Asian equities saw a mixed performance overnight following a rough day in US stocks, which fell due to hot US inflation, supporting the higher-for-longer narrative. India, Indonesia, Malaysia, and Pakistan were closed for Eid al-Fitr, marking the end of Ramadan. The Asia Dollar Index fell -0.21% versus the US dollar overnight. China’s March CPI was lower than expected, with the index increasing by +0.1% versus the estimate of 0.4%. The bad news is seen as good news as investors expect more policy support in the face of weak domestic consumption and real estate concerns.
The Hang Seng, Shanghai, and Shenzhen all opened lower but managed to climb from intra-day lows in a positive sign. Hong Kong’s most heavily traded stocks included Tencent, Meituan, Alibaba, AIA, and CNOOC. Mainland investors bought a healthy $912 million worth of Hong Kong-listed stocks and ETFs. Shanghai and Shenzhen opened lower but closed higher, with the most heavily traded stock being Changan Automobile gaining +5.14% on strong March auto sales. The PBOC is defending CNY versus the strong US dollar, as today’s market action is seen as constructive despite negative headlines.
The US government added six more companies to an entity list. However, market sentiment remained unaffected by headlines on US and Japan cooperation or the TikTok sale extension. The Hang Seng and Hang Seng Tech fell on volume that decreased. Factors such as large caps and value stocks “outperformed” small caps and growth stocks. The top-performing sectors were Utilities, materials, and energy Philips, while healthcare, staples, and financials were the worst. Southbound Stock Connect volumes were moderate, with Mainland investors buying a healthy $912 million of Hong Kong stocks and ETFs.
Shanghai, Shenzhen, and STAR Board gained on volume, with 3,026 stocks advancing and 1,836 declining. The value factor and small caps outperformed the growth factor and large caps. The top sectors were communication, industrials, and discretionary, while healthcare, real estate, and financials were the worst. Northbound Stock Connect volumes were moderate, with foreign investors buying $279 million of mainland stocks. CNY and the Asia dollar index were off versus the US dollar, while copper fell and steel gained. There is an upcoming webinar discussing China’s Q1 performance and investment strategies, along with new content on Nvidia’s rise fueled by chip giants TSMC and SK Hynix.
Key performance indicators for the previous night included CNY per USD at 7.23, CNY per EUR at 7.76, Yield on 10-Year Government Bond at 2.29%, Yield on 10-Year China Development Bank Bond at 2.42%, Copper Price down by -0.41%, and Steel Price up by +0.22%. Overall, the market in Asia showed resilience in the face of negative news, with investors focusing on policy support and strong performance in certain sectors.
