Market update on China: Hong Kong and mainland China are recovering after the lifting of housing purchase restrictions.

Asian stocks generally declined overnight, with mainland China and Hong Kong performing better, while South Korea, Australia, India, and the Philippines showed weaker results, dropping more than 1%. Meanwhile, Indonesia was closed due to the Christian holiday of Ascension. The April foreign trade data acted as a catalyst, surpassing expectations with a 1.5% increase in exports compared to the expected 1.3% and a decline of 7.5% in March. At the same time, imports rose by 8.4% compared to the expected 4.7% and a decline of 1.9% in March. The data clearly indicates that the global economy is currently in good shape, while the import figures suggest that China's economy has begun to recover, albeit gradually.

Cars and mobile phones

The value of car exports has increased by +24.9% and amounts to 254 billion yuan, while the value of mobile phone exports has decreased by -5.5% and stands at 266 billion yuan.

Restrictions on purchasing housing

Another catalyst was the lifting of restrictions on home purchases in major cities like Xi'an (12.9 million residents, not including the Terracotta Army) and Hangzhou (11.9 million residents, with a GDP comparable to that of Sweden), which had been in place for the past eight years.

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The Xi'an government stated that its decision was made based on the desire to comply with the directives of the State Council.

Dividend tax

Bloomberg News reported that the 20% dividend tax paid by Chinese investors in Hong Kong may be abolished by the end of the year, which would serve as another catalyst for Hong Kong stocks, especially since the deposit rate of Chinese banks on the mainland is less than 2%.

Political infighting

It should be noted that both mainland China and Hong Kong have remained unaffected and untouched by geopolitical disputes following the U.S. Department of Commerce's ban on the sale of Huawei chips by Nvidia and Qualcomm, as well as after a U.S. senator called for a ban on any Chinese electric vehicles or their parts.

Alibaba shares +0.85%
Tencent shares up 2.43%
Meituan shares up 3.88%
HSBC shares -0.44%
Xiaomi shares +0.31%

Trade in Hong Kong

The rally in Hong Kong was extensive, as the number of gainers outnumbered the losers by a factor of 10, with active trading volume. The Hong Kong market tracking ETF was sold in significant volume through the Southbound Stock Connect.

Shanghai and Shenzhen had a successful day, with the former closing above Monday's level. Foreign investors purchased shares of mainland China worth $1.109 billion.