Key News

Asian equities were largely higher except for Hong Kong, despite a stronger US dollar, while Pakistan was closed for Ashura, a day of commemoration in Islam.

No news/catalysts were announced from the Third Plenum, and recent mediocre economic data, combined with light volumes and sentiment, weighed on Hong Kong as the Hang Seng fell below the big round/meaningless number 18,000.

The higher probability of a Trump second term, JD Vance as his VP, and his  “China threat” comment appeared to be a factor as popular foreign favorite growth stocks underperformed. After the Trump-Biden debate, did anyone not think the probability of a Trump win was high? If Trump is so negative about China, shouldn’t US multinationals with high China revenue, like Apple, Caterpillar, Boeing, Exxon Mobile, etc., be down as well? Amongst the pro-Trump business people include Elon Musk (Tesla derives 22% of its revenue in China) and Jeff Yass (investor/owner of Bytedance). 

Similar to Trump's first term, there are likely to be negotiating tactics, such as sky-high tariffs, but we should remember the potential impact on US firms, too. Ironically, Apple’s China supply chain had a strong day on an analyst upgrade, with Sunny Optical up +6.95% and AAC Technologies up +0.78%. The other bright spot was that as foreign investors puked up shares, Mainland Chinese investors bought them with a healthy $782 million net buying of Hong Kong stocks, especially the Hong Kong Tracker ETF. Let’s hope they know something is coming out of the Third Plenum that we don’t!

Hong Kong’s most heavily traded stocks by value were Tencent, down -3.13%, Ping An, down -5.41% as it issued a convertible note, Alibaba, down -1.5%, Meituan, down -1.34%, and China Construction Bank, down -2.67%. Baidu fell -2.98% despite further Mainland media coverage of its robotaxi rollout in Wuhan, with rumors that Shanghai’s rollout could be next week and Shenzhen shortly thereafter. Mainland China was bouncing around the room until a late afternoon rally lifted the market as the National Team’s favorite ETFs saw big jumps in volume. The Huatai-Pinebridge CSI 300 ETF Fund had a volume of 1.6 million versus a 30-day average of 982k, the E Fund Seeded CSI 300 ETF traded 2 million shares versus a 30-day average of 568k, and the ChinaAMC China 50 ETF traded 1.2 million shares versus a 30-day average of 832k. Mainland media noted how low mortgage rates are, with Guangzhou’s rate cut of 3% and Yunnan's 2.95%. Like Hong Kong, Apple’s supply chain and semiconductor stocks had a strong day after Hangzhou Chang Chuan Technology gained +6.35% on a positive profit alert that lifted the space. CNY and the Asia dollar index were off overnight.

The Hang Seng and Hang Seng Tech indexes fell -1.60% and -1.35%, respectively, on volume that increased +3.4% from yesterday, which is 91% of the 1-year average.146 stocks advanced, while 328 declined. Main Board short turnover increased +12.15% from yesterday, which is 107% of the 1-year average, as 20% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Small caps “outperformed”/fell less than large caps, while value and growth fell nearly the same amount. The technology and healthcare sectors gained +0.3% and +0.26%, while communication services fell -2.77%, financials fell -2.18%, and real estate fell -1.8%. The top sub-sectors were semiconductors and technical hardware, while food/staples, software, and insurance were the worst. Southbound Stock Connect volumes were light as Mainland investors bought a healthy $784 million of Hong Kong stocks and ETFs with the Hong Kong Tracker ETF and Tencent having moderate net buying while Hong Kong Exchanges was a small net sell.

Shanghai, Shenzhen, and STAR Board gained +0.08%, +0.49%, and +2.26%, respectively, on volume up +6.54% from yesterday, which is 78% of the 1-year average. 2,001 stocks advanced, while 2,825 declined. Growth and small caps outperformed value and large caps. The top sectors were technology, up +2.95%, real estate, up+1.09%, and utilities, up +0.91%, while staples and financials were down -0.03% and -0.11%. The top sub-sectors were computer hardware, power generation equipment, and precious metals, while chemicals, insurance, and construction machinery were the worst. Northbound Stock Connect volumes were moderate as foreign investors were net sellers. CNY and the Asia dollar index were lower versus the US dollar. The Treasury Curve steepened. Copper and steel both fell.

Last Night's Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	-1.6%
Hang Seng Tech	HSTECH Index	-1.4%
Hong Kong Turnover	HKTurn Index	3.4%
HK Short Sale Turnover	HKSST Index	12.2%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	784.411587708067
China (Shanghai)	SHCOMP Index	0.1%
China (Shenzhen)	SZCOMP Index	0.5%
China (STAR Board)	Star50 Index	2.3%
Mainland Turnover	.chturn Index	6.5%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	-0.9%
Japan	NKY Index	0.2%
India	SENSEX Index	0.1%
Indonesia	JCI Index	-0.7%
Malaysia	FBMKLCI Index	-0.2%
Pakistan	KSE100 Index	1.4%
Philippines	PCOMP Index	-0.3%
South Korea	KOSPI Index	0.2%
Taiwan	TWSE Index	0.5%
Thailand	SET Index	-0.5%
Singapore	STI Index	-0.3%
Australia	AS51 Index	-0.2%

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	154	-1.8
Communication Services	9	-2.8
Consumer Discretionary	29	-1.6
Consumer Staples	13	-1.2
Energy	7	-0.6
Financials	24	-2.2
Health Care	14	0.3
Industrials	18	-1.6
Information Technology	11	0.3
Materials	11	-0.2
Real Estate	6	-1.8
Utilities	12	-1
China Listed	487	0.6
Communication Services	13	0.2
Consumer Discretionary	41	0.2
Consumer Staples	32	-0.1
Energy	17	0.3
Financials	68	-0.1
Health Care	45	0.1
Industrials	74	0.4
Information Technology	93	2.9
Materials	80	0.1
Real Estate	7	1.1
Utilities	17	0.9

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	-3.1
Alibaba HK	9988 HK Equity	-1.5
JD.com HK	9618 HK Equity	-2.1
NetEase HK	9999 HK Equity	-0.6
Yum China HK	9987 HK Equity	-1
Baozun HK	9991 HK Equity	-2.7
Baidu HK	9888 HK Equity	-3
Autohome HK	2518 HK Equity	-1.3
Bilibili HK	9626 HK Equity	1.2
Trip.com HK	9961 HK Equity	-3.8
EDU HK	9901 HK Equity	-2.6
Xpeng HK	9868 HK Equity	2
Weibo HK	9898 HK Equity	-3.3
Li Auto HK	2015 HK Equity	-1.8
Nio Auto HK	9866 HK Equity	-1.6
Zhihu HK	2390 HK Equity	-3.5
KE HK	2423 HK Equity	-2.1
Tencent Music Entertainment HK	1698 HK Equity	-1.5
Meituan HK	3690 HK Equity	-1.3

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
Tencent Holdings Ltd	-3.1
Ping Insurance Group	-5.4
Alibaba Group Holding Ltd	-1.5
Meituan	-1.3
China Construction Bank Corporation	-2.7
Chinaa Mobile Ltd	-0.3
CNOOC Ltd	-0.9
Hong Kong Exchanges and Clearings	-2.3
Sunny Optical Technology Group	7
Industrial and Commercial Bank of China	-1.8

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
Chongqing Changan Automobiles	4
BAIC BluePark New Energy Technology	3.9
Cambricon Technologies Ltd	20
Luxshare Precision Industry	5.3
Ping Insurance Group	-3.2
Seres Group Ltd	0.4
IEIT Systems Company	3.2
Sunwoda Electronic	20
Zhongji Innolight Ltd	-1
GoerTek Inc	6.3

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.26 versus 7.26 yesterday
• CNY per EUR 7.91 versus 7.92 yesterday
• Yield on 10-Year Government Bond 2.26% versus 2.25% yesterday
• Yield on 10-Year China Development Bank Bond 2.33% versus 2.33% yesterday
• Copper Price -0.36%
• Steel Price -0.08%