EVs Account for 20% of November Auto Sales, CNY Hits 3-Year High Versus USD
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Asia had a strong night led by China, India, and Japan. CNY, China’s currency, had a very strong performance versus the US dollar overnight, gaining +0.27%, lifting the CNY/USD exchange rate to 6.35 from yesterday’s close of 6.37. It does not sound like much, but, for the currency world, that is a BIG move. It is worth noting that the move to a three-year high has garnered zero media coverage as the currency move reflects China’s economic strength. Western media grasps for clicks by focusing on Evergrande, which nobody in China is concerned about. If the Chinese aren’t concerned about Evergrande, you shouldn’t be either!
Hong Kong-listed internet stocks had a mixed session following significant gains yesterday. Alibaba HK fell -4.66%, Baidu HK fell -2.03%, and NetEase fell -1.88%. They were all clipped by profit-taking after rising +12.29%, +9.79%, and +5.87%, respectively, in Hong Kong yesterday. On the positive side, Tencent gained +0.69%, JD.com HK was flat, and Kuaishou gained +0.24%. Meanwhile, Weibo, which is sometimes referred to as the “Twitter of China”, relisted on the Hong Kong Exchange overnight though the stock was off -4.31% versus the US close yesterday and closed -7.18% at HKD 253 versus the IPO price of HKD 272.
I did not catch it, but Xpeng’s CEO Brian Gu was on Bloomberg TV last night according to Hong Kong newspaper The Exchange. On the subject of ADRs delisting due to the Holding Foreign Companies Accountable Act (HFCAA), Mr. Gu said that delisting is “several years away,” which is accurate as it wouldn’t occur until late 2024/2025 at the earliest. By relisting in Hong Kong, the company has prepared for “any eventualities” i.e., the possibility that the two sides can’t solve the issue. He was quite constructive on the electric vehicle (EV) company’s prospects as the company looks to expand in Scandinavia, though a US market entry would be “difficult to tackle”.
November EV sales accounted for 20.8% of all car sales according to the China Passenger Car Association. EVs accounted for just 5.8% of car sales in 2020. While auto sales slumped -12.7% in November year over year to 1.8 million units, BYD sold 90k EVs, Tesla sold 52k, and SAIC-GM sold 50k. Impressive!
Growth stocks rebounded in Hong Kong as healthcare gained +2.7% though Hong Kong volumes were light, down by -24% day-over-day and just 60% of the 1-year average. The clean technology ecosystem rebounded in both Hong Kong and China as the NDRC outlined plans on how China will achieve its carbon curtailment goals, highlighting renewable energies such as solar and wind. A Mainland media source noted the increase in clean technology ecosystem stocks among Mainland China mutual funds.
Mainland Chinese equities had a very strong day on volume that was just above the 1-year average while advancing stocks outpaced declining stocks by 3 to 1 as Shanghai, Shenzhen, and the STAR Board gained +1.18%, +1.77%, and +1.87%, respectively. Of the top 100 most heavily traded stocks by value, there were 85 advancers and just 15 decliners. Staples were led by liquor giant Kweichow Moutai, which gained +4.45%, and rival Wuliangye Yibin, which rose +4.27%. Meanwhile, the information technology sector gained +3.09%. Foreign investors bought a healthy $1.5 billion worth of Mainland stocks today via Northbound Stock Connect.
Last Night’s Exchange Rates, Prices, & Yields
- CNY/USD 6.35 versus 6.37 Yesterday
- CNY/EUR 7.15 versus 7.17 Yesterday
- Yield on 10-Year Government Bond 2.86% versus 2.85% Yesterday
- Yield on 10-Year China Development Bank Bond 3.09% versus 3.09% Yesterday
- Copper Price +0.27% overnight