Baidu Releases New AI Model, Week in Review

Week in Review

• Asian equities were mostly higher this week as Hong Kong and Indonesia outperformed while Pakistan and Mainland China underperformed.
• It was a “roller coaster” week for tariff signaling as President Trump suggested he would lower tariffs soon and was beginning negotiations with China, while China’s Ministry of Commerce stated that no talks with the US had begun yet on trade.
• Online education and educational technology provider TAL Education was the first China internet company to report earnings for Q1 2025, missing estimates on revenue, net income, and earnings per share in its Thursday morning report. The company cited rising costs as a factor.
• CATL, the world’s largest vehicle battery manufacturer, this week introduced a battery that can reach a full charge in only five minutes.

Key News

Asian equities mostly followed Wall Street higher overnight as Japan and Taiwan outperformed, while India and Singapore underperformed.

The Politburo issued a press release reiterating that it is willing to step in and support the market through its various mechanisms. These include the “National Team”, which refers to investment firms associated with sovereign wealth. It also mentioned supporting consumption, cutting rates at opportune times, and lowering some regulatory barriers. We are likely to see a cut to the reserve requirement ratio (RRR), though we may have to wait for more clarity on tariffs or for the People’s Bank of China (PBOC), China’s central bank, to gain the confidence necessary to make the cut.

Baidu unveiled a new AI model, ERNIE 4.5 Turbo, overnight. The new large language model (LLM) is being offered at an even lower price point than previous versions. Combined with upgrades, it could offer Baidu a new edge in the ongoing price war between China’s LLM and cloud providers, chiefly Tencent, Alibaba, and Baidu. Baidu shares were up in Hong Kong overnight and are trading slightly higher in the US this morning.

Electric vehicle names struggled overnight after Tesla’s disappointing earnings, though the China-based players are in a very different situation. Xpeng led declines and is down -3% this morning in US trading.

Mainland media reported that certain semiconductor and technology imports from the US were to be exempted from retaliatory tariffs. Bloomberg reported that China is also mulling exemptions for medical equipment and chemicals, including methane. This makes sense and mirrors the US’ move to exempt electronics, as no one wants to pay $2,000 or more for an iPhone. This is more evidence that tariffs will not be sustainable and are likely still opening gambits for negotiations, albeit very strong ones. Alternatively, tariffs could be in place long-term, but with so many exemptions as to make their overall impact. Any long-term tariffs are likely to target specific industries.

After Xi’s recent visit to Kenya, China will finance the country's construction of roads and railways. China’s Belt & Road Initiative has expanded China’s trade with African nations. Trade tensions could give China a new zeal to make deals and increase trade with Africa, which could benefit the infrastructure industry.

Last Night's Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	0.3%
Hang Seng Tech	HSTECH Index	0.1%
Hong Kong Turnover	HKTurn Index	1.6%
Hong Kong Short Sale Turnover	HKSST Index	-4%
Short Turnover as a % of Hong Kong Turnover	N/A	12.3%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	-622.4
China (Shanghai)	SHCOMP Index	-0.1%
China (Shenzhen)	SZCOMP Index	0.3%
China (STAR Board)	Star50 Index	0.1%
Mainland Turnover	.chturn Index	0.6%
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	1.9%
India	SENSEX Index	-0.7%
Indonesia	JCI Index	1%
Malaysia	FBMKLCI Index	0.2%
Pakistan	KSE100 Index	0.5%
Philippines	PCOMP Index	1.8%
South Korea	KOSPI Index	1%
Taiwan	TWSE Index	2%
Thailand	SET Index	1.1%
Singapore	STI Index	-0.2%
Australia	AS51 Index	0.6%
Vietnam	VNINDEX Index	0.5%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	116
Advancing Stocks	52	163
Declining Stocks	29	127
Outperforming Factors	Value, Large Caps	Value, Large Caps
Underperforming Factors	Growth, Small Caps	Growth, Small Caps
Top Sectors	Communication Services, Consumer Discretionary, Financials	Information Technology, Consumer Discretionary, Utilities
Bottom Sectors	Health Care, Information Technology, Real Estate	Real Estate, Energy, Consumer Staples
Top Subsectors	Software, Chemicals, Commercial & Profesional Services	Petrochemicals, Communication Equipment, Power Generation
Bottom Subsectors	Consumer Durables, Semiconductors, Machinery	Ground Transportation, Pharmaceuticals, Soft Drinks
Southbound Connect Buys	Xiaomi, Meituan, Sunac	N/A
Southbound Connect Sells	Tencent, Alibaba, Popmart	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	152	0.65
Communication Services	9	1.61
Consumer Discretionary	30	0.93
Consumer Staples	13	-0.02
Energy	7	-0.17
Financials	23	0.17
Health Care	13	-0.83
Industrials	19	-0.22
Information Technology	10	-0.5
Materials	10	-0.2
Real Estate	6	-0.27
Utilities	12	-0.08
Mainland China Listed	432	0.17
Communication Services	9	-0.41
Consumer Discretionary	31	0.68
Consumer Staples	27	-0.44
Energy	16	-0.49
Financials	63	-0.05
Health Care	40	-0.21
Industrials	69	0.08
Information Technology	85	0.86
Materials	68	0.54
Real Estate	7	-0.98
Utilities	17	0.61

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	1.5
Alibaba HK	9988 HK Equity	1.6
JD.com HK	9618 HK Equity	-0.3
NetEase HK	9999 HK Equity	2.1
Yum China HK	9987 HK Equity	-2.2
Baozun HK	9991 HK Equity	0.7
Baidu HK	9888 HK Equity	3.9
Autohome HK	2518 HK Equity	0.7
Bilibili HK	9626 HK Equity	0.8
Trip.com HK	9961 HK Equity	0.9
EDU HK	9901 HK Equity	0.4
Xpeng HK	9868 HK Equity	-1.8
Weibo HK	9898 HK Equity	-0.1
Li Auto HK	2015 HK Equity	0.3
Nio Auto HK	9866 HK Equity	3.9
Zhihu HK	2390 HK Equity	1.5
KE HK	2423 HK Equity	-0.7
Tencent Music Entertainment HK	1698 HK Equity	0.8
Meituan HK	3690 HK Equity	0.5

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
TENCENT HOLDINGS LTD	1.5
ALIBABA GROUP HOLDING LTD	1.6
XIAOMI CORP-CLASS B	-1
MEITUAN-CLASS B	0.5
BYD CO LTD-H	1.7
SEMICONDUCTOR MANUFACTURING	-2.8
POP MART INTERNATIONAL GROUP	-4.3
JD.COM INC-CLASS A	-0.3
SUNAC CHINA HOLDINGS LTD	-6.6
PING AN INSURANCE GROUP CO-H	0.7

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
SATELLITE CHEMICAL CO LTD-A	10
TALKWEB INFORMATION SYSTEM-A	10
EOPTOLINK TECHNOLOGY INC L-A	5.3
ZHONGJI INNOLIGHT CO LTD-A	4.8
EAST MONEY INFORMATION CO-A	1.1
LUXSHARE PRECISION INDUSTR-A	2.8
BYD CO LTD -A	1.3
VICTORY GIANT TECHNOLOGY -A	3.3
LAKALA PAYMENT CO LTD-A	-5.4
HYUNION HOLDING CO LTD-A	0.2

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.29 versus 7.29 yesterday
• CNY per EUR 8.27 versus 8.29 yesterday
• Yield on 10-Year Government Bond 1.66% versus 1.66% yesterday
• Yield on 10-Year China Development Bank Bond 1.70% versus 1.70% yesterday
• Copper Price -0.17%
• Steel Price +1.06%