Daily Posts

The Year of The Rabbit Hops To It

3 Min. Read Time

Key News

Asian equities were mixed overnight as central bank meetings will dominate this week as Taiwan outperformed while Hong Kong-listed internet stocks were hit with profit taking.

The Hong Kong stock fall was exacerbated by Mainland investors selling a healthy $881 million worth of Hong Kong stocks via Southbound Stock Connect, though the Hang Seng Index stayed above the 22k level. With China’s reopening on full display, we likely had some buy-the-rumor/sell-the-news trades after strong year-to-date performance. Weekend rhetoric from US politicians on increased investment bans, semiconductor bans, and the probability of war over Taiwan may have been a factor, though Taiwan’s strong day does not quite fit that narrative. In traveling for work last week, we warned US political rhetoric as a continued risk, though headlines have had more bark than bite thus far.

Hong Kong’s most heavily traded stocks by value were Tencent, which fell -6.7%, Alibaba, which fell -7.08%, and Meituan, which fell -0.8%. The key will be whether investors take advantage of the dip in Hong Kong stocks as data still suggests many investors are underweight to Chinese equities.

Baidu fell -0.8%, “outperforming” on reports that the company will launch a ChatGPT-like offering. Meanwhile, JD fell -5.57% after announcing a pullback from efforts in Southeast Asia. Domestic Chinese investors were far less pessimistic than their foreign counterparts, as Mainland stocks’ first day in the year of the rabbit posted small gains, though off intra-day highs.

Data from the weeklong holiday look strong with 308 million domestic trips, up +23% from 2021, which is 88.6% of pre-pandemic, 2019 levels as airlines moved 9 million people, which is up +80% year-over-year, and near pre-pandemic, 2019 levels, according to Yicai. However, movie ticket sales did not get back to 2019 levels, at RMB 6.5 billion from RMB 7.8 billion.

Premier Li was in the news for statements supporting consumption as the Ministry of Commerce, calling 2023 “the year of the consumption boost”. Shanghai’s government announced 32 measures to achieve its GDP target of 5.5%, including subsidies for electric vehicles and home appliances, according to a Hong Kong media source. Foreign investors bought a healthy $2.76 billion worth of Mainland stocks overnight via Northbound Stock Connect, with a bias towards large/mega cap growth stocks.

The Hang Seng and Hang Seng Tech indexes fell -2.73% and -4.84%, respectively, on volume that increased +10% from Friday, which is 162% of the 1-year average. 73 stocks advanced while 436 stocks declined. Main Board short turnover increased +101% from Friday, which is 168% of the 1-year average. Value factors “outperformed” growth factors as large caps edged out small caps. All sectors were negative as consumer staples fell -1.25%, while communication fell -5.72%, consumer discretionary fell -5%, and technology fell -4.19%. Telecom was the only positive sector while consumer services, software, and retail were among the worst. Southbound Stock Connect volumes were high as Mainland investors sold -$881 million worth of Hong Kong stocks today. Tencent was a significant sell via Southbound Stock Connect, Meituan was a small net buy, and Kuaishou was a small net sell. 

Shanghai, Shenzhen, and the STAR Board gained +0.14%, +1.16%, and +0.24%, respectively, on volume that increased +42.25% from last Friday, which is 118% of the 1-year average. 3,596 stocks advanced while 1,064 stocks declined. Growth factors outperformed value factors, while small caps outpaced large caps. The top-performing sectors were consumer staples, which gained +1.81%, technology, which gained +1.6%, and consumer discretionary, which gained +1.49%. Meanwhile, communication fell -2.48%, energy fell -1.84%, and real estate fell -1.39%. The top-performing subsectors were auto parts, auto industry, and aerospace/military, while catering, office supplies, and precious metals were among the worst. Northbound Stock Connect volumes were high as foreign investors bought $2.76 billion worth of Mainland stocks with a bias towards mega/large-cap growth stocks. CNY appreciated versus the US dollar over the last week, Treasury bonds appreciated, and copper was off -0.66%.

Last Night's Performance

Major Chinese City Mobility Tracker

We should anticipate an uptick in traffic and metro usage as workers return from holiday.

Last Night's Exchange Rates, Prices, & Yields

  • CNY per USD 6.75 versus 6.79 on 1/20
  • CNY per EUR 7.36 versus 7.34 on 1/20
  • Yield on 10-Year Government Bond 2.91% versus 2.93% on 1/20
  • Yield on 10-Year China Development Bank Bond 3.08% versus 3.09% on 1/20
  • Copper Price -0.66% overnight