Asian equities experienced a downtrend due to strong US economic data that decreased the likelihood of a US Federal Reserve rate cut, combined with escalating oil prices amid tensions in the Middle East. Taiwan was hit by a powerful earthquake, with fortunately limited loss of life reported so far. Market activity was muted ahead of Hong Kong’s holiday for the Ching Ming Festival and Mainland China’s holiday for Tomb Sweeping Day. President Biden and President Xi engaged in a lengthy discussion covering various topics, including fentanyl precursors, Taiwan, and Ukraine, with both leaders describing the conversation as candid and constructive. Notably, China mentioned the implementation of the “San Francisco Vision” to enhance communication on military matters, drug control, AI, and climate change.
Janet Yellen’s impending trip to China caused a disruption to someone’s four-day holiday plans, followed by Secretary of State Blinken’s visit in the upcoming weeks. Energy and materials sectors performed well in Hong Kong and Mainland China, driven by higher oil and gold prices. Tesla’s disappointing sales announcement impacted the electric vehicle ecosystem, but the China Passenger Car Association reported a notable increase in retail sales of new energy vehicles. Hong Kong’s growth stocks, including Tencent and Xiaomi, experienced mixed performance, while Alibaba’s buyback activities attracted attention despite a decline in share price. Travel stocks showed resilience ahead of the holiday weekend, with Trip.com and Tongcheng Elong Travel posting gains.
Mainland investors seized the opportunity to buy into the Hong Kong market dip, with significant net buying through Southbound Stock Connect. Foreign investors sold Mainland-listed stocks and ETFs via Northbound Stock Connect. The Hang Seng and Hang Seng Tech indexes fell, with notable declines in short turnover and trading volume. In Mainland China, the Shanghai, Shenzhen, and STAR Board indexes also dropped, with varying performances across different sectors. Northbound Stock Connect volumes were light, with foreign investors selling a net worth of Mainland-listed stocks. CNY and the Asia Dollar Index remained stable against the US dollar, while Treasury bonds rallied. In terms of commodities, copper prices rose while steel prices fell.
Looking ahead, a webinar on normalization trends will take place on April 24th, focusing on Quadratic Capital’s insights. Readers can also explore content on Microsoft’s prominence in the US equities market. Exchange rates, bond yields, and commodity prices saw fluctuations, with the CNY per USD rate holding steady, while copper prices increased and steel prices declined slightly. Despite challenges in the markets, the conversation between US and Chinese leaders provided a glimpse of diplomatic progress amidst economic uncertainties and geopolitical tensions.
