CLN
Week in Review
- Asian equities were mostly lower for the week as Vietnam and Pakistan saw small gains while Indonesia and Hong Kong underperformed.
- China came out with more stimulus and government borrowing plans this week ahead of the “Dual Sessions” next month, including recapitalizing three major state-owned banks.
- Travel booking site Trip.com reported Q4 earnings that beat expectations on revenue and net income, though light guidance led to weakness in the stock.
- Join KraneShares’ Xiabing Su and Coco Zhang as they explore Harbin, a city that transformed its sub-zero winter weather into a hotspot for tourism, in our latest video.
Key News
Mainland China and Hong Kong stocks ended a choppy week lower after a strong performance run since the start of the year.
Growth stocks were under pressure across the board, which may have involved some profit taking. Trump’s March 5th tariff deadline for Canada and Mexico and to increase the tariff on China led to a risk off environment globally. Meanwhile, MSCI’s index rebalance trade might have weighed on Hong Kong with selling pressure from index-trackers. However, Southbound flows capped off a strong week of dip buying with $1.5 billion of net inflow.
Are the tariffs the “Art of The Deal”? We continue to think so, though it appears likely that we could weather heightened tariffs for some time. The US President’s overtures to Russia to end the conflict in Ukraine are positive signals for future negotiations with China. Understandably, the first areas of focus are places where there are ongoing conflicts as well as the US’ immediate trade partners. A deal with China will be complex and, arguably, more important. It takes time.
Smartphone and electric vehicle maker Xiaomi debuted its SU7 Ultra SUV, the latest in its line of high-end and futuristic electric vehicles. The company said it received more than 10,000 pre-orders of the vehicle, meeting its sales target on day one. Xiaomi is a pioneering player in the electronics space. They came out with their first “roadster” style electric vehicle two years ago. The vehicle is reportedly driven by Jim Farley, Ford CEO, after he said he took a liking to the car after his company ordered it especially from China to do some competitive research. They accomplished what Apple mulled doing, which is creating a car that is seamlessly linked to a smartphone.
Unfortunately, Xiaomi’s overnight success did not translate to gains in the electric vehicle (EV) ecosystem overall. Battery giant CATL was down -2% despite inking a deal to provide their latest battery technologies to Baidu’s robo-taxis.
Baidu has underperformed in the internet space on speculation that large language models will drive traffic away from search. The company has a great deal of cash on hand and continues to grow its other businesses. Baidu was an early AI leader, but investor attention to China’s AI industry has mostly been directed at Alibaba, so far. We will be speaking with Baidu next month, so stay tuned for more updates on what we believe is an undervalued company.
All sectors were lower in Hong Kong while only Consumer Staples names saw gains on a sector level in Mainland China.
The Hang Seng and Hang Seng Tech indexes fell -3.28% and -5.32%, respectively, on volume that decreased -0.05% from yesterday. Mainland investors bought a net $1.5 billion worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Energy, which fell -0.48%, Utilities, which fell -1.94%, and Financials, which fell -2.64%. Meanwhile, the worst-performing sectors were Consumer Discretionary, which fell -5.71%, Consumer Staples, which fell -4.07%, and Real Estate, which fell -3.83%.
Shanghai, Shenzhen, and the STAR Board all closed lower by -1.98%, -3.17%, and -4.22%, respectively. The top-performing sectors were Consumer Staples, which gained +0.13%, Utilities, which fell -0.77%, and Energy, which fell -1.12%. Meanwhile, the worst-performing sectors were Information Technology, which fell -4.69%, Communication Services, which fell -3.00%, and Consumer Discretionary, which fell -2.92%.
New Content
Read our latest article:
2025 China Outlook: A Recipe For Re-Rating
Please click here to read
Last Night’s Performance
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Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.28 versus 7.29 yesterday
- CNY per EUR 7.58 versus 7.59 yesterday
- Yield on 10-Year Government Bond 1.72% versus 1.76% yesterday
- Yield on 10-Year China Development Bank Bond 1.75% versus 1.78% yesterday
- Copper Price -0.31%
- Steel Price +0.06%
