This week in the Asian equities market saw mostly lower performance, with Hong Kong-listed internet and technology stocks being the exception. US Treasury Secretary Janet Yellen had productive meetings in China with top officials, discussing various economic issues. China’s March inflation, as measured by the consumer price index, was below estimates despite a rise in pork prices. Additionally, new energy vehicle sales in China saw a strong increase of 35% year-over-year.
Tensions in the Middle East contributed to a risk-off market move, with safe havens such as gold and the US dollar surging. Hong Kong and mainland China markets experienced volatility, with Hong Kong’s most heavily traded stocks fluctuating. Despite mainland investors buying Hong Kong-listed stocks and ETFs, foreign investors sold mainland stocks in size, impacting overall market sentiment. The Shanghai Composite and Shenzhen markets remained above key levels, with precious metals shining amidst high gold prices.
Export-driven manufacturing continued to support China’s economy, but there were calls for policymakers to focus more on boosting domestic consumption. Reports suggested that Chinese telecom companies were directed to replace US semiconductor companies by 2027, although this information was not confirmed in Chinese media. The Hang Seng and Hang Seng Tech indexes fell, with a negative sentiment prevailing in the market. Short turnover decreased, with most factors pointing towards a decline in market performance.
In China, Shanghai, Shenzhen, and the STAR Board also experienced a decline in performance, with volume decreasing and a larger number of stocks declining than advancing. Technology, energy, and materials sectors performed relatively well, while real estate, consumer staples, and financials sectors struggled. Foreign investors sold a significant amount of mainland stocks, leading to negative Northbound Stock Connect volumes. Overall, CNY and the Asia Dollar Index were down against the US dollar, with Treasury bonds rallying and copper and steel prices increasing.
Looking ahead, there is a webinar scheduled to discuss China’s Q1 performance, consumer rebound, and investment strategies. Another webinar will focus on Quadratic Capital and the normalization of the market. In terms of exchange rates, prices, and yields, CNY per USD and CNY per EUR remained relatively stable, while government bond yields and metal prices showed slight fluctuations. Overall, the market outlook remains uncertain as geopolitical tensions and economic data continue to influence market performance.
