Asian equities faced a tough week, with most markets following Wall Street lower. Taiwan underperformed due to semiconductor weakness and a typhoon closure, while India managed a slight gain. China’s central bank, the PBOC, implemented multiple interest rate cuts following policy meetings. Lackluster earnings reports from Tesla and Google impacted China’s internet, technology, and electric vehicle ecosystem stocks as investors sought more evidence of AI’s revenue impact. Conflicting narratives surrounding the US election also affected offshore markets, with analysts suggesting that Trump’s tariff claims may be part of a negotiating strategy with China.
In China, the National Development and Reform Commission announced a subsidy program for the purchase of home appliances, resulting in a surge in mainland-listed home appliance companies’ stocks. Additionally, subsidies for electric vehicles and new energy vehicles were increased, leading to gains for electric vehicle and auto companies. CATL, the world’s largest battery maker, announced positive earnings results but a revenue decline. The NDRC also announced support for infrastructure REIT issuance and the establishment of a fund to support technology companies in Shanghai.
Indian and Chinese relations showed signs of improvement, with both countries pledging to work towards the withdrawal of troops on their disputed border. In China, the clean technology ecosystem saw a boost as India lifted restrictions on Chinese solar, wind, and electric vehicle products. Smartphone sales in China increased by 8.9% year-over-year, with major domestic brands leading the market. The Hang Seng and Hang Seng Tech indexes in Hong Kong posted modest gains, with growth sectors outperforming as mainland investors bought a significant amount of Hong Kong-listed stocks and ETFs.
In Shanghai and Shenzhen, major indexes saw gains, with growth and small caps outperforming value and large caps. The top-performing sectors were consumer discretionary, materials, and technology, while utilities, financials, and consumer staples saw declines. Northbound Stock Connect volumes were moderate as foreign investors net sold mainland stocks, with notable buys in home appliance companies like Haier, Gree, and Midea. The treasury curve flattened, and the yuan and Asia Dollar Index weakened against the US dollar. Copper and steel prices saw increases. Overall, the week was characterized by market fluctuations influenced by domestic and international factors.
