Asian equities were lower overnight, with Japan underperforming and closing down almost -2%. Markets in India, Indonesia, Malaysia, Pakistan, the Philippines, and Singapore were closed for Eid al-Adha, the Feast of Sacrifice, one of the two main Islamic holidays. In the US, May aggregate financing and new loan data missed expectations, impacting US-listed China ADRs’ performance. Despite mixed economic data released in Mainland China and Hong Kong, markets showed resilience, with growth stocks outperforming value stocks.
Industrial production in May increased by +5.6% YoY in Mainland China, while retail sales rose by +3.7% YoY. Online retail sales saw significant growth, with online retail sales of physical goods increasing by +11.5% and accounting for 24.7% of total retail sales. Hong Kong’s most heavily traded stocks included Tencent, Meituan, Alibaba HK, China Mobile, and BYD. Mainland investors purchased $483 million worth of Hong Kong stocks and ETFs. There was speculation about China’s potential retaliation against EU tariffs on EVs, with China targeting Spain, Italy, and France, the main sponsors of the tariffs.
Despite concerns about oversupply in China’s EV sector, vehicle stocks performed well in both Mainland China and Hong Kong. Brilliance Auto saw a significant increase in its stock price after announcing a special dividend. The real estate sector, however, saw a decline in both markets as new and used home sales decreased in May. The Hang Seng and Hang Seng Tech index were mixed, with financials, communication services, and consumer discretionary sectors performing well, while utilities, energy, and real estate sectors declined.
In Shanghai, Shenzhen, and the STAR Board, stocks were mixed, with technology, industrials, and consumer discretionary sectors performing well. Growth and small caps saw positive returns, while value and small caps posted negative returns. Northbound Stock Connect volumes were light as foreign investors were net sellers of Mainland stocks. CNY and the Asia dollar index remained flat, while Treasury bonds, copper, and steel prices fell. Overall, Asian markets experienced a mix of positive and negative performances across various sectors.
For investors looking for high yield opportunities in Asia’s high yield bond market, the KHYB portfolio manager discusses potential opportunities in a recent article. Exchange rates, prices, and yields experienced slight fluctuations, with the CNY per USD at 7.25, CNY per EUR at 7.77, the yield on 10-Year Government Bond at 2.26%, and the yield on 10-Year China Development Bank Bond at 2.37%. The copper price declined by -1.00%, while the steel price decreased by -0.60%.
