China & Hong Kong Equities Edge Higher, China Trade Surplus Narrows

Hong Kong and China markets showed gains, helped by a regional rally after the BoJ announced it wouldn’t raise interest rates amidst financial instability. The Hang Seng China Enterprises Index climbed as much as 1.6%, breaking a four-day losing streak. Stocks related to China's electricity grid technology surged on plans to enhance renewable energy infrastructure, while China's trade surplus narrowed a touch after exports came in below estimates while imports were well above estimates.

• Major benchmarks are higher across the board, with Hong Kong's HSI up 1.25% & China's CSI 300 up 0.20%. Looking at sectors, the HSTech Index is up 1.15%, HS Finance Index is 0.90% higher, Property Indices are about 0.25% higher.
• China's battery makers face challenges of overcapacity, weakening demand, and falling prices in 2024, with smaller producers at risk as top players dominate the market; fierce competition and squeezed profit margins are expected to continue until a demand-supply rebalance occurs, the Global X China EV & Battery ETF is off 6.50% from recent highs made in July.
• China's imports surged 7.2% in July, the highest in three months, while export growth slowed to 7%, resulting in a $84.65b trade surplus, narrowing from $99.05b. The rise in imports indicates some domestic demand strength, but the decelerating exports suggest cooling global demand, potentially exacerbated by US and European trade tensions. The overall economic outlook remains mixed, with weak domestic demand and a prolonged housing slump offsetting export growth.
• Looking ahead focus will now turn to PPI & CPI on Friday