Asian Macro Initial Thoughts Bomb shell - US Federal court blocks Trump's global tariffs; says he doesn't have the power he claims. Nvidia gives up beat outlook +VE Tech names.

NZX drifting lower. Expect traders to close a lot of positions and take a wait and see stance

Overview.
Markets hit by uncertainty as US federal court says the Trump’s tariffs are illegal. No doubt Trump will appeal the decision but it introduces a lot of uncertainty into the market. I would expect to see a lot of short covering as traders close positions and wait for clarity.

It comes after news that Trump has increased the pressure in foreign students studying in America, especially Chinese & Hong Kong ones (for whom visa criteria will be revised), seems not only potential ones but existing too. Seems like he wants to ensure the US doesn’t benefit from bright foreigners.

All that happened after the Nvidia results which were mixed and the detail will be in the detail but overall the company has done well and gave an upbeat outlook. But countering that the FT reported that the US was tightening restrictions on companies that provide software to China that can be used in Chip design

That followed the FOMC minutes showed that they remain in ‘waiting and see’ mode as most expected.

In the White House Trump was asked about TACO trades - Trump Always Chickens Out; a new acronym in Washington - and he refuted the label and defended his actions but ended by saying 'it was a nasty question’.

Ascension Day in Europe sees a number of countries on holiday but markets remain open.

Earnings continue

Thursday Costco, Gap, Ulta Beauty, Marvell Technology, Dell, Zscaler, Auto Trader FY, Bath & Body Works Q1, Best Buy Q1, Costco Wholesale Q3, Dell Technologies Q1, Gap Q1, Hollywood Bowl HY, Nationwide Building Society FY, Royal Bank of Canada Q2

U.S. Defense Secretary Pete Hegseth will try to convince Asian defence leaders this weekend that the United States is a more trusted partner for the region than China, U.S. officials told Reuters, as questions linger about the Trump administration's commitment to the region. He will make his first extended remarks in Singapore on Saturday about how he envisions U.S. defence policy in the Indo-Pacific.

Housekeeping

Monday I will be on RTHK’s Money Talk with host Chloe Feng and Le Xia, Asia Chief Economist at BBVA Research. If you have a question or topic you want aired let me with a message or them vis the link which can also be used to listen to the programme .

https://www.rthk.hk/radio/radio3/programme/money_talk

This Thursday (29May) I will be on RTHK’s The Close, with host Nitin Dialdas, and Manishi Raychaudhuri, CEO, Emmer Capital. If you have a question or want to listen to the show you can via the linkbelow.

https://www.rthk.hk/radio/radio3/programme/the_close

ERI-C is a great platform were you can find leading independent research from world leading analysts to help make sense of the current turmoil, click on http://ERI-C.com it is a where independent research vendors list their research and trading analysis. ERI-C is free to access, you can browse different independent research providers, most offer free trials; so worth a look.

For Example Next Tuesday 3 June Russell Napier will be in conversation with Andy Rothman on the topic of Will Trump make China great again. Russell has covered Asia for year and Andy has a unique perspective on China, having lived and worked there for more than 20 years as an American diplomat and a sell-side macro strategist. Andy first went to China as a student in 1980, returned as Foreign Service Officer in 1984, joined CLSA in Shanghai in 2000, and then went to the buy side with Matthews Asia in 2014. This year, Andy founded Sinology LLC, advising institutional investors and corporate directors on the risks and opportunities in the Chinese economy, and on navigating the rising tensions in US-China relations. This follows on from Andy’s recent webinar after a recent visit to China in early April you can still go to the website to listen to that recording if you didn’t hear it live.

Mark Tinker recently posted the Latest thoughts from Market Thinker - Active not Passive. Trump wants active investments, not passive ones.

You can find the whole article here

Market opening indications and data

New Zealand
NZX 50 opened lower testing down to 12,270 level, currently -84pts -0.7% at 12,278 but drifting lower
Data Due after the open
Business Confidence May vs 49.3 Apr (F/cast is 53)

Australia
ASX to open higher futures indicate up 13 pts 0.15% at 8,430 with tech higher after Nvidia’s earnings. Energy names higher but miners mixed with Gold flat but Iron Ore weak.
A rebound after Wednesday’s sell off after higher than expected inflation data.
Data Due after the open
Building Capital Expenditure Q1 QoQ vs 0.2% Q4 (F/cast is 0.3%)
Plant Machinery Capital Expenditure Q1 QoQ vs -0.8% Q4 (F/cast is 0.4%)
Private Capital Expenditure Q1 QoQ vs -0.2% Q4 (F/cast is 0.5%)

Japan
Market to open higher
Nikkei 225 Futures indicate up 178pts 0.5% at 37,900
Chicago Futures up 300pts 0.79% at 38,185
Yen closed 144.75. but fell to 145.43 on news that Trump’s tariffs are illegal.
Watch for soundbites as the Nikkei hosts the 30th Future of Asia forum, its flagship annual conference, in Tokyo over two consecutive days.
Data Due Pre market
Foreign Bond Investment 24 May vs ¥2824.6B
Foreign Stock Investment 24 May vs ¥714.9B
Lunchtime
Consumer Confidence May vs 31.2 Apr (F/cast is 32.8)

S Korea
Stocks to open higher but with caution ahead of the BoK rate decision
Stocks closed higher on Wednesday trade volume was moderate at 403.25 million shares worth 11.16 trillion won ($8.11 billion), with winners beating losers 579 to 308. Institutions and foreign investors net bought, while individuals net sold. The local currency was quoted at 1,376.5 won against the greenback at 3:30 pm Wednesday, down 7 won from the previous session.
Data Due 60 minutes after the open
BoK Interest Rate Decision current 2.75% (F/cast is a cut to 2.5%)

Taiwan - No Data Due
Market to open higher with Tech seeing a rebound following the positive Nvidia earnings and upbeat outlook.
After market Wednesday
GDP Growth Rate Final Q1 5.48% vs 2.9% Q4 (F/cast is 5.37%)

China - No Data Due
Market to open lower after Golden Dragon Index closed -51pts -0.71% at 7,124
Spot USD/CNY opening -0.0002pts unch at 7.1923
Spot USD/CNY hiked 42 bps to close at 7.1907 Wednesday (28th). As of 4:28 pm, USD/CNY in the night session gained 37 bps. USD/CNH added 20 bps to 7.1866, 41 bps above USD/CNY.

Hong Kong - No Data Due
HSI to open lower after the ADR’s closed -123pts -0.53% at 23,135 with only HSBC, AIA and Bank of China HK in the green.
HK Futures are indicating -88pts -0.4% at 23,170
UBS Asian Investment Conference continues today so watch for soundbites.
Turnover on Wednesday HK$180.816bn vs HK$203.268bn Tuesday is still a long way off the $620.898 bn seen Monday (7 April). Short selling rose on Wednesday to 15.6% from 14.1% Tuesday, despite the HSI spending most of the day in the red.

Macau - No Data Due
After Market Wednesday
Balance of Trade Apr MOP -9.4B vs -9.4B Mar (F/cast was MOP -9.8B)

Singapore - Data Due
Export Prices Apr YoY vs -5.1% Mar (F/cast is -3%)
Import Prices Apr YoY vs -4% Mar (F/cast is -2.5%)
PPI Apr YoY vs 3.9% Mar (F/cast is 2%)

Indonesia - No Data Due
Malaysia - Data Due

Thailand - No Data Due
Thailand’s tourism industry is experiencing a slowdown, mainly due to a decline in Chinese visitors, causing the number of foreign tourist arrivals to drop by 2.6 percent year-on-year, with 13.9 million foreign visitors arriving since Jan. 1, according to the Thai Ministry of Tourism and Sports.

Philippines - No Data Due
Myanmar - No Data Due
Cambodia - No Data Due
Vietnam - No Date Due

India - No Data Due
After Market Wednesday
Industrial Production Apr 2.7% YoY vs 3% Mar (F/cast is 3.2%)
Manufacturing Production Apr 3.4% YoY vs 3% Mar (F/cast is 3.1%)
M3 Money Supply 16 May 9.5% vs 9.5% prior

Europe
Eurozone No Data Due Ascension Day
Germany No Data Due Ascension Day
France No Data Due Ascension Day
United Kingdom No Data Due

United States
Futures opened Dow up 206pts 0.5%, S&P 1.1% and NDX 1.4% ( rallying after Nvidia’s earnings)
After market
API Crude Oil Stock Change -4.236m vs 2.499m prior
Nvidia 4.4% in after market trading off initial high after revenues were in-line despite the China headwinds and gave an upbeat outlook. Other tech names also rallying.
Data Due GDP Data (Growth Rate, Price Index, Sales), Corporate Profits, Initial & Continuing Initial Claims, Jobless Claims 4 week average, Core PCE Prices, PCE Prices, Real Consumer Spending, Pending Home Sales, EIA Natural Gas Stocks Change, Feds Goolsbee Speaks, 4 & 8 Week Bill Auction, EIA Oil Change Report, 15 & 30 year Mortgage Rate, 7-Year Note Auction, EIA Oil Report, Feds Balance Sheet.

HEADLINES & NEWS

AUSTRALIA

Former Qantas Loyalty boss Olivia Wirth, now at the helm of Myer, has lifted the curtain on how she plans to turn around the department chain.

One of Australia’s biggest energy companies compares Victoria to North Korea. The comments by Santos boss Kevin Gallagher show the industry’s frustration with what it sees as a hostile stance against gas.

JAPAN

The Bank of Japan's long-term government bond holdings fell for the first time in 16 years as of end-March as it tapered bond purchases, its earnings showed on Wednesday, in another sign of its steady retreat from a massive decade-long stimulus policy. As a result of its interest rate hikes, the central bank paid 1.25 trillion yen ($8.3 billion) in interest on excess reserves parked at the BOJ in the fiscal year that ended in March - a move aimed at mopping up liquidity from the market to nudge short-term borrowing costs around its 0.5% policy rate.

A lacklustre auction for Japan's longest-dated bonds on Wednesday did little to relieve sovereign debt markets where fiscal deficit concerns have driven a worrying surge in long-term yields. Heavily indebted Japan's government bonds have become the "canary in the global duration coalmine," Goldman Sachs analysts wrote last week after a very poor sale of 20-year bonds. The Ministry of Finance sold about 500 billion yen ($3.46 billion) of 40-year bonds with a bid-to-cover ratio of 2.21, the lowest since a sale in July last year and well below the historical average of 3, signifying tepid demand.

Japan's government will pledge in this year's policy guidelines to take "nimble policy action" as U.S. tariffs and high inflation impact household finances, according to a draft seen by Reuters. The statement, to be included in Japan's annual economic and fiscal policy guidelines in June, suggests the government could consider compiling a supplementary budget later this year, depending on economic and price developments. The government also plans to reiterate its expectations for the Bank of Japan to achieve the 2% price target in a sustainable and stable manner.

The draft guidelines, which form the basis for budget planning, will note that, although the Japanese economy has been recovering modestly, downside risks posed by the U.S. tariffs and rising consumer prices "need to be closely monitored.” The pursuit of fiscal discipline should not narrow policy options, the draft said, giving room for swift policy responses such as stimulus measures when necessary.

The government will mobilise all measures to achieve wage growth to ensure the transition to a growth-oriented economy driven by wage hikes and investment, the draft said. The draft stated the BOJ is expected to achieve the 2% inflation target in a sustainable and stable manner through appropriate monetary policy in response to economic, price, and financial conditions. A key Japanese government economic panel, the Council on Economic and Fiscal Policy (CEFP), will meet on June 5 to discuss the draft guidelines and finalise them on June 13.

Nikkei will host the 30th Future of Asia forum, its flagship annual conference, in Tokyo over two consecutive days. This year's main theme is "Asia's challenge in a turbulent world." Political leaders set to attend the event include Japanese Prime Minister Shigeru Ishiba, Cambodian Prime Minister Hun Manet, Chief Adviser of Bangladesh Muhammad Yunus, Laotian President Thongloun Sisoulith and Palauan President Surangel Whipps Jr.

SOUTH KOREA

Early voting for South Korea's June 3 snap election will be held for two days

Business leaders of South Korea and Japan on Wednesday agreed to expand bilateral cooperation in artificial intelligence, semiconductors and other key sectors while supporting Seoul's efforts to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). The agreement was part of a joint statement adopted during the 57th South Korea-Japan Business Conference held in Seoul, which brought together some 300 business and economic representatives from the two countries for an annual two-day meeting that began Tuesday. Specific areas of cooperation include carbon neutrality, hydrogen energy, AI and semiconductor industries, as well as the bio and health care sectors. They also agreed to collaborate on addressing social challenges, such as the two countries' low birth rates and aging populations. On South Korea's bid to join the CPTPP, the participants agreed to support preliminary measures by relevant organizations to facilitate the move. Business leaders from South Korea and Japan have voiced shared concerns over the United States' growing protectionist stance and the escalating US-China rivalry.

GM Korea said Wednesday it will dispose of non-core assets and directly managed service centers as part of its efforts to sustain operations amid weak demand for its vehicles. In response to a rapidly evolving industry landscape and global business challenges, the company said in a press release that it will begin consultations with relevant stakeholders to secure financial sustainability in the Korean market. GM Korea plans to gradually sell all nine of its directly operated after-sales service (AS) centers. However, all employees at these centers will be reassigned to other divisions within the company, it said.

Bang Si-hyuk, founder and chairman of the K-pop powerhouse Hybe, has been under investigation over charges that he intentionally misled investors ahead of the company's stock market debut, industry sources said Wednesday. According to the sources, the Financial Supervisory Service (FSS), the country's financial watchdog, has been probing Bang on speculation that he had sought to list Hybe on the stock market while stressing that there was no plan for Hybe's initial public offering (IPO). The sources said Bang signed a deal with private equity funds in 2020 to share a portion of the gains from the Hybe's IPO, and the Hybe chairman received some 400 billion won (US$291.3 million). But in 2019, Bang said to investors that Hybe's stock market listing was impossible while applying for a designated external auditor for its IPO, according to the sources. Hybe, listed on the Korean stock market in October 2020, closed at 265,000 won Wednesday, down 7.33 percent from the previous session's close

TAIWAN

A delegation led by US Senator Tammy Duckworth met with President William Lai at the Presidential Office Wednesday. Lai welcomed the delegation and thanked the US Congress and government for its long-term bipartisan support for Taiwan. Taiwan would continue to boost cooperation with the US to maintain peace and stability in the region, he said.

Taiwan Wednesday cut its GDP growth forecast for this year to 3.1 percent, marginally lower than the previous estimate of 3.14 percent, weighed by expectations of a sharp slowdown in the second half due to global trade tensions and tariff pressure from the US. The Directorate-General of Budget, Accounting and Statistics (DGBAS) said economic momentum is likely concentrated in the first half with a growth of 5.35 percent, but might weaken to 1 percent for the remainder of the year. DGBAS Minister Chen Shu-tzu attributed the expected slowdown to attenuated global demand and the impact of US protectionist trade policies under US President Donald Trump.

Taiwan this week is expected to become the first Asian country to be declared free of the “three swine diseases” — referring to classical swine fever (CSF), African swine fever and foot-and-mouth disease, the Ministry of Agriculture said yesterday. The World Organisation for Animal Health (WOAH) is expected to declare Taiwan free of CSF this week, the ministry said, adding that the announcement would make Taiwan the only Asian nation to eliminate all of the “three swine diseases” in its territory. Deputy Minister of Agriculture Tu Wen-jane is visiting the organization’s annual meeting in Paris to receive Taiwan’s CSF-free certification, the ministry said.

TSMC Wednesday said that it plans to launch a new research-and-development (R&D) center in Munich, Germany, next quarter to assist customers with chip design. TSMC Europe president Paul de Bot made the announcement during a technology symposium in Amsterdam on Tuesday, the chipmaker said. The new Munich center would be the firm’s first chip designing center in Europe, it said. The chipmaker has set up a major R&D center at its base of operations in Hsinchu and plans to create a new one in the US to provide services for major US customers, including Apple Inc, Nvidia Corp and AMD Inc, it said. The planned Munich center would support TSMC’s European customers to design high-density, high-performance and energy-efficient chips with a focus on automotive, industrial, artificial intelligence and Internet-of-Things applications, De Bot said.

TSMC is building a new chip manufacturing fab in Dresden, Germany, with its customers Robert Bosch GmbH, Infineon Technologies AG and NXP Semiconductors NV through a joint venture called European Semiconductor Manufacturing Co (ESMC). ESMC would invest more than 10 billion euros (US$11.3 billion) toward building the fab, with the EU also providing funds. The creation of ESMC marks a significant step toward construction of a 12-inch fab to support demand from the fast-growing automotive and industrial sectors, the chipmaker said in 2023. The planned fab is to produce 12-inch wafers using TSMC’s 28-nanometer and 22-nanometer process technologies, it said.

Taiwanese insurers are facing difficult questions about the damage of recent swings in the New Taiwan dollar. Regulators might have a partial solution: letting firms change how they calculate the value of foreign currency assets. The Financial Supervisory Commission (FSC) is considering allowing insurers to use six-month average exchange rates when they calculate risk-based capital in their semiannual reports, a shift from the current system where insurers use exchange rates on the final day of reporting. The change could ease pressure on the US$1.2 trillion insurance sector, whose huge exposure to foreign assets came into the spotlight earlier this month after a rapid surge in the NT dollar against the greenback.

Asustek Computer Wednesday said it expects closer collaboration with Nvidia Corp, after the latter announced plans to build its new Taiwan office in the Beitou-Shilin Technology Park in Taipei. However, the company hopes Nvidia would not poach its talent as the artificial intelligence (AI) chip company is “too attractive,” Asustek chairman Jonney Shih told reporters after its annual shareholders’ meeting. Shih also told shareholders that the company expects continued growth in server business this year, after revenue in the segment last year increased fivefold from a year earlier. Earlier this month, the company projected that servers would contribute about 15 percent of its revenue this year. Shih described the current AI trend as “the poor man’s Chinese kung fu,” referring to the emergence of cost-efficient AI models developed in China that enable effective and resource-saving applications.

United Microelectronics Corp (UMC), the world’s third-largest wafer foundry service provider, said that the appreciation of the New Taiwan dollar, which has surged at its fastest pace in four decades against the US dollar, poses a significant threat to its revenue and profitability in the second half of this year. As order visibly remains vague for the second half of the year, foreign exchange rate volatility is a more real and visible factor that would affect the chipmaker’s financial performance than capricious tariff policies, UMC chief financial officer Liu Chi-tung told reporters on the sidelines of its annual shareholders’ meeting in Hsinchu. “We are more worried about the impact of foreign exchange rates in the second half of the year,” Liu said.

Apparel maker Makalot Industrial yesterday gave a conservative outlook for the company’s business in the second half of this year, as brand clients remain on the sidelines following US President Donald Trump’s tariff policy announcement early last month. The company also faces potential earnings erosion amid the New Taiwan dollar’s fast appreciation against the US dollar this year, Makalot chairman Frank Chou told an annual general meeting in Taipei. With an order decline expected in the second half of the year, the company would slow down its capacity expansion, while employing flexible capacity allocation and pricing strategy to respond to market changes, and secure as many orders as possible to maintain its market share and steady its factory utilization, he said. Makalot, a manufacturer of ready-to-wear garments and functional sportswear products, counts GAP Inc, Fast Retailing Co’s GU sub-brand, Kohl’s Corp, Target Corp, Walmart Inc and Dick’s Sporting Goods Inc among its major clients.

In Q1 net profit grew 13.55 percent year-on-year to NT$1.27 billion (US$42.5 million), or earnings per share of NT$5.15, while revenue rose 15.29 percent to NT$9.92 billion from a year earlier. The firm operates overseas production bases in Vietnam, Indonesia, Bangladesh, Cambodia, the Philippines, Guatemala and El Salvador. However, Trump’s tariffs hit the company’s major overseas bases, with rates of 46 percent for Vietnam, 49 percent for Cambodia, 37 percent for Bangladesh and 32 percent for Indonesia. Makalot said it would keep its business plans unchanged for new production lines in Bangladesh and El Salvador, while adjusting operations at its plants in Indonesia and Vietnam pending the development of order intake. As all clients are waiting for the Trump administration’s final tariffs, which might become clearer in early July, the company is conservative about its order outlook for the second half of the year, Makalot CEO Chou Hsin-peng said.

CHINA

Satellite imagery shows China landed two of its most advanced bombers in the disputed Paracel islands in the South China Sea this month - a gesture that some analysts described as Beijing's latest signalling of its growing military capabilities to rivals. The deployment marks the first time the long-range H-6 bombers have landed on Woody Island in the Paracels since 2020, and the movement of the now upgraded aircraft comes amid tensions with the Philippines, operations near Taiwan and ahead of the region's biggest defence forum this weekend. This comes as China this month has sent an unusually large number of naval and coast guard vessels through a swathe of East Asian waters, according to security documents and officials, in moves that have unnerved regional capitals. Since early May, China deployed fleets larger than usual, including navy, coast guard and other ships near Taiwan, the southern Japanese islands and the East and South China Seas, according to three regional security officials and documents of regional military activities reviewed by Reuters.

Six people are still missing after the explosion at the plant in Gaomi, a city in the eastern province of Shandong, the official Xinhua news agency said. Another 19 were injured after a massive blast killed at least five people, flattened buildings and fuelled safety fears among residents living close to the factory.

China's National Meteorological Centre on Wednesday issued alerts for heavy rain and flooding in southern regions, forecasting the most intense storms of the year so far. The NMC flagged a high risk of mountain floods, geological disasters and localised flooding in southern provinces and regions due to strong rainfall including in Jiangxi, Fujian, Guangxi, Guangdong and Guizhou.

China may relax curbs on exports of rare earths for Chinese and European semiconductor firms and other companies in their supply chain, state media said on Wednesday. In April, China put seven rare earths and related products on an export control list, forcing all exporters to apply for licences, regardless of the nationality of overseas customers. While a few licences have since been granted to exporters of rare earth magnets, used in the semiconductor, auto and defence industries, the complex licensing process can take months, and is already causing confusion at customs. The rare earth controls were discussed at a meeting between Chinese and European semiconductor firms hosted by China's commerce ministry on Tuesday, the paper said, where Chinese officials explained the application process. "The meeting provided European Chamber members the opportunity to express in person the urgent need to accelerate approval processes, to ensure the stability of their supply chains," said Jens Esklund, president of the European Union Chamber of Commerce in China.

China on Wednesday embarked on its first mission to retrieve samples from a nearby asteroid with the nighttime launch of its Tianwen-2 spacecraft, a robotic probe that could make the fast-growing space power the third nation to fetch pristine asteroid rocks. China's Long March 3B rocket lifted off around 1:31 a.m. local time from the Xichang Satellite Launch Center carrying the Tianwen-2 spacecraft, which over the next year will approach the small near-Earth asteroid named 469219 Kamoʻoalewa, some 10 million miles away.

Global makers of surveillance gear have clashed with Indian regulators in recent weeks over contentious new security rules that require manufacturers of CCTV cameras to submit hardware, software and source code for assessment in government labs, official documents and company emails show. The security-testing policy has sparked industry warnings of supply disruptions and added to a string of disputes between Prime Minister Narendra Modi's administration and foreign companies over regulatory issues and what some perceive as protectionism. New Delhi's approach is driven in part by its alarm about China's sophisticated surveillance capabilities, according to a top Indian official involved in the policymaking. In 2021, Modi's then-junior IT minister told parliament that 1 million cameras in government institutions were from Chinese companies and there were vulnerabilities with video data transferred to servers abroad. Under the new requirements applicable from April, manufacturers such as China's Hikvision (002415.SZ), Xiaomi (1810.HK) and Dahua (002236.SZ), South Korea's Hanwha, and Motorola Solutions (MSI.N) of the U.S. must submit cameras for testing by Indian government labs before they can sell them in the world's most populous nation. The policy applies to all internet-connected CCTV models made or imported since April 9.

The Czech Republic on Wednesday accused China of being responsible for a "malicious cyber campaign" targeting a network used for unclassified communication at its Foreign Affairs ministry, but China rejected the accusations. China's embassy in Prague called on the Czech side to end its "microphone diplomacy”. The attacks started during the country's 2022 EU presidency and were perpetrated by the cyber espionage group APT31, the Czech government said in a statement. The Czech Republic, an EU state and NATO member, said APT31 was publicly associated with the Chinese Ministry of State Security. Foreign Minister Jan Lipavsky said that after the attack was detected, the ministry implemented a new communications system with enhanced security in 2024. "I summoned the Chinese ambassador to make clear that such hostile actions have serious consequences for our bilateral relations," he said. Lipavsky said the attacks centered on email and other documents and focused on information concerning Asia. "The Government of the Czech Republic strongly condemns this malicious cyber campaign against its critical infrastructure," the government said in its statement. China's embassy in the Czech Republic expressed "strong concern and decisive disagreement" with the Czech accusations. "We call on the Czech side to immediately correct its incorrect actions, (and) stop 'microphone diplomacy'," it said in a statement on the embassy website. NATO and the European Union said they stood in solidarity with the Czech Republic, while Britain called the activity concerning and the United States denounced the actions.

HONG KONG

IPO

Shein intends to list in Hong Kong this year as its London IPO plan has failed to obtain approval from Chinese regulatory authorities, Reuters reported, citing sources. The company is planning to submit its prospectus to HKEX (00388.HK in the coming weeks. It is understood that China did not grant approval to Shein swiftly even after it received approval from the UK's Financial Conduct Authority (FCA) to list in London in March. As a result, the company is considering listing in Hong Kong instead. Bonnie Chan, CEO of HKEX (00388.HK) said at a forum that there are more than 150 companies waiting to be listed, and many of them are mega-corporations with a fundraising scale of over US$1 billion. After the listing of the world's largest IPO in Hong Kong, CATL (03750.HK) this year, Hong Kong's IPO market will continue to benefit from the listing of A+H shares, as well as the return of ADRs, Chan added. HKEX recently communicated with some ADR-listed enterprises in the US, while some shareholders reflected that they would like to have a backup plan (Plan B) for delisting, coupled with the possibility of being included in the Southbound Trading of Stock Connects after changing Hong Kong as their primary listing place.

Earnings
KINGSOFT (03888.HK) announced its first-quarter results ended March 2025. The turnover gained 9.4% YoY to RMB2.338 billion. The net profit amounted to RMB284 million, down 0.2% YoY. EPS was RMB0.21.

Tourism

The Legislative Council has passed the Air Passenger Departure Tax (Amendment) Bill after its third reading, which raises the tax from HK$120 to HK$200 per passenger starting from October. The bill received majority support from lawmakers, with 77 out of 85 votes in favor, two against, and five abstentions. The tax hike is projected to generate around HK$1.6 billion in annual revenue for the government. Under Secretary for Financial Services and the Treasury, Joseph Chan Ho-lim, stated that the government has struck a balance between the need to boost government revenue and the impact on passengers. He noted that the tax was last raised over two decades ago, and the proposed increase aligns with the rate of inflation, believing it will have only a minimal effect on travelers. Apart from ticket prices, Chan mentioned that passengers would also consider factors such as flight prices, airport connectivity, and surrounding facilities, expressing confidence that the tax hike would not severely deter passengers from utilizing Hong Kong International Airport. Chan described the additional HK$80 as a reasonable and affordable increase, noting there will be an exception for passengers arriving and departing within 48 hours.
Interestingly there was some dissent; lawmaker Gary Zhang Xinyu expressed concerns that the tax hike could undermine the city's position as an aviation hub, suggesting that more travelers may opt for the neighboring Shenzhen airport as a cheaper alternative. Another lawmaker, Frankie Yick Chi-ming, indicated that the industry only supported the bill due to the introduction of exemption measures, criticizing the tax hike as contradictory to efforts to attract travelers. Yick further cautioned that a decrease in flight and passenger traffic could significantly impact the aviation industry, affecting tourism, retail, dining, and transportation sectors. I think it is another negative to the tourism sector and shows the short sighted nature of the administraiton that is supposed to be supporting and promoting the sector.

Buybacks - None Announced

HSI Short Selling Wednesday 15.6% vs 14.2% Tuesday
Top shorts Hansoh Pharma (3692) 48%, Chow Tai Fook (1929) 34%, SHKP (16) 34%, CKHutch (1) 33%, CM Bank (3968) 32%, Longfor (960) 32%, JD Health (6618) 32%, China Res Power (836) 32%, New Oriental (9901) 32%, Power Assets (6) 32%, China Overseas (688) 30%, Anta (2020) 30%, Wuxi Bio (2269) 29%, Galaxy Ent (27) 29%, CSPC Pharma (1093) 30%, Haidilao (6862) 29%, Sands China (1928) 28%, Nongfu Spring (9633) 28%, Xinyi Solar (968) 28%, Hang Seng Bank (11) 27%, Sinopec (386) 27%, Sinopharm (1099) 27%, China Res Mixc (1209) 26%, Hang Lung Ppty (101) 26%, NTES (9999) 26%, Hengan (1044) 26%, Wharf REIC (1997) 26%, Haier Smarthome (6690) 26%, CK Asset (1113) 25%, Henderson Land (12) 25%

WATCH

PETROCHINA (00857.HK) launched today its Kunlun Large Model with 300 billion parameters, featuring 100 application scenarios, Chinese media reported. Among them, 43 have been iteratively upgraded and 57 are newly added, with all now fully operational. It is understood that the Kunlun Large Model has built intelligent full-waveform inversion application scenarios in the field of oil and gas exploration and development, which have significantly improved the efficiency of solving seismic wave equations, achieving more than a tenfold increase in the overall efficiency of forward and inverse modeling processes.

Wang Tao, General Manager of Public Affairs at POP MART (09992.HK) said in an interview with Chinese media that the global art toy industry is in a fast-growing stage, with the market size growing from US$8.7 billion in 2015 to nearly US$40 billion in 2023, and is estimated to grow to US$64.7 billion in 2028, with a CAGR of 16.94%. Besides plush products, sub-categories such as building blocks and accessories also have great market space. The Group's IP-based building block products achieved good market results, while POPOP, its independent accessories brand, will open its first store subsequently. The Company will not blindly pursue the expansion of the number of stores, rather, it will focus on the continuous improvement of store services and experience, Wang added. Moreover, with the deepening of the fine membership operation of the whole channel, the scale of POP MART's users continued to expand.

Wang Teng, General Manager of XIAOMI-W (01810.HK)s China Market Department and General Manager of the Redmi brand, released a video today addressing when Redmi will adopt the Xring chip. In the video, Wang confessed that this isn't something the team can rush. The initial investment in the XringO1 was as high as RMB13.5 billion, and the R&D costs were extremely high. If these costs are allocated to each individual chip, he stressed that the cost per chip would be even higher.

TENCENT (00700.HK) Tencent Hunyuan released and opened source for its voice digital human model, HunyuanVideo-Avatar, which was jointly developed by Tencent Hunyuan's video foundation model, HunyuanVideo, and TME Lyra Lab's MuseV technology. HunyuanVideo-Avatar supports head-and-shoulder, half-body and full-body shots, as well as multi-style, multi-species and double-player scenarios, providing video creators with the ability to generate highly consistent and dynamic videos.

SENSETIME-W (00020.HK) together with Sanmenxia Cultural Tourism Group and Lingbao City Government, officially launched China's first AI-driven "Laozi Digital Human”. The design of this digital human was created by SenseTime's digital human team, in collaboration with several domestic experts in history, costume culture, and Taoist philosophy. The design was comprehensively referenced from portrait bricks in Han Dynasty, literature and unearthed cultural relics in Tang and Song Dynasty, supplemented by over 2 million ultra-high precision 3D models.

K11 Group, a company owned by Adrian Cheng, Non-executive Vice-chairman of NEW WORLD DEV (00017.HK) will jointly acquire land in Pahang, Malaysia with Shanghe Holding Development and a company under China Chang Kun Industry, according to Chinese media. The project will be named as “Canglong Harbor” while K11 Group will be responsible for the management of Canglong Harbor's commercial complex, and for the day-to-day operation and management of all aspects of the commercial sector. The investment is regarded as an important port terminal project under the Belt and Road Initiative (BRI), according to the report.

Wednesday’s closings in EUROPE & US
DAX -0.78%, CAC -0.49%, FTSE -0.59%
European markets opened around flat initially ticked higher but then drifted lower through the day to close at the day lows. Defence stocks continued to rally as Germany give further support to arming Ukraine; Renk 4.7%, Hensoldt 3.93%. Saab 2.52% announced a new contract worth 1.6 billion Swedish kronor ($166.2 million), to equip five Visby-class corvettes, a small warship used by Sweden’s navy, with the Sea Ceptor air defense system. Stellantis -2.2% named North American chief operating officer Antonio Filosa as its new chief executive. Oil and gas stocks up 0.12% gain, as OPEC+ late in the session announcing it would leave its formal output quotas unchanged.

German Apr import prices -0.4% YoY vs 2.1% Mar (F/cast was 0.2%), unemployment was inline. French GDP Q1 was inline at 0.1% QoQ although 0.6% YoY missed, PPI was weaker than expected -4.3% MoM (-0.8% YoY).

UniCredit’s 0.81% decision to double its stake in Greek bank Alpha, one analyst has suggested a full acquisition may not be on the cards. The Italian lender appeared this morning to continue its M&A trend while bidding for peer Banco BPM and Germany’s Commerzbank simultaneously. However, JPMorgan’s equity analysts suggest that UniCredit is likely to pursue Alpha as a takeover target, only if its other deals do not materialize.

Thames Water has been fined £123 million ($166 million) by its regulator for paying dividends to its shareholders while it was failing to meet environmental protection and performance targets.

DOW -0.58%, NDX -0.51%, S&P -0.56%, Russel 2K -1.08%
US markets opened higher but then ticked lower into the red and then traded sideways in the red for most of the day before ticking lower into the close.

Cautious trading ahead of Nvidia earnings and the FOMC minutes which were downbeat and noted “The labor market was expected to weaken substantially,” the minutes said, adding that Fed economists at the May 6-7 meeting also revised up their projections for inflation this year and lowered their expectations for economic growth. Fed policymakers also fretted over whether the labor market’s resilience could persist, especially if Trump continues with his haphazard on-again, off-again tariff regime.

The administration has effectively cut off some American companies from selling goods to China, a Commerce Department spokesperson told CNN on Wednesday; saying it is “reviewing exports of strategic significance to China. In some cases, Commerce has suspended existing export licenses or imposed additional license requirements while the review is pending.” The FT reported the news on Wednesday, saying it pertains to American companies that sell software used to design semiconductors, citing people familiar with the matter.

Elon Musk criticised Trump’s big beautiful bill which gives priority to cut taxes and lift border security spending, saying it increases the budget deficit and undermines the work of his government efficiency team, DOGE.

Salesforce up1% after it posted better-than-expected fiscal Q1 results and lifted its full-year forecast.

Banks JPMorgan Chase -0.68%, Citigroup -0.58% Wells Fargo -0.35%, Amex -0.14
Ecommerce Meta 0.2%, Apple 0.1%, Amazon -0.63%, Netflix -0.25%, Disney -0.75%, Zoom Video 0.98%, Alphabet -0.34% and Microsoft -0.72%,
Tech NXP Semi -1.35%, Nvidia -0.51%, Micron -0.21%, AMD -1.48%, Skyworks -2.27%
Industrial/Discretionary Boeing 0.23%, Caterpillar -0.57%, Simon Property 0.62%, Kohl’s 2.4%, Gap -0.7%, United Airlines -0.87%, Carnival -2.54%, Wynn Resorts -1.73%,
Energy Chevron -1.31%, Exxon Mobil -1.36%,
Consumer Staples Campbell Soup -1.6% General Mills -1.4%, JM Smucker -2.62%

DAILY DATA
USD firmer on trade hopes, Bitcoin -2.14% at 107,509.00, VIX 1.85% at 1,9.31
US T30 up 4 bpts at 4.983% but had touched over 5% intraday, T10 up 5 bpts to 4.485% and T2 up 5 bpts at 3.996%
OIL Brent 1.26%, WTI 1.56% as OPEC+ held production output level ahead of July output review.
Gold -0.48%, Silver -0.65%, Copper -1.18% Platinum -0.15%, Palladium -1.83%.