Internet Stocks Mostly Rebound, National Team Rumored To Be Buying Small Cap ETFs
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Key News
Asian equities were mostly higher overnight except for Thailand as Hong Kong was flat overnight.
All sectors were higher on the Mainland overnight, based on the constituents of the MSCI China All Shares Index. The Mainland market has lagged Hong Kong significantly in recent sessions. Why the divergence? I think local investors are waiting for some more indications of stimulus from the Third Plenum, which starts on Monday.
The “official” consumer price index (CPI) and producer price index (PPI) for China will be released tomorrow. The expectation is for CPI to rise due to sharp increases in pork prices, while the PPI is expected to fall, perhaps on slowing external demand.
Internet stocks mostly reversed declines from yesterday as Tencent and NetEase were higher. Meituan fell though, despite buying back more than 4 million shares yesterday. Bilibili outperformed internet names, gaining +3.51%, on continuing momentum from the short-video platform’s positive first quarter results. Alibaba was slightly higher by nearly +1% while JD.com fell -0.78%.
Ping An fell as the mega bank and fintech investor considers another convertible bond offering of above $2 billion.
Top government strategist Wang Huning said that China must bolster “internal circulation” including consumer spending in a vague but promising statement ahead of the Third Plenum meetings.
Goldman strategists noted that they are increasingly bullish on China small cap stocks due to low valuations, liquidity, and compelling industry composition. Meanwhile, the National Team is rumored to be getting involved in small cap index ETFs, as the China Southern 1000 ETF saw elevated turnover.
The Hang Seng and Hang Seng Tech indexes closed flat and +0.96% higher, respectively, on volume that increased +6% from yesterday. Mainland investors bought a net $45 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Information Technology, which gained +2.14%, Materials, which gained +1.18%, and Industrials, which gained +0.85%. Meanwhile, the worst-performing sectors were Energy, which fell -1.45%, Utilities, which fell -1.32%, and Real Estate, which fell -0.55%.
Shanghai, Shenzhen, and the STAR Board all closed higher by +1.26%, +1.74%, and +2.51%, respectively, on volume that increased +25% from yesterday. The top-performing sectors were Information Technology, which gained +3.77%, Consumer Discretionary, which gained +1.90%, and Financials, which gained +1.37%. Meanwhile, the worst-performing sectors were Health Care, which gained +0.12%, Energy, which gained +0.23%, and Consumer Staples, which gained +0.48%.
Last Night’s Performance
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 154 | -1 |
| Communication Services | 9 | -0.3 |
| Consumer Discretionary | 29 | -1.2 |
| Consumer Staples | 13 | -2.1 |
| Energy | 7 | -0.6 |
| Financials | 24 | -0.8 |
| Health Care | 14 | -3.3 |
| Industrials | 18 | -2.8 |
| Information Technology | 11 | -1.4 |
| Materials | 11 | -0.3 |
| Real Estate | 6 | -2.7 |
| Utilities | 12 | -0.1 |
| China Listed | 487 | -0.9 |
| Communication Services | 13 | -1.8 |
| Consumer Discretionary | 41 | -0.6 |
| Consumer Staples | 32 | -1.8 |
| Energy | 17 | 0.1 |
| Financials | 68 | -0.4 |
| Health Care | 45 | -2.3 |
| Industrials | 74 | -1.1 |
| Information Technology | 93 | -0.7 |
| Materials | 80 | -1.1 |
| Real Estate | 7 | -2.5 |
| Utilities | 17 | 2 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.3 |
| Alibaba HK | 9988 HK Equity | -1.5 |
| JD.com HK | 9618 HK Equity | 0.3 |
| NetEase HK | 9999 HK Equity | -1.4 |
| Yum China HK | 9987 HK Equity | -0.9 |
| Baozun HK | 9991 HK Equity | 7.2 |
| Baidu HK | 9888 HK Equity | 0 |
| Autohome HK | 2518 HK Equity | -3.1 |
| Bilibili HK | 9626 HK Equity | -0.4 |
| Trip.com HK | 9961 HK Equity | 0.5 |
| EDU HK | 9901 HK Equity | -3.6 |
| Xpeng HK | 9868 HK Equity | -2.5 |
| Weibo HK | 9898 HK Equity | 0.5 |
| Li Auto HK | 2015 HK Equity | -1.3 |
| Nio Auto HK | 9866 HK Equity | -3.9 |
| Zhihu HK | 2390 HK Equity | 3.6 |
| KE HK | 2423 HK Equity | -2.4 |
| Noah HK | 6686 HK Equity | 0 |
| Tencent Music Entertainment HK | 1698 HK Equity | -3.4 |
| Meituan HK | 3690 HK Equity | -1.8 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| Tencent Holdings Ltd | -0.3 |
| Alibaba Group Holding Ltd | -1.5 |
| Meituan | -1.8 |
| AIA Group Ltd | -1.6 |
| Hong Kong Exchanges and Clearings | -2 |
| Ping Insurance Group | -2.4 |
| HSBC Hodings PLC | -1 |
| China Construction Bank Corporation | 0.2 |
| Industrial and Commercial Bank | -0.9 |
| CNOOC Ltd | -0.4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| Kweichow Moutai Ltd | -2.3 |
| BAIC BluePark New Energy Technology | 5.3 |
| COSCO Shipping Holdings | -6.1 |
| Lingyi iTech Guangdong | 9.4 |
| Luxshare Precision Industry | 1.7 |
| China Yangtze Power Ltd | 2.1 |
| Zhongji Innolight Ltd | 2 |
| Zijin Mining Group Ltd | -1 |
| Seres Group Ltd | -0.4 |
| Wuliangye Yibin Ltd | -2.4 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.27 versus 7.27 yesterday
- CNY per EUR 7.87 versus 7.87 yesterday
- Yield on 1-Day Government Bond 1.24% versus 1.24% yesterday
- Yield on 10-Year Government Bond 2.27% versus 2.29% yesterday
- Yield on 10-Year China Development Bank Bond 2.36% versus 2.38% yesterday
- Copper Price -0.17%
- Steel Price +0.09%
