HK Continues To Outperform Mainland Stocks As Tariffs Hurt EV Names

Hong Kong and China equities are mixed today with HK equities outperforming. On Saturday, we had CPI which was slightly above expectations, while PPI missed estimates. Chinese Biotech stocks climbed this morning after the US issued a revised version of a bill aimed at blocking foreign biotech firms from acquiring US federal contracts, a provision was added that the deadline for US companies to stop working with blocked firms is now 2032, WuXi Apptec was up as much at 15% earlier before paring gains and trading up 6.70%, China EV names are lower as the US continues to mull over Tariffs. While in the property space Country Garden made payment on two onshore bonds within the grace period and Logan has proposed to suspend payment on all onshore bonds.

• Hong Kong equities are mostly higher today with the HSTech Index is up 1.05% at 4,004 we have failed to hold above 4,000 multiple times this month, the Mainland Property Index is down 0.40% today after rallying 4.20% on Friday, the China EV Index is trading down 1.30%, while the HSI is up 0.44%. China onshore markets are lower today, with the CSI300 unchanged and closed the week above the 200-day EMA, while small-cap index the CSI1000 is down 0.77% and the ChiNext off 0.61%.
• China Northbound saw a -6.2b yuan outflow on Friday, flows over the week were +4.8b yuan with equity flow momentum declining over the same period, 5-day average now at 0.95b, sitting just above the 20-day average at 0.83b and the 100-day average at 0.66b yuan.
• In the property space, Country Garden made interest payments totaling 66 million yuan ($9.1 million) for two bonds within a grace period after missing the initial deadline. Despite government support measures, the company's mounting cash strains highlight challenges in the Chinese property sector. Logan, has proposed a plan to its bondholders to suspend payment on all of its onshore public debt for 10 months, seeking to delay interest and principal payments on its yuan bonds and asset-backed securities until March or April 2025. If approved, Logan plans to develop a new restructuring plan for its onshore public debt, potentially including options like a discounted tender offer and a trust plan. Finally, China will curb land supplies and further ease restrictions on property purchases to aid the housing market, Securities Times reported.
• Over the weekend China released PPI & CPI data. CPI rose by 0.3 percent year-on-year in April, staying in positive territory for the third straight month while PPI which measures costs for goods at the factory gate, went down 2.5 percent year on year in April.
• Looking ahead, 1yr MLF on Wednesday, Industrial Production & Retail Sales on Friday