Daily Posts

Let’s Get Physical, As China EV & Clean Tech Rises

Key News

Asian equities had a strong day less Japan while China, Korea, and India outperformed.

Tencent gained +2.42% on volume 3X higher than the second most heavily traded stock in Hong Kong by value. A National Fitness Plan, announced today, is aimed at raising youth participation in sports. This comes just after yesterday’s article about video games being “opium.” Part of the Fitness Plan will encourage kids to get outside instead of playing video games. The article sent gaming stocks Tencent and NetEase down despite likely limited revenue exposure to young children. Investors also quickly shot online video companies like Bilibili and HUYA without asking any questions.

The investor reaction shows how tenuous the situation is due to the regulatory oversight. Tencent did see net buying from Mainland investors via Southbound Stock Connect for the first time in two weeks. Mainland investors appear to be giving an all-clear signal.

Alibaba HK was off -0.62% overnight, which isn’t as pessimistic as US investors who sent the US shares down -1.35%. The quarter was good, not great; the key takeaway is that Alibaba is committed to its fiscal year revenue target of RMB 924B. It’s worth noting that the second quarter has been Alibaba’s weakest revenue quarter every year since its IPO.

Mainland markets had a strong day as investors cheered the July Caixin PMI Services, which came in at 54.9 versus expectations of 50 and June’s 50.3.

The electric vehicle ecosystem ripped today along with clean technology and semiconductors. Mainland media buzzing about BYD’s +10% move today gives it a market cap of $124B, which is almost as large as energy giant PetroChina. Healthcare was off despite rising delta outbreaks in China due to concerns that drug bulk buying might be applied to medical equipment as well.

H-Share Update

The Hang Seng opened lower but quickly headed higher closing +0.88% while the Hang Seng TECH gained +2.43% as volume fell -17.28% from yesterday which is just above the 1-year average. The 208 Chinese companies listed in Hong Kong within the MSCI China All Shares gained +1.16% led by tech +4.21%, materials +2.59%, communication +2.38%, healthcare +2.11% and discretionary +0.67% while staples -0.87%, real estate -0.52% and financials -0.33%. Hong Kong’s most heavily traded by value were Tencent +2.42%, BYD +8.34%, Meituan +0.95%, Alibaba HK -0.62%, Geely Auto +5.03%, Li Ning +5.03%, Xiaomi +3.67%, Anta Sports +4.66%, Galaxy Entertainment -6.5% and SMIC +5.5%. Southbound Stock Connect volumes were moderate/high as Mainland investors were net buyers of Hong Kong stocks today.

A-Share Update

Shanghai, Shenzhen & STAR Board also opened lower but hopped on the up escalator closing at +0.85%, +1.72% and 2.67% on volumes -9.05% from yesterday though still 1.41% of the 1-year average. The 522 Mainland stocks within the MSCI China All Shares gained +1.21% led by tech +3.63%, industrials +3.51%, materials +3.39%, discretionary +2.45%, energy +2.31% and utilities +0.53% while communication -1.29%, staples -1.21%, healthcare -0.93% and financials -0.58%. The Mainland’s most heavily traded stocks by value were BYD +10%, Longi GreenEnergy +8%, Sany Heavy Industry +5.18%, China Northern RareEarth +8.47%, CATL +7.16%, Ganfeng Lithium +8.45%, Sanan Optoelectronic +9.99%, Tongwei +10.01%, Walvax Biotechnology +2.77% and Sungrow Power +6.47%. Northbound Stock Connect volumes moderate/high as foreign investors bought $858mm of Mainland stocks today.

Last Night’s Exchange Rates, Prices, & Yields

  • CNY/USD 6.46 versus 6.46 yesterday
  • CNY/EUR 7.66 versus 7.68 yesterday
  • Yield on 10-Year Government Bond 2.83% versus 2.83% yesterday
  • Yield on 10-Year China Development Bank Bond 3.19% versus 3.21% yesterday
  • Copper Price -1.31% overnight