Key News
Asian equities delivered mixed performance overnight on hopes that a phone call between President Trump and President Xi would take place this week.
Hong Kong outperformed, buoyed by a stronger renminbi (RMB) versus the US dollar, while South Korea was closed for the presidential election and Thailand was closed for the Queen’s birthday.
The Organization for Economic Cooperation and Development (OECD) emphasized that economic cooperation is essential for development, lowering its 2025 global GDP growth forecast to 2.9% from 3.2%. The OECD also reduced its US growth target to 1.6% from 2.2%, citing the ongoing US-induced trade war as a primary factor.
Mainland China’s economic data appeared to confirm the negative impact of the trade war. The May Caixin Manufacturing Purchasing Managers’ Index (PMI) came in at 48.3, down from April’s 50.4 and below expectations of 50.7. Caixin’s private survey, which focuses on smaller companies, may have underperformed the PMI released by the National Bureau of Statistics (NBS) due to the higher export exposure of the firms included in the survey. Investors may view the weak reading as a catalyst for policymakers to introduce strong stimulus measures at the upcoming Lujiazui Forum, which begins on June 18th.
Hong Kong had a strong session, with nearly four advancing stocks for every declining stock. However, trading volumes were only at 100% of the one-year average, and stronger volumes would have been preferred. Banks, internet stocks, and auto companies led gains, while underperformers were limited.
Appliance giant Midea Group fell -1.82% in Hong Kong and -3.82% in Mainland China after the Chairman commented that he was not concerned about Xiaomi entering the home appliance industry, but his remark that Midea “had no moat” may have unsettled investors.
The auto and electric vehicle (EV) sector benefited from robust May sales figures. Li Auto rose +5.82% following its first-quarter results and strong May sales. Xiaomi’s CEO announced that the company will reach profitability later this year and that the new YU7’s price will be revealed soon. After the close, the Ministry of Commerce (MoC) and several departments announced new measures to promote EV and hybrid auto sales in rural areas.
Mainland China equities also posted gains, though enthusiasm lagged behind Hong Kong. Financials led the advance, as banks, insurance, and brokerages all performed well. National Team exchange-traded fund (ETF) volumes were below average.
Looking ahead, markets are watching to see whether a Trump–Xi phone conversation can pave the way for a summit between the two leaders.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.18 versus 7.19 Friday
- CNY per EUR 8.19 versus 8.15 Friday
- Yield on 10-Year Government Bond 1.68% versus 1.67% Friday
- Yield on 10-Year China Development Bank Bond 1.72% versus 1.72% Friday
- Copper Price +0.05%
- Steel Price -1.18%
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