Key News

Asian equities were higher, despite a stronger US dollar due to rising US Treasury yields, except for India. Mainland China remains closed for the week-long national holiday until tonight.

It is worth noting that India rebounded from its intra-day lows once other Asian markets closed, indicating India could be a funding source for the China re-rating trade.

Hong Kong bounced around the room in the morning, but grinded higher as the National Development and Reform Commission (NDRC) announced that Director Zheng Zhajie and several Deputy Directors will host a press conference tomorrow at 10 am to review the “implementation of a package of incremental policies to solidly promote the economic structure to improve and development trend to continue to improve”. We’ve seen the monetary, housing, and stock market policy bazooka unleased, but with very little fiscal stimulus thus far, except subsidies for auto and home appliance purchases. The press conference should provide further clarity on fiscal measures.

The rock band Imagine Dragon’s popular song titled “Whatever It Takes” is what the Chinese government is committed to doing to get the economy, consumer confidence, and domestic consumption higher. Over the weekend, a Mainland brokerage noted the government fiscal stimulus will be “a gradual strategy” versus “an immediate large-scale expansion” as they expect “the initial expansion scale will be about 2 trillion yuan of additional bonds, which will be used to support the trade-in of consumer goods, strengthen social security benefits, and help local governments repay their debts.”

Based on economic data and government policy meetings at month-end, December’s Chinese Economic Working Conference, and next year’s Two Sessions, there are multiple opportunities for the government to press the gas pedal, as necessary. Skepticism about the Chinese government’s ability to improve the economy was cited in a Bloomberg News article on the topic. CLSA and Goldman Sachs equity strategists are the only two firms that have upgraded their China model weights thus far. Moving the sentiment supertanker will take time, which means more buyers will likely be forced to come back into the space in the coming months, quarters, and years.

Train data indicates a strong National Holiday, with 17 million passengers taking trips on each of the last six days. Meanwhile, Macau hotel occupancy rates were 95% during the holiday.

Hong Kong was led higher by growth stocks and sectors, though it was another broad rally, led by Hong Kong’s most heavily traded stocks by value, which were Tencent, which gained +0.17%, Alibaba, which gained +0.61%, Semiconductor Manufacturing International (SMIC), which gained +21.76%, Meituan, which fell -0.09%, and Hong Kong Exchanges, which gained +4.68%. Tomorrow’s China reopening should be fun to watch! Shanghai and Shenzhen stocks have a limit-up of 10%, which means trading will be halted once the market is up by that amount, while the STAR Board has a limit-up of 20%.

The Hang Seng and Hang Seng Tech indexes gained +1.60% and +3.05%, respectively, on volume that increased +13.5% from Friday, which is 266% of the 1-year average. 448 stocks advanced, while 60 stocks declined. Main Board short turnover increased 40% from Friday, which is 248% of the 1-year average, as 16% 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 small caps outperformed the value factor and large caps. All sectors were positive, except for Real Estate, which fell -0.02%. The market was led higher by Information Technology, which gained +5.46%, Industrials, which gained +4.84%, and Utilities, which gained +4.45%. All subsectors were positive, except for media, led higher by semiconductors, diversified finance, and capital goods. Southbound Stock Connect will reopen tonight.

Shanghai, Shenzhen, and the STAR Board are closed until tomorrow.

Last Night’s Performance

Last Night's Exchange Rates, Prices, & Yields

Mainland China's currency, commodity, and bond markets were closed overnight.