CNY Rally, 2019 GDP Target, 5G Rollout
TGIF! It is officially January here in NYC.
Hang Seng gained +0.55% on moderate volume and strong breadth with 39 advancers and 8 decliners to end the week +3%. Markets were buoyed by a several positive catalysts such as continued positive trade discussions, potential VAT tax cut coming, talk of Vice Premier and lead trade negotiator Liu He visiting the US soon, potential 5G rollout, continued CNY strength (ie US $ weakness) which helps tourist stocks and airlines. Reuters is reporting a lower 2019 GDP target between 6% and 6.5%. HSBC gained +0.94%/24 index points followed by AIA’s +0.75%/18 points and Tencent’s +0.67%/18 points while Macao casino operator Galaxy Entertainment was off -2.83%/-10 index points on a dearth of news. Within the MSCI China All Shares’ HK stocks, tech gained +1.51% driven by what we used to call Telecom stocks (just another reminder we are getting older. There is no such thing as the Telecom sector which you can add to other reminders such as the Lehman Aggregate, NYSE specialists and teenies.) Apple suppliers AAC and Sunny jumped +4.96% and +2.65% while communication equipment maker jumped ZTE +3.6% on the 5G news. Utilities and real estate gained +1.32% and +1.31% while healthcare declined -0.84% on a Jefferies downgrade. Southbound Connect volumes were moderate in balanced trading. Tencent experienced 2 to 1 buyers (again) as the day’s Connect volume leader.
Shanghai & Shenzhen gained +0.74% and +0.76% on light volumes and strong breadth to end the week +4.3% and +5.51% respectively. Following last year’s market performance, I’ve noticed the mood of our onshore brokers has perked up as one used the term “inspiring” to describe today’s trading compared to another describing the A Shares market being in the “despair” zone. Within the MSCI China All Shares’ mainland stocks, staples gained +2.14% led by food & beverage/liquor stocks as one of the major Moutai producers raised prices in advance of Chinese’s New Year’s (1st week of February; another the Chinese consumer isn’t as bad off as Tim Cook suggests). Today was a very broad rally with every sector positive with communications gaining +1.52% on the 5G rollout talk. Northbound Connect volumes were moderate in balanced trading. Interesting to see foreign buyers potentially take some profits as Ping An saw 3 to 1 selling as the day’s volume leader.
Online car seller Autohome (ATHM) is off more than 10% pre-market on multiple brokers reporting rumors they’ve lost a contract. No news from the company as of yet.
Alipay reported it has reached 1 billion users globally.
While Elon Musk’s Shanghai factory ground breaking stole the spot light, Chinese EV maker Nio reported selling 11,348 vehicles in 2018. I will try to find out the price point for Nio’s EV.
Multiple media sources are reporting that JD.com will significantly lower the price on Apple iPhone 8 to $90 (RMB 600). iPhone 8 Plus saw a RMB 800 price cut. Apple challenger Oppo will begin selling in the UK.
CNY 6.75!!! Wow!
Yields fell though trend for bond rally appear solid.
- Yield on 1 Day Chinese Gov’t Bond 1.63%
- Yield on 10 Year Chinese Gov’t Bond 3.13%
- Yield on 10 Year China Development Bank Bond 3.66%
Commodities were again mostly higher on both the Dalian and Shanghai exchanges