Market Insights: May 16th, 2024

Domestic Economy:

• China Stock Market

1. The Shanghai Composite Index rose by 0.25%, closing at 3127.18 points; the Shenzhen Component Index increased by 0.18%, closing at 9614.73 points; the ChiNext Index remained flat, closing at 1846.98 points; the STAR 50 Index went up by 0.53%, closing at 753.45 points. The combined turnover of the Shanghai and Shenzhen markets was 69.02 billion yuan.
2. On the sector front, real estate, non-ferrous metals, electronics, computers, telecommunications, non-bank financial sectors, and agriculture, forestry, animal husbandry, and fishery sectors performed strongly; home appliances, media, light industry manufacturing, power equipment, coal, and defense and military industry sectors weakened.
3. Guolian Securities hit the daily limit continuously, with the non-ferrous metals and high-speed connector sectors leading the gains, while the A-share mobile game sector declined. The copper cable high-speed connector concept stocks continued their strong performance.

• Chinese Concept Stocks and RMB:

1. During the US trading period, Chinese concept stocks saw a thrilling rebound, with Alibaba rising nearly 2%, while NIO closed down 8%, and Zeekr and XPeng Motors fell 3.5% respectively.
2. The offshore RMB rose by more than 300 basis points, breaking past the 7.21 mark, hitting a new one-week high.

International Economy:

• US Inflation and Rate Cut Expectations:

Overnight, key US inflation data was released showing a slowdown, with the core CPI year-on-year growth being the smallest since April 2021, roughly matching market expectations. This eased concerns about further interest rate hikes by the Federal Reserve and increased expectations of rate cuts. As a result, Asia-Pacific stock markets generally opened higher and moved up, with AH shares also rising in response.

• Japanese Economy:

1. Japan's economy contracted in the first quarter, with the real GDP annualized quarterly rate falling by 2%, surpassing economists’ expectations of -1.2%. Both private consumption and capital expenditure fell, and net exports dragged down the economy. Since the beginning of this year, Japan's economy has been impacted by adverse events such as the New Year's Day earthquake and the Toyota subsidiary scandal.
2. The Nikkei 225 Index opened higher and rose by 1% at one point, with Tokyo Electron up more than 4%, Keyence up more than 3%, and the stock prices of companies like Sony, Fast Retailing, Softbank Group, and Nintendo also gaining by more than 1%.

• Yen and US Treasury Holdings:

1. The yen continued to rise, with the USD/JPY falling below the 154 mark, dropping nearly 100 points during the day. This was the first time since May 7 that the yen broke past this mark.
2. According to data from the US Treasury, in March, Japan's holdings of US Treasury bonds increased by $19.9 billion to nearly $1.19 trillion, the highest level since August 2002; China's holdings decreased by $7.6 billion to $767.4 billion, marking the third consecutive month of decline. As Japan ends its negative interest rate policy, the yen may weaken, leading it to intervene in the foreign exchange market and sell US Treasuries by the end of April.

• Korean and Australian Markets:

The Korea Composite Stock Price Index opened up by 1.5%, currently up by 1.2%. SK Hynix rose nearly 4%, and Samsung Electronics rose by more than 2%. The Australia S&P/ASX 200 Index went up by 0.59%, and the MSCI Asia Pacific Index rose by 1% to 181.44 points.

Corporate Dynamics:

• Berkshire Hathaway:

Warren Buffett's Berkshire Hathaway acquired nearly 26 million shares of Zurich Insurance Company Chubb, valued at $6.7 billion, making it its ninth largest holding. Additionally, Berkshire reduced its stake in Apple in the first quarter, but Apple remains its top holding.

Policies and Regulations:

• Argentine Foreign Exchange Control:

Argentine President Javier Milei stated that the government will soon lift foreign exchange controls, with the central bank planning to shift to a "flexible" exchange rate and working to clean up its balance sheet and increase foreign exchange reserves.

• US Biosafety Bill:

The US House of Representatives Oversight and Accountability Committee passed a new version of the "Biosafety Bill" with a vote of 40-1, adjusting the exemption period for contracts/products and adding WuXi Biologics to the exemption list.