Asian equities had a mixed performance overnight, with the Philippines outperforming while Hong Kong opened lower but grinded higher, led by growth stocks despite geopolitical headwinds. The Hang Seng gained +0.8% and closed above the 19,000 level, with the most heavily traded stocks including Tencent and Alibaba. Tomorrow, investors are eagerly anticipating the earnings releases of Alibaba and Tencent, with expectations for revenue growth and adjusted net income and EPS numbers to be released.
Alibaba’s earnings release for fiscal Q4 2024 is expected to show a growth in China’s E-Commerce revenue and international E-Commerce. Tencent’s earnings release for Q1 2024 is also anticipated to bring positive results. Internet stocks in Hong Kong had a good day, with Tencent Music Entertainment and Huya beating expectations. Southbound Stock Connect saw high volumes of net buying, led by a big net buy for the Hong Kong Tracker ETF from Mainland investors.
Despite geopolitical tensions and news of a 100% tariff on China electric vehicle imports by the US, Hong Kong stocks performed well. Mainland China experienced consolidation with EV battery maker CATL and LONGi Green Energy seeing mixed performances. New economic data, such as April’s CPI and PPI numbers, demonstrated the need for policy support to boost demand. Northbound Stock Connect was closed due to Hong Kong’s holiday, but Southbound Stock Connect volumes were high with Mainland investors buying a net $1.13 billion worth of Hong Kong-listed stocks.
In Hong Kong, the Hang Seng and Hang Seng Tech indexes performed well, with growth and small caps outpacing value and large caps. The top-performing sectors were Industrials, Consumer Discretionary, and Utilities, while Health Care, Real Estate, and energy saw declines. Shanghai, Shenzhen, and the STAR Board all fell, with the value factor and large caps outperforming growth and smaller caps. CNY and the Asia Dollar Index were slightly lower, Treasury bonds rallied, and copper gained while steel fell.
As investors eagerly await earnings releases from Alibaba and Tencent, Hong Kong and Mainland Chinese markets continue to navigate geopolitical tensions and economic data. The strong performances of growth stocks in Hong Kong and the mixed results in Mainland China demonstrate the nuanced landscape of Asian equities. The next steps for these markets will depend on a combination of upcoming earnings releases and policy decisions to support demand.
