Asian equities struggled overnight due to strong US economic data reducing US Fed cut probabilities and escalating oil prices amid Middle East tensions. Taiwan experienced a powerful earthquake with limited casualties. Markets were subdued ahead of holidays in Hong Kong and Mainland China. President Biden and President Xi had a two-hour discussion covering various topics like fentanyl precursors, Taiwan, and Ukraine. Secretary of State Blinken is set to visit China soon following Janet Yellen’s departure.
Energy and materials sectors performed well in Hong Kong and Mainland China, benefiting from higher oil and gold prices. Tesla’s underwhelming sales announcement affected the electric vehicle ecosystem, but NEV retail sales in China increased significantly. Despite buybacks and strong sales, stocks like Tencent, Xiaomi, Alibaba, Meituan, and BYD experienced declines. Travel stocks showed resilience ahead of the holiday weekend.
Mainland investors bought Hong Kong stocks during the dip, while foreign investors sold Mainland-listed stocks. The Hang Seng and Hang Seng Tech indices fell, with the value factor and large caps outperforming growth factors and small caps. Subsectors like materials, business services, and energy saw gains, while technology, autos, and media recorded losses. Shanghai, Shenzhen, and the STAR Board also slipped, with energy, materials, and consumer staples sectors performing well. Northbound Stock Connect volumes were light, with foreign investors selling Mainland stocks.
The upcoming market holidays in Hong Kong and Mainland China will lead to a break in China Last Night. The Quadratic Capital webinar discussing normalization will take place on April 24th. US equities article about Microsoft being the largest weighting in a Dynamic Dividend Equity Index ETF is also available. Exchange rates, prices, and yields remained stable overnight, with CNY per USD at 7.23, CNY per EUR at 7.79, and the yield on 10-year government bond at 2.28%. Copper prices increased while steel prices slightly declined.
