What Did We Expect On TACO Tuesday?
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Key News
One does not see the market moves that we saw overnight in Asia very often in one's career. I would describe the market action with epiphanic awe or expletives.
Asian stocks ripped higher after an announcement of a two-week truce with Iran, as the US dollar and oil plummeted, and Pakistan posted an eye-watering gain of +9.09%. An amazing surge higher in the Renminbi versus the US dollar, which appreciated by +0.48% to a 52-week high of 6.829, which was last seen in February 2023. The US media is not highlighting China’s role in the truce, despite President Trump’s mention. Mainland media noted that Iran’s Ambassador to China Mohsen Bakhtiar Fazli said no Strait of Hormuz toll had been issued as of yet.
At today’s Foreign Ministry press conference, spokesperson Mao Ning answered a question on China’s role, stating that “Foreign Minister Wang Yi has held 26 phone calls with foreign ministers of relevant countries, the Chinese government's special envoy on Middle East issues has made shuttle visits to the Gulf region, and China and Pakistan have jointly put forward a five-point initiative to restore peace and stability in the Gulf and the Middle East.” When pressed by the Associated Press’ reporter on “why China prefers to remain behind the scenes rather than publicly disclose its efforts”, she did not give much explanation.
On a question concerning US Trade Representative Greer, noting China’s continued exports of rare earths, she stated: “The essence of China-US economic and trade relations is mutual benefit and win-win.” Obviously, Hong Kong and Mainland China were higher, led by growth stocks and non-ferrous metals stocks on the truce news, though there were a few other positives, especially for Hong Kong, which reopened following the five-day Qing Ming Festival holiday.
Yesterday, we mentioned the China Daily article titled “China plans to foster AI-driven e-commerce,” following the Ministry of Commerce’s concisely-titled "Guiding Opinions on Better Serving the Real Economy and Promoting High-Quality Development of E-commerce". The report recommends policy support to “leverage the advantages of e-commerce to help consolidate and strengthen the foundation of the real economy” and “advancing cross-border e-commerce, expanding Silk Road e-commerce." Hong Kong-listed internet stocks had a strong day.
Mainland media noted that holiday trips during the Qing Ming Festival increased by +6.8% year-over-year (YoY), as spending increased by +6.6% to RMB 61.3 billion. Meanwhile, air passenger volumes increased by +5.6% YoY to 842 million total trips. In Hong Kong, Trip.com gained +4.71%.
The Beijing local government released the city’s 15th Five-Year Plan (FYP). The local plan is just one example of how the national FYP is filtered down through the bureaucracy to provinces and cities.
The only negative, aside from oil and gas stocks heading lower, was the large net sell of Hong Kon-listed stocks and ETFs by Mainland investors via Southbound Stock Connect, concentrated in a massive net sell of the Hong Kogn Tracker ETF. Remember, Southbound flows have been a "Jekyll & Hyde" of buying the dips and selling the rips.
Alibaba gained +6.75% on very high volumes and two large call option trades, as the company announced a new AI video too: Wan2.7-Video. Tencent gained +3.84% on high volumes and two large call option trades. Mainland China was led higher by technology hardware, semiconductors, non-ferrous metals, and software stocks. Look at the number of advancers in China versus the number of decliners! Amazing. The ETFs favored by the National Team had above-average volumes and net inflows overnight.
Spain’s Prime Minister Sanchez will visit President Xi in China beginning on April 11th. The National Conference on the Service Sector concluded today in Beijing with President Xi delivering a statement and Premier Li giving the keynote address. Both leaders' remarks stressed the importance of domestic consumption.
In March, foreign reserves declined by -2.5% month-over-month (MoM), but grew by +3.1% YoY to $3.34 trillion, compared to February’s $3.43 trillion, and versus expectations of $3.39 trillion.
If you listen to podcasts, you might know Dan Carlin’s Hardcore History, which takes deep dives into historical subjects in episodes that last hours. To say I’m a fan is an understatement as I eagerly await the next Alexander the Great episode. In the interim, I read Carlin’s book with the uplifting title of "The End is Always Near". It’s a great book exploring humanity's near-misses in extinction, including a deep dive into pandemics, despite being written in 2019.
I found the chapter on the Cuban Missile Crisis enlightening. I had not been taught that JFK’s military advisory committee recommended a nuclear preemptive strike, which, obviously, would have been the end of the world. Thankfully, JFK did not take that advice, favoring a blockade. I find that comparing where the two most recent Presidents spend their time is an interesting way to think about their decision-making. When you are in DC, it feels like a military base. How did that affect Biden, a career politician who arguably spent the majority of his life in DC? Trump, a businessperson who spent most of his life in NYC and Florida, continues to split his time between DC and Florida. In the latter, I assume he spends a lot of time with businesspeople. That could be something to noodle on.
If you ever wanted a greater display of the politicalization of US media, it was last night’s coverage of the truce announcement. Comparing the two main TV news networks was laughable. They were so different that it was hard to tell they were talking about the same event. I assume that the truth is somewhere in the middle.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 3.1% |
| Hang Seng Tech | HSTECH Index | 5.2% |
| Hong Kong Turnover | HKTurn Index | 52.9% |
| Hong Kong Short Sale Turnover | HKSST Index | 17.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 16.8% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -2,755.27 |
| China (Shanghai) | SHCOMP Index | 2.7% |
| China (Shenzhen) | SZCOMP Index | 4.3% |
| China (STAR Board) | Star50 Index | 6.2% |
| Mainland Turnover | .chturn Index | 50.7% |
| Japan | NKY Index | 5.4% |
| India | SENSEX Index | 3.9% |
| Indonesia | JCI Index | 4.4% |
| Malaysia | FBMKLCI Index | 1.2% |
| Pakistan | KSE100 Index | 9.1% |
| Philippines | PCOMP Index | 2.2% |
| South Korea | KOSPI Index | 6.9% |
| Taiwan | TWSE Index | 4.6% |
| Thailand | SET Index | 1.4% |
| Singapore | STI Index | 0.8% |
| Australia | AS51 Index | 2.6% |
| Vietnam | VNINDEX Index | 4.7% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 144% | 124% |
| Advancing Stocks | 431 | 4834 |
| Declining Stocks | 86 | 310 |
| Outperforming Factors | Liquidity, Growth, Buybacks | Liquidity, Momentum, Growth |
| Underperforming Factors | ||
| Top Sectors | Tech, Materials, Discretionary | Tech, Communication, Materials |
| Bottom Sectors | Healthcare, Energy | Energy |
| Top Subsectors | Semis, Tech Hardware, Non Ferrous Metals | Internet, Precious Metals, Cultural Media |
| Bottom Subsectors | Coal, Petroleum, Pharmaceuticals | Oil/Gas, Coal |
| Southbound Connect Buys | Alibaba (Very Large), Pop Mart (Small) | N/A |
| Southbound Connect Sells | HK Tracker ETF (Massive), Xiaomi (Very Large), CNOOC, HS China Enterprise ETF, Meituan (Large), Tencent (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | 3.39 |
| Communication Services | 11 | 3.73 |
| Consumer Discretionary | 28 | 5.24 |
| Consumer Staples | 12 | 2.31 |
| Energy | 6 | -1.15 |
| Financials | 25 | 1.18 |
| Health Care | 16 | -1.57 |
| Industrials | 19 | 2.5 |
| Information Technology | 15 | 7.51 |
| Materials | 14 | 6.23 |
| Real Estate | 1 | 3.49 |
| Utilities | 6 | 0.88 |
| Mainland China Listed | 11 | 4.07 |
| Communication Services | 11 | 6.01 |
| Consumer Discretionary | 26 | 3.42 |
| Consumer Staples | 18 | 2 |
| Energy | 11 | -0.98 |
| Financials | 64 | 2.56 |
| Health Care | 29 | 2.53 |
| Industrials | 60 | 3.94 |
| Information Technology | 113 | 7.39 |
| Materials | 58 | 4.4 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 3.8 |
| Alibaba HK | 9988 HK Equity | 6.8 |
| JD.com HK | 9618 HK Equity | 3.6 |
| NetEase HK | 9999 HK Equity | 2.2 |
| Yum China HK | 9987 HK Equity | 1.3 |
| Baozun HK | 9991 HK Equity | 7.1 |
| Baidu HK | 9888 HK Equity | 2.6 |
| Autohome HK | 2518 HK Equity | 2.6 |
| Bilibili HK | 9626 HK Equity | 5.8 |
| Trip.com HK | 9961 HK Equity | 4.7 |
| EDU HK | 9901 HK Equity | 2.7 |
| Xpeng HK | 9868 HK Equity | 4.4 |
| Weibo HK | 9898 HK Equity | 3.6 |
| Li Auto HK | 2015 HK Equity | 2.1 |
| Nio Auto HK | 9866 HK Equity | 4.2 |
| Zhihu HK | 2390 HK Equity | 10.3 |
| KE HK | 2423 HK Equity | 6.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 5.2 |
| Meituan HK | 3690 HK Equity | 10.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 6.8 |
| TENCENT HOLDINGS LTD | 3.8 |
| MEITUAN-CLASS B | 10.3 |
| XIAOMI CORP-CLASS B | 6.1 |
| YANGTZE OPTICAL FIBRE AND-H | 18.9 |
| SEMICONDUCTOR MANUFACTURI-H | 10.1 |
| CNOOC LTD-H | -3.3 |
| POP MART INTERNATIONAL GROUP | 7.6 |
| HSBC HOLDINGS PLC | 6.6 |
| KUAISHOU TECHNOLOGY | 4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | 8.8 |
| SHANTUI CONSTRUCTION MACHI-A | 5.2 |
| ZHONGJI INNOLIGHT CO LTD-A | 11.1 |
| EOPTOLINK TECHNOLOGY INC L-A | 9.3 |
| GIGADEVICE SEMICONDUCTO-CL A | 2.5 |
| SUZHOU TFC OPTICAL COMMUNI-A | 6.2 |
| CONTEMPORARY AMPEREX TECHN-A | 1.7 |
| ZIJIN MINING GROUP CO LTD-A | 6.8 |
| FOXCONN INDUSTRIAL INTERNE-A | 7.7 |
| VICTORY GIANT TECHNOLOGY -A | 7.9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.82 versus 6.86 yesterday
- CNY per EUR 7.98 versus 7.92 yesterday
- Yield on 10-Year Government Bond 1.81% versus 1.82% yesterday
- Yield on 10-Year China Development Bank Bond 1.93% versus 1.94% yesterday
- Copper Price +0.61%
- Steel Price -0.35%
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