Asian equities were mixed but mostly lower overnight as the US reported hotter-than-expected inflation in August.
Hong Kong saw very low volumes overnight as 31% of names saw no transaction volume. This has attracted the attention of Hong Kong’s government, which is now following the Mainland’s example and implementing stock market reforms. Those reforms were detailed in a 16-point report released on Friday. The most important are the reduction in transaction costs and extending trading hours. Analysts are saying that perhaps the most significant beneficiary will be Beijing’s new stock market, which was created to facilitate trading in small and medium-sized enterprises that had previously been listed over-the-counter (OTC).
The electric vehicle (EV) ecosystem was lower overnight on reports that the European Union is looking into China’s EV subsidies. Ursula von der Leyen has said that cheaper vehicles coming out of China is distorting the European market. This will likely result in a European version of the inflation reduction act (IRA) that was passed in the United States last year to provide subsidies to its own auto industry. The frustration is also probably led by Germany, which was surpassed by China in auto exports recently.
During a press conference, a foreign minister said that China has not yet issued specific rules on the use of iPhones by government employees. However, she noted that “some security incidents” have been noticed regarding iPhones. Some media outlets may have jumped the gun on this story. While certainly a tit-for-tat measure, it is likely to have a negligible impact on iPhone sales in China.
Health care represented the worst-performing sector in Hong Kong overnight. This is on the tail of a renewed focus by regulators on improving the sales pipeline for many drugs.
The Hang Seng and Hang Seng Tech indexes both closed lower by -0.09% and -0.56%, respectively, on volume that decreased -5% from yesterday. Mainland investors sold a net -$225 million worth of Hong Kong stocks overnight via Southbound Stock Connect. The top-performing sectors were Utilities, which gained +0.63%, Energy, which gained +0.41%, and Real Estate, which gained +0.40%. Meanwhile, the worst-performing sectors were Health Care, which fell -1.34%, Consumer Discretionary, which fell -0.89%, and Materials, which fell -0.54%.
Shanghai, Shenzhen, and the STAR Board all closed lower by -0.45%, -1.12%, and -1.39%, respectively, on volume that decreased -2% from yesterday. Foreign investors sold a net -$841 million worth of Mainland stocks via Northbound Stock Connect.
Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.28 versus 7.29 yesterday
- CNY per EUR 7.81 versus 7.83 yesterday
- Yield on 1-Day Government Bond 1.45% versus 1.45% yesterday
- Yield on 10-Year Government Bond 2.62% versus 2.62% yesterday
- Yield on 10-Year China Development Bank Bond 2.74% versus 2.75% yesterday
- Copper Price +0.03% overnight
- Steel Price +0.21% overnight