China & HK Equities Head Lower As Middle East Tension Picks Up

Hong Kong and China equity are lower today growing tension in the middle east has been seen to be the major catalyst for the move lower, although the semiconductor sector has also sold off after TSMC scaled back its outlook for a chip market expansion, cautioning that the smartphone and personal-computing markets remain weak, while defense stocks in Asia buck global weakness to rally on hopes that intensifying concerns about escalating conflict in the Middle East can raise demand for their arms and weapons.

• Hong Kong equities are lower across the board, the HSTech Index is the worst performer, trading down 3.40% and has broken below the 3300 level it had been holding above since early march, seller are back in control with the Index now trading below the 20, 50, 100 & 200-day EMA, the Mainland Property Index is faring slightly better down 1.90%, while the HSI is down 1.81%. In China, equities are performing better however still all in the red with the CSI300 down 1.00%, while small-cap indices have been less impacted by global issues today with the CSI2000 & CSI1000 down about 0.75%.
• China Northbound saw an outflow of 5.28b on Thursday, flow momentum has been slightly decreasing over the past week with the 5-day average at -1.51billion, while the 20-day average sits at -0.90billion yuan.
• Mexico's federal government, influenced by pressure from the US, is reportedly denying Chinese automakers incentives for EV production, including low-cost land and tax breaks, signaling a shift from past practices. This decision follows pressure from the US to keep Chinese automakers out of the North American Free Trade Agreement zone, with US officials citing concerns about national security threats posed by Chinese vehicles, according to Reuters.
• Looking ahead, China's 1 & 5 yr LPR on Monday is the focus.