Key News

Asian equities were mixed overnight. China, Hong Kong, Taiwan, South Korea, and the Philippines outperformed while Japan, India, Australia, Thailand, and Malaysia underperformed. Jerome Powell’s dovish comments were cited as a key catalyst as US tech outperformed yesterday. Hong Kong and Chinese equities left my neck hurting from the whiplash as the market did the opposite of yesterday, which was the opposite of the day before as tech/growth had a big day led by Hong Kong-listed China internet stocks.

Alibaba HK was up +2% on a Dow Jones news story that Ant Group’s individual credit scores will be shared with a new government entity. I have not seen this reported in China. However, if true, it shows that companies are adapting to new regulations.

In addition to internet plays, semiconductors had a monster day as demand-driven shortages drove prices higher.

Electric vehicle (EV) plays had a strong day following news that US-listed Xpeng (XPEV US) will list shares in Hong Kong. Another positive catalyst was an interview with BlackRock portfolio managers that received attention in China. The asset managers said they like Chinese EV and solar plays. We also had yesterday’s positive 2021 EV sales forecast.

The Financial Times is reporting that US and Chinese diplomats will meet next week at the G20 meetings with the potential for a second Biden/Xi phone call.

Full Truck Alliance (YMM US), China’s Uber for truck drivers, went public yesterday, gaining 13% with a market cap of $23 billion.

Overnight, Missfresh updated its IPO prospectus with further details. The online grocery delivery company is selling 15% of itself by issuing 21 million shares (an additional 3.15mm shares are available if demand exists) at a price between $13 and $16, which would raise $272 million to $366 million ($314mm to $386mm w/the additional shares) and value the company at $3.192B to $3.929B (with the additional shares available $3.233B to $3.979B). Didi’s IPO is coming as well. Meanwhile, the South China Morning Post is reporting logistics company Lalamove also filed for a US listing. Suzhou Nanomicro Technology (688690 CH) which went public today on the STAR Board and gained +1,275%!

H-Share Update

The Hang Seng Index and Hang Seng TECH opened higher and kept going gaining +1.79% and +2.66% as volume increased +10.76% which is 95% of the 1-year average. The 209 Chinese companies listed in Hong Kong within the MSCI China All Shares gained +1.94% led by discretionary +2.88%, staples +2.31%, healthcare +2.18%, tech +2.11%, materials +1.96%,energy +1.77%, communication +1.59%, industrials +1.53% and real estate +1%. HK’s most heavily traded by value Tencent +1.57%, Meituan +5.19%, Geely Auto +5.81%, Xiaomi +1.48%, Alibaba HK +2.07%, Kuaishou Tech +6.23%, COSCO Shipping -4.07%, Ping An +2.1%, Sunny Optical +6.99% and AIA +2.99%. Southbound Stock Connect volumes were moderate/high s Mainland investors sold $40mm of Hong Kong stocks today as Southbound trading accounted for a healthy 14.1% of Hong Kong turnover.

A-Share Update

Shanghai, Shenzhen & STAR Board gained +0.25%, +0.79% and +0.72% on volume +6.1% from yesterday which is 115% of the 1-year average. The 531 Mainland stocks within the MSCI China All Shares gained +0.46% led by tech +2.58%, discretionary +1.77%, energy +1.74%, materials +1.69% and communication +0.88% while healthcare and staples were off -0.06% and -1.76%. The mainland’s most heavily traded was COSCO Shipping -3.54%, BYD +2.28%, Tianqi Lithium +10.01%, Kweichow Moutai -1.78%, Longi Green Energy +2.05%, Congqing Changan +9.99%, Wuliangye Yibin -2.98%, broker East Money +1.28%, HangzhouSilan Micro +7.79% and Luxshare Precision +5.28%. Northbound Stock Connect volumes were moderate/high as foreign investors bought $1.266B of Mainland stocks as Northbound Connect trading accounted for 6.1% of Mainland turnover.

Last Night’s Exchange Rates, Prices, & Yields

• CNY/USD 6.47 versus 6.48 yesterday
• CNY/EUR 7.74 versus 7.72 yesterday
• Yield on 1-Day Government Bond 1.60% versus 1.65% yesterday
• Yield on 10-Year Government Bond 3.09% versus 3.09% yesterday
• Yield on 10-Year China Development Bank Bond 3.50% versus 3.51% yesterday
• Copper Price +1.50% overnight