Quiet night in Asia, Chinese markets see profit taking

New Keys

Asia has had a quiet night with little news on the market. Mainland China has been hit by a wave of profit taking after a strong rise since early May. Shanghai closed just below the 3600 level while Shenzhen closed at 2400. Let’s see if these large round number index levels can serve as support.

The CNY was down against the US dollar following recent hesitation from policymakers after a major move. Since June 1st From 2020 to today, the CNY has appreciated + 10.92% against the US dollar.

Vice Premier Liu He spoke with Treasury Secretary Yellen yesterday about the “Biden-Harris administrations’ plans to support a strong and continued economic recovery and the importance of cooperating in areas that are in the ‘US interest, while frankly tackling the issues,’ which, though vague, reinforced China’s desire for more dialogue. Mainland and foreign media noted President Xi’s plans to “present a true, multidimensional and panoramic view of China.”

Hong Kong was uniformly mixed as healthcare was down despite the increase in coronavirus cases in Southeast Asia.

Alibaba hosted a cloud summit last week. The company plans to take several steps to grow its cloud business, including integrating Ali Cloud with its business communications service Ding Talk and expanding its low-cost offerings. CICC analysts believe the company will continue to expand its cloud service to new areas while maintaining profitability through economies of scale.

H-Share update

The Hang Seng lost -0.58% as volume declined -4.31%, or 92% of the year-over-year average. The 211 Chinese companies listed in Hong Kong within the MSCI

China All Shares fell -0.57% with energy + 1.41%, utilities + 0.92% and industry + 0.17% while healthcare -1.71%, materials -1.37%, discretionary goods -1.03% and technology -0.94%. The most traded Hong Kong stocks by value were Tencent + 0.08%, Meituan -0.38%, Alibaba Hong Kong -1.74%, Geely Auto + 5.94%, Xiaomi + 0.34%, Ping An -0.48%, AIA -1.25%, JD logistics – 087%, CK Asset + 2% and JD.com Hong Kong + 0.67%. Southbound Stock Connect volumes are low, with mainland investors buying $ 87 million in Hong Kong shares, with Southbound Connect trading accounting for 11.1% of Hong Kong revenue.

A-Share Update

Shanghai, Shenzhen and STAR Board lost -0.76%, -1.18% and -2.31% as volumes were down -3.6% from yesterday, or 110% of the average over a year. Today there were 1,110 stocks up and 2,797 stocks down. MSCI China All Shares’ 532 mainland stocks were down -1.13%, led by energy + 0.33% while healthcare -2.33%, technology -1.83%, communications -1.44%, commodities -1.08%, discretionary goods -1.04% and industrials -0.86%. Northbound Stock Connect flows were moderate / high, with overseas investors selling – $ 315 million in mainland stocks, with Northbound Connect trading accounting for 5.1% of mainland revenue. The CNY was down against the US dollar at 6.39 while bonds were down and copper was down.

Last night’s exchange rates, prices and yields

  • CNY / USD 6.38 vs. 6.38 yesterday
  • CNY / EUR 7.79 vs. 7.81 yesterday
  • Yield on 1-day government bonds 1.70% vs. 1.71% yesterday
  • 10-year government bond yield 3.07% vs. 3.04% yesterday
  • 10-year Development Bank of China bond yield 3.54% vs. 3.52% yesterday
  • Copper price -0.03% overnight

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