HK & China Equities Edge Higher Ahead Of FOMC Later

Hong Kong and China equities have opened lower, but have for the most part reversed those losses to trade slightly higher. There has been little in the way of market headlines or drivers today. Earlier, China kept 1yr & 5yr LPR unchanged at 3.45% & 3.95%, respectively. Chinese data-tech companies rose after the nation plans to improve cross-border data flows as part of the initiative to further attract foreign investment, while the US weighs sanctioning Chinese Chip manufacturers. Overall it has been a very subdue day as investors in the region take a break post BoJ the RBA yesterday, Japan is also out and finally ahead of the FOMC later Today.

• Hong Kong equities are slightly higher today, with the Mainland property Index being the top-performing sector, up 0.65% although the index is off 7.90% from its recent highs made on March 14th, the HSTech Index is up 0.40%, after opening the morning down 1%, while the HSI is now up 0.18% In China, equities markets are slightly higher, with the smaller cap CSI1000 the best performing, up 0.31%, while the large cap CSI300 is up 0.20%
• China Northbound flows were -7.0 billion yuan on Tuesday, with the 5-day average at 2.80 billion, while the 20-day average sits at 3.31 billion yuan.
• China's property-debt crisis has intensified, with developers facing court battles over debt restructuring plans and potential liquidation orders. At least 23 companies have received wind-up petitions in Hong Kong, with five ordered to wind up. The crisis has particularly impacted China Evergrande Group, fined for falsely inflating revenue, while other smaller peers like Redsun Properties Group Ltd. and Kaisa Group Holdings Ltd. are also facing legal challenges amid a backdrop of substantial defaults totaling $111 billion in onshore and offshore bonds.
• Siemens warns of a persistent China slowdown after flagging disappointing demand in China for its key digital industries division. This comes on the back of Apple recently announcing their sales to China had slumped by 24%.
• Hong Kong's fast-tracked approval of domestic security legislation has raised concerns from the US, European Union, and UK about potential limitations on open discussion in the global finance hub. Despite Chief Executive John Lee's assertion that the move is a patriotic endeavor, critics worry it could further erode fundamental freedoms and political pluralism in Hong Kong.
• The Biden administration is contemplating blacklisting several Chinese semiconductor firms, including those linked to Huawei Technologies Co., to further restrict Beijing's access to semiconductor technology, with a focus on companies producing chips or semiconductor manufacturing gear. This move is part of a broader US campaign to curtail China's semiconductor and AI ambitions, and it could impact companies like Qingdao Si’En, SwaySure, Shenzhen Pensun Technology Co. (PST), ChangXin Memory Technologies Inc., Shenzhen Pengjin High-Tech Co., and SiCarrier.
• Looking ahead, the calendar is light for the remainder of the week.