Asian equities had a mixed week, with a boost in sentiment from a “light” US inflation print and the US Fed holding rates steady. However, concerns arose regarding the Biden Administration potentially restricting Chinese companies’ access to AI chips. In Hong Kong, Wuxi Biologics and WuXi AppTec saw significant gains as the Biosecure Act did not include provisions to limit the use of their services. May Aggregate Financing and New Loans in China both increased from April but missed expectations.
Tesla’s shareholder meeting was a major focus in China, with Hong Kong experiencing a choppy session that ultimately ended lower. EU tariffs on Chinese electric vehicles weighed on sentiment despite being described as “preliminary.” The China Association of Automobile Manufacturers reported a 1.5% increase in auto sales in May, with new energy vehicles (NEVs) rising by 33.33% year over year. Chinese banks’ Russian transactions were reportedly under scrutiny by the US Treasury, adding to market uncertainty.
In Hong Kong, the lack of a strong catalyst led to mixed performance in the market, with growth stocks seeing declines. Mainland investors bought the Hong Kong dip, bringing the weekly total of net buying to $3.451 billion. Real estate was the top-performing sector in both Hong Kong and Mainland China, with reports of increased property transactions in Shanghai following relaxed purchase restriction rules. After market close, May new loans and Aggregate Financing figures were released, showing positive month-over-month gains but slightly missing expectations.
The Hang Seng and Hang Seng Tech indices fell on increased volume, with real estate, materials, and financials outperforming while consumer discretionary, energy, and healthcare underperformed. Southbound Stock Connect volumes were moderate, with Mainland investors buying a significant amount of Hong Kong-listed stocks. In Shanghai, Shenzhen, and the STAR Board, divergent performance was seen with real estate, information technology, and financials leading the gains. Northbound Stock Connect volumes were light, with foreign investors being net sellers of Mainland stocks.
Exchange rates, prices, and yields saw fluctuations, with the CNY per USD holding steady, the yield on the 10-Year Government Bond decreasing slightly, and changes in copper and steel prices. Overall, the week in Asian equities was characterized by mixed performance, influenced by various factors such as US economic indicators, Chinese government policies, and global trade tensions. Investors will be closely watching for further developments in key sectors such as technology, autos, and real estate in the coming weeks.
