CNY’s Monster Move, London Stock Connect, Tencent Music IPO
Hope all is well! I am traveling for work today so CO will concise as I need to get to a breakfast meeting.
Hang Seng rallied out of negative territory in a late afternoon surge to gain +0.29% on strong volume though volume slipped from yesterday’s massive activity. Breadth was mixed with 24 advancers and 26 decliners. Tencent was the leading stock advancing +1.11% worth 30 of the indice’s 78 index points. Tencent’s move powered the communication sector’s 1.13% move within the MSCI China All Shares Indice’s HK stocks. Within the Communications sector Alibaba Pictures had an outsized gain +6.01% as Crazy Rich Asians debuted in China. Healthcare gained +1.31% followed by utilities +1.29%. Discretionary names gained 1.13% led by auto stocks following talk of China eliminating auto import tariffs of 40%. Real estate was off -1.14%. Southbound Connect volumes were light with sellers outpacing buyers.
Shanghai & Shenzhen gained +0.42% and +0.43% in choppy trading as a late afternoon rally led the market higher. Volumes contracted day over day though were still robust highlighted by strong breadth. Industrials led the market higher gaining +1.51% followed by healthcare +1.46% and utilities 1.3% within the MSCI China All Shares’ mainland stocks. Real estate mimicked HK lower -0.92%. Northbound Connect volumes were moderate though buyers outpaced sellers by a strong margin.
We heard chatter that the 90 ceasefire clock won’t begin until January 1 providing more time for negotiations scheduled to begin in mid-December in DC.
Tianqi Lithium purchased 62.6 million shares of Chile’s SQM, the world’s second largest lithium supplier, worth $4.1 billion for a 24% stake. EVs will continue to be the future in China as a key supply chain is locked in.
London China Stock Connect is scheduled to debut on December 14th in another step of opening up. I will dive into the details this week and report back.
Tencent Music is reporting it will list shares on the HK Stock Exchange in a range of $13 to $15. Their timing could be strong based on the recent market move post-G 20.
South China Morning Post noted that HK investor confidence reached a low not seen since 2009. Trade war has been debilitating for investor sentiment in both HK and mainland China.
CNY 6.83; another monster move as the renminbi as slices through 50 and 100 day moving average over the last two days. Yesterday was 1.11% move followed by today’s 0.68%. To put things in perspective, in the summer of 2015 CNY deappreciated 20 cents versus the dollar. Remember all the headlines? Over the last two days it appreciated 13 cents but where are the positive headlines?
Interesting to see bonds rally yesterday.
- Yield on 1 Day Chinese Gov’t Bond 1.74%
- Yield on 10 Year Chinese Gov’t Bond 3.35%
- Yield on 10 Year China Development Bank Bond 3.85%
Commodities were largely weaker on the Shanghai & Dalian exchanges.
To my friend Jan Plummer: I apologize I can’t deliver these words in person but I am doing what you would want me to be doing. Your valiant fight against cancer has been an inspiration for all you have touched. Your entrepreneurial spirit has galvanized my efforts as you supported me through the inevitable ups and downs of building a business. You have been a role model as a father providing a roadmap for Kate and I with our children. Your character and integrity inspires me, will continue to do so on a daily basis and be passed along to my children. I will have always have fond memories of our time on the golf course together as it reminds me the necessity of golf lessons. I want to ensure you know your family will always be part of our family. I’ll carry a piece of you in all that I do and endeavor to live up to your character my friend.