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China & Hong Kong Equities Lower On FOMC Minutes

ASIA STOCKS

Hong Kong & Chinese equities have lower today after FOMC minutes suggested they would keep interest rates elevated for some time due to sticky inflation. China set its daily reference rate for the yuan at its weakest level since January, allowing for more currency depreciation alongside regional peers due to the dollar's rebound. Today, we have CPI composite with consensus at 2%, in line with May.

  • Hong Kong equities are lower today, with property the worst performing sector. The Mainland Property Index is down 0.90%, while the HS Property Index is down 1.80%, HStech Index is down 1.30% while the wider HSI is down 1.45%. In China, the CSI300 is down 0.80% performing better than the small-cap CSI1000 and CSI2000 Indices which are trading down 1.40%, while the growth focus ChiNext Index is down 1.12%.
  • In the property space today, China Vanke has pledged about 27b yuan worth of shares in the Vanke logistics Development unit, to China Merchants Bank, which is typically used to obtain a loan.
  • MNI China Press Digest May 23: Exports, Sino-EU, Electricity - (See link)
  • Chinese automaker BYD plans to launch its low-cost Seagull hatchback in Europe next year, increasing competitive pressure on local carmakers like Stellantis and Renault. With premium features and a price under €20,000, the Seagull's arrival is part of a broader push by Chinese EV manufacturers into the European market, challenging incumbents and prompting discussions on tariffs and new industry alliances, as per BBG.
  • Hong Kong’s retail investors are increasingly betting on a decline in local equities, pouring around $400 million into inverse exchange-traded funds (ETFs) this quarter, the highest since late 2022. These investments, largely driven by retail traders, suggest expectations of a market reversal following a 30% rebound in key equity gauges since January. Despite institutional interest, the trend is typical of retail behavior during market upswings. Concurrently, ETFs tracking Hong Kong stocks have seen significant outflows of $1.2 billion this quarter, primarily from those linked to the Hang Seng Tech Index.
  • Today, we have HK CPI Composite at 1830 AEST/ 1630HKT

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