This week in Asian equities, markets saw a mix of performance with China underperforming due to profit-taking and India outperforming. Companies like Trip.com, NetEase, Kuaishou, and PDD reported better-than-expected earnings in Q1, with PDD exceeding analyst expectations. JP Morgan’s China economist raised the bank’s 2024 GDP target to 5.2%, and CSRC Vice Chairman Fang Xinghai spoke about encouraging companies to pay more in dividends in a speech in London.
Asian equities were mostly in the red as investors reacted to higher rates. The Thai Baht, South Korean Won, Philippine Peso, and Japanese Yen all saw declines. Hong Kong and Mainland China markets continued to correct, led by growth stocks. Despite China’s military drills around Taiwan, they did not involve live-fire exercises. Alibaba’s convertible bond deal was seen as a reason for selling, but it had solid rationale. Hong Kong traders saw the market action as healthy profit-taking.
Premier Li presided over a State Council meeting focusing on expanding cross-border e-commerce exports in China. The CSRC announced rules on large corporate insider sales to reduce selling pressure. The Ministry of Commerce’s economic data review showed a 2.3% year-over-year increase in retail sales in April, with online retail sales accounting for 23.9% of total retail sales. Nvidia’s decline in chip sales to China was attributed to US government restrictions.
The Hang Seng and Hang Seng Tech indexes fell, with 84 advancing stocks and 406 declining. Main Board short turnover decreased, and large caps fell less than small caps. Top sub-sectors were energy and utilities, while healthcare, real estate, and tech declined. Shanghai, Shenzhen, and the STAR Board also saw declines, with low volatility and utilities as the only positive factors. Northbound Stock Connect volumes were moderate.
Upcoming webinars will discuss the potential drivers of a sustained equity bull market in China and the likely impact of the US election on US-China relations. Recent articles cover opportunities in Asia’s high-yield bond market. Exchange rates showed minor fluctuations, with the CNY per USD at 7.24, the yield on 1-day and 10-year government bonds unchanged, and slight changes in copper and steel prices.
