Hong Kong Rises On Signs Of Consumer Comeback

Key News

Asian equities were mostly higher overnight despite Wall Street’s pessimism on Friday. Mainland markets underperformed Hong Kong, a dynamic that we have not seen in a while and leading up to important releases of Q1 GDP, retail sales, and industrial production, all expected tomorrow (this evening in NY).

PBOC Chair Yi Gang made statements at the IMF Conference regarding the reform of China’s banking sector. The central bank chief said that consumption and services continue to rebound in China while many small and medium-sized financial institutions have made significant progress in reforming their businesses and improving their risk management practices.

Since the beginning of April, ten car brands in China have offered new purchase incentives, hoping to jump-start growth in China’s car market following a difficult 2022.

According to a survey of home prices in 70 major cities, home prices rose for the second month in a row in March after 16 months of declines.

We are seeing more indicators of a consumer rebound. Kweichow Moutai released strong Q1 earnings overnight, indicating that the company’s profit rose +19% year-over-year. Meanwhile, domestic flight booking activity for the upcoming Labor Day holiday is up 150% compared to 2019.

China’s new defense minister Li is visiting Moscow, his first foreign trip, to highlight China’s commitment to regional stability and peace in Ukraine. Also highlighting China’s increased role on the world stage, China’s embassy in Khartoum was one of the first to sound the alarm about the increased violence in Sudan of late, according to reports by the South China Morning Post.

The Hang Seng and Hang Seng Tech indexes gained +1.68% and +2.16%, respectively, on volume that increased +26% from Friday and short sale turnover that nearly doubled. The top-performing sectors overnight were energy, communication services, and financials. Meanwhile, real estate, health care, and materials were among the worst.

Shanghai, Shenzhen, and the STAR Board gained +1.42%, +0.20%, and +0.34%, respectively, on volume that was mostly flat from Friday. The top-performing sectors on the Mainland overnight were energy, financials, and consumer staples. Meanwhile, technology, communication services, and real estate were among the worst-performing.

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Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 6.87 versus 6.87 Friday
• CNY per EUR 7.52 versus 7.56 Friday
• Yield on 1-Day Government Bond 1.70% versus 1.65% Friday
• Yield on 10-Year Government Bond 2.84% versus 2.83% Friday
• Yield on 10-Year China Development Bank Bond 3.02% versus 3.01% Friday
• Shanghai Copper Price -0.34% overnight