April Economic Data Release
- New Home Prices Month over Month -0.12%
- Used Home Prices MoM -0.41%
- Property Investment Year-to-Date (YTD) -10.3% versus expectations -10% and March’s -9.9%
- Residential Property Sales YTD -1.9% versus March’s -0.4%
- Retail Sales +5.1% versus expectation 5.8% and March’s 5.9%
- Online Retail Sales +7.7% YTD YoY
- Industrial Production +6.1% versus expectations 5.7% and March’s 7.7%
- Fixed Asset Investment 4.0% versus expectations 4.2% and March’s 4.2% (Infrastructure +5.9% YoY, Manufacturing +8.8%, Real Estate Development -10.3%)
- Jobless Rate 5.1% versus expectations 5.2% and March’s 5.2%
Key Points made in the National Bureau of Statistics spokesperson Fu Linghui:
- “Vigorously boosting consumption is conducive to effectively responding to external challenges”
- “In April, the retail sales of household appliances and audio-visual equipment, cultural and office supplies, furniture and communication equipment increased by 38.8%, 33.5%, 26.9% and 19.9% respectively on a year-on-year basis”
- On the April CPI decline (released earlier this month -0.1% YoY) “eight categories of prices, 7 rose and 1 fell….Only the transportation and communication prices fell by 3.9%. The consumer price index (CPI) declined slightly, mainly due to the impact of the decline in international oil prices on domestic prices. In April, the energy price in CPI decreased by 4.8% year-on-year.”
Key News
Asian equities had a poor start to the week, as Moody’s US debt rating cut weighed on risk sentiment, as Mainland China and Indonesia managed gains, while Taiwan and South Korea underperformed, as the US dollar fell versus most regional indices.
Asian media covered the US downgrade, as I expect it to further exacerbate foreign selling of US stocks and bonds. President Trump’s comments on Fox News that he was willing to travel to China did not garner attention, nor did the US Trade Representative Jamieson Greer’s meeting with trade envoy Li Chenggang at the APEC meeting in South Korea. All this feels like positive progress, though only bad news is fit to print in the perpetually negative Western media.
China’s economic release was decent, which worried some that further policy support is not coming, though I disagree. Today’s National Bureau of Statistics (NBS) press conference was very upfront about the economic and real estate challenges. Tier 1 cities’ real estate prices are firming, though lower-tier cities continue to see price declines.
The New York Times reported that the White House and Congress are looking into Apple’s AI deal with Alibaba, which weighed on the stock, leading it to fall -3.4%, though Apple has far more to lose, as their China-bound phones lack some features versus rivals such as Huawei and Samsung.
As I experienced a few weeks ago, Congress’ views of China can be toxic, despite the strong economic ties and US multi-nationals’ $1.1 trillion in revenues generated there, according to Apollo. It is amazing that DC is meddling with such a well-respected firm as Apple.
One factor in Hong Kong growth stocks’ underperformance today was likely electric vehicle (EV) battery giant CATL’s $5.6B Hong Kong IPO, expected tomorrow, as the funding for the new listing has to come from somewhere. This likely explains the underperformance of Hong Kong-listed EV and hybrid names overnight, as BYD fell -0.09%, Li Auto fell -3.18%, Geely fell -2.53%, Xpeng fell -2.63%, Great Wall Motors fell -1.14%, and NIO fell -4.03%.
Internet stocks were mixed, as Tencent gained +1.18%, Meituan gained +2.28%, and Trip.com gained +2.17%, though NetEase fell -2% after a strong post-Q1 results pop, and JD.com fell -1.06%. April online sales were strong, along with consumer trade-in beneficiaries. Air freight stocks rebounded on the tariff cooldown, along with pharmaceuticals and biotech.
Appliance maker Midea gained +2.95% and delivery giant ZTO gained +4.04% after Friday night’s announcement they will be added to the Hang Seng Index along with BYD, which will be added into the Hang Seng Tech Index at the June 6th rebalance.
Mainland investors bought a net $1.1 billion worth of Hong Kong-listed stocks today via Southbound Stock Connect. Mainland China was mixed, as growth stocks including semiconductor, household appliances, and air freight held up better than liquor, as Kweichow Moutai fell -2.18%, banks, and insurance.
Trip.com (9961 HK, TCOM US) will report Q1 financial results after the US close today.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
CNY per USD 7.21 versus 7.21 Friday
CNY per EUR 8.12 versus 8.04 Friday
Yield on 10-Year Government Bond 1.69% versus 1.68% Friday
Yield on 10-Year China Development Bank Bond 1.69% versus 1.72% Friday
Copper Price -0.73%
Steel Price -0.77%
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