Daily Posts February 9, 2023

Economic and Corporate Profit Rebound Lifts Markets

2 Min. Read Time

Key News

Asian equities were largely lower following a decline in US stocks, though China and Hong Kong had a strong day. Shanghai, Shenzhen, and Hong Kong all opened lower but grinded higher across the trading day.

One morning catalyst was chatter that January loan growth will be stronger than anticipated as the PBOC injected liquidity into the financial system. Hong Kong’s most heavily traded stocks by value were Tencent, which gained +3.51% on new game enthusiasm, Alibaba, which gained +3.96% on their AI efforts and securing a partnership with a Saudi Arabian investment firm, Meituan, which gained +0.26%, and Baidu, which fell -3.58% on AI news profit taking. MGM’s Q4 financial results included statements on Macau’s rebound, which lifted the casino stocks, but likely had a spillover effect on the broad market.

President Biden was balanced about China following the balloon fiasco as Treasury Secretary Yellen stated, “I do think it’s important to improve communication.... I still want to be able to visit China and meet with economic peers”. Also helping were foreign investors buying a very healthy $1.785 billion of Mainland stocks today via Northbound Stock Connect. Hong Kong short turnover increased to 17% of Hong Kong turnover though there has been chatter about hedge funds dialing back their shorts. CNY posted a small gain versus the US dollar as the Asia dollar index gained +0.21%.

The Hang Seng and Hang Seng Tech indexes gained +1.6% and +3.16%, respectively, on volume that increased +12.45% from yesterday, which is 93% of the 1-year average. 362 stocks advanced while 111 stocks declined. Main Board short selling volume increased 12.45% from yesterday which is 90% of the 1-year average as 17% of the turnover was short turnover. Growth and value factors were mixed as small caps outpaced large caps. Top sectors were tech up +5.27%, discretionary gaining +2.64%, and communication closing higher +2.44%, while energy was off -0.08%. Top sub-sectors were technical hardware, consumer services, and semis while energy, banks, and food were among the worst. Southbound Stock Connect volumes were light as Mainland investors sold -$104 million of Hong Kong stocks with Tencent a small net buy while Meituan and Kuiashou were small/moderate sells.

Shanghai, Shenzhen, and the STAR Board closed up +1.18%, +1.54%, and +2.59%, respectively, on volume that increased +11% from yesterday, which is 99% of the 1-year average. 3,890 stocks advanced while 667 stocks declined. Growth factors outpaced value factors as small caps outperformed large caps. The top-performing sectors were tech, which gained +2.79%, consumer staples, which gained +2.09%, and communication, which gained +1.93%, while utilities were off -0.15%. The top-performing subsectors were computer hardware, communication equipment, and semiconductors, while airports and leisure products were down. Northbound Stock Connect volumes were moderate as foreign investors bought a healthy +$1.785 billion of Mainland stocks. CNY gained +0.2% versus the US dollar, Treasury bonds rallied while Shanghai copper and steel gained +0.41% and +1.34%.