Key News

Asian equities were higher overnight as Japan outperformed on salary increases and may rescind its negative interest rate policy next week.

Growth stocks and sectors outperformed in both Mainland China and Hong Kong as Nvidia’s GTC conference received significant attention in China. New policies to support technological self-sufficiency, announced during the “Two Sessions” important policy meetings, which concluded last week, might have been a factor.

Following weak credit data last week, at 10 am, January and February data, which were combined due to the Chinese New Year holiday, were released, leaving something for bulls and bears.

The decline in property investment and lower-than-expected rebound in retail sales both reinforce the sector’s need for more support. Meanwhile, China’s economy is still showing signs of its incremental recovery.

Mainland China had a strong day, led by growth stocks and sectors, many of which closed at their intra-day highs on strong breath and volume. Meanwhile, Shenzhen closed above the 1,800 level, and Shanghai closed just below the 3,100 level.

The world’s largest battery maker, CATL, gained +5.5% on another day of strong net buying by foreign investors via Northbound Stock Connect following last Monday’s analyst upgrade. The industrial giant also announced 2023 revenue of RMB 400.9 billion versus 2020’s RMB 50.3 billion and a sizeable dividend.

One of the ETFs favored by the “National Team” (i.e. institutional buyers associated with government entities) saw a spike in volume as the market dipped in the morning.

Hong Kong overcame a small morning loss, staying in a narrow range, though growth stocks and sectors outperformed. Hong Kong’s most heavily traded stocks by value were Tencent, which gained +2.11%; AIA, which fell —3.2 %; Meituan, which gained +1.12%; and Li Auto, which fell —5.63 % on concerns about their latest model’s weak sales, and Alibaba, which gained +0.14%. Mainland investors bought the dip in Hong Kong with a decent $374 million worth of net buying of Hong Kong-listed stocks and ETFs. Despite the constant negative Western media narrative, markets appear to have held up.

The Hang Seng and Hang Seng Tech indexes gained +0.10% and +1.25%, respectively, on volume that decreased -31.14% from Friday, which is 97% of the 1-year average. 298 stocks advanced, while 182 declined. The Main Board short turnover declined -29.72% from Friday, which is 95% of the 1-year average, as 17% of turnover was short turnover (remember Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The growth factor and small caps outperformed the value factor and large caps. The top-performing sectors were Technology, which gained +2.48%, Consumer Staples, which gained +2.12%, and Communication Services, which gained +1.58%. Meanwhile, Real Estate fell by 2.05%, Energy fell by 1.25%, and Materials fell by 0.82%. The top-performing subsectors were foodstuffs, software, and technical hardware. Meanwhile, real estate, energy, and insurance were among the worst-performing. Southbound Stock Connect volumes were moderate as Mainland investors bought a net $374 million worth of Hong Kong stocks and ETFs, including Kuiashou, China Mobile, and Xiaomi, which were small net buys. Meanwhile, Li Auto, Wuxi Biologics, and China Shenhua were small net sells.

Shanghai, Shenzhen, and the STAR Board gained +0.99%, +1.62%, and +2.07%, respectively, on volume that increased +20.44% from yesterday, which is 131% of the 1-year average. 4,159 stocks advanced, while 758 declined. The growth factor and small caps outperformed the value factor and large caps. The top-performing sectors were Communication Services, which gained +2.77%, Technology, which gained +2.50%, and Industrials, which gained +1.77%. Meanwhile, Energy fell -0.92%, Real Estate fell -0.26%, and Consumer Staples fell -0.07%. The top-performing subsectors were education, auto, and computer hardware. Meanwhile, coal, household appliances, and precious metals were among the worst-performing. Northbound Stock Connect volumes were high as foreign investors bought a net $302 million worth of Mainland stocks, including CATL, which was a large net buy, Wuliangye, and Midea. Meanwhile, Kweichow Moutai was a large net sell, along with LCXX and Foxconn. CNY was off slightly versus the US dollar, treasury bonds rallied, and copper gained while steel fell.

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Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

  • CNY per USD 7.20 versus 7.20 Friday
  • CNY per EUR 7.84 versus 7.84 Friday
  • Yield on 1-Day Government Bond 1.48% versus 1.48% Friday
  • Yield on 10-Year Government Bond 2.29% versus 2.32% Friday
  • Yield on 10-Year China Development Bank Bond 2.41% versus 2.45% Friday
  • Copper Price 0.93%
  • Steel Price -0.86%

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