Key News
Asian equities were mixed overnight on light volumes and news flow.
Hong Kong was clipped with profit-taking after yesterday’s very strong move in growth/internet stocks following strong results from JD.com’s 618 e-commerce sales event and Bilibili’s +18.96% move on an analyst upgrade. Hong Kong rose on yesterday’s news of capital market reforms, and the fact that the National Team bought Mainland China-listed ETFs with Hong Kong stocks for the first time. Traders were quick to take profits with Bilibili -4.5% today, though the Hong Kong market was a net gain over the two days. It is fair to say today’s move implies recent policy announcements underwhelmed investors.
Hong Kong’s most heavily traded by value were Tencent -0.36%, CNOOC +3.52%, Meituan -1.24%, Kuaishou -5.17% on no news, and ICBC +0.66%. Semis and high dividend plays had a strong day, while healthcare was weak. Mainland Chinese investors bought a healthy $964mm of Hong Kong stocks and ETFs today, which brings the weekly total to $2.502B of net buying, $9.44B month to date, and $40.433B year to date. Shipping companies had a strong day on Red Sea news. The Houthi sent the bulk carrier Tutor to Davey Jones’ locker, indicating shipping rates will be higher for longer.
Real estate underperformed -2.92% in China and -2.4% in Hong Kong as investors gave the PBOC’s decision to leave the 1 and 5 Year Loan Prime Rate unchanged as expected, a big thumbs down. China was off except for the STAR Board, which was a beneficiary of yesterday’s eight market reform measures. PBOC Governor Pan Gangsheng introduced the idea that the central bank could begin buying/selling bonds in the secondary market to manage monetary policy. However, many deny this implies that quantitative easing is coming to China.
The RMB and the Asia dollar index fell slightly compared to the US dollar as the PBOC seems to believe that US interest rates have been higher for longer, indicating RMB weakness. The Shanghai closed just above the 3,000 level while the Shenzhen closed below 1,680 which has acted as support. Foreign investors have been net sellers for the last nine days in a row, though a change in how the data is disseminated has been problematic—no sign of the National Team in their favorite ETFs. The Hang Seng and Hang Seng Tech have risen above their support signs in a positive move.
The Hang Seng and Hang Seng Tech fell -0.52% and -1.68% on volume -8.16% from yesterday, 101% of the 1-year average. 110 stocks advanced, while 371 declined. Main Board short turnover increased +4.69% from yesterday, 99% of the 1-year average (Hong Kong short turnover includes ETF short volume, driven by market makers’ ETF hedging). Large caps and value “outperformed”/fell less than small caps and growth. The top sectors were energy +1.74%, utilities +0.79%, and materials +0.59%, while healthcare -2.81%, real estate -2.4%, and staples -2.2%. The top sub-sectors were energy, telecom, and semis, while food/staples/media and pharmaceuticals were the worst. Southbound Stock Connect volumes were moderate/light as Mainland investors bought a healthy $964mm of Hong Kong stocks and ETFs, with the Hong Kong Tracker ETF seeing a large net buy.
Shanghai, Shenzhen, and STAR Board were mixed -0.42%, -1.88%, and +0.46% on volume +2.51% from yesterday, which is 86% of the 1-year average. 830 stocks advanced, while 4,179 declined. Large caps and value outperformed small caps and growth. Energy and utilities were the only positive sectors, +1.57%, and +0.77%, while real estate -2.02%, communication -1.74%, and healthcare -1.51%. The top sub-sectors were shipping, education, and coal, while forest, internet, and retail were the worst. Northbound Stock Connect volumes were moderate/average, with foreign investors net sellers with LXJM, CATL, and PetroChina small net buys, while Midea and Yili were small/moderate net sells, and Kweichow Moutai were small net sells. CNY and the Asia dollar index were off small versus the US dollar. Treasuries were flat. Copper gained while steel fell.
New Content
Read our latest article:
How to Buy the Same Stocks as China’s Sovereign Wealth Funds
Please click here to read
Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.26 versus 7.25 yesterday
- CNY per EUR 7.78 versus 7.79 yesterday
- Yield on 10-Year Government Bond 2.24% versus 2.24% yesterday
- Yield on 10-Year China Development Bank Bond 2.35% versus 2.35% yesterday
- Copper Price +1.30%
- Steel Price -0.61%
Read the full article here
