Asian equities experienced a positive day with growth/semiconductor stocks in the region receiving a boost from Nvidia’s rally. The Yen traded above 160 for the first time since 1986, with OpenAI’s decision to limit access to Chinese users also contributing to gains in local AI plays and the technology sector. Rumors of the CSRC meeting to discuss the market’s recent downtrend fueled afternoon gains in Hong Kong and Mainland China markets. Additionally, the approval of 104 video games and 4 mobile games further boosted sentiment and gaming companies like Tencent and NetEase.
The announcement of Beijing’s local government lowering minimum down payment ratios for first-time and second-time homebuyers, as well as offering favorable loan terms for families with two or more children purchasing a second home, had a significant impact on the real estate market. This move aligns with the national directive to stabilize home prices, with Beijing being the last Tier One city to implement the 5/17 directive. Key stocks in Hong Kong such as Tencent, Alibaba, Meituan, China Construction Bank, and ICBC experienced varied trading activity, while Mainland China saw strong performance across sectors like big banks, technology, and healthcare, signaling a positive market sentiment following President Xi’s pro-technology speech.
China’s 5-year Treasury Yield closed below 2% for the first time since April 2020, indicating tepid retail animal spirits but strong buying from Mainland financial professionals. Despite concerns about China’s economy, Hong Kong-listed companies have initiated significant stock repurchases year-to-date, with Tencent, Meituan, Kuaishou, and Xiaomi leading the pack. The commitment to buy back shares reflects a positive outlook on business prospects, especially considering that the founders serve as Chairman or CEO of these companies.
The National Health Commission issued an “Implementation Plan for Weight Management Year,” emphasizing the role of technology in developing personalized nutrition and fitness plans. Meanwhile, the Hang Seng and Hang Seng Tech indexes recorded gains on increased volume, with growth and small caps outperforming value and large caps. In Shanghai, Shenzhen, and the STAR Board, sectors like communication, technology, and healthcare led the positive performance. Southbound Stock Connect volumes were light, with Mainland investors buying $487 million of Hong Kong stocks, while foreign investors were small net sellers through Northbound Stock Connect.
In the financial market, CNY struggled against the US dollar, leading to a flat Treasury curve and varied performance in commodity prices such as copper and steel. The new directive on weight management and technology in China reflects a growing emphasis on health and innovation in the country. Overall, the Asian equities market experienced a positive day, driven by various factors such as favorable policy changes, strong performance in key sectors, and ongoing investment activity from both domestic and foreign investors.
