This week, Asian equities saw a significant increase, with markets in Hong Kong, Indonesia, and Taiwan leading the way, while Mainland China markets remained flat. Internet earnings were in focus, with Tencent and JD.com beating estimates, while Alibaba and Baidu reported mixed results. Real estate also garnered attention as news of the government’s efforts to stabilize prices by purchasing unsold apartments led to gains in developer stocks. Inflation reports were also impacting markets, as China reported higher-than-expected growth in consumer prices and the US’ softer-than-expected CPI print contributed to a global risk-on atmosphere.
In China, markets experienced a volatile session, with Hong Kong and Mainland China initially fluctuating before rallying following the announcement of three policies by the People’s Bank of China to support the real estate market. These policies include providing loans to local governments to buy unsold apartments, lowering down payments for first-time home buyers, and reducing mortgage rates. This stimulus package is seen as a significant step in addressing the various economic impacts of the real estate sector on China’s economy. Real estate was the top-performing sector in Mainland China and Hong Kong this week, with developer stocks seeing significant gains.
Foreign investor confidence in China remains low, despite the government’s efforts to support the real estate market. However, with the PBOC implementing strong stimulus measures, investors in China and Asia are paying attention. The Hang Seng and Hang Seng Tech indexes both saw gains, with value and large caps outperforming. Trading volumes in Hong Kong and Mainland China were high, with Southbound Stock Connect volumes almost twice the 1-year average. While foreign investors sold a net worth of Mainland stocks, Mainland investors bought a net of $763 million worth of Hong Kong-listed stocks and ETFs.
Looking ahead, there are upcoming webinars discussing the potential drivers of a sustained equity bull market in China and the likely impact of the US election on US-China relations. The performance of CNY against USD and EUR remained relatively flat, while yields on government bonds saw slight fluctuations. The prices of copper and steel both saw an increase, with copper and steel prices up by 1.17%. Overall, the week in Asian markets was characterized by significant gains in equities, driven by positive earnings reports, government policies to support the real estate market, and inflation reports impacting global market sentiment.
