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Hong Kong and Asian Markets Cheer US President’s Improving Health

Key News

Asian equities rebounded on news that President Trump’s health is improving after Friday’s plunge. South Korea, Taiwan, and Hong Kong missed Friday’s fun though gained on the news regardless. It was a quiet day on the news front as volumes were anemic regionally. Hong Kong volume leaders were Tencent, which gained +2.64%, Alibaba, which gained +2.32% as analysts raise price targets following their conference, Meituan Dianping, which gained +1.65%, Ping An, which gained +0.75%, AIA, which was up +3.69%, and HSBC, which was up +4.03%. JD.com HK gained +1.23%, NetEase HK gained +0.58%, Yum China HK gained +2.86%, and Baozun HK gained +3.95%.

Remember that US markets plunged on Friday and one would have expected Hong Kong stocks to follow them lower today upon reopening from the holiday. But, that was not the case. Hong Kong shares rallied, leading to a meaningful pop in the US shares as, for instance, Alibaba HK is currently trading at a 3.3% premium to US shares.  

Healthcare names were higher as heightened restrictions in Europe raise fears of a 2nd wave. CStone Pharma gained +11.79% following Wednesday’s +5.8% gain as investors continue to cheer Pfizer’s minority stake. Notable laggards today were Semiconductor Manufacturing, which fell -4.64% as it could have its ability to buy US chips constrained. US-listed Micron Technology also fell -2.86% on the news. SMIC’s weakness weighed on supply chain firms such as Sunny Optical, which fell -2.37%, and AAC Technologies, which fell -0.36%. Macau casino stocks were largely off as 77,092 visitors in the first four days of Golden Week represent only 87% of last year’s numbers.

The Wall Street Journal pointed out this morning that China has steadily increased its purchases of US crude oil since May.

H-Share Update

The Hang Seng gained +1.32%/+308 index points to close at 23,767 on light volume -15% below the 1 year average. Breadth was positive with 31 advancers and 17 decliners though worth noting the broader Hang Seng Compositive +1.13% had 215 advancers and 235 decliners. The 204 Chinese stocks listed in HK within the MSCI China All Shares +1.07% led by communication +2.33%, discretionary +1.74% and health care +0.74% while energy -1.22%, materials -0.53% and real estate -0.14%. Southbound Connect is closed.

A-Share Update

Mainland markets are closed until Friday.