June Trade & Credit Data Beat Expectations

Key News

Asian equities were mixed overnight, led higher by Thailand and the Philippines, as President Trump’s tariff ire over the weekend was focused on the EU and Mexico.

Hong Kong grinded higher throughout the trading day. Stronger-than-expected export/import data provided a late-day boost, while Shanghai and Shenzhen bounced around the room to end slightly higher. Hong Kong saw large buying from Mainland China via Southbound Stock Connect. Internet stocks were largely higher, as Alibaba gained +0.95%, Tencent gained +0.68%, and Meituan gained +0.75%, though video platform Bilibili fell -0.35%, despite announcing 2025 gaming and advertising revenue growth targets of +20% and +15%.

Pharmaceuticals, biotech, auto, coal, non-ferrous metals, precious metals, and oil all had good sessions, while consumer services, such as hotels and restaurants, were off. The Mainland’s pockets of strength were oil, banks, electricity, telecom, and precious metals. Meanwhile, semiconductors, software, healthcare equipment, and defense were all off.

Battery maker Contemporary Amperex Technology (CATL) fell -1.1% in Mainland trading, despite a deal with Australian miner BHP.

Solar manufacturer Tongwei gained +1.18% after announcing its first half net income loss would be in a range from RMB -3.9 billion to -5.2 billion, despite installed capacity growth due to “the imbalance between supply and demand in the industry, which has not improved significantly, and the product prices of each link have been continuously depressed.”  Peer LONGi Green Energy Technology fell -0.55% after announcing its first half net income loss will be between RMB -2.4 billion and RMB -2.8 billion.

Hopefully, overcapacity efforts kick into gear as investors look up China’s government’s new buzzword: anti-involutionary. Involution is when intense competition leads to diminished returns. Solar, steel, cement, autos, and E-Commerce are areas highlighted by the government to face “anti-involutionary” measures. The effect could bring the end of China’s deflationary effect on the global economy as well as its domestic economy. It could also lead to higher margins and profits for listed corporations. It is also very aligned with President Trump’s China demands.

Export/import and credit data release was stronger than expected.

Export/Import Release

Some additional metrics to consider include the following.

• Rare Earth Exports increased +32% month-over-month (MoM), as export volume increased to 7.74 million tons from May’s 5.86 million tons
• Exports to the US declined -16.1% YoY, though were up +32% MoM
• US imports increased to $11.6 billion from May’s $10.8 billion, though are down -8.7% for the first six months of the year compared to the first six months of 2024.
• China’s total trade balance was $114 billion, versus expectations of $112 billion and May’s $103 billion.

June Credit Data

The People’s Bank of China (PBOC) held a press conference overnight. The release noted “the effect of monetary policy supporting the real economy is relatively obvious”, as social financing, new loans, and M2 data all beat expectations. Since 2020, the bank reserve requirement ratio has been cut twelve times, along with “9 policy rate reductions, lowering 1-year and 5-year LPR by 115 basis points and 130 basis points, respectively.” (The 5-Year Loan Prime Rate determines the mortgage rate). Lower interest rates have lowered the average corporate loan yields by 0.45% to 3.30% and new housing loan rates by 0.60% to 3.10%. Efforts will continue “to implement moderate loose monetary policy… better promote the expansion of domestic demand…”. The release also stated that the market expects interest rate cuts in the second half of the year, as the “misalignment of the monetary policy cycle between China and the United States will be improved”, as spreads narrow.

It is funny that the PBOC and Trump both think Powell should cut US interest rates. GDP, new and second-hand home sales, retail sales, industrial production, and fixed asset investment will all be reported today.

On Friday, I stated that Hank Paulson’s conversation with Vice Premier Ding Xuexiang received significant attention in China. I incorrectly stated that Paulson was a Democrat. Paulson was Secretary of the Treasury under George W. Bush. My bad! He did endorse Hillary Clinton in 2016, despite being a lifelong Republican.

Last Night’s Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	0.3%
Hang Seng Tech	HSTECH Index	0.7%
Hong Kong Turnover	HKTurn Index	-35.1%
Hong Kong Short Sale Turnover	HKSST Index	-31.9%
Short Turnover as a % of Hong Kong Turnover	N/A	11.5%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	195.3
China (Shanghai)	SHCOMP Index	0.3%
China (Shenzhen)	SZCOMP Index	0.1%
China (STAR Board)	Star50 Index	-0.2%
Mainland Turnover	.chturn Index	-14.8%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	-0.9%
Japan	NKY Index	-0.3%
India	SENSEX Index	-0.3%
Indonesia	JCI Index	0.7%
Malaysia	FBMKLCI Index	0.1%
Pakistan	KSE100 Index	1.7%
Philippines	PCOMP Index	1%
South Korea	KOSPI Index	0.8%
Taiwan	TWSE Index	-0.6%
Thailand	SET Index	2%
Singapore	STI Index	0.5%
Australia	AS51 Index	-0.1%
Vietnam	VNINDEX Index	0.9%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	104	100
Advancing Stocks	343	2920
Declining Stocks	137	2040
Outperforming Factors	Momentum, EPS Revision, Low Volatility	EPS Revision, Dividend Yield, Value
Underperforming Factors	Buyback, Value, Liquidity	Liquidity, Buyback, Quality
Top Sectors	Energy, Materials, Staples	Energy, Utilities, Materials
Bottom Sectors	Real Estate	Real Estate, Communication, Healthcare
Top Subsectors	Construction Materials, Coal, Building	Soft Drink, Precious Metals, Oil/Gas
Bottom Subsectors	Consumer Services, Textiles, National Defense	Diversified Financials, Real Estate, Software
Southbound Connect Buys	Alibaba, Meituan (Large), Guotai Junan (Small)	N/A
Southbound Connect Sells	Healthyway, Xiaomi (Small)	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	152	0.7
Communication Services	9	0.61
Consumer Discretionary	30	0.81
Consumer Staples	13	1.29
Energy	7	2.31
Financials	23	0.4
Health Care	13	1.24
Industrials	19	0.63
Information Technology	10	0.1
Materials	10	2.23
Real Estate	6	-0.01
Utilities	12	1.12
Mainland China Listed	432	0.18
Communication Services	9	-0.86
Consumer Discretionary	31	0.15
Consumer Staples	27	0.12
Energy	16	1.21
Financials	63	0.09
Health Care	40	0
Industrials	69	0.07
Information Technology	85	0.07
Materials	68	0.62
Real Estate	7	-1.16
Utilities	17	0.88

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	0.7
Alibaba HK	9988 HK Equity	1
JD.com HK	9618 HK Equity	-0.7
NetEase HK	9999 HK Equity	0.2
Yum China HK	9987 HK Equity	-0.6
Baozun HK	9991 HK Equity	2.7
Baidu HK	9888 HK Equity	-2.7
Autohome HK	2518 HK Equity	-2.1
Bilibili HK	9626 HK Equity	-0.3
Trip.com HK	9961 HK Equity	0.2
EDU HK	9901 HK Equity	-0.7
Xpeng HK	9868 HK Equity	0.8
Weibo HK	9898 HK Equity	0.1
Li Auto HK	2015 HK Equity	2.6
Nio Auto HK	9866 HK Equity	10.6
Zhihu HK	2390 HK Equity	-1.3
KE HK	2423 HK Equity	0.2
Tencent Music Entertainment HK	1698 HK Equity	-0.6
Meituan HK	3690 HK Equity	0.8

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
ALIBABA GROUP HOLDING LTD	1
TENCENT HOLDINGS LTD	0.7
GUOTAI JUNAN INTERNATIONAL	-0.2
MEITUAN-CLASS B	0.8
XIAOMI CORP-CLASS B	0.8
SEMICONDUCTOR MANUFACTURING	2.2
PING AN INSURANCE GROUP CO-H	2.3
CHINA CONSTRUCTION BANK-H	-1.5
POP MART INTERNATIONAL GROUP	2.3
STAR PLUS LEGEND HOLDINGS-H	-4.7

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
CHINA NORTHERN RARE EARTH -A	10
EAST MONEY INFORMATION CO-A	3.1
INNER MONGOLIA BAOTOU STE-A	1.4
WUXI APPTEC CO LTD-A	1.9
ZHONGJI INNOLIGHT CO LTD-A	3.1
BEIJING COMPASS TECHNOLOGY-A	13.1
BOC INTERNATIONAL CHINA CO-A	-1.6
HENGBAO CO LTD-A	-7.6
BYD CO LTD -A	-1.7
CHINA RARE EARTH RESOURCES-A	-4

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.17 versus 7.17 yesterday
• CNY per EUR 8.37 versus 8.38 yesterday
• Yield on 10-Year Government Bond 1.67% versus 1.67% yesterday
• Yield on 10-Year China Development Bank Bond 1.73% versus 1.73% yesterday
• Copper Price -0.31%
• Steel Price -0.06%