Key News

Asian equities were mixed, but mostly higher overnight as Mainland China continues to lead Asian index gains this week. Internet names and growth stocks generally made a comeback in Mainland China overnight on strong volumes, after seeing some pressure in yesterday’s session.

Mainland investors piled into Tencent and Meituan overnight via Southbound Stock Connect buying a net HKD 1.5 billion and 1.2 billion worth of stock in the two internet companies, respectively.

It appears that Bytedance may go through with its much-anticipated IPO on the Hong Kong Stock Exchange. The internet company runs the popular video social media platform Tiktok and is one of the most highly valued “unicorns” globally. The IPO may occur as early as the fourth quarter this year or early 2022. The company appears to be awaiting further guidance on data practices.

The PBOC noted in its Q2 report that the central bank will continue to support the real economy while keeping an eye on liquidity conditions. Some analysts believe this is a potential sign of further cuts to reserve requirement ratios (RRR) later this year.

Copper traded slightly lower as restrictions in China arising from the delta variant and the country’s extremely cautious stance on covid-19 continue to weigh on commodities.

Fintech platform Lufax Holdings recently reported Q2 2021 net profit of RMB 4.7 billion, an increase of +53% year-over-year (YoY). On the earnings call, the company’s management discussed new regulations, including the new rule stating that internet platforms cannot pass on consumer data directly to financial institutions and the need to obtain a credit scoring license. Lufax management said that both the financial and operational impact of the new rules will be negligible.

Liquor names Wuliangye Yibin and Kweichow Moutai surged overnight following strong foreign buying via Northbound Stock Connect. Foreign investors are, once again, betting on the strength of the Chinese consumer.

H-Share Update

The Hang Seng and Hang Seng Tech indexes gained +1.23% and +2.48%, respectively, as Hong Kong-listed internet names rallied as investors appear to believe that the worst has already been priced in. The top traded stocks by Mainland investors via Southbound Stock Connect were Tencent, which gained +5.33%, Meituan, which gained +8.44%, Semiconductor Manufacturing, which fell -2.62%, and Sunny Optical, which fell -5.58%.

A-Share Update

The Shanghai, Shenzhen, and STAR board gained +1.01%, +0.85%, and +0.87%, respectively, overnight on volumes that were higher than yesterday on the Shanghai Stock Exchange. The top traded stocks by foreign investors via Northbound Stock Connect were Kweichow Moutai, which gained a +6.21%, Sany Heavy Industry, which gained +0.51%, China Northern Rare Earth, which fell -1.67%, and Wuliangye Yibin, which gained 8.21%.

Last Night’s Exchange Rates, Prices, & Yields

• CNY/USD 6.48 versus 6.49 yesterday
• CNY/EUR 7.60 versus 7.62 yesterday
• Yield on 1-Day Government Bond 1.60% versus 1.50% yesterday
• Yield on 10-Year Government Bond 2.88% versus 2.86% yesterday
• Yield on 10-Year China Development Bank Bond 3.25% versus 3.24%
• Copper Price -0.22% overnight