Asian equities experienced a downturn for the week, with the US dollar causing the Asia Dollar Index to decline. Middle East tensions also contributed to a risk-off-market move, leading to safe-haven assets like gold and the US dollar surging. Hong Kong-listed internet and technology stocks managed to see gains, but the overall sentiment was negative in the region.
US Treasury Secretary Janet Yellen had productive meetings with Chinese officials during her visit to China, including Premier Li and members of the People’s Bank of China. China also reported that its March inflation was lower than expected, despite a rise in pork prices. Fresh data from the China Association of Automobile Manufacturers showed a strong performance for the electric vehicle industry, with new energy vehicle sales up by 35% year-over-year in March.
In Hong Kong, the stock market opened lower and experienced a late-day selloff, with Tencent, AIA, Xiaomi, Alibaba, and Meituan being the most heavily traded stocks. The Hang Seng index fell below the 17,000 level, but Mainland investors bought stocks and ETFs in Hong Kong, while foreign investors sold Mainland stocks. Precious metals performed well amid high gold prices, and the Shanghai Composite and Shenzhen index remained steady above specific levels.
Export-driven manufacturing has been supporting the Chinese economy, but there is pressure on policymakers to boost domestic consumption following the latest data. Reports of new Mainland financial regulations and potential changes in the telecom industry also affected market sentiment. Both the Hang Seng and Hang Seng Tech indexes fell, with Mainland investors buying Hong Kong-listed stocks and ETFs, while foreign investors were selling Mainland stocks.
In Shanghai, Shenzhen, and the STAR Board, stocks saw declines, with some sectors performing better than others. The growth factor and large caps were less affected compared to the value factor and small caps. Northbound Stock Connect volumes were moderate/light as foreign investors sold mainland stocks. In terms of exchange rates, the CNY and the Asia Dollar Index were lower against the US dollar. Treasury bonds rallied, while copper and steel prices were higher. Some upcoming webinars were announced, covering topics such as China’s Q1 review and investment strategies.
