Asian equities had a mostly positive week, with Hong Kong leading the way. The Ministry of Culture and Tourism reported a significant increase in domestic travel for the Labor Day holiday, boosting travel stocks. Online car dealership Autohome also reported better-than-expected Q1 results. China’s trade data for April exceeded expectations, with imports rising by 8.4% year-over-year.
Hong Kong stocks saw a surge after reports that Mainland investors’ 20% dividend tax on Hong Kong stocks would be waived. Value stocks performed well, with China Construction Bank, Hong Kong Exchanges, Tencent, China Mobile, and CNOOC among the top gainers. Mainland investors eagerly invested in Hong Kong-listed stocks and ETFs via Southbound Stock Connect, anticipating increased trading activity due to the tax removal. Real estate was the top-performing sector, following the removal of home purchase restrictions in Xi’an and Hangzhou.
Mainland China experienced mixed performance, with growth stocks lagging behind value stocks. Concerns arose over Biden’s upcoming tariff announcement on China-made electric vehicles and solar panels. However, Chinese automaker Geely moved forward with an IPO for its Zeekr EV brand on the NYSE. The Hang Seng and Hang Seng Tech indexes showed gains, with real estate, financials, and energy sectors performing well. Southbound Stock Connect volumes were high, with Mainland investors buying a substantial amount of Hong Kong-listed stocks and ETFs.
Shanghai, Shenzhen, and STAR Board had mixed results, with real estate, financials, and utilities sectors outperforming. Technology, healthcare, and consumer staples sectors experienced declines. Northbound Stock Connect volumes were moderate, with foreign investors selling a considerable amount of Mainland stocks. CNY weakened slightly against the USD, with the Treasury bond curve flattening. Copper prices rose while steel prices fell. An upcoming webinar will discuss whether AI could be the next catalyst for emerging markets.
Exchange rates showed a slight fluctuation, with CNY per USD at 7.23 and CNY per EUR at 7.78. Yields on government bonds saw minor changes, with the 1-day government bond at 1.43% and the 10-year government bond at 2.31%. Copper prices increased while steel prices decreased. The performance of Asian equities reflected a mix of positive developments, including strong travel data, positive earnings reports, and promising trade data, balanced with concerns over potential tariffs and fluctuating market conditions.
