On April 2, markets opened lower and continued to decline throughout the morning session. The Shenzhen Component Index and the ChiNext Index both fell over 1%. Sector-wise, oil and gas stocks performed strongly in the morning, with Lanyan Holdings and Beiken Energy hitting the daily limit up. The pork concept saw volatile rebounds during the session, with Muyuan Foods leading the gains. The innovative drug sector was active, with Kangzhi Pharmaceutical and Nuosieneder rising over 10%, while Yibai Pharmaceutical, Jinyao Pharmaceuticals, and Beijing Beida Pharmaceutical, among others, surged by the daily limit. The optical fiber concept remained active, with Tefa Information rising over 7%, continuing to set new historical highs. On the downside, the computing power leasing sector continued to decline, led by Jinkai New Energy. Precious metal stocks fell collectively, with Xiaocheng Technology among the top decliners. The semiconductor sector weakened, with Changchuan Technology leading the losses. Overall, the market saw a broad decline, with over 4200 stocks falling. By the midday close, the Shanghai Composite Index was at 3927.60 points, down 0.53%; the Shenzhen Component Index was at 13548.46 points, down 1.15%; and the ChiNext Index was at 3189.72 points, down 1.78%.
In sector highlights, oil and gas stocks such as Lanyan Holdings and Beiken Energy surged by the daily limit, while Keli Shares, Tongyuan Petroleum, and Zhongman Petroleum, among others, also rose. This movement followed a reversal in international oil prices, which saw a sharp uptick. At the time of reporting, Brent crude futures rose nearly 4% to $105.03 per barrel, while WTI crude was at $100.82 per barrel. In related news, the former U.S. President delivered a speech claiming a "swift, decisive, and overwhelming victory" in military actions against Iran. He stated that Iran's missile and drone capabilities had been "significantly degraded," with weapon factories and rocket launchers left "very few." He also emphasized that no foreign assistance was needed for the strikes and highlighted the reduction of nuclear threats as a major success.
Pork-related stocks, including Dayu Bio, Julong Agricultural, and Muyuan Foods, advanced. This followed an announcement on the Ministry of Commerce's website indicating that the ministry, along with the National Development and Reform Commission and the Ministry of Finance, is conducting central reserve frozen pork purchases. The Ministry of Commerce stated it would continue monitoring market trends and collaborate on reserve adjustments to ensure stable market operations.
Across the Asia-Pacific region, markets experienced volatile declines. The MSCI Asia Pacific Index fell 2%, with Japanese and South Korean stocks dropping significantly. Hong Kong's Hang Seng Index declined over 1%, while the Hang Seng Tech Index fell nearly 2%. In contrast, the Hang Seng Biotechnology Index rose 0.7% against the trend. Biopharmaceutical stocks performed well, with companies like InnoCare Pharma, Zai Lab, and Hansoh Pharma rising over 4%. JW Therapeutics rose nearly 10%, while Luye Pharma, Xuanzhu Biopharma, and BioMap saw gains exceeding 6%.
The central bank conducted a minimal 5-billion-yuan 7-day reverse repo operation for the second consecutive day. The operation's announcement included a new phrase stating it "fully met the demand of primary dealers," while the policy interest rate remained unchanged. This minimal operation reflects reduced demand for central bank funds from market institutions. Financial institutions reported that substantial liquidity injections at the end of March to support quarter-end funding, combined with concentrated fiscal expenditures, kept liquidity ample in early April. Most institutions did not submit funding requests to the central bank recently due to their own liquidity management needs. The added wording in the announcement indicates that the minimal operations are not tightening liquidity and that the moderately easy monetary policy stance remains unchanged.
Wang Qing, Chief Macro Analyst at Dongfang Jincheng, noted that the consecutive small-scale reverse repos are due to the persistently loose and stable liquidity conditions, amplified by typically ample liquidity at the start of the month. Furthermore, these operations signal an intent to stabilize market liquidity and prevent key market rates from deviating excessively below the policy rate, thereby helping to anchor market expectations.
