Key Highlights:
In the recent Asian trading session, markets saw an uptick with notable performances from China and the Philippines, while Japan lagged behind, and Australia along with Hong Kong observed closures for Easter Monday.
Both Shanghai and Shenzhen exhibited robust performances driven by the latest official Purchasing Managers’ Index (PMI) for March, surpassing expectations. Notably, the official PMI survey, focusing on larger firms, indicated positive momentum, whereas the Caixin PMI survey, focusing on smaller privately-held companies, provides complementary insights. PMIs serve as a gauge of economic activity, with readings above 50 signaling expansion and below 50 indicating contraction on a month-to-month basis. The surge in manufacturing output was propelled by strong orders, including exports, reflecting a gradual rebound in China’s economy since last summer.
Despite the closure of Stock Connect overnight, Mainland China witnessed significant market activity marked by a strong surge in both volume and breadth.
In the realm of electric vehicles (EVs), anticipation surrounded March sales figures, with CATL and BYD registering notable gains prior to the release. BYD, in particular, experienced an impressive month with the second-highest monthly sales on record, selling 302,459 new energy vehicles (NEVs). Competitors such as NIO, Xpeng, and Li Auto also reported their sales figures.
Hong Kong’s markets remained shuttered for Easter Monday.
Shanghai, Shenzhen, and the STAR Board witnessed gains, with substantial volume increases compared to Friday. Noteworthy advancements were observed in communication services, consumer discretionary, and technology sectors, while utilities and energy experienced declines. The growth factor and small caps outperformed large caps and value factors. Additionally, various subsectors exhibited diverse performances, with notable gains in office supplies, autos, and household products, juxtaposed with declines in coal, highways, and oil & gas sectors. Currency-wise, both CNY and the Asia Dollar Index depreciated against the US dollar. Meanwhile, the Treasury curve experienced steepening, and copper prices surged while steel prices declined.
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Recent Market Performances:
- CNY per USD: 7.23 versus 7.23 on Friday
- CNY per EUR: 7.79 versus 7.78 on Friday
- Yield on 1-Day Government Bond: 1.46% versus 1.50% on Friday
- Yield on 10-Year Government Bond: 2.31% versus 2.29% on Friday
- Yield on 10-Year China Development Bank Bond: 2.43% versus 2.42% on Friday
- Copper Price: +0.68%
- Steel Price: -1.25%
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Brendan Ahern, Chief Investment Officer, KraneShares