Equities Mixed Amid War Jitters

Market Snapshot

Asset	Level	Change
Shanghai Composite	3,836.24	+0.60%
CSI 300	4,423.63	+0.13%
Hang Seng	25,063.71	+2.79%
TAIEX	32,612.24	-0.34%
USD/CNY	6.89	+0.08%
USD/HKD	7.83	-0.11%
Copper	5.56	+2.18%
Brent Crude	100.04	+0.10%
Gold	4,474.90	+1.61%
Bitcoin	70,194.66	-1.02%
China 2Y Govt Yield	-	-
China 10Y Govt Yield	-	-

Prior Economic Events

Data	Prior	Cons	Actual
No events available

Today's Economic Events

Data	Prior	Cons	Time
No events available

Greater China stocks showed divergence, with Hang Seng surging 2.79% on tech rebound while TAIEX dipped 0.34% on semiconductor caution.
USD/CNY edged up 0.08% to 6.89, reflecting PBoC tolerance amid stable liquidity; commodities like copper rose 2.18% on demand hopes.
Global war fallout pressured sentiment, but resilient China retail earnings highlighted pockets of growth despite deflation.

Yesterday's Recap

Greater China equities displayed mixed performance on March 23, with mainland China's Shanghai Composite climbing 0.60% to 3,836.24, driven by infrastructure and financial sectors amid ongoing stimulus expectations. The CSI 300 index rose modestly by 0.13% to 4,423.63, supported by consumer staples as deflation concerns eased slightly with China CPI YoY at -0.10%. Hong Kong's Hang Seng index outperformed, jumping 2.79% to 25,063.71, fueled by a tech sector rebound and positive retail earnings from firms like Pop Mart, despite broader geopolitical tensions.

Taiwan's TAIEX fell 0.34% to 32,612.24, weighed down by export-oriented chipmakers amid global supply chain worries linked to semiconductor outlook. Currency markets remained steady, with USD/CNY at 6.89 (+0.08%) showing PBoC's managed stability, while USD/HKD eased 0.11% to 7.83 under the peg. Commodities relevant to China, such as copper, advanced 2.18% to 5.56, signaling potential industrial demand recovery, though Brent crude held flat at 100.04 (+0.10%).

No major macro data releases occurred across the region, keeping focus on market reactions to global war news.

The Day Ahead

The Greater China calendar remains light on March 24, with no scheduled data releases from mainland China, Hong Kong, or Taiwan, allowing markets to digest recent earnings and geopolitical developments. Investors will monitor any unscheduled PBoC liquidity operations, particularly open market injections to support credit amid deflationary pressures. In Hong Kong, attention turns to aggregate balance dynamics under the HKMA peg, potentially influencing short-term rates.

Taiwan's semiconductor export sentiment could sway TAIEX, with any updates on cross-strait trade flows in focus. Broader events include ongoing South China Sea talks, as Philippine President Marcos signals openness to energy discussions with Beijing, which may impact regional investment flows. Overall, expect volatility tied to global macro headlines rather than local data.

Other Economic Notes

Deflation persists in mainland China with CPI YoY at -0.10%, underscoring challenges in the property sector and weak consumer demand, though standout retail performers like Pop Mart and Laopu Gold project triple-digit earnings growth for 2025. (cont...)

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Other Economic Notes (continued)

Taiwan's economy benefits from robust semiconductor exports, linking closely to global AI demand, but faces risks from geopolitical tensions in the Taiwan Strait. Hong Kong grapples with security-related developments, such as new police powers on smartphone access, potentially affecting business confidence and foreign investment. Cross-region trade remains resilient, with copper prices as a proxy for China's industrial health amid global supply disruptions.

Broader themes include stimulus needs, with State Council signals hinting at targeted support for infrastructure to counter war-induced economic slowdowns.

Global Macro News

The Iran war is delivering a dual shock to global growth and inflation, as evidenced by business surveys showing synchronized slowdowns, directly impacting Greater China's export-dependent economies like Taiwan's semiconductors and mainland China's commodities trade. Wall Street banks have pushed back expectations for PBoC rate cuts, raising China inflation projections amid war fallout, which could delay monetary easing in mainland China. US Federal Reserve Chair Jerome Powell's uncertainty on economic conditions, coupled with a slowing US economy as a potential war casualty, heightens recession risks that may weaken demand for Greater China exports.

In Europe, the ECB notes AI's potential to reshape the euro area economy, offering long-term opportunities for Taiwan's tech sector but short-term volatility from energy price spikes. UK business growth has stalled due to war tensions, with the pound dropping and economists warning of a pronounced recession, indirectly pressuring Hong Kong's financial links. Swiss National Bank's increased forex intervention readiness signals global currency volatility, affecting USD/HKD peg stability.

Emerging markets like Pakistan and India show mixed resilience, with remittances boosting some economies while others face energy pains, mirroring Greater China's commodity exposure. Overall, these dynamics amplify downside risks for Greater China's recovery, particularly in trade and energy sectors.

Greater China Central Banks Watch

The People's Bank of China (PBoC) maintained steady liquidity operations without new MLF or LPR adjustments, focusing on supporting credit amid deflation with CPI YoY at -0.10%, while State Council hints at potential RRR cuts to bolster infrastructure. Wall Street banks' revised forecasts delay expectations for PBoC rate cuts due to war-driven inflation pressures, keeping yuan dynamics managed with USD/CNY at 6.89. Hong Kong Monetary Authority (HKMA) upheld the USD/HKD peg at 7.83, with aggregate balance likely stable amid eased short-term rates, though security law changes could influence capital flows.

(cont...)

Continuation

Greater China Central Banks Watch (continued)

Taiwan's Central Bank (CBC) remains vigilant on FX interventions to counter export volatility, tied to strong semiconductor outlook despite TAIEX dips, with rates on hold pending global demand cues. Cross-region policy coordination appears limited, but PBoC's tolerance for mild yuan depreciation supports export competitiveness for Taiwan and mainland firms. No immediate rate decisions loom, but war escalation could prompt PBoC liquidity boosts to shield against global shocks.

Greater China Macro Daily(Beta Mode)