Key News
Asian equities were mixed on the great news of a debt ceiling deal and some belief that the Fed may pause in June, though fixed income futures appear to disagree.
Caixin released the May Manufacturing PMI overnight, which came in at 50.9 versus expectations of 49.5 and April’s 49.5. The Caixin PMI survey is called the “private” as the survey, as it is conducted by private company IHS Markit (now owned by S&P) and focuses on small and medium enterprises (SMEs) versus the “official” PMI’s focus on large companies. However, the Caixin survey polls fewer people than the official PMI, leading to higher volatility.
JD.com’s mid-year shopping festival, the “618 sales event”, kicked off with an impressive start. JD.com stated that “23% more brands achieved the RMB 100-million-yuan sales milestone within the first ten minutes compared to last year.” JD.com’s strong start was evidenced by Hong Kong’s most heavily traded stocks today, which were concentrated in E-Commerce names. They included Tencent, which gained+1.55%, Meituan, which gained +2.36%, Alibaba, which fell -0.77% as short turnover fell to 11% today from yesterday’s 32%, and JD.com, which gained +3.26%. While Hong Kong-listed internet stocks outperformed, the broad market came off the intra-day highs to post small gains.
The Mainland market posted a flat day as support levels for Shanghai at 3,200 and Shenzhen’s 2,000 held steady.
Real estate was weak overnight in Hong Kong and Mainland China on expected light sales volumes for May.
After the close, May electric vehicle (EV) sales were released. BYD announced sales of over 240,220 new energy vehicles (NEVs) in May, bringing the year-to-date total to 1 million units sold, according to CnEVPost.com.
There is a rumor that Nvidia’s CEO Jensen Huang will visit China following trips this week from Elon Musk and Jamie Dimon.
The Hang Seng and Hang Seng Tech indexes diverged to close -0.1% and +0.11%, respectively, on turnover that decreased -24.83% from yesterday, which is 109% of the 1-year average. 222 stocks advanced, while 277 stocks declined. Main Board short turnover declined -34.45% from yesterday, which is 114% of the 1-year average, as 18% of turnover was short turnover. Growth factors outperformed value factors as large caps outpaced small caps. The top-performing sectors were utilities, which gained +1.51%, communication services, which gained +1.26%, and materials, which gained +1.13%, while real estate fell -1.91%, consumer staples fell -1.57%, and industrials fell -1.01%. The top-performing subsectors were media, software, and materials. Meanwhile, food, transportation, beverages, and tobacco were among the worst. Southbound Stock Connect volumes were light as Mainland investors sold a net -$467 million worth of Hong Kong stocks as Tencent and Meituan were moderate net buys.
Shanghai, Shenzhen, and the STAR Board diverged to close 0.0%, +0.45%, and -0.03%, respectively, on volume that increased +5% from yesterday, which is 106% of the 1-year average. 2,790 stocks advanced, while 1,875 declined. The growth factor outperformed the value factor, while large caps edged out smaller caps. The top sectors were communication +1.43%, staples +0.43%, and materials +0.43%, while utilities -1.54%, real estate -0.93%, and industrials -0.75% were the worst. The top sub-sectors were cultural media, software, and internet, while land transportation, airport, and aviation. Northbound Stock Connect volumes were moderate/light as foreign investors sold -$253mm of Mainland stocks Foxconn a small net buy, Kweichow Moutai a moderate/high net sell, and China Tourism Group Duty-Free a moderate net sell. CNY eased -0.04% versus the US dollar while the Asia dollar index pulled a James Bond +0.07%. Treasury bonds rallied while copper and steel rallied.
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Last Night’s Performance
MSCI China All Shares Index
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Country performance
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Stock performance
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Hong Kong Top 10
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China Top 10
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Last Night’s Exchange Rates, Prices, & Yields
CNY per USD 7.11 versus 7.11 yesterday
CNY per EUR 7.62 versus 7.59 yesterday
Asia Dollar Index +0.07% overnight
Yield on 10-Year China Development Bank Bond 2.68% versus 2.69% yesterday
Yield on 10-Year China Development Bank Bond 2.84% versus 2.85% yesterday
Copper Price +0.71% overnight
Steel Price +1.71% overnight
