Sina Goes Private, JD Health To Pursue Hong Kong IPO
Asian equities rebounded following last week’s poor performance in what turned out to be a busy night on the news front. Hong Kong and Mainland China markets will be closed on Thursday and Friday. Hong Kong will reopen next Monday, while the Mainland reopens on Friday, October 9th. Over the weekend, China’s August Industrial Profits grew by +19.1% year over year versus July’s 19.6%, providing further evidence of China’s V-shaped economic recovery.
US District Court Judge Carl Nichols played governor, granting TikTok a stay of execution on Sunday. The ruling gives the company and its suitors time to work on a deal.
Meanwhile, real estate giant Evergrande (3333 HK) repeatedly denied that it is in financial duress, which led to a rebound of +20% in the company’s stock price today after hitting a low point on chatter last week that it is experiencing a crash crunch. In fact, the real estate sector was the strongest sector overall in both Hong Kong and the Mainland on the news.
JD.com HK rose +2.76% on news its online pharmacy JD Health will raise $3 billion in a Hong Kong IPO. HSBC finally got some good news as shareholder Ping An increased its stake in the global bank. HSBC experienced a +9.22% rebound, which accounted for 161 of the Hang Seng’s 240 index point gain overnight.
Hong Kong volume leaders other than HSBC were Tencent, which rose +0.5%, Alibaba HK, which rose +2.09%, Meituan Dianping, which rose +2.16%, and Xiaomi, which rose +2.43%. NetEase HK was off -1.57% and Yum China HK was up +0.05%. Semiconductor Manufacturing was off -3.88% in Hong Kong and -7% on the Mainland on news that the US would limit the company’s access to US technology. Mainland China was off a touch as investors focus on their upcoming vacation. Investors largely took profits in healthcare names overnight. We are likely in for a quiet week with low volumes due to the holiday.
Sina’s board approved a privatization offer from Chairman Charles Cao. Cao’s is a great story. He joined the company as an accountant and led Sina’s IPO back in April 12, 2000. I believe Sina was the first Chinese company to list publicly in the US. Post-IPO, Cao rose to become the CEO. He spun off Weibom China’s Twitter, in April of 2014 after stating that investors weren’t valuing Sina properly. When Sina’s stock still failed to rise, he borrowed a few hundred million and bought Sina’s stock himself. Gotta love a CEO like that! I will miss Sina, but I assume the company will return to public markets with a Hong Kong listing at some point.
108 volunteers who received a coronavirus vaccine developed by CanSino Biologics are receiving another dose six months after receiving the first.
The first four Mainland-listed STAR Board ETFs raised $14.1 billion in their launches. Wow!
The Hang Seng grinded higher all day to close +1.04%/+240 index points at 23,476 as volume shrank -20% on the day, which is below the 1-year average. Breadth was positive with 26 advancers and 22 decliners. The 204 Chinese companies listed in Hong Kong and within the MSCI China All Shares Index gained +0.96%, led by real estate +2.57%, discretionary +1.73%, financials +1.17%, and tech +1.04%. Southbound Connect volumes were light as Mainland investors bought $471 million worth of Hong Kong stocks as Southbound Connect trading accounted for 11.9% of Hong Kong turnover.
Shanghai and Shenzhen bounced around the room to close -0.06% and -0.75% at 3,217 and 2,126, respectively. Volume was off -5%, which was well off the 1-year average while breadth was mediocre with 915 advancers and 2,766 decliners. The 517 Mainland stocks within the MSCI China All Shares Index gained +0.09% led by real estate +1.06%, utilities +0.87%, and energy +0.6%. Meanwhile, healthcare -1.31%, communication -0.32%, and materials -0.32%. Northbound Stock Connect flows were light as foreign investors sold -$158mm worth of Mainland stocks today. Northbound Connect trading accounted for 6.2% of Mainland turnover.
Last Night’s Exchange Rates & Yields
- CNY/USD 6.81 versus 6.82 Friday
- CNY/EUR 7.95 versus 7.93 Friday
- Yield on 1-Day Government Bond 0.45% versus 0.45% Friday
- Yield on 10-Year Government Bond 3.11% versus 3.13% Friday
- Yield on 10-Year China Development Bank Bond 3.69% versus 3.72% Friday