Key News
Asian equities were positive overnight, led by Hong Kong and South Korea, while Japan underperformed, as Trump and Xi are said to have held a phone call.
Helping sentiment was May’s Caixin Services PMI, which increased month over month to 51.1 from 50.7, beating expectations of 51.0. Hong Kong and Mainland China were led higher by growth and technology stocks following a speech from a senior official of the CSRC, China’s SEC, affirming strong support for the science and technology sector in the capital markets. This follows a similar message from the Ministry of Industry and Information Technology (MIIT) supporting AI development.
Alibaba gained +3.23% despite a Financial Times article, widely publicized by Bloomberg News, that Apple and Alibaba’s AI iPhone partnership was being held back by the China’s government, according to “two people familiar with the matter”. This was a great sign of resiliency! Alibaba likely benefited from a rise in AI plays, including Kuaishou, which gained +5.01%, along with semi conductors, including Semiconductor Manufacturing International (SMIC), which gained +4.19%. Healthcare and biotech were hit with profit taking along with precious metals and home appliances.
According to a Mainland media article, a great indicator of Hong Kong’s market rebound is that $77.6 billion of capital has been raised by listings, which is 7 times the amount raised versus last year and 90% of 2024’s total.
Today, Tencent was Hong Kong’s most heavily traded stock by value in Hong Kong, with HKD 9.3 billion in total volume, which is almost 2X the average HKD 5 billion for the highest value last year. The US appears to be going the other direction on reports that the SEC will tighten scrutiny of foreign listings.
Autos, including electric vehicles (EVs) and hybrids, had a good day in both markets following strong May results, along with insurance and capital markets. Mainland China opened lower but managed to grind higher, led by technology hardware, software, and semiconductors. The Renminbi closed at 7.17 per US dollar, having rallied from 7.34 on April 9th, which was also a 52-week low. It feels like stocks are starting to play catch-up to the currency. Fingers crossed!
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.18 versus 7.19 yesterday
- CNY per EUR 8.19 versus 8.19 yesterday
- Yield on 10-Year Government Bond 1.67% versus 1.67% yesterday
- Yield on 10-Year China Development Bank Bond 1.71% versus 1.71% yesterday
- Copper Price -0.10%
- Steel Price +0.10%
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