Asian equities displayed mixed performance overnight, with notable gains in Pakistan and Malaysia, while Hong Kong faced declines. This divergence in stock performance was a reflection of broader market sentiment across the region. The editorial from Xinhua emphasized the importance of expanding domestic demand in China’s economic growth, pointing out a significant year-over-year increase of 30.2% in household appliance sales for October, largely attributed to government trade-in subsidies. However, the editorial stopped short of predicting an immediate positive impact on GDP growth, a point underscored by the bearish sentiment highlighted in a Bloomberg report.
As investors look forward to the Central Economic Work Conference (CEWC) scheduled for next week, there is a palpable anticipation for insights into future stimulus policies. The CEWC is expected to outline economic policy priorities for 2025, but since it is a closed-door event, the conclusions will only be released following a press conference upon its conclusion. This upcoming gathering underscores a critical period for investors, as they seek clarity on the strategic direction of China’s economy and potential interventions aimed at bolstering growth.
Interestingly, mainland investors returned to net buying in Hong Kong-listed stocks and ETFs after a rare instance of net selling the previous day. In total, they invested $477 million into Hong Kong markets overnight, signaling confidence in cross-border opportunities. Meanwhile, Vice Premier He Lifeng held discussions with a U.S. financial institution, expressing China’s commitment to deepening cooperation in financial markets with the United States. This communication indicates a willingness to strengthen economic ties, potentially allaying some investors’ concerns about ongoing geopolitical tensions.
In the backdrop of these developments, certain stocks made notable gains. For instance, the advertising agency Blue Focus Group experienced a remarkable surge of 17% in Shanghai, buoyed by strong advertising revenue reported over the last year. This uptick aligns neatly with the optimistic tone of the Xinhua editorial and suggests a recovery in consumer-related sectors. In contrast, markets in South Korea continued to trade lower amid political unrest, as calls for President Yoon’s resignation escalated, contributing to negative sentiment in the region.
Looking specifically at the Hong Kong market, the Hang Seng and Hang Seng Tech indexes fell by 0.92% and 0.77%, respectively, with trading volume decreasing significantly from the previous day. Notably, the market exhibited a pattern where growth and small-cap stocks outperformed larger value counterparts. Sectors such as technology and communications showed positive movements, while discretionary, staples, and real estate stocks faced declines. This uneven performance may reflect broader market uncertainties and investor sentiments toward different sectors amid a fluctuating economic landscape.
Meanwhile, China’s mainland markets, including Shanghai, Shenzhen, and the STAR Board, registered modest gains, with different sectors exhibiting divergent trends. Technology, communications, and financials showed strength, while energy and materials faced some pressure. The volumes on Northbound Stock Connect remained above average, indicating sustained interest in cross-border trading. On the commodities front, while copper prices saw a slight decline, steel prices fell more sharply, reflecting mixed dynamics in raw material markets. The continued strengthening of the Chinese yuan against the U.S. dollar underscores the local currency’s resilience amidst global macroeconomic pressures.