Main news

Asian stocks had a good day as tensions eased in the Middle East, but mainland Chinese stocks were weak.

Hong Kong had a strong day after China's SEC, the China Securities Regulatory Commission (CSRC), announced policies aimed at strengthening the city's position as a financial hub. The measure aims to expand Stock Connect rules related to ETFs and REITs traded in the renminbi and encourage more IPOs by “major companies.”

The Hong Kong market was led by gains in internet stocks. The most actively traded stock by value was Tencent, +5.46% after the company announced a May 21st release date for its widely anticipated game. dungeon & fighter, Meituan rose +5.56% on another $4 million share buyback, Alibaba rose +2.62%, Li Auto fell -8.33% on further price cuts for electric cars and light initial demand for new models, and Bank of China. rose +1.19%. It's also worth noting that Tencent bought back an additional 3.2 million shares today. Other internet stocks rose as well, with Kuaishou Technology up +1.92%, NetEase up +2.52%, up +3.29%, Baidu up +1.57%, and up +0.21%. .

The Hang Seng Tech Index has outperformed the Nasdaq 100 by more than 10% since its February 2 low.n.d., until last Friday. However, this is the only place you'll actually read about it. Yes, it's only two and a half months of outperformance, but we'll accept it.

The market didn't care that the bill containing the forced sale of TikTok was passed by the House of Representatives, but even if it passes the Senate and is signed into law, it will be challenged in court and overturned. Probability is high. It's surprising to me that the media hasn't mentioned that TikTok's parent company, Bytedance, is owned by a US private equity firm, and the company controls 3 out of 5 seats on the board of directors. , which invests in the company on behalf of U.S. pensions, endowments and foundations.

Media coverage of the US-China economic meeting at the International Monetary Fund (IMF) is also scant. The Chinese Navy is hosting a four-day meeting with 30 senior naval leaders from around the world and Secretary of State Blinken heading to China on Wednesday.

Loan prime rate (LPR) remained unchanged as expected.

Shanghai and Shenzhen closed lower as China's 10-year government bond yield hit its lowest since April 2002 (2.24%). There was no evidence of activity by the state team (institutional investors connected to Chinese state assets). Their preferred ETFs had below-average volume. After the meeting, the State Council announced special investigations and “prevention of fraudulent activities” to support the capital market, including fraud prevention.[ing] Listed companies will increase their awareness of returns to investors. ” Encouraging companies to pay dividends and buy back their own stock from the top down should attract investors' attention.

Remember, the national team is not buying the Chinese stock market. They are buying the companies with the most influence and weight in China's indexes. This is why investors should focus on mega-cap stocks among mainland Chinese listed stocks. We're not talking about 300 or 600 stocks, because smaller companies don't impact the index.

The Hang Seng Index and Hang Seng Tech Index rose +1.77% and +1.78%, respectively, on volume down -1.16% from Friday, which corresponds to 108% of the one-year average. 337 stocks rose in price and 141 stocks fell. Short volume on the main board decreased by -9.55% from Friday, as 19% of the volume was short volume. This is equivalent to 112% of the one-year average (recall that Hong Kong short volume includes ETF short volume driven by market makers' ETF hedging). . Growth factors and small-cap stocks outperformed value factors and large-cap stocks. The best-performing sectors were communications services, which increased by +4.57%, and healthcare, which increased by +3.40%. and Consumer Staples, +2.62%. Meanwhile, materials fell by -3.43%, energy by -2.8% and industrial by -0.38%. Software, retail, and food and beverages were the best performing subsectors, while materials, energy, and automotive were the worst performers. Volume on southbound Stock Connect was moderate as mainland investors bought a net $370 million worth of Hong Kong-listed stocks and ETFs.

Shanghai, Shenzhen, and STAR Board diverged to close at -0.67%, -0.49%, and +0.17%, respectively, with volume down -4.38% from Friday, which is 96% of the one-year average. The number of rising stocks was 2,016, and the number of declining stocks was 2,911. Growth factors and small-cap stocks outperformed value factors and large-cap stocks. Consumer staples and healthcare rose +1.79% and +0.60%, respectively, while energy fell -3.89%. Meanwhile, Materials fell -1.74% and Communication Services fell -1.22%. The best-performing subsectors were motorcycles, agriculture, and soft drinks. Meanwhile, energy equipment, coal and precious metals were the worst. Volume on Northbound Stock Connect was moderate as foreign investors bought $191 million worth of mainland stocks. The CNY and Asian dollar index fell slightly against the US dollar. National debt rose. Copper rose, but steel fell.

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last night's performance

Last night's exchange rates, prices and yields

  • CNY/USD 7.24 vs. 7.24 yesterday
  • CNY 7.70 per euro vs yesterday's 7.71
  • The one-day government bond yield is 1.30% (yesterday it was 1.33%)
  • The 10-year government bond yield is 2.24% (2.25% yesterday)
  • National Development Bank of China 10-year bond yield 2.31% (2.32% yesterday)
  • Copper price +1.39%
  • Steel prices -0.16%

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