Key News

Asian equities were mixed overnight as Hong Kong and Mainland China returned from holiday refreshed and in good spirits (similar to how I feel post-vacation!), and Indonesia outperformed while Thailand underperformed.

Japan was closed for Greenery Day, a holiday “dedicated to appreciating nature and expressing gratitude for its blessings.” South Korea was closed for Vesak Day, which is also Buddha’s Birthday.

Hong Kong and Mainland China were driven higher by green shoots in US-China trade talks last Friday and over the weekend, as well as Treasury Secretary Bessent’s positive comments yesterday. Asian currencies have made monster moves versus the US dollar. The Taiwan dollar is up +7.29% and the offshore CNY (CNH) is up +0.96% since April 28^th.

Chinese people were on the move during the May Day holiday, with 101.7 million railway passengers and 11.15 million airline passengers, while 10.896 million foreigners visited China, according to Mainland media sources. According to the South China Morning Post, people opened their wallets, with 60,000 auto trade-in subsidy applications. Meanwhile, home appliance sales during the holiday were up +15.5% year-over-year (YoY), auto sales were up +13.7% YoY, communication equipment sales were up+10.5% YoY, and home and apartment sales data appear strong in the top 30 major cities.

The April Caixin Services PMI was 50.7 versus expectations of 51.8 and March’s 51.9 as the month-over-month indicator declines from tariff front running. Hong Kong soft technology (internet), airlines, hotels, restaurants, and Macau casino stocks outperformed overnight. Hardware technology stocks, including biotechnology, and semiconductors, underperformed, led by index heavyweight Xiaomi, which was down -2.92%.

Mainland investors bought a healthy $1.7 billion worth of Hong Kong-listed stocks and ETFs today as Meituan and Alibaba saw an inflow, while Tencent saw a small outflow. From a breadth perspective, Mainland China had a very strong day led by growth stocks, with 4,677 advancing stocks and only 396 declining stocks. Unlike Hong Kong, hard technology stocks had a very strong day, led by electronic equipment, semiconductors, software, and travel and consumer plays, such as airlines. Hopefully, the positive momentum continues!  

Investor’s Business Daily had an insightful article over the weekend titled “The Trade War Comes Ashore,” providing a timeline of the coming tariff tsunami effect on store shelves and retail employment. Maritime consulting firm Drewry anticipates 2025 cargo volumes will decline for only the third time since 1979. The only two declines were the 2009 Global Financial Crisis and the 2020 coronavirus pandemic. Apollo Global Management believes that domestic freight and retail companies will begin layoffs by early June as “most retailers will have run through their stockpiled inventory.”

Companies anticipating inventory issues mentioned in the article include Amazon, Target, and Walmart, though the list is far more expansive. Even if the US and China governments make significant progress over the next few weeks, the American people will likely discover how reliant and intertwined our two economies are.

I suspect most Americans don’t want their kids working in low-end manufacturing versus high-end manufacturing and innovation industries (brain versus brawn industries). Obviously, there are things that should be made here in the US for national security reasons, but the vast majority of what is made in China and Asia more broadly and sold in US stores doesn’t fit that criteria. Ultimately, not even politicians can overpower economic laws, just as President Hoover and Senators Smoot and Hawley learned nearly a century ago.

Last Night's Performance

Country / Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	0.7%
Hang Seng Tech	HSTECH Index	-0.1%
Hong Kong Turnover	HKTurn Index	59.6%
Hong Kong Short Sale Turnover	HKSST Index	64.3%
Short Turnover as a % of Hong Kong Turnover	N/A	16.2%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	703.6
China (Shanghai)	SHCOMP Index	1.1%
China (Shenzhen)	SZCOMP Index	2.3%
China (STAR Board)	Star50 Index	1.4%
Mainland Turnover	.chturn Index	14.3%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	0.2%
Japan	NKY Index	1%
India	SENSEX Index	-0.2%
Indonesia	JCI Index	1%
Malaysia	FBMKLCI Index	-0.2%
Pakistan	KSE100 Index	-0.5%
Philippines	PCOMP Index	0.9%
South Korea	KOSPI Index	0.1%
Taiwan	TWSE Index	-0.1%
Thailand	SET Index	-0.9%
Singapore	STI Index	0.2%
Australia	AS51 Index	-0.1%
Vietnam	VNINDEX Index	0.2%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	118	109
Advancing Stocks	260	4677
Declining Stocks	220	396
Outperforming Factors	Large Caps, Low Volatility, Growth	Liquidity, Growth, Momentum
Underperforming Factors	Liquidity, Quality, Buybacks	Low Volatility, Dividend Yield, Large Caps
Top Sectors	Communication, Materials, Discretionary	Tech, Communication, Materials
Bottom Sectors	Tech, Healthcare, Real Estate
Top Subsectors	Food/Beverage, Consumer Services, Transportation	Office Supplies, Internet, Education
Bottom Subsectors	Tech Hardware, Consumer Staples Distribution, Pharmaceuticals/Biotech	Soft Drink, Banking, Oil/Gas
Southbound Connect Buys	Meituan, HS China Enterprise ETF, HK Tracker ETF (very large), Alibaba (large)
Southbound Connect Sells	CSPC Pharma, Xiaomi (moderate), SMIC, Tencent (small)

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	151	0.57
Communication Services	9	1.32
Consumer Discretionary	28	1.01
Consumer Staples	13	0.99
Energy	7	0.08
Financials	23	0.39
Health Care	13	-1.39
Industrials	20	0.86
Information Technology	10	-2.41
Materials	10	1.05
Real Estate	6	-1.06
Utilities	12	0.44
Mainland China Listed	404	1.73
Communication Services	6	3.21
Consumer Discretionary	31	1.75
Consumer Staples	24	0.78
Energy	13	1.06
Financials	64	1.19
Health Care	31	1.13
Industrials	64	1.94
Information Technology	91	3.22
Materials	58	2.46
Real Estate	6	1.15
Utilities	16	0.61

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	1.6
Alibaba HK	9988 HK Equity	1.5
JD.com HK	9618 HK Equity	-0.5
NetEase HK	9999 HK Equity	-0.2
Yum China HK	9987 HK Equity	1.2
Baozun HK	9991 HK Equity	4.4
Baidu HK	9888 HK Equity	0.4
Autohome HK	2518 HK Equity	0.9
Bilibili HK	9626 HK Equity	0.6
Trip.com HK	9961 HK Equity	0.1
EDU HK	9901 HK Equity	-4
Xpeng HK	9868 HK Equity	-3.3
Weibo HK	9898 HK Equity	2.2
Li Auto HK	2015 HK Equity	-0.1
Nio Auto HK	9866 HK Equity	-6.4
Zhihu HK	2390 HK Equity	0.8
KE HK	2423 HK Equity	-3.1
Tencent Music Entertainment HK	1698 HK Equity	2.5
Meituan HK	3690 HK Equity	4.5

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
MEITUAN-CLASS B	4.5
ALIBABA GROUP HOLDING LTD	1.5
TENCENT HOLDINGS LTD	1.6
XIAOMI CORP-CLASS B	-2.9
HONG KONG EXCHANGES & CLEAR	2.3
BYD CO LTD-H	0.6
AIA GROUP LTD	1.5
SEMICONDUCTOR MANUFACTURING	-1.2
JD.COM INC-CLASS A	-0.5
CNOOC LTD	-1.2

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
TALKWEB INFORMATION SYSTEM-A	5.6
EAST MONEY INFORMATION CO-A	2
SHIJIAZHUANG CHANGSHAN BEI-A	10
BYD CO LTD -A	1.9
JIANGSU HOPERUN SOFTWARE C-A	9.6
CONTEMPORARY AMPEREX TECHN-A	0.1
VICTORY GIANT TECHNOLOGY -A	8.2
SICHUAN CHANGHONG ELECTRIC-A	7
LUXSHARE PRECISION INDUSTR-A	3.1
HONG BO CO LTD -A	8.3

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.21
• CNY per EUR 8.16
• Yield on 10-Year Government Bond 1.63%
• Yield on 10-Year China Development Bank Bond 1.66%
• Copper Price +0.15%
• Steel Price -0.13%