April Manufacturing PMI
50.8 versus estimate 51 and March’s 52
April Non-Manufacturing PMI
53.2 versus estimate 52.5 and March’s 52.3
April Caixin China PMI Manufacturing
49.4 versus estimate 50.5 and March’s 50.1
The “official” Purchasing Managers Indexes (PMI) released by the National Bureau of Statistics involves a survey of large companies and many SOEs. The Caixin PMI, which is calculated by IHS Markit
I hope Hong Kongers and South Koreans enjoyed their well-deserved holiday. Unfortunately, they missed out on a strong day across Asian equities, largely driven by promising news of Gilead’s drug results. Mainland China had a strong day led by tech after positive results overnight from Facebook, Qualcomm
China’s main policy meeting, the “Two Sessions”, will take place in mid-May. China’s policymakers, who have significant dry powder as they’ve not cut the broad interest rate, can expand the budget deficit further, allow for more bond issuance to support economic activity and implement consumption support. Leading sectors staples and healthcare were off on the day as investors pocketed some vacation spending cash. The coming holiday is apt to see a significant uptick in domestic travel. The only market in Asia open tomorrow is Australia though we’ll publish our weekly review.
A major media outlet had a piece on a mainland China fund manager who is bearish on the market so her whole fund is in cash. Guess how much money the manager runs? $28 million. It must have been hard work finding a manager who is bearish! Looking at equity ETFs listed in China they have seen $8.8 billion of inflow year to date. Not going to read about the latter other than here.
I’m reading an interesting book called Factfullness by Hans Rosling, which explores misperceptions about the world today and the vast improvements in the quality of life in the world over the last several decades. It examines life spans, child mortality, income, etc, which have all improved dramatically even if the vast majority of us don’t realize it. The author runs a website called gapminder.org that has several interesting tools. According to the website’s GDP per capita section, China has risen from $1,000 to $16,000 from 1980 to 2019. China’s WTO inclusion is cited as a seismic change for China though a strong upward trend had already been in place twenty years prior. What drove it? We believe urbanization, which has risen from 20% to nearly 60%. What comes with living in a city? Proper housing and access to education, services, and health care. If you need something optimistic to read Factfullness is a great read.
Hong Kong – Closed
Shanghai & Shenzhen jumped higher and grinded higher all day to close +1.33% and +1.88%, respectively, as volumes popped +27% from yesterday and were above the 1-year average. Breadth was very strong with 3,109 advancers and 83 decliners as mid and small caps outperformed large caps. The Mainland stocks within the MSCI China All Shares Index gained +1.65% led higher by tech +5.32%, discretionary +3.04%, industrials +2.6%, materials +2.35%, communication +1.62%, financials +1.24%, energy +1.22%, utilities +0.52% and real estate +0.14%, while staples and health care were off -0.16% and -0.59%. Northbound Connect was closed today.
Last Night’s Prices & Yields
- CNY/USD 7.06 versus 7.08 yesterday
- CNY/EUR 7.69 versus 7.68 yesterday
- Yield on 1-Day Government Bond 0.88 versus 0.71 yesterday
- Yield on 10-Year Government Bond 2.54 versus 2.50 yesterday
- Yield on 10-Year China Development Bank Bond 2.82% versus 2.79% yesterday
Krane Funds Advisors, LLC is the investment manager for KraneShares ETFs. Our suite of China focused ETFs provide investors with solutions to capture China’s importance as an essential element of a well-designed investment portfolio. We strive to provide innovative, first to market strategies that have been developed based on our strong partnerships and our deep knowledge of investing. We help investors stay up to date on global market trends and aim to provide meaningful diversification. Krane Funds Advisors, LLC is majority owned by China International Capital Corporation (CICC).