Tariffs Rattle Nerves & Asia Stocks, Bonus Feature: The Flow Show, Week In Review
7 Min. Read Time
Week in Review
- Asian equities were mixed for the week as tariffs continue to be a top focus for investors.
- BYD reported that it sold over 4 million vehicles in 2024, while Tesla sold less than 2 million.
- The CEOs of Qualcomm, Pfizer, Cargill, and Boeing met with Premier Li this past Sunday and Vice Premier He Lifeng on Saturday in Beijing.
- Online video and social media company Kuaishou Technology reported Q4 and 2024 financial results and joined the AI frenzy as it was a major focus during the company's earning call.
Key News
Asian equities ended the week with a thud as Japan, Taiwan, South Korea, Thailand, and Malaysia fell more than -1% as tariff talk (terror?) curtails animal spirits and Indonesia closed for Hindu Saka New Year.
Thailand’s market closed afternoon trading following a severe earthquake as we hope our friends and their families there are safe. Obviously, investors are nervous about the April 2nd Trump tariff announcement. After the close, Mainland media reported that Premier Li and the State Council presided over a meeting focused on promoting “cross-border E-Commerce”. Another not-so-subtle sign following President Xi’s meeting with tech entrepreneurs and Wednesday’s Vice Premier Zhang Quoqing meeting with undisclosed “platform enterprises,” i.e., internet companies. That meeting was to promote the platform economy in the “food delivery, online retail, live streaming E-Commerce, and transportation services.” I assume Meituan, Alibaba/JD/PDD, Bytedance, and Didi are the companies hinted at.
Internet stocks had a good day on an absolute and relative basis, with Alibaba up +0.69%, NetEase up +0.38%, Trip.com up +1.3%, JD.com down -0.12%, Meituan down -1.66%, Baidu down -1.84%, and Bilibili down -0.71%. Tencent gained +0.1% following Ubisoft, which it owns 10% of, announced it would spin off its several marquee games, including Assassin’s Creed and Tom Clancy’s Rainbow Six, in a new company that Tencent will take a 25% stake in, according to Bloomberg.
The real drivers of today’s Hong Kong and Mainland China weakness were the bank, insurance, energy (including gas and coal), auto, and hard technology like semiconductors, technology hardware, and electronic equipment sectors. Mainland investors bought the Hong Kong dip via Southbound Stock Connect with $1.059 billion of net buying today, which brings the year-to-date (YTD) total to $56 billion! That’s half of 2024’s total of $103 billion, more than 2023's $40 billion and 2022's $49 billion.
After the close, the following companies reported 2024 results (% is year-over-year):
- SF Holdings' net profit was up +23.51%.
- ICBC's net profit was up +0.50%.
- CCB's net profit was up +0.28%.
- Agricultural Bank's (ABC) net profit was up +4.70%.
Reuters reported that President Xi met with the CEOs of BMW, Mercedes, and Qualcomm. Chinese Foreign Minister Wang Yi and France’s Foreign Minister Jean-Noel Barrot met to discuss Ukraine and trade. The People's Bank of China (PBOC) held its 2025 Financial Stability Work Conference, though I don’t see anything out of the ordinary. Chinese Vice Premier Ding Xuexing spoke at the Boao Forum For Asia on “promoting inclusive economic globalization”.
There is a lot of attention on the YTD performance of US, European, and Chinese equities. There are also lots of questions on what inning we are in the China rally. One indication of where we are would be the flows into funds investing in the space. Below is data we pulled from Bloomberg showing the YTD inflow (net of selling) of US-listed European and Chinese equity ETFs as of Wednesday’s close (we took all equity funds in the geographic category and added each fund’s inflows or outflows). Despite outperforming by 2X YTD, the Chinese funds have received just over $1 billion versus European funds receiving nearly $10 billion.10X! No one has allocated! No one! The pain trade is higher, IMO.
The Hang Seng and Hang Seng Tech fell -0.65% and -1.48%, respectively, on volume that was down -4.18% from yesterday, which is 137% of the 1-year average. 177 stocks advanced, while 302 declined. Main Board short turnover decreased by -9.5% from yesterday, which is 141% of the 1-year average, as 16% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Value and small capitalization stocks “outperformed”/fell less than growth and large capitalization stocks. The top sectors were healthcare, up +0.84%, and materials, up +0.67%, while technology fell -1.66%, energy fell -1.57%, and utilities fell -1.14%. The top sub-sectors were machinery, pharmaceuticals, and commercial/professional services, while semiconductors, household/personal products, and steel were the worst. Southbound Stock Connect volumes were 3x pre-stimulus levels as Mainland investors bought $1.059 billion of Hong Kong stocks and ETFs, as Alibaba, SMIC, and Tencent were moderate net buys, CNOOC Finance and Kuaishou were small net buys, NCI and Xiaomi were small net sells.
Shanghai, Shenzhen, and the STAR Board fell -0.67%, -0.90%, and -1.07%, respectively, on volume that was down -5.83% from yesterday, which is 93% of the 1-year average. 1,084 stocks advanced, while 3,943 declined. Momentum, quality, dividends, and large capitalization stocks “outperformed”/fell less than value, growth, and small capitalization stocks. Utilities and communication were the only positive sectors, up +0.16% and +0.20%, while energy fell -1.2%, technology fell -0.78%, and industrial fell -0.61%. The top sub-sectors were precious metals, diversified financials, and cultural media, while fertilizer/pesticides, chemical fiber, and energy equipment were the worst. Northbound Stock Connect volumes were well above average. CNY and the Asia dollar index fell versus the US dollar. Treasury bonds were flat. Copper and steel fell.
Last Night's Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.6% |
| Hang Seng Tech | HSTECH Index | -1.5% |
| Hong Kong Turnover | HKTurn Index | -4.2% |
| HK Short Sale Turnover | HKSST Index | -9.5% |
| Short Turnover as a % of HK Turnovr | N/A | 15.6% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1059 |
| Southbound Stock Connect Volume as % of HK Turnover | N/A | 43% |
| China (Shanghai) | SHCOMP Index | -0.7% |
| China (Shenzhen) | SZCOMP Index | -0.9% |
| China (STAR Board) | Star50 Index | -1.1% |
| Mainland Turnover | .chturn Index | -5.8% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.5% |
| Japan | NKY Index | -1.8% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | 0.6% |
| Malaysia | FBMKLCI Index | -1.4% |
| Pakistan | KSE100 Index | 0.2% |
| Philippines | PCOMP Index | 0.1% |
| South Korea | KOSPI Index | -1.9% |
| Taiwan | TWSE Index | -1.6% |
| Thailand | SET Index | -1% |
| Singapore | STI Index | -0.2% |
| Australia | AS51 Index | 0.2% |
| Vietnam | VNINDEX Index | -0.48% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -0.44 |
| Communication Services | 9 | -0.06 |
| Consumer Discretionary | 30 | -0.35 |
| Consumer Staples | 13 | -0.58 |
| Energy | 7 | -1.57 |
| Financials | 23 | -0.87 |
| Health Care | 13 | 0.84 |
| Industrials | 19 | 0.36 |
| Information Technology | 10 | -1.66 |
| Materials | 10 | 0.67 |
| Real Estate | 6 | -0.4 |
| Utilities | 12 | -1.14 |
| Mainland China Listed | 432 | -0.48 |
| Communication Services | 9 | 0.2 |
| Consumer Discretionary | 31 | -0.57 |
| Consumer Staples | 27 | -0.51 |
| Energy | 16 | -1.2 |
| Financials | 63 | -0.19 |
| Health Care | 40 | -0.48 |
| Industrials | 69 | -0.6 |
| Information Technology | 85 | -0.78 |
| Materials | 68 | -0.52 |
| Real Estate | 7 | -0.41 |
| Utilities | 17 | 0.16 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.1 |
| Alibaba HK | 9988 HK Equity | 0.7 |
| JD.com HK | 9618 HK Equity | -0.1 |
| NetEase HK | 9999 HK Equity | 0.4 |
| Yum China HK | 9987 HK Equity | -0.2 |
| Baozun HK | 9991 HK Equity | -0.1 |
| Baidu HK | 9888 HK Equity | -1.8 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -0.7 |
| Trip.com HK | 9961 HK Equity | 1.3 |
| EDU HK | 9901 HK Equity | 0.8 |
| Xpeng HK | 9868 HK Equity | -2.3 |
| Weibo HK | 9898 HK Equity | 0.2 |
| Li Auto HK | 2015 HK Equity | -3.5 |
| Nio Auto HK | 9866 HK Equity | -7.1 |
| Zhihu HK | 2390 HK Equity | 3.4 |
| KE HK | 2423 HK Equity | -3 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.1 |
| Meituan HK | 3690 HK Equity | -1.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| XIAOMI CORP-CLASS B | -1.3 |
| TENCENT HOLDINGS LTD | 0.1 |
| ALIBABA GROUP HOLDING LTD | 0.7 |
| SEMICONDUCTOR MANUFACTURING | -4.7 |
| BYD CO LTD-H | -0.1 |
| MEITUAN-CLASS B | -1.7 |
| KUAISHOU TECHNOLOGY | -0.9 |
| HONG KONG EXCHANGES & CLEAR | -1.2 |
| XPENG INC - CLASS A SHARES | -2.3 |
| CNOOC LTD | -1.2 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| BYD CO LTD -A | -1 |
| KUNSHAN KINGLAI HYGIENIC-A | 14.5 |
| WOLONG ELECTRIC GROUP CO L-A | -0.8 |
| EAST MONEY INFORMATION CO-A | 0.1 |
| HANGZHOU IRON & STEEL CO-A | 6.1 |
| JIANGSU HENGRUI PHARMACEUT-A | 0.5 |
| ZIJIN MINING GROUP CO LTD-A | 1.7 |
| NINGXIA BAOFENG ENERGY GRO-A | -3.5 |
| SUNGROW POWER SUPPLY CO LT-A | 0.7 |
| POSTAL SAVINGS BANK OF CHI-A | -2.4 |
Last Night's Exchange Rates, Prices, & Yield
- CNY per USD 7.26 versus 7.26 yesterday
- CNY per EUR 7.82 versus 7.82 yesterday
- Yield on 10-Year Government Bond 1.81% versus 1.81% yesterday
- Yield on 10-Year China Development Bank Bond 1.86% versus 1.84% yesterday
- Copper Price -1.08%
- Steel Price -0.44%
