Hong Kong Growth Stock Momentum Continues
6 Min. Read Time
Key News
Asian equity markets were mixed on light news prior to the US Fed’s Jackson Hole meetings as the US dollar fell against Asian currencies and Hong Kong, Thailand, and Malaysia outperformed while Japan and South Korea underperformed.
Hong Kong powered higher, though closed well off intra-day highs, as all sectors except for healthcare were higher on decent volume and breadth led by growth stock momentum following last week’s Q2 financial results.
Also helping Premier Li’s release from the State Council on Friday, in which he focused on raising domestic consumption, and CCTV’s reiteration of electric vehicle (EV) and auto purchase subsidies.
The US-China Financial Working Group, which was created following Janet Yellen’s Beijing visit last September met for the fifth time last week in Shanghai. The People’s Bank of China, China’s central bank, had a spokesperson state that the two sides have conducted “professional, pragmatic, frank, and constructive communication” on a variety of trade and economic topics.
Hong Kong’s most heavily traded stocks by value were Tencent, which closed flat despite a new game release coming, Alibaba, which gained +1.69%, Xiaomi, which gained +1.73%, Meituan, which gained +0.93%, and JD.com, which gained +3.88%. More Q2 internet earnings are coming this week with Kuaishou on deck tomorrow after gaining +0.80%. Baidu, which gained +2.39% overnight, reports on Thursday. NetEase gained +1.96% and Trip.com fell -0.66%. Short video platform Bilibili gained +2.17% ahead of its earnings release tomorrow. JD subsidiaries JD Logistics and JD Health gained +5.06% and +7.93%, respectively, after the parent company’s positive results from last week.
EV plays were higher, including Li Auto, which gained +5.29%, BYD, which gained +0.45%, and Xpeng, which gained +3.76%.
Real estate gained on news that minimum price levels would be removed in certain markets.
Mainland investors sold a healthy net -$793 million worth of Hong Kong-listed stocks and ETFs, as their incoherent buying and selling makes me jealous of their brokers’ commissions. Mainland China had a far less enthusiastic trading day, though Shanghai managed a gain on the strength of mega-cap banks and insurance companies.
After the close, appliance maker Midea Group announced its operating revenue increased +10.3% year-over-year (YoY) in the second quarter and its net profit increased +14.11%. Meanwhile, Will Semiconductor reported an operating revenue increase of +36.5% YoY and a whopping net profit increase of +792% YoY (not a typo!).
President Xi met with Vietnam’s President Lam as the Chinese and Philippine Coast Guards are having fun playing a seaborne version of bumper cars.
Northbound Stock Connect data transparency diminished today as stock and aggregate buy and sell data will no longer be made available. It will likely be revised to be produced on a monthly or quarterly basis and we will update you if we have access to the data once again.
The Hang Seng and Hang Seng Tech indexes gained +0.80% and +1.68%, respectively, on volume that declined -6.89% from Friday, which is 93% of the 1-year average. 302 stocks advanced while 173 stocks declined. Main Board short turnover fell -17.94% from Friday, which is 93% of the 1-year average, as 17% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The growth factor and large caps outperformed the value factor and small caps. The top-performing sectors were Industrials, which gained +1.9%, Materials, which gained +1.87%, and Consumer Discretionary, which gained +1.56%. Meanwhile, Health Care was the only negative sector, falling -0.53%. The top-performing subsectors were retail, capital goods, and banks. Meanwhile, media, food & beverage, and health care equipment were among the worst-performing subsectors. Southbound Stock Connect volumes were moderate as Mainland investors sold a healthy -$793 million worth of Hong Kong-listed stocks and ETFs, including the Hong Kong Tracker ETF, which was a very large net sell, and the Hang Seng Tech ETF and China Enterprise ETF, which were large net sells.
Shanghai, Shenzhen, and the STAR Board diverged to close +0.49%, -0.10%, and -0.27%, respectively, on volume that declined -3.45% from yesterday, which is 71% of the 1-year average. 1,959 stocks advanced while 2,865 declined. The value factor and large caps outperformed the growth factor and small caps. The top-performing sectors were Financials, which gained +1.68%, Materials, which gained +1.18%, and Industrials, which gained +0.98%. Meanwhile, Health Care fell -0.50% and Consumer Staples fell -0.32%. The top-performing subsectors were precious metals, construction machinery, and motorcycles. Meanwhile, power generation equipment, biotechnology, and pharmaceuticals were among the worst-performing subsectors. CNY and the Asia Dollar Index gained versus the US dollar. Treasury bonds rallied. Cooper managed a small gain while steel was flat.
Last Night’s Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.8% |
| Hang Seng Tech | HSTECH Index | 1.7% |
| Hong Kong Turnover | HKTurn Index | -6.9% |
| HK Short Sale Turnover | HKSST Index | -17.9% |
| Short Turnover as a % of HK Turnovr | N/A | 17.3% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -791.2 |
| China (Shanghai) | SHCOMP Index | 0.5% |
| China (Shenzhen) | SZCOMP Index | -0.1% |
| China (STAR Board) | Star50 Index | -0.3% |
| Mainland Turnover | .chturn Index | -3.4% |
| 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 | -1.8% |
| India | SENSEX Index | 0% |
| Indonesia | JCI Index | 0.5% |
| Malaysia | FBMKLCI Index | 1.5% |
| Pakistan | KSE100 Index | -0.5% |
| Philippines | PCOMP Index | 0.6% |
| South Korea | KOSPI Index | -0.8% |
| Taiwan | TWSE Index | 0.3% |
| Thailand | SET Index | 1.6% |
| Singapore | STI Index | 0.1% |
| Australia | AS51 Index | 0.1% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 154 | 0.95 |
| Communication Services | 9 | 0.41 |
| Consumer Discretionary | 29 | 1.54 |
| Consumer Staples | 13 | 0.82 |
| Energy | 7 | 0.28 |
| Financials | 24 | 1.11 |
| Health Care | 14 | -0.55 |
| Industrials | 18 | 1.88 |
| Information Technology | 11 | 1.07 |
| Materials | 11 | 1.86 |
| Real Estate | 6 | 0.7 |
| Utilities | 12 | 0.71 |
| China Listed | 487 | 0.71 |
| Communication Services | 13 | 0.92 |
| Consumer Discretionary | 41 | 0.44 |
| Consumer Staples | 32 | -0.32 |
| Energy | 17 | 0.82 |
| Financials | 68 | 1.68 |
| Health Care | 45 | -0.5 |
| Industrials | 74 | 0.98 |
| Information Technology | 93 | 0.3 |
| Materials | 80 | 1.18 |
| Real Estate | 7 | 0.43 |
| Utilities | 17 | 0.59 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0 |
| Alibaba HK | 9988 HK Equity | 1.7 |
| JD.com HK | 9618 HK Equity | 3.9 |
| NetEase HK | 9999 HK Equity | 2 |
| Yum China HK | 9987 HK Equity | -3.2 |
| Baozun HK | 9991 HK Equity | -1.5 |
| Baidu HK | 9888 HK Equity | 2.4 |
| Autohome HK | 2518 HK Equity | 1 |
| Bilibili HK | 9626 HK Equity | 2.2 |
| Trip.com HK | 9961 HK Equity | -0.7 |
| EDU HK | 9901 HK Equity | 1.1 |
| Xpeng HK | 9868 HK Equity | 3.8 |
| Weibo HK | 9898 HK Equity | 1.8 |
| Li Auto HK | 2015 HK Equity | 5.3 |
| Nio Auto HK | 9866 HK Equity | 2.8 |
| Zhihu HK | 2390 HK Equity | -0.4 |
| KE HK | 2423 HK Equity | -2.1 |
| Tencent Music Entertainment HK | 1698 HK Equity | -3.3 |
| Meituan HK | 3690 HK Equity | 0.9 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 0 |
| ALIBABA GROUP HOLDING LTD | 1.7 |
| XIAOMI CORP-CLASS B | 1.7 |
| MEITUAN-CLASS B | 0.9 |
| JD.COM INC-CLASS A | 3.9 |
| CHINA CONSTRUCTION BANK-H | 0.7 |
| IND & COMM BK OF CHINA-H | 1.7 |
| CNOOC LTD | -0.2 |
| LI AUTO INC-CLASS A | 5.3 |
| AIA GROUP LTD | -0.1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SERES GROUP CO L-A | 2.3 |
| KWEICHOW MOUTAI CO LTD-A | -0.4 |
| CONTEMPORARY AMPEREX TECHN-A | 1.1 |
| ZHONGJI INNOLIGHT CO LTD-A | 1.4 |
| ZIJIN MINING GROUP CO LTD-A | 2.2 |
| IND & COMM BK OF CHINA-A | 2.1 |
| AGRICULTURAL BANK OF CHINA-A | 2.7 |
| FOXCONN INDUSTRIAL INTERNE-A | -1.3 |
| BANK OF JIANGSU CO LTD-A | 3.8 |
| EOPTOLINK TECHNOLOGY INC L-A | 1.4 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.15 versus 7.16 Friday
- CNY per EUR 7.89 versus 7.88 Friday
- Yield on 10-Year Government Bond 2.18% versus Friday
- Yield on 10-Year China Development Bank Bond 2.24% versus 2.26% yesterday
- Copper Price: 0.03%
- Steel Price: 0.00%
