Asian equities were mixed overnight as China corrected following yesterday’s exuberance over strong economic data.
Mainland China markets fared better than Hong Kong markets, though were still down. Lower volumes on the Mainland may have also been a factor, though it is good to see less of a correction on the Mainland after yesterday’s gains.
The rebound in China’s manufacturing PMIs to 10-year highs in February was significant in letting investors know that the country has fully reopened and is reaping the benefits. Q4 internet earnings have been decent so far, beating estimates, but not as good as they could be in Q1 as reopening is taking full effect.
CATL fell -2.7% overnight, mirroring declines in other EV ecosystem names, the most significant decline in many of these names in two weeks as investors may have been taking profits. However, BYD “outperformed” the broader EV ecosystem, declining only -0.5% on positive February sales figures. NIO led declines in the ecosystem, falling -13% overnight as the company continues negotiations with CATL over battery contracts.
We saw mixed developments on the geopolitical front overnight. Xi Jinping hosted Belarusian president Lukashenko in Beijing, who said he supports China’s peace proposal. Meanwhile, senior US economic official Robert Kaproth is reported to have traveled to Beijing last week. At the same time, Blinken said that he will not be meeting with his counterparts from either China or Russia on the sidelines of G20 meetings in India, as many had hoped.
The 14th National Party Congress will convene for the first time starting Sunday, which will be the first of the “Two Sessions”. This will involve the confirmation of Xi’s new appointees as well as the articulation of economic policy, which will likely involve more targeted stimulus measures.
The Hang Seng and Hang Seng Tech indexes closed -0.92% and -1.41%, respectively, on volume that decreased -28% from yesterday. Financials, telecom, and energy were among the best performing sectors overnight. Meanwhile, internet, technology, healthcare, and real estate were among the worst. Value factors outpaced growth factors.
Shanghai, Shenzhen, and the STAR Board closed lower by 0.05%, -0.52%, and -0.58%, respectively, on volume that increased +1% from yesterday. The most heavily traded stocks on the Mainland were mostly higher. Energy, industrials, materials, and telecoms were among the best performing sectors. Meanwhile, technology, consumer, and healthcare were among the worst.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 6.92 versus 6.87 yesterday
- CNY per EUR 7.33 versus 7.32 yesterday
- Yield on 1-Day Government Bond 1.70% versus 1.75% yesterday
- Yield on 10-Year Government Bond 2.91% versus 2.90% yesterday
- Yield on 10-Year China Development Bank Bond 3.11% versus 3.10% yesterday
- Copper Price -1.11% overnight