Key News
Asian equities were mixed but mostly lower overnight as Mainland China’s STAR Board and Taiwan outperformed, while Vietnam and the Philippines underperformed.
Multiple US-China deals are in the works, which is a powerful catalyst for the markets and overall relationship. According to President Trump, TikTok’s sale to a group of US technology and media corporations may include a deal to sell its algorithm, a key part of what makes the US platform so valuable, to Oracle. Meanwhile, the China-based Luxshare is said to have been tapped by OpenAI to assemble a home device equipped with ChatGPT that would compete with Amazon’s Alexa, Apple’s Siri, etc.
Apple’s iPhone 17 orders in China were better-than-expected, which led its supplier ecosystem to rally overnight. Sunny Optical gained nearly +7%. So much for slowing sales in China! Apple appears to be faring better than Nvidia when it comes to competing with domestic technology firms.
Mainland China saw gains overall on very high volume, at nearly 200% of the 1-year average, as the STAR Board led, especially on the Apple ecosystem boost, which lifted technology stocks generally. However, Hong Kong fell due, in part, to sellers of recently outperforming names, especially in the internet space, such as short-video platform Kuaishou. According to some brokers, this appeared to be a “sell the news” situation after the announcement of the US-China business deals. Alibaba and Baidu bucked the trend, though, and ended the session higher.
The People’s Bank of China (PBOC) kept the 1 and 5-year loan prime rates (LPRs) unchanged overnight. This was not necessarily a surprise, though some may have been expecting a cut after the US Federal Reserve cut its interest rate targets last week. But, remember that the PBOC is on a completely different cycle and rates are already very low in China.
Mainland investors were strong net buyers of Hong Kong-listed stocks overnight on weakness, to the tune of $1.6 billion. However, they were net sellers of recent winners such as Pop Mart and Meituan, were among the top net sells.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.11 versus 7.12 yesterday
- CNY per EUR 8.38 versus 8.36 yesterday
- Yield on 10-Year Government Bond 1.86% versus 1.88% yesterday
- Yield on 10-Year China Development Bank Bond 1.93% versus 1.94% yesterday
- Copper Price 0.43%
- Steel Price 0.85%