The Asian equities market experienced mixed performance overnight, with most stocks trading higher, except for Hong Kong which closed lower in a half-day session. Mainland China, on the other hand, was closed for the Lunar (Chinese) New Year holiday. President Xi, speaking at a Lunar New Year event, emphasized the importance of building on China's economic recovery progress. However, this pro-equity statement did not have a significant impact on Hong Kong-listed stocks, as the Mainland market was closed. It is worth noting that policy statements tend to impact Mainland markets more than the mostly foreign-owned Hong Kong market. We will have to wait until next week to assess the full impact of China's leader's positivity on Mainland stocks, as both the Shanghai and Shenzhen stock exchanges will be closed.
In its monetary policy report, the People's Bank of China (PBOC) expressed its intention to ensure stable and abundant liquidity in the markets. At the same time, a state-run media outlet reported that China's inflation rate is expected to grow at a 'moderate' pace in 2024, in contrast to the deflation indicated by the January consumer price index (CPI). This suggests that further rate cuts and stimulus measures may be implemented to achieve this target.
Another notable development is the replacement of long-time China Securities Regulatory Commission (CSRC) Chair Yi Huiman with Wu Qing, the deputy party secretary of Shanghai. This leadership change highlights a shift in top leadership's expectations regarding stock market stabilization and attracting foreign investment. Chinese stock markets have gained political significance, marking a significant departure from past approaches.
Education stocks gained following further clarification of the private tutoring policy, while the real estate sector experienced a slight decline after its earlier gains this week. Shipping companies faced downward pressure after Maersk issued a negative guidance for the year, excluding the rate increase resulting from conflicts in the Red Sea. Automakers, on the other hand, saw a broad decline due to decreased overall car sales in 2023, although electric vehicle sales increased to over 9 million compared to 6 million in 2022.
Looking ahead, Hong Kong will be closed on Monday and Tuesday, with Mainland markets remaining closed throughout the week. As a result, China Last Night will resume reporting on Wednesday, February 14th, coinciding with Valentine's Day.
In terms of specific indices, the Hang Seng and Hang Seng Tech indexes closed lower by -0.83% and -1.30% respectively. The volume of trading decreased by -60% compared to the previous day. Among the top-performing sectors were Communication Services, Energy, and Consumer Discretionary, which experienced declines of -0.25%, -0.41%, and -0.97% respectively. Conversely, the worst-performing sectors included Real Estate, Utilities, and Industrials, which fell by -3.24%, -1.87%, and -1.71% respectively.
For those interested in the Chinese market, a live webcast titled 'Embracing Volatility: Investing in Today's China Market' is scheduled for Tuesday, February 13th, at 11:00 am ET. You can register for the webinar by clicking here.
It is important to note that Mainland fixed income and currency markets were closed during this period.
