Asian equities had a mixed session. Asian equities had a mixed session. Japan stood out as a state of emergency related to the coronavirus has been rolled out in Osaka and Tokyo, and calls to cancel the Olympics are rising locally. President Xi’s speech at the Boao Forum garnered some attention for his veiled swipe at the US though it was really just one sentence, while the majority of the speech focused on strengthening ties amongst Asian countries through trade, technology, and innovation.
News out of the Shanghai Auto Show included Huawei working with battery giant CATL on an electric vehicle while a Tesla
There was Mainland chatter on a star mutual fund manager raising his exposure to liquor stocks. As anticipated, the PBOC kept the 1- and 5-year Loan Prime Rates at 3.85% and 4.65% respectively. A bond broker noted an uptick in market liquidity, which is a good sign.
I read an interesting sell-side analyst report after the analyst hosted a conference call with a very large Chinese internet company with foreign investors. The analyst remarked in his notes that EVERY question was on regulation and not one was on the operations or fundamentals of the company’s business. This is very similar to the call two weeks ago with the Chinese equity strategist from a major global bank for US investors who called them out for their pessimism. The analyst changed neither their rating nor price target after the call, providing a strong indication that they don’t believe the regulations will affect the balance sheet and income statement of the company.
A Mainland media source noted that the Guangzhou Futures Exchanges will proceed with rolling out carbon emissions futures.
New Oriental Education (EDU US) reported strong fiscal year Q3 results before the US market open.
The Hang Seng bounced around the room opening lower and clawing back to close up +0.1% as volume increased 30% from yesterday to 125% of the 1-year average. The Chinese companies listed in Hong Kong within the MSC China All Shares Index gained +0.08%, led by discretionary +1.07%, financials +0.55%, and tech +0.15%, while communication fell -0.69% and materials and energy fell -0.43%. Hong Kong’s most heavily traded by value were Meituan, which rose +1.52%, Tencent, which fell -0.72%, Alibaba Hong Kong, which fell -1.64%, Xiaomi, which gained +0.75%, Geely Auto, which rose +1.09%, Hong Kong Exchanges, which rose +1.5%, Ping An, which gained +0.44%, China Construction Bank, which was flat at 0.0%, JD.com Hong Kong, which fell -1.13%, and China Mobile, which gained +0.48%. Southbound Stock Connect volumes were light as Mainland investors bought $694mm of Hong Kong stocks, which was led by large buying in Meituan as Southbound trading accounted for 8.4% of Hong Kong turnover.
Shanghai, Shenzhen, and STAR Board had a choppy session after yesterday’s strong day, easing -0.13%, -0.07%, and -0.65%. respectively Volume was off -2% from yesterday to 95% of the 1-year average. The Mainland stocks within the MSCI
Last Night’s Exchange Rates, Prices, & Yields
- CNY/USD 6.50 versus 6.51 yesterday
- CNY/EUR 7.83 versus 7.84 yesterday
- Yield on 1-Day Government Bond 1.72% versus 1.72% yesterday
- Yield on 10-Year Government Bond 3.16% versus 3.16% yesterday
- Yield on 10-Year China Development Bank Bond 3.52% versus 3.52% yesterday
- China’s Copper Price +0.95%
Krane Funds Advisors, LLC is the investment manager for KraneShares ETFs. Our suite of China focused ETFs provide investors with solutions to capture China’s importance as an essential element of a well-designed investment portfolio. We strive to provide innovative, first to market strategies that have been developed based on our strong partnerships and our deep knowledge of investing. We help investors stay up to date on global market trends and aim to provide meaningful diversification. Krane Funds Advisors, LLC is majority owned by China International Capital Corporation (CICC).