Key News

Asian equities were mixed overnight as China underperformed.

Health care was the worst-performing sector in Hong Kong overnight after contract research giant WuXi Biologics issued a negative medium-term growth outlook. The primary factors were the boom in COVID-related business coming to an end and less funding for smaller biotechnology companies due to higher interest rates. However, the company expects a recovery in the second half of 2024. Other contract manufacturers were also lower overnight. The company’s stock was halted for trading for the announcement. However, it is important to note that WuXi is one of the largest contract manufacturers in the world with a global footprint and client base that is likely to continue to be a global leader. Sentiment in the biotechnology industry is at an historic low and that is a global issue, not just a China issue.

On Sunday, the China Securities Regulatory Commission (CSRC) released a statement reaffirming its easing monetary and fiscal policy stance. The statement released included multiple recommendations and plans to shore up support for financial markets including encouraging companies to buy back stock and pay dividends. Meanwhile, a Singapore-listed ETF targeting Shanghai-listed stocks was approved by regulators.

A Mainland-listed ETF saw significant buying overnight with over $40 million in volume, the second-highest since inception earlier this year. Rumors are that the buying was driven by the “National Team” or sovereign wealth funds entering the stock market.

The Hang Seng and Hang Seng Tech indexes both closed lower by -1.09% and -1.86%. respectively, overnight on volume that decreased -7% from yesterday. Mainland investors sold a net -$89 million worth of Hong Kong stocks overnight via Southbound Stock Connect. The top-performing sectors overnight were Materials, which gained +1.01%, Energy, which gained +0.38%, and Industrials, which gained +0.03%. Meanwhile, the worst-performing sectors were Health Care, which fell -8.90%, Communication Services, which fell -2.19%, and Consumer Discretionary, which fell -1.64%.

Shanghai, Shenzhen, and the STAR Board all closed lower by -0.29%, -0.34%, and -0.65%, respectively, on volume that decreased increased +2% from Friday. Foreign investors sold a net-$184 million worth of Mainland stocks overnight via Northbound Stock Connect. The top-performing sectors overnight were Energy, which gained +0.83%, Materials, which gained +0.22%, and Communication Services, which gained +0.19%. Meanwhile, the worst-performing sectors were Real Estate, which fell -1.82%, Health Care, which fell -1.64%, and Consumer Staples, which fell -0.83%.

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Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.14 versus 7.13 Friday
• CNY per EUR 7.74 versus 7.76 Friday
• Yield on 1-Day Government Bond 1.17% versus 1.38% Friday
• Yield on 10-Year Government Bond 2.67% versus 2.66% Friday
• Yield on 10-Year China Development Bank Bond 2.78% versus 2.77% Friday
• Copper Price -0.39%
• Steel Price -0.18%