Key News
Asian equities were mostly higher overnight as Hong Kong and Indonesia outperformed while Taiwan and Pakistan underperformed.
Alibaba gained +8% in Hong Kong overnight on news that Apple will tap the company for the rollout of AI tools in new iPhones sold in China. Alibaba Cloud won out against Baidu and Tencent. Apple’s selection is a testament to the conglomerate’s leading role in the AI space, supported by new models, including those using DeepSeek’s underlying technology.
Real estate was the top-performing sector in both Hong Kong and Mainland China. State-owned (SOE) developer Vanke is said to have secured state funding to fill a gap in its budget and pay expenses for ongoing projects, as well as opening up additional funding sources for the company, including bond issuance. Asian high yield USD-denominated bond issuance reached a 10-year low in 2024, mostly owing to little to no new issuance from China developers, so the mage developer’s ability to tap bond markets is important. The support comes at a pivotal time with China’s “Two Sessions” important policy meetings coming up next month. Officials had been hinting at ratcheting up support even further in recent days.
JD.com launched a food delivery service, offering zero-commission delivery to restaurants and stores. The announcement accounted for Meituan’s weakness overnight, as the legacy food delivery giant was down -4% in Hong Kong. In the crowded industry, JD will be going head-to-head not only with Meituan, but also with Alibaba’s Ele.me food delivery service.
MSCI announced the results of its quarterly index review. In Emerging Markets, 14 companies will be added and 58 will be deleted. Of the 14 additions, half of them are China A-shares.
The Hang Seng and Hang Seng Tech indexes both closed higher by +2.64% and +2.70%, respectively, on volume that increased by +30% from yesterday. Mainland investors sold a net -$959 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Real Estate, which gained +6.61%, Information Technology, which gained +4.32%, and Communication Services, which gained +3.44%. Meanwhile, the worst-performing sectors were Materials, which fell -1.68%, Health Care, which gained +0.17%, and Utilities, which gained +0.65%.
Shanghai, Shenzhen, and the STAR Board all closed lower by -0.12%, -0.49%, and -1.19%, respectively. The top-performing sectors were Real Estate, which gained +3.46%, Information Technology, which gained +2.26%, and Consumer Staples, which gained +1.31%. Meanwhile, the worst-performing sectors were Energy, which fell -0.62%, Materials, which fell -0.18%, and Utilities, which gained +0.03%. The Renminbi was unchanged versus the US dollar. Copper and steel gained.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.31 versus 7.31 yesterday
- CNY per EUR 7.55 versus 7.56 yesterday
- Yield on 10-Year Government Bond 1.63% versus 1.63% yesterday
- Yield on 10-Year China Development Bank Bond 1.62% versus 1.63% yesterday
- Copper Price +0.35%
- Steel Price +0.24%
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