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Mainland Traders Take Labor Day Holiday

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Key News

Asian equities were lower as China, Japan, and Thailand were closed today for the Labor Day holiday. Volumes in Hong Kong were off -23% from Friday, highlighting the start of a slow week as China’s markets will be closed until Thursday.

News surrounding Friday’s policy meeting was front and center as the 18.3% year-over-year GDP growth was driven by the low bar set by Q1 2020. The recovery was deemed “unbalanced and without a solid foundation”. While elements of the economy are improving “faster and stronger than expected, some are still feeling the pinch,” according to Xinhua. “Fiscal policy should be implemented thoroughly, while a prudent monetary policy should be adopted”. The economy is neither too hot nor too cold, according to policymakers.

Alibaba-backed cloud computing firm Qiniu filed for a Nasdaq IPO. It was interesting to note that two retail brokerage houses from China are underwriters. Also, the company’s filing represents yet another Chinese company deciding to list in the United States despite the implementation of the Holding Foreign Companies Accountable Act (HFCA).

Early indications are that levels of travel for China’s Labor Day so far are strong.

Hong Kong’s Q1 GDP growth was released after the close at +7.8% year-over-year versus an estimate of +3.7%. A Mainland media source interviewed a famous Chinese portfolio manager who remains constructive on consumption plays and health care in the Hong Kong market.

Secretary of State Anthony Blinken was interviewed on 60 Minutes last night. The previous administration used China issues as a distraction technique and it appears that we are in for more of the same, unfortunately. The Blinken interview was followed by an interview with Intel’s new CEO, who talked about how Taiwan Semiconductor has eaten its lunch. Taiwan Semiconductor’s successful management was largely ignored while Intel’s missteps were glossed over. I came away with the impression that Intel wants to become a State-Owned Enterprise. Behind the scenes, over the last twenty years, US government expenditures have almost doubled from $2 trillion to nearly $4 trillion. I will venture a guess that this will only increase in the years to come.

H-Share Update

The Hang Seng opened lower and stayed there closing -1.28% on volumes that were -23.83% lower than Friday and just 60% of the 1-year average. The Chinese companies listed in Hong Kong and within the MSCI China All Shares Index were off -0.52% with healthcare, energy, and industrials gaining +0.54%, +0.44%, and +0.37%, respectively. Meanwhile, discretionary, staples, and financials were off -1.43%, -1.35%, and -1.25%, respectively. Sub-sector leaders were industrial metals such as steel and iron ore, which gained. Meanwhile, cobalt, mining, electric appliances, and solar were off. Appliance maker GOME announced discounts on its appliances, which weighed on the space. Hong Kong’s most heavily traded stocks by value were Ping An, which fell -2.47% after buying a stake in a brokerage house, Tencent, which gained +0.24%, Meituan, which fell -1.61%, Alibaba HK, which fell -0.53%, China Construction Bank, which fell -1.14%, AIA, which fell -2.58%, ICBC, which fell -1.19%, Shanghai Fosun Pharma, which gained +19.55%, HK Exchanges, which fell -1.06%, and HSBC, which fell -3.17%. Southbound Connect trading was closed.  

A-Share Update

Mainland markets will be closed until Thursday.