Key News

Asia was mostly higher as South Korea had a solid day while Mainland China was off a touch before tonight’s Biden-Xi virtual summit. The Mainland opened higher but bounced around the room following the 10 am economic data release and real estate news.

Shanghai eased -0.16%, Shenzhen fell -0.19%, and the STAR Board was down -0.52% on volume that was +5% higher than Friday, which is 114% of the 1-year average.

The Beijing Stock Exchange officially opened today, providing an exchange for micro-cap companies versus the previous over-the-counter/pink sheets venue called the NEEQ. The 81 listed companies have a market cap of approximately $45 billion.

The economic data release was for the most part positive as retail sales beat estimates. Real estate had mixed signs as the National Bureau of Statistics showed that new home prices fell in 52 cities while used home prices fell in 64 cities. The declines are expected to be short-term as policymakers pivot to support the real estate sector. That being said, real estate had a rough day in both China (-1.24%) and Hong Kong (-3.88%). Evergrande’s April 2022 bonds gained +0.85/+3.02% to $28.50 while the June 2025 bonds were flat at $23.06.

Elon Musk’s Tesla stock sales weighed on the clean technology ecosystem as electric vehicles, solar, and wind were off along with semiconductors.

Healthcare had a strong day in China and Hong Kong on news of a new Covid vaccine from Cansino (6185 HK), which gained +3.84% in Hong Kong and +9.87% in China.

Foreign investors bought $529 million worth of Mainland stocks in a light trading day for Northbound Stock Connect.

Hong Kong looked better than it appears as Tencent gained +1.36%, playing Atlas and holding up the Hang Seng Tech Index, which gained +0.54% though there were nearly 2 to 1 decliners versus advancers in the broader Hang Seng Composite, which gained +0.25%. Tencent gained on reports that the company is engaging ByteDance’s China version of TikTok, called Douyin, on content sharing. Internet had a mixed day overall as Meituan fell -0.07%, Alibaba HK fell -0.55% and Kuaishou fell -1% while JD HK gained +1.88% on speculation that it could be added to the Hang Seng Index. Hong Kong volumes were off -12.4% from Friday, which is just 69% of the 1-year average.

Southbound Stock Connect volumes were light as Mainland investors sold $196 million worth of Hong Kong stocks as Tencent and Meituan were both net sells. Mainland Treasury bonds gained, CNY was basically flat versus the US Dollar, and copper gained a touch.

Electricity consumption increased +6.1% in October year-over-year, which brings the year-to-date increase to +14% versus 2019.

I mentioned Meituan (3690 HK) is supposed to announce earnings today.

Bloomberg had an article titled Tiger Global’s $65 Billion Man Shrugs Off China Crackdown Threat. On a Bloomberg terminal, the article was a glowing endorsement of the firm’s investment prowess. On the Bloomberg website, the article has a negative tone on the firm’s China investments. Strange! Excluded from the online article are the below two lines from a July client event with quotes coming from CEO Chase Coleman and #2 Scott Shleifer: “It is hugely in China’s continued best interest to have wonderful internet-enabled market leaders,” Shleifer told clients during the July presentation. Then Coleman added: “We’ve answered skeptical questions about China for each of the past 17 years. It was bank balance sheets. It was trade wars. And throughout this entire period, the result has been that China’s GDP share, relative to the U.S., has gone up 5X.”

Last Night’s Exchange Rates, Prices, & Yields

• CNY/USD 6.38 versus 6.38 Friday
• CNY/EUR 7.30 versus 7.31 Friday
• Yield on 1-Day Government Bond 1.65% versus 1.72% Friday
• Yield on 10-Year Government Bond 2.93% versus 2.94% Friday
• Yield on 10-Year China Development Bank Bond 3.19% versus 3.20% Friday
• Copper Price +0.27% overnight