Week in Review

• Asian equities were mostly higher for the week as Hong Kong and Mainland China outperformed and Indonesia and Pakistan underperformed.
• Tariffs were the talk of the world this week as President Trump walked back 25% tariffs on Mexico and Canada and implemented 10% tariffs on China, for now, while China retaliated by instituting tariffs on agricultural products and natural gas, as well as launching an antitrust probe into Google.
• The world’s largest battery maker CATL will list shares in Hong Kong, in addition to its listing on the Mainland, according to an official announcement this week.
• Following DeepSeek’s launch of its hyper-efficient large language model (LLM), Baidu and Perplexity have both integrated its model into their platforms and Alibaba released a new version of its visual-language model Qwen.
• In our latest video, join KraneShares' Xiabing Su as she accompanies students from the US visiting China for the first time, thanks to the US-China Green Institute.

Key News

Asian equities were mixed but mostly higher overnight as Hong Kong and Mainland China outperformed and Indonesia and the Philippines underperformed.

DeepSeek announced that it would be restricting access to its servers due to capacity constraints. This is interesting as, while its model was efficient and relatively cheap to develop, ever-increasing demand for querying it still demands a great deal of server space. This led cloud computing and data infrastructure names to continue their rise. Tuya, in particular, gained +43% after advertising to developers that they can access DeepSeek’s models through their system.

The electric vehicle ecosystem also performed well overnight, especially Geely, up +8%, and Li Auto, up +8%. The gains were seemingly driven by enthusiasm over potential technological advances in China’s vehicle industry using AI. However, semiconductor names were mostly lower.

Tencent was the most heavily traded stock in Hong Kong by value, gaining +1.86%, followed by smartphone maker Xiaomi, which gained +4.96%. These names helped lead the technology surge this week higher, finishing strong overnight.

US Treasury Secretary Scott Bessent gave an interview to Bloomberg News yesterday. He said that he was not sure of the long-term inflationary impact of tariffs. He said that the effect would be offset by other policies, such as deregulation. He also cited China’s excess capacity as a reason for the lack of inflationary pressure stemming from tariffs. Our thesis continues to be that tariffs are an opening salvo in a trade negotiation. The first call did with Xi apparently did not accomplish this, though. As the most complex and important trade relationship the US has, getting China trade right will take some time.

All sectors were higher in Mainland China’s markets.

The Hang Seng and Hang Seng Tech indexes both closed higher by +1.16% and +1.80%, respectively, overnight on volume that increased +38% from yesterday. Mainland investors bought a net $136 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Information Technology, which gained +4.54%, Real Estate, which gained +2.00%, and Consumer Discretionary, which gained +1.81%. Meanwhile, the worst-performing sectors were Energy, which fell -1.10%, Health Care, which fell -0.42%, and Utilities, which fell -0.21%.

Shanghai, Shenzhen, and the STAR Board all closed higher by +1.01%, +1.61%, and +0.75%, respectively. The top-performing sectors were Consumer Discretionary, which gained +2.74%, Real Estate, which gained +2.25%, and Information Technology, which gained +1.96%. Meanwhile, the worst-performing sectors were Utilities, which gained +0.03%, Financials, which gained +0.66%, and Energy, which gained +0.72%. Exchange rates and yields were mostly flat overnight.

Last Night's Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	1.2%
Hang Seng Tech	HSTECH Index	1.8%
Hong Kong Turnover	HKTurn Index	38.1%
HK Short Sale Turnover	HKSST Index	10.2%
Short Turnover as a % of HK Turnovr	N/A	14.1%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	0
China (Shanghai)	SHCOMP Index	1%
China (Shenzhen)	SZCOMP Index	1.6%
China (STAR Board)	Star50 Index	0.7%
Mainland Turnover	.chturn Index	27.7%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	-0.1%
Japan	NKY Index	-0.7%
India	SENSEX Index	-0.3%
Indonesia	JCI Index	-1.9%
Malaysia	FBMKLCI Index	0.4%
Pakistan	KSE100 Index	0.2%
Philippines	PCOMP Index	-1.4%
South Korea	KOSPI Index	-0.6%
Taiwan	TWSE Index	0.7%
Thailand	SET Index	1.6%
Singapore	STI Index	0.8%
Australia	AS51 Index	-0.1%

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	152	1.32
Communication Services	9	1.57
Consumer Discretionary	30	1.81
Consumer Staples	13	0.46
Energy	7	-1.1
Financials	23	0.02
Health Care	13	-0.42
Industrials	19	0.27
Information Technology	10	4.54
Materials	10	0.75
Real Estate	6	2
Utilities	12	-0.21
Mainland China Listed	432	1.35
Communication Services	9	0.86
Consumer Discretionary	31	2.74
Consumer Staples	27	1.23
Energy	16	0.72
Financials	63	0.66
Health Care	40	1.39
Industrials	69	1.61
Information Technology	85	1.96
Materials	68	1.41
Real Estate	7	2.25
Utilities	17	0.03

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	1.9
Alibaba HK	9988 HK Equity	1.5
JD.com HK	9618 HK Equity	-0.4
NetEase HK	9999 HK Equity	1.2
Yum China HK	9987 HK Equity	5.1
Baozun HK	9991 HK Equity	2.5
Baidu HK	9888 HK Equity	-0.5
Autohome HK	2518 HK Equity	0
Bilibili HK	9626 HK Equity	2.7
Trip.com HK	9961 HK Equity	-1.8
EDU HK	9901 HK Equity	2.7
Xpeng HK	9868 HK Equity	1.7
Weibo HK	9898 HK Equity	6.4
Li Auto HK	2015 HK Equity	7.6
Nio Auto HK	9866 HK Equity	0.3
Zhihu HK	2390 HK Equity	-1
KE HK	2423 HK Equity	2
Tencent Music Entertainment HK	1698 HK Equity	1.9
Meituan HK	3690 HK Equity	2.7

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
TENCENT HOLDINGS LTD	1.9
XIAOMI CORP-CLASS B	4.7
ALIBABA GROUP HOLDING LTD	1.5
SEMICONDUCTOR MANUFACTURING	-2.6
BYD CO LTD-H	4.5
MEITUAN-CLASS B	2.7
GEELY AUTOMOBILE HOLDINGS LT	8
HONG KONG EXCHANGES & CLEAR	2.5
LI AUTO INC-CLASS A	7.6
LENOVO GROUP LTD	6.3

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
EAST MONEY INFORMATION CO-A	2.5
BYD CO LTD -A	5.1
ZTE CORP-A	-1.1
IEIT SYSTEMS CO LTD-A	7.1
DAWNING INFORMATION INDUST-A	2.8
SEMICONDUCTOR MANUFACTURIN-A	-1.8
HITHINK ROYALFLUSH INFORMA-A	3.4
ISOFTSTONE INFORMATION TEC-A	10
JIANGSU HOPERUN SOFTWARE C-A	5.6
CONTEMPORARY AMPEREX TECHN-A	3.2

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 7.29 versus 7.29 yesterday
• CNY per EUR 7.57 versus 7.57 yesterday
• Yield on 10-Year Government Bond 1.60% versus 1.60% yesterday
• Yield on 10-Year China Development Bank Bond 1.61% versus 1.61% yesterday
• Copper Price +1.38%
• Steel Price +0.24%