Mainland China Sees 10 IPOs After Rule Change

Key News

Asian equities were largely higher less Mainland China though Hong Kong, Australia, and the Philippines were closed for Easter Monday. China stocks eased after Friday’s gains as ChatGPT-like tech stocks were hit with profit taking, sending the STAR Board lower by -2.74%.

Ten new companies listed today in Mainland China under the new listing standards, which include no limit on stock movement for the first five trading days. The top-performing IPO was Shenzhen CECport Technologies (001287 CH), which gained a mere +221%. The new standards are not necessarily “looser,” though streamline the IPO process, which should increase the number of IPOs. The ten IPOs today diverted money away from stocks already listed, which may have been a mitigating factor in today’s trading.

The China Securities Regulatory Commission (CSRC) lowered the minimum settlement reserve payment ratio to 15% from 16%, another pro-market/investor move.

Tesla’s announcement on a new Megapack battery factory in China garnered media attention.

Additionally, China’s response to Tsai Ing-Wen’s visit to California was considered muted compared to Pelosi’s visit. I was thinking that if a Taiwan conflict was anticipated, wouldn’t the Taiwan stock market decline?

Solar giant Longi Green Energy (601012 CH) reported 2022 financial results after the market’s close. Operating revenue jumped +60% year-over-year (YoY) and net profit increased +62.66% YoY.

CNY slipped slightly versus the US dollar overnight. March data releases this week include CPI, PPI, money supply, and trade/export/import data. E-commerce logistics activity increased in March, according to JD.com and the China Federation of Logistics and Purchasing. China’s economy continues to rebound incrementally, which we anticipate will occur across the year.

The Hang Seng and Hang Seng Tech were closed today.

Shanghai, Shenzhen, and the STAR Board were down -0.37%, -1.02%, and -2.74%, respectively, on volume that increased +15.25% from Friday, which is 133% of the 1-year average. 1,226 stocks advanced while 3,508 declined. Value factors outperformed growth factors while large caps “outperformed,” or fell less than small caps. The top-performing sectors were utilities, which gained +2.04%, industrials, which gained +0.92%, and healthcare, which gained +0.48%. Meanwhile, technology fell -3.05%, communication services fell -2.73%, and consumer staples fell -1.06%. The top-performing subsectors were oil/gas, electric power grid, and power industry. Meanwhile, software, internet, and computer hardware were the worst-performing. Northbound Stock Connect was closed. CNY was off -0.12% versus the US dollar, which closed at 6.87. The short end of the Treasury curve was sold while Shanghai copper posted small gains and steel was off.

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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 7.49 versus 7.51 yesterday
• Yield on 1-Day Government Bond 1.50% versus 1.47% Friday
• Yield on 10-Year Government Bond 2.85% versus 2.86% Friday
• Yield on 10-Year China Development Bank Bond 3.02% versus 3.04% Friday
• Copper Price +0.26% overnight
• Steel Price -0.93% overnight