Asian equities experienced mixed performance overnight, with Mainland China and Hong Kong outperforming while South Korea, Australia, India, and the Philippines underperformed. Indonesia was closed for the Christian holiday Ascension Day. April trade data exceeded expectations, with exports increasing by +1.5% and imports by +8.4%. This indicates strong global economic performance and a recovering Chinese economy. Major cities Xi’an and Hangzhou lifted housing purchase restrictions, boosting real estate stocks in Hong Kong and Mainland China, though these stocks are volatile.
Bloomberg News reported that China may waive the 20% dividend tax paid by Chinese investors in Hong Kong by year-end, potentially boosting Hong Kong stocks further as Mainland banks’ deposit rates remain low. Despite geopolitical tensions following the US Commerce Department’s ban on Nvidia and Qualcomm selling chips to Huawei, both Mainland China and Hong Kong remained unaffected. Hong Kong experienced a significant rally, with Tencent, Meituan, and Alibaba among the most traded stocks in the region. Shanghai and Shenzhen also had a positive day, with foreign investors purchasing a healthy amount of Mainland stocks.
The US Chamber of Commerce’s 14th Annual China Business Conference received little media attention. Despite skepticism around the China rally, recent economic data suggests that China’s economy is improving. Next week’s earnings reports from companies like Alibaba and Tencent will offer further insights. The Hang Seng and Hang Seng Tech indexes saw gains, with all sectors performing positively. Foreign investors continued to purchase Mainland stocks via Stock Connect, with Shanghai, Shenzhen, and the STAR Board also seeing gains. Overall, market performance was positive, with sectors like Industrials, Health Care, and Technology leading the way.
An upcoming webinar will explore the potential impact of AI on emerging markets. Exchange rates, prices, and yields were relatively stable overnight, with minor fluctuations in CNY per USD and EUR, yields on government and China Development Bank bonds, and prices of copper and steel. Despite recent challenges and uncertainties, the outlook for Asian equities remains relatively positive as economic indicators and market performance continue to show signs of improvement.
