Week in Review

• Asian equities were mixed overnight as Korea and Taiwan outperformed while Mainland China’s STAR Board and India underperformed.
• It was a choppy week for Asian shares with the catalyst of US-China talks and the specter of flaring Middle East tensions.
• Trade talks on Monday between the US and China in London resulted in an agreement on rare earth exports and established a framework for continuing negotiations.
• May’s Consumer Price Index (CPI) in China, reported Monday, fell by -0.1% year-over-year, compared to April’s -0.2% and expectations of -0.2%.

Key News

Asian equities were lower overnight as Israel’s preemptive strike on Iran sent oil higher as the US dollar appreciated versus local currencies.

Higher beta growth stocks were off more than broad indexes in both Hong Kong and Mainland China, as local and foreign investors unloaded their favorite stocks, including internet stocks, electric vehicles (EVs), and recent outperformers, especially healthcare. Mainland investors were net sellers of Alibaba, Tencent, and Xiaomi via Southbound Stock Connect, which accounted for 54% of Hong Kong turnover following yesterday’s 53%. The high Connect percentage indicates a lack of local and foreign investor dip buying.

Tencent filed that they bought 982,000 shares today, which is in line with the epic daily buyback amount. Alibaba filed that they bought 85,700 US-listed shares yesterday.

It is interesting to note that outperforming factors (Dividend Yield, Value, Low Volatility) and underperforming factors (Liquidity, Momentum, Growth) almost perfectly match the barbell strategy advocated by most equity strategists, though in the medium-to-long run, I lean heavily toward the latter. Hong Kong’s short turnover jumped +65% from yesterday, accounting for 17%.

Energy and aerospace stocks outperformed, while consumer plays were weak.

Real estate had a good day, including online broker KE Holdings, which gained +1.09%, after the Guangzhou Municipality announced 33 measures to stimulate the local economy, including eliminating all real estate purchase restrictions and consumer subsidies.

Labubu doll maker Pop Mart gained +2.17% following a sell side analyst price target upgrade, as the stock continues its meteoric rise. 

The data could lead to more policy support from the upcoming Lujiazui Forum starting on June 18^th. It is important to note the importance of local government policy, which takes its lead from national policy, though it does not look the same everywhere, as China is a big place geographically and economically.

Premier Li and PBOC head Pan Gongsheng met separately with ECB President Lagarde.

Mainland media announced that President Xi will attend the China-Central Asia Summit in Kazakhstan on June 16^th, though someone mentioned he will not participate in the UN fall meetings in NYC. There was some chatter about President Xi’s health as he will turn 72 on Sunday. The last long overseas trip I can think of was his South America trip in May 2025, though in his defense, these long flights weigh on you as time marches on. I am still hopeful that President Trump and President Xi will have a birthday call on Trump’s 79^th birthday tomorrow.

The Air India crash was a terrible tragedy, and we send our condolences to our friends in the UK and India. As a frequent flyer of Boeing 787s, I’ve always been impressed by how quickly the big plane gets off the ground. The South China Morning Post article on the crash noted an expert’s observation that the pilots may have inadvertently raised the takeoff flaps instead of the landing gear, based on his observation.

Last Night's Performance

Country / Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	-0.6%
Hang Seng Tech	HSTECH Index	-1.7%
Hong Kong Turnover	HKTurn Index	20.4%
Hong Kong Short Sale Turnover	HKSST Index	65.4%
Short Turnover as a % of Hong Kong Turnover	N/A	16.7%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	140.3
China (Shanghai)	SHCOMP Index	-0.8%
China (Shenzhen)	SZCOMP Index	-1.3%
China (STAR Board)	Star50 Index	-0.5%
Mainland Turnover	.chturn Index	0%
Northbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	-1.6%
Japan	NKY Index	-0.9%
India	SENSEX Index	-0.7%
Indonesia	JCI Index	-0.5%
Malaysia	FBMKLCI Index	-0.6%
Pakistan	KSE100 Index	-1.5%
Philippines	PCOMP Index	0.2%
South Korea	KOSPI Index	-0.9%
Taiwan	TWSE Index	-1%
Thailand	SET Index	-0.5%
Singapore	STI Index	-0.3%
Australia	AS51 Index	-0.2%
Vietnam	VNINDEX Index	-0.6%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	154	115
Advancing Stocks	166	861
Declining Stocks	318	4186
Outperforming Factors	Dividend Yield, Value, Low Volatility	Value, Large Caps, Dividends
Underperforming Factors	Liquidity, Growth, Momentum	Liquidity, Momentum
Top Sectors	Energy, Real Estate, Materials	Energy, Utilities, Materials
Bottom Sectors	Consumer Discretionary, Healthcare, Consumer Staples	Consumer Staples, Health Care, Communication Services
Top Subsectors	Aerospace, Consumer Services, Petroleum & Petrochemicals	Energy Equipment, Marine Industry, Aerospace
Bottom Subsectors	Media & Entertainment, Consumer Discretionary Distribution	Leisure Products, Daily Chemicals, Internet
Southbound Connect Buys	Meituan, Pop Mart, Shandong Molong	N/A
Southbound Connect Sells	Alibaba, CNOOC, Tencent, Xiaomi	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	151	-0.78
Communication Services	9	-0.23
Consumer Discretionary	28	-2.02
Consumer Staples	13	-0.87
Energy	7	1.77
Financials	23	-0.62
Health Care	13	-0.97
Industrials	20	1.01
Information Technology	10	-0.86
Materials	10	1.02
Real Estate	6	1.09
Utilities	12	1
Mainland China Listed	404	-0.73
Communication Services	6	-1.41
Consumer Discretionary	31	-1.36
Consumer Staples	24	-2.03
Energy	13	1.19
Financials	64	-0.86
Health Care	31	-1.6
Industrials	64	-0.34
Information Technology	91	-0.67
Materials	58	0.22
Real Estate	6	-1.14
Utilities	16	1.04

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	0
Alibaba HK	9988 HK Equity	-2.3
JD.com HK	9618 HK Equity	-1.2
NetEase HK	9999 HK Equity	-0.7
Yum China HK	9987 HK Equity	-0.7
Baozun HK	9991 HK Equity	-2.2
Baidu HK	9888 HK Equity	-0.6
Autohome HK	2518 HK Equity	-1
Bilibili HK	9626 HK Equity	-2.4
Trip.com HK	9961 HK Equity	-2.7
EDU HK	9901 HK Equity	-1.9
Xpeng HK	9868 HK Equity	-5.2
Weibo HK	9898 HK Equity	-1.8
Li Auto HK	2015 HK Equity	-2.7
Nio Auto HK	9866 HK Equity	-4.9
Zhihu HK	2390 HK Equity	-1.9
KE HK	2423 HK Equity	1.1
Tencent Music Entertainment HK	1698 HK Equity	-3.3
Meituan HK	3690 HK Equity	-2

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
ALIBABA GROUP HOLDING LTD	-2.3
TENCENT HOLDINGS LTD	0
XIAOMI CORP-CLASS B	-0.5
MEITUAN-CLASS B	-2
BYD CO LTD-H	-2.5
CNOOC LTD	2.1
POP MART INTERNATIONAL GROUP	2.2
KE HOLDINGS INC-CL A	1.1
BANK OF CHINA LTD-H	-1.7
XPENG INC - CLASS A SHARES	-5.2

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
KWEICHOW MOUTAI CO LTD-A	-2.2
BYD CO LTD -A	-2
EAST MONEY INFORMATION CO-A	-1.5
AVIC CHENGDU AIRCRAFT CO L-A	11.3
ZHONGJI INNOLIGHT CO LTD-A	0.6
ANHUI JIANGHUAI AUTO GROUP-A	-2.2
SHENZHEN FORMS SYNTRON INF-A	5.1
RONGFA NUCLEAR EQUIPMENT C-A	1.5
WULIANGYE YIBIN CO LTD-A	-2.8
CONTEMPORARY AMPEREX TECHN-A	-0.6

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.18 versus 7.17 yesterday
• CNY per EUR 8.26 versus 8.31 yesterday
• Yield on 10-Year Government Bond 1.64% versus 1.65% yesterday
• Yield on 10-Year China Development Bank Bond 1.70% versus 1.71% yesterday
• Copper Price -0.36%
• Steel Price -0.47%