Asian equities were mixed ahead of the Labor Day holiday, with Japan outperforming following its holiday yesterday. Growth stocks were down in Hong Kong and Mainland China as investors took profits in outperforming sectors. Mainland financial results showed positive performance in mega-banks and big energy/oil, while weak results were seen in brokerage, insurance, and clean tech. Foreign investors sold $1.19B in Mainland stocks to avoid idle money, with the market closed until next Monday.
In morning trading, the “official” April PMIs showed mixed results, with Manufacturing beating expectations but Non-Manufacturing missing expectations. The Caixin Manufacturing PMI surpassed expectations, indicating positive sentiment among smaller companies. The Politburo’s policy moves focused on implementing macro policies, issuing ultra-long term special national bonds, and boosting support for the real economy using interest rates and deposit reserve ratios.
Real estate support was highlighted, with profit-taking in the sector despite some cities lifting home purchase restrictions. Major companies like Tencent, Alibaba, Meituan, AIA, and Bank of China saw mixed performance, with growth and small caps falling further. Mainland investors bought $415mm of Hong Kong stocks and ETFs, while Mainland markets closed lower.
YUM China reported Q1 2024 financial results, with revenue missing expectations despite reaching an all-time high. Northern China showed faster recovery, while Tier 2 cities performed well. The company remains optimistic about mall sales surpassing 2019 levels and highlighted macroeconomic trends. The Hang Seng and Hang Seng Tech saw divergent performance, with energy, staples, and utilities sectors performing well.
Shanghai, Shenzhen, and STAR Board markets closed lower, with the value factor and large caps falling less than growth factors and small caps. Utilities, energy, and healthcare sectors performed well, while real estate, communication, and tech sectors showed weakness. Foreign investors sold a significant amount of Mainland stocks, while CNY and the Asia dollar index remained stable. Treasury bonds rallied, with copper prices seeing gains and steel prices remaining flat.
Overall, the markets in Asia showed mixed performance ahead of the Labor Day holiday, with varied results in different sectors and markets. Positive sentiment was seen in certain industries, while profit-taking and selling by foreign investors impacted others. Policy moves and economic data continue to influence investor sentiment, with a focus on real estate support and macroeconomic trends. The outlook remains uncertain as markets navigate through various challenges and opportunities.
