Singles Day Sales Surge, Private Company Support
Hang Seng eked out a +0.12% gain on very light volumes that were off -19% day over day with 28 advancers and 21 decliners. Tencent’s -3.08% decline subtracted -69 index points from the indice’s 31 point gain. AIA and China Mobile gained 1.6% and 1.78% worth 37 and 24 index points. Within the MSCI China All Shares’ HK industrials and utilities gained +0.69% and +0.6% while communications and discretionary lost -1.89% and -1.08%. Within discretionary, Autos were lower on Dongfeng’s weak monthly results while Tencent traded down in advance of their quarterly results Wednesday. Apple supplier AAC’s earnings came in light -3.28%. SouthBound Connect volumes were anemic with buyers outpacing sellers. Interesting that Tencent saw 2 to 1 buyers from mainland investors.
Shanghai & Shenzhen gained +1.22% and +2.53% on strong volumes +23% from Friday. Breadth was remarkably strong with 3,474 stocks up and only 114 stock declining for the day. Within the MSCI China All Shares’ mainland stocks, tech and communications gained 3.43% and 2.43% with every sector gaining other than staples. Staples was weighed down by Kweichow Moutai’s decision not to raise prices next year. The strong day was driven by Premier Li’s speech on supporting the private sector through lower bank loan rates. Additionally the Ministry of Finance announced several proposed tax cuts. Mega cap and large cap stocks saw increased demand/inflows while small and mid caps saw outflows. Northbound Connect volumes were light with buyers outpacing sellers. MSCI Inclusion Index heavyweights Kweichow Moutai and Ping An saw buying demand.
Alibaba hosted their Singles Day sales extravaganza yesterday selling $30.8 billion (RMB 213.5B) worth of goods an increase of 27% year over year. Interesting to hear some chatter that the numbers are a disappointment which I don’t agree with. There are a number of factors effecting Singles Day such as increased competition from rival JD’s 618 sales event. The results are great in my opinion.
Electric vehicle production increased YTD through October to 860,000 units which is an increase of 75% according to a mainland broker.
While news was light overnight, this will be a busy week both for Q3 earnings and economic data. Stay tuned!
- CNY 6.96
- Front end of the curve jumps! Dropped down to 1.5% at the end of October.
- Yield on 1 Day Chinese Gov’t Bond 2%
- Yield on 10 Year Chinese Gov’t Bond 3.48%
- Yield on 10 Year China Development Bank Bond 4.13%
Commodities were off on both exchanges