Hong Kong Equities End Three Day Slide, China Equities Mixed

Hong Kong & China equities have shown a mixed performance today, HK stocks are performing better than their mainland peers with the HSI up 0.5%, buoyed by gains in tech stocks such as Meituan, Tencent, and Alibaba, despite broader concerns. In contrast, mainland Chinese indices experienced modest losses, with the Shanghai Composite dipping 0.4%. Traders in Hong Kong attributed the volatility to improving fundamentals and a global rotation away from semiconductors into other sectors.

• Hong Kong equities are higher this morning with the HSI up 0.45% following a positive performance from US-listed Chinese shares, with the Nasdaq Golden Dragon China Index climbing 1.3%. Investors in Hong Kong are likely assessing the potential for a tech sector rally to run out of steam, as seen with Nvidia’s recent losses. Additionally, concerns about China’s economic outlook remain, particularly after data showed a significant decline in fiscal revenue, potentially prompting further government intervention to support the economy. The HSTech Index is 0.26% higher, while property Indices are higher with the Mainland Property Index up 0.90% and the HS Property Index up 0.66%
• In Mainland China, Investors are closely monitoring signs of pressure on the world’s second-largest economy. Data released on Monday showed China’s fiscal revenue shrank at the fastest pace in over a year, increasing expectations of a potential mid-year budget revision to support economic recovery. The CSI 300 is 0.40% lower today, the small-cap indices CSI 1000 is 0.10% higher, the CSI 2000 is 0.80% lower, the CSI 300 Real Estate Index is 1.20% higher, while the ChiNext is down 1.35%.
• Property space, The Shanghai luxury real estate market is thriving amid China's overall property downturn, driven by wealthy Chinese seeking secure investments in prime locations with recent policy relaxations favoring buyers, resulting in high demand and rapid sales for upscale properties exceeding $3.8 million.
• Canada, aligning with the Biden administration, plans to begin public consultations on imposing tariffs on Chinese-made electric vehicles due to concerns over unfair competition and potential impacts on domestic industries, while also considering adjustments to federal incentives and broader investment restrictions in the EV sector. While China has proposed easing tariffs on German luxury cars in exchange for the European Union dropping planned tariffs on Chinese electric vehicles (EVs), amidst escalating trade tensions. The EU, aiming to counteract alleged state subsidies benefiting Chinese EV manufacturers, faces pressure from Germany's auto industry to negotiate a resolution ahead of tariff implementation in July.
• Looking ahead, it is a quiet week for China, while Hong Kong has trade balance data later today