$2.1 Billion Net Flows To Alibaba In First Week of Connect, Week in Review
7 Min. Read Time
Week in Review
- Asian equities were mostly higher this week as India and Singapore outperformed while Mainland China underperformed.
- Alibaba’s Hong Kong-listed shares were added to Southbound Stock Connect on Tuesday, leading to nearly $2 billion in inflows from Mainland investors.
- China’s massive $5 trillion mortgage refinancing push, announced last week, could occur by month-end, according to Bloomberg, which could help sentiment in the real estate market.
- China’s August inflation, released Monday, was softer than expected both in terms of producer and consumer prices.
Key News
Asian equities were largely higher on light volumes, except for Japan, China, and India, as the US dollar weakened against regional currencies.
The Chinese government did something no Western politician dares, which is delay seniors’ entitlements by raising the retirement age to 63 from 60 for male workers, 58 from 55 for white collar female workers, and 55 from 50 for blue collar female workers. The full implementation will take 15 years as, beginning in January, the retirement age will be pushed out one month every four months.
The US House of Representatives and White House passed a whole host of China related bills, moving to eliminate the duty free de minimis exemption on imports under $800 and banning Chinese electric vehicles (EVs) and drones. Hong Kong stocks did not react, as these measures still need to pass in the Senate.
Hong Kong posted small gains despite next week’s mid-autumn festival, which means Hong Kong will be closed on Wednesday and China’s stock market will be closed on Monday and Tuesday. The holidays also mean Southbound Stock Connect is closed until Thursday, which likely explains the profit taking in Alibaba, which fell -0.54%.
Regardless of the market’s closure next week, Mainland investors bought another HKD 1.32 billion ($168 million) worth of the stock, which brings the week’s total net buy to $2.1 billion. The company also announced they bought 468,500 US ADRs yesterday which would be 4.3% of the ADR’s total volume. Over the last three weeks the company has bought 0.394% of shares outstanding. Thanks, management!
Hong Kong had a decent day as all sectors were positive. The most heavily traded stocks by volume following Alibaba were Tencent, which gained +0.59% after buying 2.67 million shares today, Meituan, which gained +0.57%, Akeso, which gained +9.5%, and CNOOC, which gained +1.76%. Mainland China had a strange day that was fitting for Friday the 13th as broad indices struggled (again) on light volumes as Treasury bonds rallied (again). What made it strange was that mega cap banks and energy and materials companies such as Zijin Mining, which gained +3.38%, CYPDC, which gained +1.58% and Foxconn +2.18% held up, though CATL fell -3.09%, BYD fell -0.79%, liquor stocks Kweichow Moutai and Wuliangye Yibin fell -2.32% and -3.67%, respectively. Mid and small caps underperformed large caps. The National Team ETFs had below average volumes
There is a big China economic data release coming this weekend!
I caught up with my commodity trend-following friends at Mt Lucas. They are short many commodities which is likely driven by the US and global economy slowing. Everyone seems to forget that’s why the Fed is cutting, i.e. a recession is coming. Think that’s positive for US stocks or the US dollar? Me neither! Think foreign investors will stick around as their US stocks start losing money due to FX depreciation? Think the yen carry trade unwind is over? Me neither. We shall see and time will tell. Check out Mt. Lucas’ blog as lots of good, non-consensus views, in my opinion.
The IMF released a piece yesterday titled “Trade Balances in China and the US Are Largely Driven by Domestic Macro Forces”. The piece takes a data driven perspective on the common US politician rhetoric that Chinese government subsidies are leading to overcapacity and flooding the world with cheap goods. The IMF is being kind when it calls such a view “incomplete” as, yes, the Chinese government does provide subsidies to “priority sectors such as software, automobiles, transportation, semiconductor and more recently green technology” though there are no signs of overcapacity. China exports lots of goods that don’t receive subsidies while even EV exports only accounted for only 1% of Chinese goods. The real issue is China’s weak domestic consumption combined with United States’ “persistent decline in US domestic savings” i.e. too much spending. It is a worthwhile read as it takes an analytical approach to an issue. The reality is the US factory utilization (77%) is higher than China’s (74.9%).
The Hang Seng and Hang Seng Tech indexes gained +0.75% and +0.13%, respectively, on volume that declined -3.05% from yesterday, which is 86% of the 1-year average. 339 stocks advanced while 144 stocks fell. Main Board short turnover fell -13.45% from yesterday, which is 62% of the 1-year average, as 12% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Value and large caps outperformed growth and small caps. All sectors were positive, including healthcare, which gained +2.45%, materials, which gained +2.44%, and industrials, which gained +1.67%. The top-performing subsectors were pharmaceuticals, biotech, materials, and consumer durables. Meanwhile, food & beverage, semiconductors, and consumer services were among the worst-performing. Southbound Stock Connect volumes were light as Mainland investors bought a net $30 million worth of Hong Kong-listed stocks and ETFs, including Alibaba, which was a large/moderate net buy. Meanwhile, Meituan was a moderate net sell, and the Hong Kong Tracker ETF and Hang Seng Tech ETFs were small net sells.
Shanghai, Shenzhen, and the STAR Board fell -0.48%, -1.08%, and -0.58%, respectively, on volume that increased +1.78% from yesterday, which is 67% of the 1-year average. 980 stocks advanced while 3,947 stocks declined. The value factor and large caps fell less than growth and small caps. The top-performing sectors were Utilities, which gained +1.13%, Real Estate, which gained +0.69%, and Technology, which gained +0.53%. Meanwhile, Consumer Staples fell -1.53%, Industrials fell -0.64%, and Health Care fell -0.33%. The top-performing subsectors were precious metals, telecom, and insurance. Meanwhile, liquor, fine chemicals, and electric power grid were among the worst-performing subsectors. Northbound Stock Connect volumes were light. CNY and the Asia Dollar Index had a strong night versus the US dollar. Copper and steel gained.
Last Night's Performance
Country/Index | Ticker | 1-Day Change |
---|---|---|
China (Hong Kong) | HSI Index | 0.7% |
Hang Seng Tech | HSTECH Index | 0.1% |
Hong Kong Turnover | HKTurn Index | -3.1% |
HK Short Sale Turnover | HKSST Index | -13.5% |
Short Turnover as a % of HK Turnovr | N/A | 12.1% |
Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 30.6 |
China (Shanghai) | SHCOMP Index | -0.5% |
China (Shenzhen) | SZCOMP Index | -1.1% |
China (STAR Board) | Star50 Index | -0.6% |
Mainland Turnover | .chturn Index | 1.8% |
Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
Jing Daily China Global Luxury Index | CHINALUX Index | 1.3% |
Japan | NKY Index | -0.7% |
India | SENSEX Index | -0.1% |
Indonesia | JCI Index | 0.2% |
Malaysia | FBMKLCI Index | 0.8% |
Pakistan | KSE100 Index | 0.5% |
Philippines | PCOMP Index | 0% |
South Korea | KOSPI Index | 0.1% |
Taiwan | TWSE Index | 0.5% |
Thailand | SET Index | 0.2% |
Singapore | STI Index | 0.2% |
Australia | AS51 Index | 0.3% |
MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
---|---|---|
Hong Kong Listed | 154 | 0.76 |
Communication Services | 9 | 0.57 |
Consumer Discretionary | 29 | 0.04 |
Consumer Staples | 13 | 0.33 |
Energy | 7 | 1.01 |
Financials | 24 | 1.44 |
Health Care | 14 | 2.45 |
Industrials | 18 | 1.67 |
Information Technology | 11 | 0.94 |
Materials | 11 | 2.45 |
Real Estate | 6 | 1.44 |
Utilities | 12 | 1.24 |
China Listed | 487 | -0.04 |
Communication Services | 13 | -0.19 |
Consumer Discretionary | 41 | 0.17 |
Consumer Staples | 32 | -1.5 |
Energy | 17 | 0.35 |
Financials | 68 | 0.34 |
Health Care | 45 | -0.3 |
Industrials | 74 | -0.61 |
Information Technology | 93 | 0.55 |
Materials | 80 | 0.15 |
Real Estate | 7 | 0.72 |
Utilities | 17 | 1.16 |
US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
---|---|---|
Tencent HK | 700 HK Equity | 0.6 |
Alibaba HK | 9988 HK Equity | -0.5 |
JD.com HK | 9618 HK Equity | -0.1 |
NetEase HK | 9999 HK Equity | 0.5 |
Yum China HK | 9987 HK Equity | 0.5 |
Baozun HK | 9991 HK Equity | -1 |
Baidu HK | 9888 HK Equity | 0.6 |
Autohome HK | 2518 HK Equity | 0.8 |
Bilibili HK | 9626 HK Equity | -0.8 |
Trip.com HK | 9961 HK Equity | 0.4 |
EDU HK | 9901 HK Equity | -2 |
Xpeng HK | 9868 HK Equity | -1.3 |
Weibo HK | 9898 HK Equity | 0.4 |
Li Auto HK | 2015 HK Equity | -0.5 |
Nio Auto HK | 9866 HK Equity | -3 |
Zhihu HK | 2390 HK Equity | 0.6 |
KE HK | 2423 HK Equity | -4.1 |
Tencent Music Entertainment HK | 1698 HK Equity | 0.1 |
Meituan HK | 3690 HK Equity | 0.6 |
Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
---|---|
ALIBABA GROUP HOLDING LTD | -0.5 |
TENCENT HOLDINGS LTD | 0.6 |
MEITUAN-CLASS B | 0.6 |
CNOOC LTD | 1.8 |
XIAOMI CORP-CLASS B | 1.6 |
CHINA CONSTRUCTION BANK-H | 1.7 |
IND & COMM BK OF CHINA-H | 1.7 |
PING AN INSURANCE GROUP CO-H | 1.4 |
HONG KONG EXCHANGES & CLEAR | 1.4 |
CHINA MOBILE LTD | 1.2 |
Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
---|---|
AGRICULTURAL BANK OF CHINA-A | -0.9 |
BOE TECHNOLOGY GROUP CO LT-A | -1.6 |
IND & COMM BK OF CHINA-A | 0.4 |
ZIJIN MINING GROUP CO LTD-A | 3.4 |
LINGYI ITECH GUANGDONG CO -A | -1.1 |
WINTIME ENERGY GROUP CO L-A | -0.9 |
FOXCONN INDUSTRIAL INTERNE-A | 2.2 |
CMOC GROUP LTD-A | -0.6 |
TONGLING NONFERROUS METALS-A | 0.7 |
BANK OF CHINA LTD-A | -1.1 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.09 versus 7.12 yesterday
- CNY per EUR 7.87 versus 7.85 yesterday
- Yield on 10-Year Government Bond 2.07% versus 2.10% yesterday
- Yield on 10-Year China Development Bank Bond 2.17% versus 2.19% yesterday
- Copper Price +0.93%
- Steel Price +1.20%