Daily Posts

Quiet Night, Baozun/YY Earnings, the Power of Passive-notice BABA at yesterday’s close?

Hope all is well! 

Key News Overnight

  • It was a fairly quiet night as insurance companies outperformed on an expansion of expenses eligible for tax deduction. US weakness led to a sea of red across Asian equity markets as global bonds are rallying while the lack of trade talks weighs on sentiment. The escalation of the trade war into a trade war has had a negative impact on global equities in the last month as global bond markets are appearing to price in a global recession or worse. While US equities had been immune to a trade war, the tech war has weighed on semis and tech in particular but the broad US equity market as well. Trade sensitive Korea is down nearly 10% in the last month. Hopefully someone reads the tea leaves before the situation escalates.
  • Mainland media has raised the issue of Chinese rare earths as potential trade war tool though the New York Times had an article last week that downplayed the importance of rare earth.
  • The Treasury Department released its semi-annual report on currency manipulators. While China remains on the watch list, it was not deemed a manipulator. Based on the current state of trade talks (or the lack of), could the move be deemed an olive branch?

The Hang Seng was off -0.57%/-155 index points on light volumes below the 1 year average led by 12 advancers and 36 decliners as the index appears to be consolidating above the 27k level. AIA was off -1.03%/-28.7 index points despite the positive insurance news though their HK domicile is a hinderance to the new expense rules while making its rivals potentially stronger. Tencent was off -1.11%/-28.6 index points on no news and despite a broker upgrade while HSBC fell -0.92%/-26.3 index points. The HK stocks in the MSCI China All Shares declined -0.41% as staples managed a +0.27% gain though communications was pulled lower by Tencent -0.95%. Every broker noted a “tight range” and fairly lackluster trading. Southbound Connect volumes were light though buyers were led the way as banks and Tencent saw inflows. 

The Shanghai & Shenzhen opened lower but managed a mid-afternoon rally to eek out a +0.18% and 0.0% day on light volumes just above the 1 year average on mixed breadth of 2,061 advancers and 1,388 decliners. Mega/large caps/mid caps outperformed small caps on the day. Both indices appear to be consolidating at support levels for the last week or two. The mainland stocks in the MSCI China All Shares were off -0.18% as strength in staples +0.74% and materials +0.59% was offset by weakness in real estate -1.38% and discretionary -1.07%. Foreign investors sold $480mm of mainland stocks following yesterday’s MSCI driven inflows in light trading. Investors will be watching Kweichow Moutai’s annual shareholder meeting today. 

Baozun helps companies navigate China’s e-commerce landscape. The company reported strong Q1 earnings this morning pre-US market open. The stock is up pre-market this morning.

  • Revenue increased 39.7% YoY to RMB 1.2B ($191mm)
  • Gross Merchandise Value increased 34% to RMB 709mm
  • Net income attributable to shareholders +127% YoY to RMB 34MM ($5.1MM)
  • Diluted net income attributable to shareholders RMB 0.89 ($0.13) versus RMB 0.57 a year earlier


Social media and online video company YY reported Q1 earnings after the US close yesterday. The company ‘s strong results were driven by their purchase of Singapore based Bigo, a live streaming platform, and IMO, a video communications app with roots in the Middle East. The stock is up pre-market this morning.

  • Revenues increased 47% to RMB 4.7b ($703mm) from RMB 3.2B YoY
  • Monthly Average Users increased 65% to 59mm from 36mm YoY
  • Paying users increased 17% to 4.1mm from 3.5mm YoY
  • Diluted net income per ADS was RMB 44.55 ($6.57) versus RMB 10.19 YoY


Alibaba had a 9.8mm share trade at the close yesterday. BABA traded 38mm shares which is 2X the 1 year average of 18mm shares while the value of shares traded jumped to $5.9B. Tencent traded 28mm shares versus  16mm Monday and the 1 year average of 22mm shares.

  • CNY 6.90 versus 6.91 yesterday
  • Yield on 1 Day Chinese Gov’t Bond 1.92% versus 2.19% yesterday
  • Yield on 10 Year Chinese Gov’t Bond 3.32% versus 3.34% yesterday
  • Yield on 10 Year China Development Bank Bond 3.75% versus 3.77% yesterday
  • Commodities were largely lower on the Shanghai & Dalian Exchanges with Dr. Copper -0.51%