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Real Estate Stocks Soar, Biden & Xi Meet In Bali

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Asian equities were mixed overnight as Hong Kong outperformed on real estate strength and a continuation of Friday’s growth stock rebound on a lower-than-expected US CPI print.

Biden and Xi met on the sidelines of the G20 summit in Bali. According to initial reports, the two leaders had a constructive discussion on preventing the use and proliferation of nuclear weapons in Ukraine, improving US-China communication, and working together on climate.

Real estate outperformed in both Hong Kong and Mainland China after the government laid out a 16-point plan for industry support, which includes granting developers access to pre-sale funds and having banks engage in swap-based lending. While government support for the sector has been in the works over the past few months, the release of pre-sales funds seems to be the most compelling catalyst yet for real estate equities, as Country Garden Holdings gained +45% overnight in Hong Kong.

Although most growth stocks were higher overnight, reopening plays such as Trip.com saw profit-taking and continued declines on uncertainty about the path of China’s Zero COVID policy. On Saturday, the National Health Commission (NHC) hosted a press conference, where leaders reiterated new guidelines for lessening the economic cost of virus containment measures.

As we can see below in our Major City Mobility Tracker, as of Friday, congestion and metro traffic picked up again after slowing in the November 4th to 10th period. Beijing's change is particularly notable here as the city has seen a strong pick up in COVID cases, threatening a full-scale lockdown, which clearly has not happened.

Major City Mobility Tracker, Powered by Wind

Mainland investors took profits overnight in Southbound Connect trading while foreign investors poured over $2 billion into Mainland stocks via Northbound Stock Connect.

The Hang Seng and Hang Seng Tech indexes closed +1.70% and +1.80%, respectively, on volume that increased +12% from Friday. Real estate was the top-performing sector in Hong Kong overnight as Investors reacted positively to new policy support for the sector. Meanwhile, Short sale turnover increased by +13% after coming down last week as growth stocks saw a strong rebound.

Shanghai, Shenzhen, and the STAR Board closed -0.13%, -0.26%, and -0.03%, respectively, overnight on volume that decreased -12% from Friday. Real estate was also a top-performing sector on the Mainland.

Last Night’s Exchange Rates, Prices, & Yields

  • CNY per USD 7.07 versus 7.10 Friday
  • CNY per EUR 7.29 versus 7.32 Friday
  • Yield on 1-Day Government Bond 1.20% versus 1.20% Friday
  • Yield on 10-Year Government Bond 2.84% versus 2.74% Friday
  • Yield on 10-Year China Development Bank Bond 2.97% versus 2.87% Friday
  • Copper Price -0.84% overnight