Daily Posts

Asian Markets Search For Direction, US Asset Managers Bet on Vast China Market

Key News

Asian equities were mostly flat overnight as markets search for direction following Powell’s reinstatement as US Fed Chair and in preparation for the Thanksgiving holiday in the US. Mainland China was mostly unchanged as Shanghai, Shenzhen, and the STAR Board closed +0.10%, +0.00%, and -0.27%, respectively. Meanwhile, the Hang Seng managed a small gain of +0.14% and the Hang Seng Tech Index lagged again, declining by -0.50%.

Value outperformed growth once again in Hong Kong and on the Mainland. Internet platforms were mixed overnight as some, including Alibaba, continue to see selling due to a confluence of factors including the broad rotation out of tech, overblown concerns over tiny new fines, and concerns of a consumer slowdown. Mainland investors were bullish on coal names as increased investment in the sector following China’s fall energy shortage begins to sink in. Oil and gas names rose in Hong Kong, brushing off the release of strategic reserves by the US.

Chinese electric vehicle maker Xpeng rose +10.09% after delivering 14% more SUVs and sedans than expected in Q3.

Financial technology platform Ant Group will be re-branding certain consumer lending products to indicate that the loans are being provided by third parties, rather than the company itself. This move follows guidance from regulators on how to reduce risks and ensure that consumers are protected and well informed.

Meituan shares surged ahead of what is expected to be a positive Q3 earnings release on Friday. I will provide commentary and analysis on the release on Monday, so stay tuned.

A top economic official stated that the goal of curbs on real estate lending and speculation is to stabilize housing prices. Vice Premier Liu He echoed the official’s statements in an editorial for the People’s Daily. Real estate was up once again in both the Mainland (+0.94%) and Hong Kong (+1.24%).

US asset management firms are piling into China in force. JP Morgan has agreed to purchase the remainder of its China wealth management subsidiary. Meanwhile, Ray Dalio’s Bridgewater is setting up a wholly-owned asset management unit in China, which will invest in RMB-denominated securities on behalf of Mainland Chinese citizens. Bridgewater and JP Morgan join Goldman Sachs and a handful of other American investment managers that are betting on growth in China’s asset management industry and taking advantage of their newfound ability to operate in the country without a local partner. This bodes well for China’s Mainland stock market, which is apt to see a significant increase in domestic participation and inflows following restrictions on how much real estate a household can own as investment property. Chinese households own twice as much real estate as American households. Therefore, divesting of these assets and searching for alternatives is a significant event for China A-shares.

China Last Night will take a break tomorrow and Friday in observance of the Thanksgiving holiday in the US . Happy turkey day!

Last Night’s Exchange Rates, Prices, & Yields

  • CNY/USD 6.39 versus 6.39 yesterday
  • CNY/EUR 7.16 versus 7.19 yesterday
  • Yield on 1-Day Government Bond 1.65% versus 1.70% yesterday
  • Yield on 10-Year Government Bond 2.86% versus 2.89% yesterday
  • Yield on 10-Year China Development Bank Bond 3.15% versus 3.17% yesterday
  • Copper Price +1.08% today