Daily Posts

COP26 Catalyst For Clean Energy

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Key News

Asian equities cheered Fed Chair Powell’s comments though Taiwan was off and markets were closed in Singapore, India, and Malaysia. Hong Kong was led higher by internet stocks and clean energy technology ecosystem, EV/solar/particularly wind stocks, as the Hang Seng Index gained +0.8% while the Hang Seng Tech gained +1.62%.

As China is the world’s factory, many of the COP26 commitments will mean increased demand for wind, solar, and EVs which should benefit Chinese manufacturers in the space.

Discretionary, Communication, and technology were Hong Kong leading sectors gaining +3.12%, +2.47%, and +1.28% driven by Tencent +2.52%, Meituan +3.25%, and Alibaba  +3.11%. Tencent, Meituan, and Kuaishou +0.68% saw moderate/small net buying via Southbound Stock Connect which saw light volumes today. Real estate and healthcare were off today. We would like to have seen stronger volumes in today’s Hong Kong rebound which was below the 1-year average.

Volumes in China did increase +7% from yesterday which is just above the 1-year average as Shanghai +0.81%, Shenzhen +1.32%, and STAR Board +0.8%. Like Hong Kong, the clean technology ecosystem had a strong day along with liquor stock Kweichow Moutai +2.22%. Today’s highest volume Mainland stock by value was Longi Green Energy +1.65% after diving yesterday on reports US authorities had detained solar panels shipped to the US. Longi is the world’s largest solar panel maker globally according to Bloomberg.

We’ve heard chatter there is no consensus within the Biden’s administration China policy as USTR, State, NSA, and Treasury vie to be the agenda setter.

Foreign investors bought $188mm of Mainland stocks today via Northbound Stock Connect which had moderate/light volumes today. CNY appreciated a touch via the US $ while bonds rallied and copper was off.

Evergrande’s bond due in April 2022 was flat overnight at $30.93 versus its October 14th  low of $20.61. The company’s bond due in June 2025 was also flat at $26.54 versus its low on October 14th of $19.43.

The WSJ had a good article on the challenges the trucking industry faces similar to our comments yesterday.  

Last Night’s Exchange Rates, Prices, & Yields

  • CNY/USD 6.40 versus 6.40 Yesterday
  • CNY/EUR 7.39 versus 7.41 Yesterday
  • Yield on 10-Year Government Bond 2.93% versus 2.94% Yesterday
  • Yield on 10-Year China Development Bank Bond 3.20% versus 3.23% Yesterday
  • Copper Price -0.18% overnight