Summer Slowdown As Investors Wait For Policy
5 Min. Read Time
Key News
Asian equities were largely higher overnight as Taiwan outperformed and Mainland China underperformed.
Summer doldrums might be setting in as volumes were thin, leading to more volatility on very light news. Hong Kong could not maintain yesterday’s strong bounce following the interest rate cuts and post-Third Plenum resolution piece as investors want tangible stimulus policies. Growth stocks and sectors in both Mainland China and Hong Kong underperformed, as many of the semiconductor and computer companies bought yesterday were sold today.
There was a fair amount of commentary on the light (below average) volumes in the National Team’s favored ETFs as the Shanghai, Shenzhen, Hang Seng, and HS Tech fell to early July lows. Hong Kong's breadth, similar to Mainland China's, was poor, as Hong Kong’s most heavily traded stocks by value were Tencent, down -1.88%, Meituan, down -2.64%, Alibaba, down -0.87%, energy giant CNOOC, down -0.49%, and China Construction Bank, up+1.11%. Even Southbound Stock Connect buying in Hong Kong was light today.
The US-China Business Council hosted a delegation of US multinationals in Beijing led by FedEx President and CEO Raj Subramaniam. The delegation met with Vice-Premier He Lifeng and Foreign Minister Wang Yi. This is another sign of China’s continued openness to foreign corporations and investors.
The Hang Seng and Hang Seng Tech indexes fell -0.94% and -1.82%, respectively, on volume that declined -8.13% from yesterday, which is 83% of the 1-year average. 78 stocks advanced, while 405 declined. Main Board short turnover fell -11.7% from yesterday, which is 86% of the 1-year average, as 18% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Value and large-cap stocks “outperformed”/fell less than growth and small-caps. The financial sector was the only positive sector as it closed higher by +0.62%, while materials fell -3.41%, consumer staples fell -2.69%, and real estate fell -2.1%. The top sub-sectors were banks, telecommunication services, and business/professional services, while materials, semiconductors, and food/beverage were the worst. Southbound Stock Connect volumes were light as Mainland investors bought $12 million of Hong Kong stocks and ETFs with Tencent a small net buy while the HK Tracker ETF was a large net sell.
Shanghai, Shenzhen, and the STAR Board fell -1.65%, -2.58%, and -4.11%, respectively, on volume that increased a slight +0.84% from yesterday, which is 81% of the 1-year average. 991 stocks advanced, while 3,895 declined. The utility sector was the only positive sector as it gained +0.14%, while materials fell -4.11%, technology fell -3.52%, and consumer staples fell -3.41%. The top sub-sectors were banking, water, and marine/shipping, while precious metals, semiconductors, and base metals were the worst. Northbound Stock Connect volumes were moderate, with foreign investors net sellers of Mainland stocks as BYD was a small/moderate net buy, Cambricon and Ag Bank were small net buys, while Kweichow Moutai, Wuliangye and Zhongji Innolight were small net sells. The Treasury curve steepened. CNY was off small versus the US dollar. Copper and steel fell.
Last Night's Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.9% |
| Hang Seng Tech | HSTECH Index | -1.8% |
| Hong Kong Turnover | HKTurn Index | -8.1% |
| HK Short Sale Turnover | HKSST Index | -11.7% |
| Short Turnover as a % of HK Turnovr | N/A | 17.8% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 12.1 |
| China (Shanghai) | SHCOMP Index | -1.6% |
| China (Shenzhen) | SZCOMP Index | -2.6% |
| China (STAR Board) | Star50 Index | -4.1% |
| Mainland Turnover | .chturn Index | 0.8% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.2% |
| Japan | NKY Index | 0% |
| India | SENSEX Index | -0.1% |
| Indonesia | JCI Index | -0.1% |
| Malaysia | FBMKLCI Index | 0.5% |
| Pakistan | KSE100 Index | 0.5% |
| Philippines | PCOMP Index | 0.6% |
| South Korea | KOSPI Index | 0.4% |
| Taiwan | TWSE Index | 2.8% |
| Thailand | SET Index | -1.2% |
| Singapore | STI Index | 0.7% |
| Australia | AS51 Index | 0.5% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 154 | -1.31 |
| Communication Services | 9 | -1.81 |
| Consumer Discretionary | 29 | -1.61 |
| Consumer Staples | 13 | -2.68 |
| Energy | 7 | -0.24 |
| Financials | 24 | 0.62 |
| Health Care | 14 | -2.04 |
| Industrials | 18 | -1.12 |
| Information Technology | 11 | -1.9 |
| Materials | 11 | -3.4 |
| Real Estate | 6 | -2.1 |
| Utilities | 12 | -1.71 |
| China Listed | 487 | -2.29 |
| Communication Services | 13 | -2.4 |
| Consumer Discretionary | 41 | -3.39 |
| Consumer Staples | 32 | -3.41 |
| Energy | 17 | -1.06 |
| Financials | 68 | -0.26 |
| Health Care | 45 | -3.39 |
| Industrials | 74 | -1.7 |
| Information Technology | 93 | -3.52 |
| Materials | 80 | -4.1 |
| Real Estate | 7 | -1.96 |
| Utilities | 17 | 0.14 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.9 |
| Alibaba HK | 9988 HK Equity | -0.9 |
| JD.com HK | 9618 HK Equity | -1.4 |
| NetEase HK | 9999 HK Equity | -1.7 |
| Yum China HK | 9987 HK Equity | -0.7 |
| Baozun HK | 9991 HK Equity | -1.3 |
| Baidu HK | 9888 HK Equity | -1.3 |
| Autohome HK | 2518 HK Equity | -1.4 |
| Bilibili HK | 9626 HK Equity | -1.9 |
| Trip.com HK | 9961 HK Equity | -0.2 |
| EDU HK | 9901 HK Equity | -2.7 |
| Xpeng HK | 9868 HK Equity | 0.9 |
| Weibo HK | 9898 HK Equity | -0.5 |
| Li Auto HK | 2015 HK Equity | -1 |
| Nio Auto HK | 9866 HK Equity | 1.5 |
| Zhihu HK | 2390 HK Equity | -1.2 |
| KE HK | 2423 HK Equity | -1.5 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.1 |
| Meituan HK | 3690 HK Equity | -2.6 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -1.9 |
| MEITUAN-CLASS B | -2.6 |
| ALIBABA GROUP HOLDING LTD | -0.9 |
| CNOOC LTD | -0.5 |
| CHINA CONSTRUCTION BANK-H | 1.1 |
| AIA GROUP LTD | -0.2 |
| BYD CO LTD-H | -3.1 |
| IND & COMM BK OF CHINA-H | 1.4 |
| CHINA MOBILE LTD | 0 |
| XIAOMI CORP-CLASS B | -1.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| CITIC SECURITIES CO-A | -4.9 |
| KWEICHOW MOUTAI CO LTD-A | -2.9 |
| BYD CO LTD -A | -4.7 |
| BAIC BLUEPARK NEW ENERGY -A | -4.9 |
| ZIJIN MINING GROUP CO LTD-A | -6.1 |
| SHANGHAI BELLING CO LTD-A | -2.9 |
| CHONGQING CHANGAN AUTOMOB-A | -3.7 |
| CAMBRICON TECHNOLOGIES-A | -6.3 |
| IND & COMM BK OF CHINA-A | 2.9 |
| ANHUI JIANGHUAI AUTO GROUP-A | -5.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.27 versus 7.27 yesterday
- CNY per EUR 7.90 versus 7.91 yesterday
- Yield on 10-Year Government Bond 2.23% versus 2.25% yesterday
- Yield on 10-Year China Development Bank Bond 2.29% versus 2.31% yesterday
- Copper Price -1.18%
- Steel Price -0.98%
