Domestic Bonds

Has CEWC indicated that Internet regulation is no longer a priority?

New Keys

Asian stocks were mixed overnight, with Japan, China and Southeast Asia outperforming while Taiwan, Korea and India lagged behind. It was another day of outperforming Mainland China overnight as Shanghai gained + 0.4%, Shenzhen gained + 0.6% and the STAR Board gained + 0.7%. Meanwhile, the Hang Seng fell -0.17%, and the Hang Seng technology index fell -0.22%.

The continent’s outperformance has become standard operating procedure as mainland investors applauded Friday’s implicit pledge of proactive stimulus measures by the Central Economic Working Group (CEWC) while foreign investors were bombarded with another week. -end full of negative media coverage.

On Saturday, Han Wenxiu, a member of the Central Committee for Financial and Economic Affairs, spoke about the CEWC’s publication, saying that “the government should be careful before unveiling policies that could trigger a contraction.” There have been discussions that this statement is a veiled reference to the internet regulation recall.

Hong Kong-listed internet stocks were mixed, although Tencent gained + 0.69% and Meituan + 2.06%, with both stocks being heavily bought by mainland investors through Southbound Stock Connect overnight. Domestic Chinese investors may have been more tuned in to Saturday’s statement, leading to the Connect feed. For Tencent, it was the biggest influx day since October 11.e. Alibaba HK was on the sidelines despite Investors Day later this week in which I anticipate a strong message from management.

Health care and real estate saw larger declines in Hong Kong than sectors on the mainland. Meanwhile, the clean energy ecosystem had a good day in both markets, although its performance was particularly strong on the continent due to the CEWC highlighting the space.

Alcohol stocks had a good day, with Kweichow Moutai gaining + 1.35% and Wuliangye Yibin gaining + 1.21% after the former announced it would launch new products.

Foreign investors’ insatiable appetite for mainland Chinese stocks continued with an overnight net purchase of $ 843 million.

The lack of media coverage on CEWC is incredible, but I’m not surprised. The strength of the renminbi against the US dollar highlights just how flawed the media account has been. On December 31, 2020, the CNY was at 6.52 from 6.37 at today’s close. On September 3, 2019, the CNY was at 7.17.

April 2022 Evergrande bonds were flat overnight at $ 23.46 while June 2025 bonds were up + 0.03 to $ 20.81.

Last night’s exchange rates, prices and yields

  • CNY / USD 6.37 vs. 6.37 Friday
  • CNY / EUR 7.19 vs. 7.20 Friday
  • Yield on 1-day government bonds 1.70% vs. 1.63% Friday
  • 10-year government bond yield 2.86% vs. 2.84% Friday
  • 10-year Development Bank of China bond yield 3.10% vs. 3.09% Friday
  • Copper price + 0.01% overnight