CLN
Key News
Asian equities rebounded except for Mainland China and India as President Donald Trump appeared to soften his tariff talk, though folks might be getting tariff PTSD or started to ignore it.
Here is some big news that you likely will only read here: Vice Premier Zhang Quoqing visited unnamed “platform enterprises,” i.e., internet companies in “food delivery, online retail, live streaming E-Commerce, and transportation services.” It doesn’t take Sherlock Holmes to guess the companies he met with (Meituan, Alibaba/JD/PDD, Bytedance, and Didi). The Vice Premier “has urged intensified efforts to promote the healthy development of the platform economy.”
Following President Xi’s tech entrepreneur meeting, we have another very unsubtle sign of the government’s change in attitude and need for the companies as domestic consumption becomes a top policy priority.
China Merchants Bank fell by -5.48% in Hong Kong and -5.39% in Mainland China after reporting tepid financial results and a decline in the dividend growth rate. Today’s drop unfortunately hits ex-state-owned enterprises and active China managers who use CMB, the largest non-SOE bank, as their financial sector proxy. We have long argued the issue is not that the companies are SOEs but are in slow-growth sectors like financials and energy. How can a Chinese bank make money with the 1-year Treasury at 1.57% and the 10-year Treasury at 1.77%? CMB weighed on bank and financial-heavy indices, including the Shanghai Composite Index.
Internet stocks were higher following yesterday’s downdraft in U.S.-listed China stocks, led by Xiaomi, which gained +1.03%, Tencent, which gained +0.90%, and Alibaba, which gained +1.41% after announcing their AI will be incorporated in BMW’s China vehicles.
Although Hong Kong volumes were light, 41% of Hong Kong volume was from Southbound Stock Connect, as Mainland investors bought a healthy $1.1 billion worth of Hong Kong-listed stocks and ETFs today.
Financial results drove price action. You can easily tell which companies beat estimates and which did not, based on their stock price moves overnight:
- Kuaishou Technology (1024 HK) fell by -1.67% following yesterday’s post-close financial results. (I though the results were just fine.)
- Textile maker Shenzhou International (2313 HK) gained +12.66%.
- Hot pot restaurant chain Haidilao International (6862 HK) gained +6.14%.
- Toy maker/retailer Pop Mart International (9992 HK) gained +10.87%.
- Bottled water giant Nongfu Spring (9633 HK) fell by -8.3%.
Mainland China had a choppy session as bank stocks weighed on Shanghai. However, Shenzhen managed a small gain.
Wednesday’s Boao Forum For Asia 2025 Annual Conference highlight was the keynote speech by Peng Shen of the China Economic System Reform Research Association on how to “boost consumption. She said that “the national income level must be raised, and the proportion of primary distribution must be changed.”
Morgan Stanley raised its Hong Kong and Mainland China index price targets again. Both markets were resilient despite the addition of several Chinese companies to the U.S. export ban list.
The Hang Seng and Hang Seng Tech indexes gained +0.60% and +1.01%, respectively, on volume that was down by -30% from Tuesday, which is 120% of the 1-year average. 285 stocks advanced, while 180 stocks declined. Main Board short turnover decreased by -6.16% from Tuesday, which is 155% of the 1-year average, as 20% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Growth and small capitalization stocks outperformed value and large capitalization stocks. The top-performing sectors were Real Estate, which gained +1.98%, Consumer Discretionary, which gained +1.61%, and Information Technology, which gained +0.93%. Meanwhile, the worst-performing sectors were Consumer Staples, which fell -1.18%; Financials, which fell -0.73%; and Utilities, which fell -0.53%. The top-performing subsectors were consumer durables, apparel, consumer services, and household/personal products. Meanwhile, food, real estate investment trusts (REITs), and banks were among the worst-performing subsectors. Southbound Stock Connect volumes were moderate, at 2x pre-stimulus levels, as Mainland investors bought a net $1.08 billion worth of Hong Kong-listed stocks and ETFs, including Tencent, Semiconductor Manufacturing International (SMIC), Pop Mart, Meituan, and Kuaishou. Meanwhile, Mainland investors were net sellers of Xiaomi, CNOOC Finance, and Alibaba.
Shanghai, Shenzhen, and the STAR Board diverged to close -0.04%, +0.39%, and -0.26%, respectively, on volume that decreased -8.35% from Tuesday, which is 96% of the 1-year average. 3,641 stocks advanced, while 1,039 stocks declined. Growth and large capitalization stocks outperformed value and small capitalization stocks. Consumer Discretionary and Consumer Staples were the only positive sectors, up +0.66% and +0.20%, respectively. Meanwhile, the worst-performing sectors were Financials, which fell -0.94%; Materials, which fell -0.66%; and Utilities, which fell -0.64%. The top-performing subsectors were office supplies, chemical fibers, and auto. Meanwhile, banks, energy equipment, and construction machinery were among the worst-performing subsectors. Northbound Stock Connect volumes were above average. CNY and the Asia Dollar Index both fell versus the U.S. dollar. Treasury bond prices gained. Copper and steel rose.
Live Webinar
Join us March 26, 2025 at 11 a.m. EDT for:
Managing Uncertainty – Alternative Strategies for Uncharted Times
Please click here to register
New Content
Read our latest article:
New Drivers For China Healthcare: AI Med-Tech Innovation, Cancer Treatment, & Favorable Balance of Trade
Please click here to read
Last Night’s Performance
Chart1
Chart2
Chart3
Chart4
Chart5
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.26 versus 7.26 yesterday
- CNY per EUR 7.83 versus 7.84 yesterday
- Yield on 10-Year Government Bond 1.79% versus 1.82% yesterday
- Yield on 10-Year China Development Bank Bond 1.82% versus 1.85% yesterday
- Copper Price +0.84%
- Steel Price +0.22%
