CLN
Key News
Asian equities were mixed overnight despite the US dollar’s weakness, led higher by Mainland China, India and Singapore, while Japan, Taiwan, and Thailand closed lower and Australia and Hong Kong remained closed for Easter.
Over the weekend, the People’s Bank of China (PBOC) left the 1- and 5-year Loan Prime Rates (LPRs) unchanged at 3.10% and 3.60%, respectively. The latter is the reference rate for mortgages.
Going into the morning’s trading, Friday’s State Council announcement on stabilizing the stock market and real estate industry was front-page news, as it is rare for the highest echelon of China’s government to comment on the market. The State Council released a piece titled “Opinions on Promoting the Development of Individual Pensions,” noting the growth over the last three years, though further promotion and adoption of the retirement savings plans is needed.
The China Daily had a front-page article titled “Policy Focus on Consumption to Drive Growth,” which reviewed the potential policies to boost consumption and highlighted their. An area of emphasis includes “raising people’s income and reducing financial burdens”.
Technology, growth, and small-cap stocks led the market higher, though on light volumes. Meanwhile, large-cap banks, liquor names, energy, and insurance were mostly lower. However, the strong breadth overall was a positive sign.
Technology and growth stocks gained after a robot marathon in Beijing. Tian Gong Ultra’s humanoid robot runner won with a time of two hours and forty minutes.
CATL gained +2.62% after the company announced five-minute recharging capabilities for its latest batteries. This follows a similar announcement from BYD a few weeks ago.
There was chatter about JD.com and Meituan’s restaurant delivery price competition escalating, though Hong Kong was closed overnight so the impact on share prices is not yet known.
There were no updated filings with the Hong Kong Stock Exchange as of this morning, though we anticipate US-listed firms with no Hong Kong listing to relist in the market. This makes sense since the companies’ founders’ wealth is in the US listing or American Depositary Receipt (ADR), along with their employees’ stock option plans. We are monitoring for new filings daily. Hong Kong’s Financial Secretary stated last Sunday: “I have instructed the Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited (HKEX) to be fully prepared for the potential return of Chinese Concept Stocks listed abroad.” This matters right now because there has been some speculation that China stocks could be delisted from US exchanges as part of the current trade spat. Expanding the goods trade war into the financial sphere would be a significant escalation by the US, and remains highly unlikely. No one in the US wants the goods trade war to expand into a services trade war, considering the fact that the US is the largest services exporter globally. Moreover, the $800 billion of market value in China-based firms’ ADRs is almost all held by US investors, not Chinese investors. It would be highly embarrassing to punish US investors, in my opinion. Capital controls would also negatively impact the prestige of the US’ capital markets. For more on this topic, check out our recent article.
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Last Night’s Performance
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Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.29 versus 7.30 Friday
- CNY per EUR 8.41 versus 8.32 Friday
- Yield on 10-Year Government Bond 1.66% versus 1.65% Friday
- Yield on 10-Year China Development Bank Bond 1.70% versus 1.69% Friday
- Copper Price +0.61%
- Steel Price +0.32%
