Key News

Asian equity markets had a very strong day after President Trump hit the pause button on tariff implementation, except for Mainland China, with a near double-digit return in Japan and Taiwan. However, India missed out on the fun due to a market holiday for Mahavir Jayanti, a festive in Jainism celebrating the birth of Lord Mahavira.

The crack in the tariff façade, driven by the US Treasury 10-Year yield hitting 5% Tuesday night, fueled Hong Kong and Mainland China’s broad beta rally, led by growth stocks, as advancers outpaced decliners significantly on high volumes. It it great to see markets providing a real-time ECON 101 lesson, though the tuition costs paid by the US and global investors in US stocks at $10 trillion are most unfortunate.

Both China's Ministry of Commerce (MoC) and Ministry of Foreign Affairs held press conferences reiterating that China will not back down, though left the door open for US negotiations. As we have stated, the Chinese government’s negotiating position is far stronger than realized due to the misperception that all 1.4 billion Chinese working in factories depend entirely on trade with the US. Our webinar this morning will review this data.

The Ministry of Commerce Minister Wang Wentao was busy hosting calls with the Minister of Malaysian Trade and Industry and the European Commission’s Committee on Trade and Economic Security. China filed another complaint on US tariffs with the World Trade Organization’s Council for Trade in Goods, which requires a sixty-day consultation. While DC might not care about the World Trade Organization (WTO), I suspect the rest of the world does.

There was a fair amount of media coverage that the Chinese government held a high-level economic meeting, though I could find no evidence of such a meeting from our local sources. The lack of evidence nor any policy stimulus announced might explain the fade off intra-day highs. There are rumors that a major domestic consumption policy will be announced now that Trump’s tariffs on China have been announced. The National Healthcare Security Administration announced the establishment of the Fertility Insurance Professional Committee. 

Pro-consumption stimulus will likely address structural headwinds, including demographics—electric vehicle (EV) and hybrid battery maker CATL, which gained +3.12%, as its Hong Kong-listing moves forward. March's producer price index (PPI) was light at -2.5% versus expectations of -2.3% and February’s -2.2%, while the consumer price index (CPI) was -0.1% versus expectations of 0.0% and February's -0.7%.

Mainland investors sold both the Hong Kong Tracker ETF and Hang Seng China Enterprise ETFs in size, making Southbound Stock Connect a rare net sell day, at a net -$519 million sold. Alibaba and Xiaomi were very large net buys today. Mainland-listed hardware and electronic device makers had a very strong day, though transportation stocks were off.

Wall Street Journal journalists Joanna Stern and Nicole Nguyen wrote a great piece titled “An American-Made iPhone: Just Expensive or Completely Impossible?”. The article outlines many challenges, such as sourcing parts from forty countries and lacking skilled labor. It's a worthwhile read! I continue to applaud data discovery in the media and, to some degree, DC.

The Hang Seng and Hang Seng Tech indexes gained +2.06% and +2.60%, respectively, on volume that decreased -4.09% from yesterday, which is 227% of the 1-year average. 410 stocks advanced, while 72 stocks declined. Main Board short turnover decreased -7.13% from yesterday, which is 294% of the 1-year average, as 20% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Growth, momentum, and small caps outperformed the value factor and large caps. All sectors were positive. The top-performing sectors were Materials, which gained +4.29%, Information Technology, which gained +3.49%, and Real Estate, which gained +2.92%. The top-performing subsectors were consumer staples distribution, nonferrous metals, and aerospace. Meanwhile, coal was the only negative subsector. Southbound Stock Connect volumes were 5X pre-stimulus levels, as Mainland investors sold a net -$519 million worth of Hong Kong-listed stocks and ETFs, including Alibaba and Xiaomi, which were very large net buys, Meituan, which was a moderate net buy, Tencent, Semiconductor Manufacturing International (SMIC), Kuaishou, and CNOOC. The Hong Kong Tracker ETF and Hang Seng China Enterprise ETFs were massive net sells.

Shanghai, Shenzhen, and the STAR Board all closed higher by +1.16%, +2.46%, and +1.09%, respectively, on volume that decreased -5.24% from yesterday, which is 140% of the 1-year average. 4,793 stocks advanced, while 299 stocks declined. Growth, momentum, and small caps outperformed value and large caps. Utilities were the only negative sector, down -0.2%, while the top-performing sectors were Consumer Discretionary, which gained +3.15%, Materials, which gained +3.03%, and Information Technology, which gained +2.93%. The top-performing subsectors were motorcycles, precious metals, and retail. Meanwhile, telecom, soft drink, and land transport were among the worst-performing subsectors. Northbound Stock Connect volumes were above average. CNY and the Asia dollar index rose versus the US dollar. Treasury bonds rallied. Copper and steel rose.

Hong Kong Tracker ETF’s Southbound Stock Connect Inflow/Outflow

Last Night's Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	2.1%
Hang Seng Tech	HSTECH Index	2.7%
Hong Kong Turnover	HKTurn Index	-4.1%
HK Short Sale Turnover	HKSST Index	-7.1%
Short Turnover as a % of HK Turnovr	N/A	19.9%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	0
China (Shanghai)	SHCOMP Index	1.2%
China (Shenzhen)	SZCOMP Index	2.5%
China (STAR Board)	Star50 Index	1.1%
Mainland Turnover	.chturn Index	-5.2%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	3.1%
Japan	NKY Index	9.1%
India	SENSEX Index	-0.5%
Indonesia	JCI Index	4.8%
Malaysia	FBMKLCI Index	4.5%
Pakistan	KSE100 Index	1.6%
Philippines	PCOMP Index	1.2%
South Korea	KOSPI Index	6.6%
Taiwan	TWSE Index	9.2%
Thailand	SET Index	4.2%
Singapore	STI Index	5.4%
Australia	AS51 Index	4.5%
Vietnam	VNINDEX Index	6.8%

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	151	1.6
Communication Services	9	0.97
Consumer Discretionary	28	1.67
Consumer Staples	13	2.78
Energy	7	0.15
Financials	23	1.27
Health Care	13	2.37
Industrials	20	1.64
Information Technology	10	3.48
Materials	10	4.28
Real Estate	6	2.92
Utilities	12	0.62
Mainland China Listed	404	1.87
Communication Services	6	2.94
Consumer Discretionary	31	3.2
Consumer Staples	24	0.71
Energy	13	0.71
Financials	64	1.46
Health Care	31	1.68
Industrials	64	1.85
Information Technology	91	2.99
Materials	58	3.08
Real Estate	6	1.65
Utilities	16	-0.15

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	0.8
Alibaba HK	9988 HK Equity	1.2
JD.com HK	9618 HK Equity	3.7
NetEase HK	9999 HK Equity	1.2
Yum China HK	9987 HK Equity	0.1
Baozun HK	9991 HK Equity	-3.2
Baidu HK	9888 HK Equity	2.4
Autohome HK	2518 HK Equity	0.5
Bilibili HK	9626 HK Equity	0.7
Trip.com HK	9961 HK Equity	3.5
EDU HK	9901 HK Equity	-0.9
Xpeng HK	9868 HK Equity	4.4
Weibo HK	9898 HK Equity	2
Li Auto HK	2015 HK Equity	4.8
Nio Auto HK	9866 HK Equity	3.9
Zhihu HK	2390 HK Equity	3.7
KE HK	2423 HK Equity	-0.6
Tencent Music Entertainment HK	1698 HK Equity	3
Meituan HK	3690 HK Equity	-0.7

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
TENCENT HOLDINGS LTD	0.8
ALIBABA GROUP HOLDING LTD	1.2
XIAOMI CORP-CLASS B	2.7
MEITUAN-CLASS B	-0.7
SEMICONDUCTOR MANUFACTURING	2
BYD CO LTD-H	2.7
HSBC HOLDINGS PLC	5.6
HONG KONG EXCHANGES & CLEAR	1.7
CHINA CONSTRUCTION BANK-H	1.3
KUAISHOU TECHNOLOGY	3.8

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
EAST MONEY INFORMATION CO-A	0
LUXSHARE PRECISION INDUSTR-A	7.1
CHINA GREATWALL TECHNOLOGY-A	-0.5
CONTEMPORARY AMPEREX TECHN-A	3.1
CHINA TOURISM GROUP DUTY F-A	5
BYD CO LTD -A	3.6
YONGHUI SUPERSTORES CO LTD-A	3.1
VICTORY GIANT TECHNOLOGY -A	5.1
ZIJIN MINING GROUP CO LTD-A	5.2
KWEICHOW MOUTAI CO LTD-A	0.5

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 7.32 versus 7.34 yesterday
• CNY per EUR 8.10 versus 8.10 yesterday
• Yield on 10-Year Government Bond 1.64% versus 1.65% yesterday
• Yield on 10-Year China Development Bank Bond 1.71% versus 1.71% yesterday
• Copper Price +1.94%
• Steel Price +1.50%