Week in Review: A Comprehensive Summary of Asian Equities and Key Developments

Overview of the Week: Asian Equities Show Mixed Performance

The week saw a mixed performance across Asian equities, with Mainland China and Hong Kong leading the charge, while Australia and Thailand lagged behind. The week was marked by a flurry of earnings reports, with several key companies beating expectations. Alibaba, Baidu, NetEase, Bilibili, and Vipshop all delivered strong results, with Bilibili notably achieving its first profitable quarter. The markets also saw a surge of interest in humanoid robots, with multiple companies rumored to be developing this technology gaining traction. Additionally, U.S. President Donald Trump hinted at a potential "grand deal" with China, further fueling optimism about the ongoing trade relations between the two superpowers.

Key News: Trade Developments and Market Sentiment

Asian equities ended the week on a high note, with Hong Kong and Mainland China-listed growth stocks leading the charge, buoyed by Alibaba’s strong financial results. India, however, stood out as a rare underperformer, both for the day and the week. This has led to speculation that investors might be using India as a funding source to reallocate capital to China. Meanwhile, President Trump’s comments on his "great" relationship with Chinese President Xi Jinping added to the positive sentiment, suggesting that the two nations might be inching closer to a trade deal.

In another significant development, China’s trade envoy, He Lifeng, held discussions with U.S. Treasury Secretary Scott Bessent. Both sides emphasized the importance of China-U.S. economic and trade relations and agreed to continue communication on issues of mutual concern. This suggests that Bessent might be taking a more active role in trade negotiations, potentially signaling a shift in the dynamics of the ongoing trade talks.

Earnings Highlights: Alibaba and Bilibili Steal the Spotlight

Alibaba’s Hong Kong-listed shares surged by an impressive 14.56%, significantly outperforming its U.S. listing, which gained 8.09%. This rally was driven by massive trading volumes, with HKD 44.5 billion ($5.7 billion) worth of shares changing hands, far exceeding the one-year average of HKD 5.8 billion ($754 million). The strong results were attributed to robust performance in China’s e-commerce, international e-commerce, and cloud computing sectors, with AI playing a key role in driving growth.

Bilibili also made headlines, with its Hong Kong share class gaining 16.47%, compared to an 8.76% gain in its U.S. listing. This optimism was reflected across other Hong Kong-listed growth names, including Tencent, Xiaomi, Meituan, Semiconductor Manufacturing International (SMIC), and Kuaishou, which all saw significant gains. The strong performance of these stocks was further fueled by Mainland investors, who poured a net $1.81 billion into Hong Kong-listed stocks via the Southbound Stock Connect.

Sector Performance: Technology and Healthcare Lead the Charge

Technology and healthcare sectors were among the top performers for the week, with semiconductor-related stocks and AI plays leading the charge. In Hong Kong, the Hang Seng and Hang Seng Tech indexes gained 3.99% and 6.53%, respectively, with volumes increasing by 38.62% from the previous day. The growth factor and large-cap stocks outperformed value factor and small-cap stocks, with consumer discretionary, health care, and information technology sectors leading the way.

In Mainland China, the STAR Board, growth stocks, and AI-related subsectors such as semiconductors, telecom, and electronic devices also saw significant gains. The electric vehicle (EV) ecosystem was another area of strength, with companies like BYD and CATL benefiting from the extension of Shenzhen’s RMB 15,000 EV subsidy. Life sciences and pharmaceuticals also had a strong day, reflecting the broader optimism in the technology and healthcare sectors.

Economic Policy and Outlook: China’s Pro-Growth Measures

The Chinese government reaffirmed its commitment to boosting domestic demand and promoting consumption. Premier Li Keqiang presided over a State Council meeting, where he emphasized the need to "consistently promote consumption and benefiting people’s livelihood, vigorously boosting consumption, and expanding domestic demand." This was further reinforced by Ministry of Finance Chief Lan Fo An, who called for a more active fiscal policy to promote economic recovery. The proposed measures include increasing the fiscal deficit rate, boosting expenditure, issuing more government bonds, optimizing the expenditure structure, resolving risks in key areas, and increasing transfers to local governments.

These pro-growth measures are seen as strong signals ahead of the legislatively important "Dual Sessions," which is scheduled to begin on March 5th. The emphasis on fiscal stimulus and consumption growth suggests that the government is taking a proactive approach to ensuring the continuous recovery and improvement of the economy.

Closing Thoughts: A Positive Outlook for Asian Equities

The week ended on a positive note for Asian equities, with Hong Kong and Mainland China leading the charge. The strong earnings reports, particularly from Alibaba and Bilibili, coupled with the optimistic comments from President Trump and the pro-growth measures announced by the Chinese government, all point to a positive outlook for the region’s equities. The focus on technology, healthcare, and AI-related sectors suggests that these areas will continue to drive growth in the coming weeks.

As we look ahead to the "Dual Sessions" and the potential for further trade developments, the momentum in Asian equities is expected to continue. With Mainland investors showing strong optimism and the Chinese government taking proactive measures to boost domestic demand, the stage is set for a re-rating of China’s equity markets in 2025.