Stocks Take a Breather though Foreign Buying Continues
Hang Seng opened higher but quickly reversed as sellers pushed the market down -0.87% on volumes higher day over day but below the 52 week average. There were 36 decliners and 14 advancers on the day as short term profit taking and effect of hedging pre-G-20 was a factor as the November Hang Seng futures expired. Technicians noted the 26,000 level as an area of support for the Hang Seng. Investors took chips off the table in advance of Friday’s PMI release. HSBC lost -1.48% worth -39 of the indice’s 231 index point loss. Within the MSCI China All Shares Indice’s HK stocks, materials and discretionary were the only positive sectors +0.81% and +0.32% while tech and healthcare were off -1.65% and -1.05%. Tech has been under the overhang of US efforts to limit allies purchase of Huwai and ZTE. Southbound Connect volumes light though sellers outpaced buyers by a healthy margin. Tencent was the volume leader with sellers outpacing buyers slightly. I am surprised Tencent didn’t have a better day as they announced the adoption of facial recognition technology to monitor the amount of playing time. Likely the stock’s recent strong performance was due to anticipation of the news. Fairly light day on stock specific news.
Shanghai & Shenzhen were positive in the morning session though sold off into the close -1.32% and -2.21% on slightly higher volume day over day though well below the 52 week average. Breadth swung heavily to the negative. The Shanghai Futures Exchange had a technical glitch as it went off air for 20 minutes which didn’t help sentiment. Within the MSCI China All Shares’ mainland stocks, all sector were off as trade war exposed sectors communications and tech were off -2.52% and -2.3%. Clearly market participants are hedging an G-20 outcome. Small caps managed to have a positive flow day though big caps were sold broadly with mega cap and mid caps experiencing light outflows. Northbound Connect volumes were moderate but buyers vastly dominated sellers despite the off day.
China lifted its ban on Japanese rice from the region around the Fukushima nuclear plant in a symbolic move.
- CNY 6.94
Bonds continue to rally in a big way
- Yield on 1 Day Chinese Gov’t Bond 1.84%
- Yield on 10 Year Chinese Gov’t Bond 3.38%
- Yield on 10 Year China Development Bank Bond 3.92%
Commodities were up on both exchanges