Daily Posts

Hang Seng – Closed for Chung Yeung Festival…

A great INXS song came on the radio during my drive to the train station this morning. After the song, the DJ announced the “oldies” station was going to commercial break. Not sure I need Father Time punching me in the gut at 5:40am. I digress…

Hang Seng – Closed for Chung Yeung Festival

Shanghai & Shenzhen gained +0.6% and +0.81% on slightly higher day over day volumes in good breadth. Volumes were well off though not surprising due to HK close and no Connect trading. Intra-day both markets opened high, slid south but rallied into the close. Within the MSCI China All Shares Index mainland stocks, technology and communications rallied 2% and 1.45% on news that the Shenzhen Stock Exchange would assist companies that had pledged stock as collateral for loans. Smaller companies, ie Shenzhen listed, are more likely to participate in such activity than large cap/Shanghai listed companies. It is becoming clear that policy makers are becoming aware of the mainland’s poor performance. I saw one report that the capital gains tax could be waived. Healthcare was off as China officially fined the vaccine company involved in a rabies scandal earlier this year.

An online source is reporting that Tesla has secured land outside of Shanghai for a new factory that could produce 500,000 EVs a year. The move would allow Tesla to avoid the 40% tariff on US imported cars which was raised post US tariffs. Tesla is going alone in China as they do not have a local partner. Great news for the company though I wonder 1) can they build 500k cars a year? and 2) can 500,000 in China afford a Tesla? Time will tell!

China’s holding of US Treasuries declined which is being widely reported elsewhere. Rising yields = falling prices. Seems like a wise strategy to me!

Hainan’s designation as a Free Trade Zone was in the news leading to a rally in many Hainan based companies.

I often chart the relative performance of indices versus one another to find the relative outperformer. I am finding an interesting area of strength in China relative to even US equities. Infrastructure. Still early but worth noting as China stimulus is apt to include an infrastructure push. Green shoots might be an optimistic at this juncture but we’ll keep an eye on this development.

  • CNY 6.92
  • 1 Day Chinese Gov’t Bond Yield 1.86%
  • 10 Year Chinese Gov’t Bond Yield 3.58%
  • 10 Year CBD Bond Yield 4.23% (CBD = China Development Bank)

 

Softs were higher on the Dalian while metals were weaker on the Shanghai.