46%, Industrials, which gained +0.18%, and Materials, which fell -0.07%. Meanwhile, the worst-performing sectors were Information Technology, which fell -3.14%, Health Care, which fell -2.33%, and Consumer Discretionary, which fell -2.01%.

Shanghai, Shenzhen, and the STAR Board all closed lower by -0.29%, -0.73%, and -2.03%, respectively, on volume that decreased -9% from yesterday. Foreign investors sold a net -$901 million worth of Mainland-listed stocks. The top-performing sectors were Energy, which gained +1.57%, Materials, which gained +0.16%, and Utilities, which fell -0.21%. Meanwhile, the worst-performing sectors were Information Technology, which fell -2.56%, Real Estate, which fell -1.26%, and Consumer Staples, which fell -1.19%. CNY was flat again versus the US dollar. Government bonds were flat, too. Copper gained while steel fell.

Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.24 versus 7.24 yesterday
• CNY per EUR 7.72 versus 7.71 yesterday
• Yield on 1-Day Government Bond 1.33% versus 1.37% yesterday
• Yield on 10-Year Government Bond 2.25% versus 2.25% yesterday
• Yield on 10-Year China Development Bank Bond 2.32% versus 2.32% yesterday
• Copper Price +1.32%
• Steel Price -0.22%