Japan's Producer Price Inflation Holds Steady, Hong Kong Stocks Approach 4-week High

Akira Ito
10 Apr, 2024
Tokyo

Market indexes in Asia generally traded higher as investors awaited the release of the U.S. consumer price inflation report later today and monetary policy decisions from the European Central Bank on Thursday. 

Moreover, China is also scheduled to release its foreign trade and inflation data later in the week. 

China's exports for March are expected to decline by about 2%, but the trade surplus may rise on account of the larger decline in imports. 

Consumer price inflation in China is expected to rise 0.4% from the previous month in March, the second monthly increase in a row. 

Financial markets are closed in South Korea for Election Day and shuttered in Malaysia, Indonesia, and Singapore to celebrate Eid ul-Fitr. 

 

Japan Stocks Halt Two-day Rally, PPI Holds Steady 

Stocks in Tokyo headed lower and halted a two-day rally after producer price indexes rose in March. 

The producer price index in March rose to 0.8% from an upwardly revised 0.7% increase in February, the Bank of Japan said on Wednesday. 

Investors were on the defensive after the measure of wholesale prices in March rose by 0.2% from the previous month and matched the increase in the previous month. 

The overall bank lending in Japan rose 3.2% from a year ago to 619.6 trillion yen and accelerated from the 3.0% annual pace in February. 

Overall lending in the first quarter rose 3.1%, the Bank of Japan added. 

Investors turned cautious in the absence of other local economic news ahead of the U.S. consumer price inflation report later in the day. 

The Nikkei 225 Stock Average decreased 0.4% to 39,613.30, and the Topix index declined 0.3% to 2,745.93. 

Financial stocks were among the leading losers. 

Mizuho Financial, Sumitomo Mitsui Financial, and Mitsubishi UFJ declined between 0.5% and 1.2%. 

Tokyo Gas, Tokyo Electric Power, and Japan Steel Works added more than 3.5%. 

Advantest, Screen Holdings, Disco Corp., and Softbank declined between 0.3% and 1.1%. 

 

Hong Kong Stocks Advance After Stock Buybacks Support Prices 

Stocks in China extended their weekly losses, but stocks advanced in Hong Kong after corporations stepped up stock-buying activities. 

Investors are looking forward to the release of inflation data later in the day and the foreign trade report on Thursday. 

The CSI 300 index decreased 0.3% to 3,518.42, and the Hang Seng index rose 1.9% to 3,518.42. Both indexes are trading below their historical earnings ratio of below eight. 

The Hong Kong market index is nearing a 4-week high after government intervention supported stock prices and foreign investors returned in search of bargains. 

About 61 Hong Kong-listed companies repurchased their stocks worth HK$4.59 billion last week, with Tencent Holdings buying back HK$3 billion worth of its stock, Zheshang Securities said in a note to its clients. 

Hang Seng Bank gained 5.6% to HK$99.30 after the company announced its stock repurchase plan of HK$3.0 billion. 

BYD Auto gained 2.2% to HK$211.80, Li Auto advanced 3% to HK$125.60, and Xpeng gained 7% to HK$32.05.

Zijin Mining Group soared 5.5% to HK$17.70 after the gold miner tracked a record high gold price in Shanghai and New York as central banks in China and India continued to add to their holdings. 

 

China Auto Sales Expanded Amid Price Wars and New Models 

China's passenger car sales increased 5.7% in March from a year ago to 1.678 million units and rebounded 53% from the previous month after consumer demand rebounded following the Lunar New Year holiday. 

Electric vehicles account for about 41.5% of all passenger car sales in China. 

Electric vehicle sales rose 10.5% in March from a year ago as automakers launched new vehicles and offered significant price discounts and additional financing incentives. 

BYD sales increased 46% to 302,500 units, LI Auto sales advanced 39% to 28,984 units, and Cherry sales rose 45.3% to 181,585 units. 

Geely Auto said sales advanced 39% to 150,800 units, and Nio deliveries increased 14.3% to 11,866 units. 

Specifically, Chinese carmakers' sales in the first quarter rose 49% from a year ago to 475,700 vehicles, including vehicle exports of 87,000.

The China Passenger Car Association estimated that wholesale new energy vehicle sales, which account for battery EVs and plug-in EVs, increased 33% from a year ago to 820,000 units in March, an 84% rise from the previous month. 

China's overall passenger car export growth accelerated to 39% in March, from 18% in February, to 406,000 units. 

Rising sales came with a sharp fall in profit margins for Chinese companies after they slashed prices and introduced cheaper models. 

The profit margin of the Chinese  auto industry has declined to 4.3% from 8.7% in 2015, said Cui Dongshu, the secretary general of the China Passenger Car Association. 

Rising exports from China also have policymakers and officials worried in Europe and the U.S. 

U.S. Treasury Secretary Janet Yellen confirmed on Monday that tariffs are still likely to stem the rising exports of Chinese vehicles. 

“China is now simply too large for the rest of the world to absorb this enormous capacity,” Janet Yellen said at a press conference on Monday. 

 

India Indexes Inch Higher In Record Territory Ahead of Tech Earnings 

Stocks in Mumbai edged higher, and bond yields held steady ahead of a public holiday on Thursday. 

The Sensex and Nifty indexes traded sideways with an upward bias as investors awaited earnings releases from tech services providers later in the week. 

Market indexes are expected to trade volatile in thin trading as financial markets are closed for the Ramzan Id public holiday on Thursday.  

The Sensex index increased by 0.3% to 74,873.93, and the Nifty index edged higher by 0.3% to 22,705.85. 

The yield on the 10-year Indian government bonds inched higher to 7.15%, and the Indian rupee edged lower at ₹83.21 against the U.S. dollar.