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Asian equities were mixed but mostly higher overnight as Hong Kong outperformed Mainland China and most Asian markets.
Mainland-listed shares rebounded following a significant downdraft over the past two days as high hopes for the National Development & Reform Commission (NDRC) led to some disappointment. As we have said before, it is important to remember that the NDRC does not make fiscal spending decisions, they only decide what to do with the money when it comes to issues such as infrastructure development.
The Ministry of Finance (MoF) today announced plans to issue a sixth round of ultra-long-dated bonds tomorrow (October 11th) at a yield of 2.19% for 30 years. Liquidity will stay sufficient in the system, and the timing is interesting, too. Tomorrow’s issuance will come only one day before the finance minister holds his conference on Saturday. Policymakers are working overtime (this weekend) to account for the weeklong holiday.
The PBOC kicked off the first round of its swap program, worth RMB 500 billion, overnight. Securities firms, asset management firms, and insurance companies can all now apply for the additional liquidity to fund their stock purchases.
All sectors were higher except for Technology and Real Estate on the Mainland. Meanwhile, all sectors were higher in Hong Kong.
Meituan was the second most-traded stock in Hong Kong, based on the Hang Seng index constituents, and gained +5% as Morgan Stanley raised its price target and growth forecasts for the local services giant. Meituan saw a jump in activity on its platforms during the National Holiday or “Golden Week”. This is the latest in a parade of analyst upgrades for China’s internet stocks, which could continue depending on the consumer fiscal policies to be announced.
The Hang Seng and Hang Seng Tech indexes both closed higher by +2.98% and +2.05% overnight, respectively, on volume that decreased -23% from yesterday. The top-performing sectors were Energy, which gained +4.64%, Financials, which gained +4.40%, and Consumer Staples, which gained +4.32%. Meanwhile, the worst-performing sectors were Communication Services, which gained +1.00%, Health Care, which gained +1.40%, and Information Technology, which gained +1.90%.
Shanghai, Shenzhen, and the STAR Board diverged to close +1.32%, -0.37%, and -4.38%, respectively, on volume that decreased -27% from yesterday. The top-performing sectors were Energy, which gained +4.45%, Utilities, which gained +2.52%, and Industrials, which gained +2.50%. Meanwhile, the worst-performing sectors were Information Technology, which fell -2.25%, Real Estate, which fell -1.55%, and Health Care, which gained +0.03%.
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Last Night’s Performance
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Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.08 versus 7.08 yesterday
- CNY per EUR 7.74 versus 7.74 yesterday
- Yield on 10-Year Government Bond 2.14% versus 2.18% yesterday
- Yield on 10-Year China Development Bank Bond 2.23% versus 2.27% yesterday
- Copper Price +0.03%
- Steel Price +0.29%