Market Insights: May 27th, 2024

Profits of Chinese Industrial Enterprises:

Data released by the National Bureau of Statistics shows that the profit growth rate of industrial enterprises above a designated size turned positive in April, indicating a continued improvement in China's economy. The specific data are as follows:

• Overall Profit Growth: From January to April, the total profit of industrial enterprises above a designated size nationwide reached 2,094.69 billion yuan, a year-on-year increase of 4.3%. In April alone, the profit of these enterprises grew by 4.0% year-on-year, a significant turnaround from last year's -3.5%.
• Industry Breakdown:
  • Mining Industry: Achieved a total profit of 392.39 billion yuan, a year-on-year decrease of 18.6%.
  • Manufacturing: Achieved a total profit of 1,443.98 billion yuan, a growth of 8.0%.
  • Production and Supply of Electricity, Heat, Gas, and Water: Achieved a total profit of 258.32 billion yuan, an increase of 36.9%.

Commodity Markets:

Hawkish Statements from the Fed Cause Decline in Gold, Copper, and Oil Prices

Over the past week, hawkish statements from the Federal Reserve had a significant impact on the commodity markets:

• Crude Oil: Rebounded after hitting a three-month low during trading, with a weekly decline of more than 2%.
• Gold: New York futures gold fell for four consecutive days, with a weekly decline of more than 3%, marking the largest weekly drop in eight months.
• Copper: London copper also fell for four consecutive days, with a weekly decline of more than 3%.
• Nickel: Despite a rebound, London nickel still declined nearly 4% for the week.

Cryptocurrency:

The cryptocurrency market showed significant volatility:

• Bitcoin: Rose by more than $2,000 during trading, climbing back above the $69,000 mark.
• Ethereum: Once dropped nearly 7%, far from its two-month high, but still posted a weekly increase of over 20%.

Chinese Concept Stocks and RMB Exchange Rate Fluctuations:

• Chinese Concept Stocks: The index of Chinese concept stocks fell for five consecutive trading days on the US stock market, with a weekly decline of nearly 9%. Among them, NetEase fell 4.5% the day after its earnings report, while Pinduoduo rose more than 7% during trading and accumulated an 8% increase for the week.
• RMB: Offshore RMB fell below 7.26 during trading, hitting a near four-week low.
• A-H Shares: Continued to consolidate, with the Shanghai Composite Index falling below 3,100 points, marking the birth of the first tenfold stock of the year.

Evergrande Auto Resumes Trading:

On May 26, Evergrande Auto announced on the Hong Kong Stock Exchange as follows:

Share Acquisition: Approximately 3.145 billion potentially pending shares (about 29% of total issued shares) will be immediately acquired, and another approximately 3.203 billion potentially pending shares (about 29.5% of total issued shares) may be acquired within a certain period after the signing of the purchase agreement. The company’s shares resumed trading on the Hong Kong Stock Exchange at 9 AM on May 27, 2024.

A-Share Market:

On May 27, news indicated that the three major indices of the A-share market opened slightly higher:

• SSE Composite Index: Rose by 0.17%.
• Shenzhen Component Index: Rose by 0.21%.
• ChiNext Index: Rose by 0.31%.

Sector Performance:

• Highest Gains: The non-ferrous metals and electricity reform sector indices performed prominently.
• Highest Losses: Sectors such as AIPC, switches, and Kirin batteries declined.
• Internet E-commerce: Sai Microelectronics, Cross-border Connect surged over 7%, with other stocks like Santai Shares, Focus Technology, RuoYuChen, and Xinghui Shares following suit.

European and American Stock Markets:

• Dow Jones: Dow Jones rose slightly by 0.01%, the S&P 500 Index increased by 0.7%, and Nasdaq increased by 1.1%.
  • Top gainers included Intel up by 2.13%, JPMorgan Chase up by 1.93%, Tesla up by 3.17%, and Facebook up by 2.67%.
    Most Chinese concept stocks fell, with Zeekr down by 9.53% and Zai Lab down by 5.98%.
• Weekly Performance: For the week, Dow Jones fell by 2.33%, while the S&P 500 Index edged up by 0.03%, and the Nasdaq rose by 1.41%, marking five consecutive weekly gains for both the S&P 500 and Nasdaq. In Europe, the German DAX Index edged up by 0.02%.

Forex and Futures Market:

• US Dollar Index: Decreased by 0.27% to 104.7421, with a weekly increase of 0.24%.
• Non-US Currencies: Performance varied among non-US currencies; offshore RMB against the dollar fell 38 basis points to 7.2618, with a cumulative weekly decline of 281 basis points.
• International Precious Metals Futures:
  • COMEX gold futures fell 0.09% to $2,335.2 per ounce, with a weekly decline of 3.4%.
  • COMEX silver futures rose 0.28% to $30.54 per ounce, with a weekly decline of 2.3%.
• International Oil Prices:
  • US oil for July delivery climbed 1.21% to $77.8 per barrel, with a cumulative weekly decline of 2.24%.
  • Brent oil for August delivery rose 1.02% to $81.94 per barrel, with a cumulative weekly decline of 2.43%.

Bank of Japan Policy:

Former Member Predicts Year-End Base Rate Hike

Former policy committee member Masai Takako predicts that if the economic situation stabilizes, the Bank of Japan may raise the base rate to 0.5% by year-end. She noted that the price increases over the past two years have altered businesses' and households' inflation expectations.