- On the last trading day before the May Day holiday, China's Shanghai Composite Index closed at 4,112.16 points, slightly up by 0.1%. It posted a cumulative rise of 5.7% in April, marking the largest monthly increase since August last year, while Hong Kong's Hang Seng Index fell by 1.3% on Thursday, recording a 4% gain for the month.
- At the end of the earnings season, exchange rate fluctuations became apparent, with the robust yuan in the first quarter leading to exchange losses for some listed companies with overseas exposure, increasing financial costs and marginally dragging down net profit performance.
- The macroeconomic fundamentals show a divergence between the prosperity of manufacturing and non-manufacturing sectors. Coupled with the National Development and Reform Commission (NDRC) of China issuing 91.5 billion RMB for equipment updates, the semiconductor sector was boosted by demand expectations, with the CSI All Index semiconductor products and equipment index surging 28.6% in a single month.
Cross-period Performance and Index Divergence
In the April finale, the core broad-based indices in China and Hong Kong showed structural divergence. The Shanghai Composite Index (000001:CH) had a cumulative rise of 5.7% in April, while the CSI 300 Index (399300:CH) also recorded a significant monthly increase of 8%. In contrast, the performance of growth style indices varied, with the ChiNext Index (399006:CH) slightly down by 0.3% in one day, while the SSE STAR 50 Component Index (000688:CH) surged by 5.2% in a single day. In the Hong Kong market, the Hang Seng Index (HSI:HK) fell by 1.3% in a day to 25,776.53 points, and the Hang Seng Tech Index (HSTECH:HK) closed down 0.8%, but both maintained positive monthly returns of 4% and 4.8% respectively, indicating that the offshore market is entering a period of fluctuation and consolidation after prior valuation recovery.
Exchange Gains and Losses and End of Earnings Season
With the disclosure period for first-quarter reports ending, the erosive effect of RMB exchange rate fluctuations on micro-enterprise profitability has become apparent. As the RMB maintained a relatively strong trend against the US dollar in the first quarter, many A-share listed companies with a high proportion of overseas business confirmed significant exchange losses. The year-on-year increase in these financial costs diluted the companies' reported net profits to some extent. Market analysis institutions believe that such exchange losses have a high one-off nature, and if the momentum of RMB appreciation slows, subsequent financial pressure is expected to ease. Meanwhile, the technology growth sector, represented by computing power, showed high intrinsic profit growth, partly offsetting the drag caused by exchange rate fluctuations.
Dual-track Macroeconomic Data and Policy Hedging
The latest April leading macro indicators confirmed the uneven nature of economic recovery. The official manufacturing PMI remained in the expansion zone for the second consecutive month, while the service and construction PMIs both weakened, with the latter falling to historically low percentile levels. Facing structural weakness in domestic demand, the National Development and Reform Commission (NDRC) of China accelerated the pace of fiscal spending, announcing that the second batch of 91.5 billion RMB for equipment updates and trade-in programs for consumer goods has been allocated. This plan is expected to support over 6,700 projects, potentially driving more than 380 billion RMB in total investment. Driven by this capital expenditure expansion expectation, the semiconductor industry chain became a reservoir for funds, with Huahong Company (688347:CH) rising by 6.7% in a single day, highlighting the market's ongoing pricing of the domestic substitution and equipment update logic.
