Ant Group Rises From the Ashes as Mainland Investors Buy Hong Kong in Size
Asian equities were mixed as Japan and China did alright, though Korea and India got whacked around. The positive coverage of Ant Group becoming a financial company, which could allow the company to come public at some point, lifted Alibaba Hong Kong +2.6% while other Hong Kong growth stocks saw profit-taking. Another big inflow into Tencent and to a lesser degree Meituan came from Mainland investors via Southbound Stock Connect. The Mainland liked PBOC Governor Yi’s comments that there is no plan to tighten/pull stimulus, though the PBOC did pull liquidity out of the system overnight. Head scratcher, right? Usually, the PBOC adds liquidity before Chinese New Year as cash is removed from banks to fund trips and parties.
In Hong Kong, the Hang Seng Index was off by only -0.32%, but the market did much worse as the broader Hang Seng Composite was off -0.72% and the Hong Kong stocks within the MSCI China All Shares were off -1.53%. Hong Kong growth stocks and sectors all took a hit as one broker noted profit-taking from non-locals. Hong Kong volume leaders were Tencent, which fell -2.37% on profit-taking as volume was twice the second most heavily traded, Meituan, which fell -3.86%, Alibaba Hong Kong, which gained +2.6%, energy giant CNOOC, which rose +6.05%, China Mobile, which was up +5.27%, Xiaomi, which fell -2.8%, Hong Kong Exchanges, which fell -2.83%, BYD, which was off -2.83%, and Geely Auto, which fell -5.09%. Shanghai and Shenzhen overcame morning losses to gain +0.11% and +0.28% respectively as liquor stocks were off while some cyclical sectors rebounded. Battery names did well today though I haven’t seen any news about them. Foreign investors sold -$193mm of Mainland stocks today via Northbound Stock Connect. CNY ticked up a bit but appears to have stalled its advance versus the US $ for the moment.
MSCI reversed its decision to drop five Chinese companies from their indexes as they will make an announcement today.
Bloomberg reported that ByteDance made $35B last year. Wow! That revenue comes at the expense of many companies making ByteDance their number one public enemy.
Takeaway: A strong release as the month-over-month is more important to me as it indicates an acceleration of the economy. Not a market-moving event though.
The Hang Seng traded in a narrow range -0.32%/-93 index points to close at 29,297. Volume was off -8% from yesterday, which is still 84% above the 1-year average while breadth had 31 advancers and 19 decliners. The 196 Chinese companies listed in Hong Kong within the MSCI China All Shares Index were off -1.53%, with energy up +1.6%, financials +0.34%, and utilities +0.26%, while discretionary fell -3.21%, tech -2.4%, communication -2.26%, health care -1.88%, and materials -0.85%. Southbound Stock Connect volumes were high (again) running more than twice the 1-year average as Mainland investors bought $3.035B of Hong Kong stocks today as Southbound Connect trading accounted for 17.1% of Hong Kong turnover.
Shanghai and Shenzhen overcame a morning loss to close up +0.11% and +0.28% at 3,573 and 2,420 respectively. Volume was off -8.9% from yesterday, which is still 5% above the 1-year average while breadth saw 1,912 advancers 1,810 decliners. The 511 mainland stocks within the MSCI China All Shares Index rose +0.09%, led by communication +3.27%, industrials +1.13%, utilities +0.85%, financials +0.81%, tech +0.69% and energy +0.34%, while staples were off -1.71%, real estate -0.84%, and health care -0.46%. Northbound Stock Connect had high volumes as foreign investors sold -$193mm of Mainland stocks today as Northbound Connect trading accounted for 6.2% of Mainland turnover.
Last Night’s Exchange Rates & Yields
- CNY/USD 6.47 versus 6.47 yesterday
- CNY/EUR 7.84 versus 7.85 yesterday
- Yield on 10-Year Government Bond 3.16% versus 3.16% yesterday
- Yield on 10-Year China Development Bank Bond 3.56% versus 3.55% yesterday
- China’s Copper Price +0.02% Overnight