In the past week, Asian equities displayed mixed but predominantly lower performance, with notable outperformance from Pakistan, India, and Japan, while mainland China, India, and the Philippines lagged. Deputy Minister of Finance Liao Min’s optimistic stance regarding the upcoming National People’s Congress (NPC) meeting, scheduled for November 4th in Beijing, highlighted the government’s commitment to stimulating consumption and effectively boosting demand. Additionally, China’s real estate sector strengthened this week, buoyed by improved sales transaction metrics, reflecting a gradual recovery after months of stagnation. In September, retail sales grew by 3.2%, outpacing August’s increase of 2.1% and exceeding economists’ predictions of a 2.5% rise.
The performance of Asian equities continued to ebb, albeit with minor gains in Hong Kong and Malaysia, while the US dollar’s strength and disappointing earnings from Apple weighed heavily on technology stocks throughout the region. With markets impacted by festivities in India and the Philippines, trading patterns shifted across Asia. Hong Kong’s real estate sector recorded a notable gain of 3.07%, benefitting from positive housing price data. A report indicated that the average price of newly built homes across 100 Chinese cities rose by 0.29% month-over-month and 2.08% year-over-year, with indications that government measures aimed at stabilizing the real estate market may be proving effective.
Nevertheless, technology stocks faced pressure due to Apple’s lackluster performance, which adversely affected its suppliers. Mainland-listed Foxconn declined by 2.35%, while other technology companies such as Sunny Optical and AAC Technologies experienced respective decreases of 3.65% and 3.02%. The technology sector in Mainland China fell by 3.24%, with various growth subsectors including software, semiconductors, and autos performing poorly. Conversely, some technology stocks in Hong Kong showed resilience with a slight gain of 0.45%, highlighting the ongoing divergence in performance between the two markets.
In the automotive sector, reports emerged detailing October sales figures. BYD, a leader in new energy vehicles, reported an impressive 66.53% year-over-year increase in deliveries. Other players, such as NIO and Li Auto, faced mixed results with NIO’s deliveries declining while Li Auto posted modest growth. The Caixin Manufacturing Purchasing Managers’ Index (PMI) for October, coming in at 50.3, indicated a potential turnaround in manufacturing, suggesting that policy measures from the Chinese government are beginning to yield results. This optimistic backdrop led to significantly increased net purchases of Hong Kong-listed stocks by mainland investors, totaling $1.95 billion for the week amid ongoing anticipation surrounding upcoming governmental and electoral events.
In international news, discussions were reported regarding financial regulatory cooperation between the United States and China, signaling a cautious step toward easing tensions. Meanwhile, the bilateral relationship between China and India appeared to show signs of thawing, following the recent meeting between leaders Modi and Xi at the BRICS conference. Furthermore, Alibaba’s strategic decision to transition to a dual primary listing has enhanced its visibility among mainland investors. Since this move, Alibaba has become a notable player in the Southbound Stock Connect program, now ranking as the 10th largest ownership position, which could lead to further integrations of other major Chinese companies into this voluntary stock trading avenue.
In terms of market indices, the Hang Seng and Hang Seng Tech indexes showcased variances, with overall trading volumes reflecting a more considerable engagement in the market. While value-based and large-cap stocks gained traction, the growth factor lagged. Key sector performances were positive except for Utilities, with Real Estate, Communication Services, and Materials driving gains. Despite the lower performance of the tech sector in mainland markets, substantial buying from mainland investors pointed towards a bullish sentiment. On the other hand, Shanghai and Shenzhen indexes experienced declines, emphasizing the selective pressures facing various sectors. Overall, market participants remain cautious as they prepare for forthcoming economic meetings and earnings announcements, with anticipation building around potentially impactful developments in the near term.
