Hong Kong Investment Bankers Get Busy, Week In Review

Week in Review

• Asian equities were mostly lower for the week, except for Indonesia, Hong Kong, and Vietnam, while Malaysia, Thailand, and Japan underperformed.
• The Mainland-listed Contemporary Amperex Technology (CATL), the world’s largest battery maker, listed shares in Hong Kong on Tuesday, marking the largest IPO globally so far this year.
• The People’s Bank of China (PBOC), China’s central bank, cut the 1-Year Loan Prime Rate (LPR) to 3.0% from 3.1% and the 5-Year LPR to 3.5% from 3.6%.
• It was another busy week for earnings, as Baidu, Full Truck Alliance, and Xpeng all beat expectations on earnings per share (EPS) and top-line revenue, and the electric vehicle maker Xpeng increased revenue by an astounding 142% year-over-year (YoY).

Key News

Asian equities were mixed overnight as the Philippines and India outperformed with gains, while Mainland China and Taiwan underperformed.

The real fireworks today were after the close with President Trump’s European Union (EU) tariff and Apple comments. I suspect the US’ increased policy volatility will expedite foreign capital outflows from the US.

Apple was a Mainland news item for offering deep iPhone discounts.

CNBC reported that China’s Vice Foreign Minister Ma Zhaoxu and US Deputy Secretary of State Christopher Landau spoke yesterday. The lack of Western media attention, except for CNBC, likely indicates things are going well!

The big news today was the Hong Kong IPO of Jiangsu Hengrui Pharmaceuticals (1276 HK, 600276 CH), which gained +25.2% after raising $1.3 billion from investors. This is another strong signal of Hong Kong’s rebound: more mainland companies are relisting in Hong Kong, following CATL’s IPO on Tuesday.

Hong Kong had a good day, except for CATL’s bout of profit-taking, which sent the stock down by -2.24%, despite an afternoon drop in the Mainland that weighed on Hong Kong shares as well. Meanwhile, Hong Kong-listed internet names were mixed, though they did not fall nearly as much as their US-listed counterparts yesterday.

The electric vehicle (EV) ecosystem had a good day, led by BYD, which gained +1.97% on news of the company outselling Tesla in Europe, and strong May preliminary auto sales. Tesla’s China sales continue to be pressured by local companies.

The Mainland market was having a decent day until a sharp sell-off in the afternoon, which pushed indices into the red. Speculation on reasons for the sell-off included US-Iran talks not going well, Israel wanting to attack Iran’s nuclear facilities, and the G7 targeting China, though, again, no clear driver. The afternoon fall was interesting, as the PBOC’s strong capital injection into the financial markets and chatter of China’s insurance companies buying Mainland stocks should be seen as catalysts. Filling the Liberation Day gap continues to be a resistance level for the market.

Premier Li presided over a State Council meeting focused on the “green and low-carbon development of the manufacturing industry” with an emphasis on promoting the implementation of green technologies. President Xi had a phone conversation with German Chancellor Merz.

The UFC will return to China with an August event in Shanghai for the first time since 2019. It is interesting that UFC founder Dana White is a supporter of President Trump.

JP Morgan’s Jamie Dimon met with PBOC Governor Pan Gongsheng today, as the investment bank held its China conference.

After the close, discount retailer Miniso Group (9896 HK, MSO US) missed Q1 estimates while online travel agency Tongcheng (780 HK) beat analyst expectations for Q1. Meituan will report Q1 financial results on Monday.

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Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.18 versus 7.21 yesterday
• CNY per EUR 8.14 versus 8.13 yesterday
• Yield on 10-Year Government Bond 1.72% versus 1.72% yesterday
• Yield on 10-Year China Development Bank Bond 1.71% versus 1.71% yesterday
• Copper Price -0.10%
• Steel Price -0.13%