Asian equities saw a mixed performance overnight, with South Korea outperforming while Hong Kong and India underperformed. Hong Kong’s 10-day winning streak came to an end due to profit-taking, particularly in the growth and internet sectors. Despite the pullback, Mainland investors bought the dip via Southbound Stock Connect, indicating some confidence in the market. Q1 earnings season is set to kick off, with Alibaba and Tencent reporting next week. The upcoming Third Plenum in July is also expected to provide economic policy updates.
In Hong Kong, there was continued chatter about home appliance upgrades/purchases, but growth and internet names were the focus of profit-taking. Real estate was the top performer following Shenzhen’s housing purchase restrictions, while energy also had a strong day. Mainland markets experienced a choppy session, with the Shanghai and Shenzhen indices showing a slight increase. Foreign investors were net sellers of Mainland stocks via the Northbound Stock Connect. President Xi’s visit to France included a call to “fend off a new Cold War.” The US dollar was slightly stronger, affecting the CNY and the Asia dollar index.
The performance of the Hang Seng and Hang Seng Tech indices saw a decline on light volume compared to the volumes during the winning streak. Main Board short turnover fell, and the value factor outperformed the growth factor. Real estate, energy, and utilities were the top sectors, while communication, discretionary, and healthcare sectors were down. Southbound Stock Connect volumes were moderate/high, with mainland investors buying Hong Kong stocks and ETFs. Shanghai, Shenzhen, and STAR Board showed mixed performance, with the value factor and small caps outpacing the growth factor and large caps.
Looking ahead, a webinar on AI as the next great catalyst for emerging markets is scheduled for Tuesday, May 14th at 10:00 am EDT. Exchange rates and prices saw fluctuations, with the CNY per USD at 7.21 and the yield on the 10-year government bond at 2.29%. Copper and steel prices also saw increases. Overall, the Asian equities market continues to show a mix of performances, with investors closely watching for upcoming events such as earnings season and economic policy updates.
