Friday Night Lights, Camera, Action?, Week in Review
4 Min. Read Time
Week in Review
- Asian equities were mostly higher for the week as Hong Kong underperformed and Mainland China outperformed.
- Mainland China did not rise as much as expected upon returning from the National Holiday (“Golden Week”) as the National Development & Reform Commission’s (NDRC) press conference on Tuesday did not include specifics about fiscal spending to support consumption, though such measures are not usually within the NDRC’s purview.
- The People's Bank of China (PBOC) kicked off the first round of its swap program, worth RMB 500 billion, to fund financial institution’s stock purchases.
- National Day Holiday travel data has been strong, with over 17 million taking train trips during the period.
Key News
Asian equities were mostly lower despite the US dollar’s weakness overnight while Hong Kong was closed for Chung Yeung Day, also called Double Ninth Festival, which is a holiday observed on the ninth day of the ninth month in the Chinese calendar.
Mainland China opened lower, sliding lower to close down on lighter volume versus the recent spike as investors waited and took profits in advance of the Ministry of Finance (MoF) press conference on Saturday at 10 am Beijing time (Friday night here in the US). The baseline expectation is for RMB 2 trillion of special government bonds to support housing consumption. There is debt in China, no doubt, but government debt is only 77% of GDP, according to the International Monetary Fund (IMF), so there is plenty of dry powder.
The NDRC’s press conference and the stock market’s poor reaction highlights domestic and foreign investors’ focus on the seriousness of the Chinese government to stimulate. I would go bigger on the fiscal policy to show the skeptics, as we’ve seen an unprecedented move in monetary policy, housing policy, and stock market policy support. As such, I think the government should be a little concerned that Shanghai and Shenzhen both closed below Tuesday’s reopening high, and below the last trading day pre-holiday on September 30th. Yes, obviously, this is due to some short-term profit-taking pullback after the meteoric rise. Brokerage houses have announced masses of new investors opening brokerage accounts.
There were some positives today that the market clearly ignored, including Citic Securities and CICC announcing they will be tapping the PBOC’s swap line to buy stocks.
CSRC Chairman Wu Qing will give a speech at the 2024 Financial Street Forum Annual meeting on October 18th in Beijing. He is expected to speak to the “Nine National Measures” supporting corporate governance, including Chinese companies paying dividends and buying back stock. Real estate stocks rose as banks in Beijing, Shanghai, and Shenzhen pushed through a mass mortgage refinancing at the new, lower Loan Prime Rate (LPR), minus 30 basis points.
A Mainland media source noted that strong domestic and international travel during Golden Week. It also highlighted a report from Meituan stating that “national in-store consumption of life services increased 41.2% year-over-year, and the average daily consumption of tourists increased by 69.6% year-over-year, compared with the previous holiday.” Obviously, year-over-year is a low bar comparison, but could it be a sign of consumption green shoots? With Singles Day a month away, we’ll have another measure to gauge sentiment.
Hong Kong was closed today.
Shanghai, Shenzhen, and the STAR Board fell -2.55%, -3.94%, and -5.79%, respectively, on volume that decreased -26.65% from yesterday, which is 191% of the 1-year average. 429 stocks advanced while 4,629 stocks declined. The value factor and large caps fell less than the growth factor and small caps. Real estate was the only positive sector, gaining +0.08%. Meanwhile, Technology fell -4.65%, Communication Services fell -4.63%, and Health Care fell -4.39%. Soft drinks, real estate, and precious metals were among the only positive subsectors. Meanwhile, semiconductors, biotech, and education were among the worst-performing subsectors. Northbound Stock Connect was closed today. CNY and the Asia Dollar Index rebounded versus the US dollar. Copper gained while steel fell.
Last Night's Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 3% |
| Hang Seng Tech | HSTECH Index | 2.1% |
| Hong Kong Turnover | HKTurn Index | -23.8% |
| HK Short Sale Turnover | HKSST Index | -16.9% |
| Short Turnover as a % of HK Turnovr | N/A | 12.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 0 |
| China (Shanghai) | SHCOMP Index | -2.5% |
| China (Shenzhen) | SZCOMP Index | -3.9% |
| China (STAR Board) | Star50 Index | -5.8% |
| Mainland Turnover | .chturn Index | -26.7% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.4% |
| Japan | NKY Index | 0.6% |
| India | SENSEX Index | -0.3% |
| Indonesia | JCI Index | 0.5% |
| Malaysia | FBMKLCI Index | -0.5% |
| Pakistan | KSE100 Index | -0.1% |
| Philippines | PCOMP Index | -1.4% |
| South Korea | KOSPI Index | -0.1% |
| Taiwan | TWSE Index | 1.1% |
| Thailand | SET Index | 0.1% |
| Singapore | STI Index | -0.3% |
| Australia | AS51 Index | -0.1% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 154 | 0 |
| Communication Services | 9 | 0 |
| Consumer Discretionary | 29 | 0 |
| Consumer Staples | 13 | 0 |
| Energy | 7 | 0 |
| Financials | 24 | 0 |
| Health Care | 14 | 0 |
| Industrials | 18 | 0 |
| Information Technology | 11 | 0 |
| Materials | 11 | 0 |
| Real Estate | 6 | 0 |
| Utilities | 12 | 0 |
| China Listed | 487 | -2.52 |
| Communication Services | 13 | -4.64 |
| Consumer Discretionary | 41 | -2.51 |
| Consumer Staples | 32 | -2.26 |
| Energy | 17 | -1.42 |
| Financials | 68 | -0.52 |
| Health Care | 45 | -4.39 |
| Industrials | 74 | -3.73 |
| Information Technology | 93 | -4.65 |
| Materials | 80 | -1.89 |
| Real Estate | 7 | 0.07 |
| Utilities | 17 | -0.87 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EAST MONEY INFORMATION CO-A | 1.5 |
| CITIC SECURITIES CO-A | 1.5 |
| CONTEMPORARY AMPEREX TECHN-A | -6.3 |
| PING AN INSURANCE GROUP CO-A | -1.6 |
| KWEICHOW MOUTAI CO LTD-A | -2.1 |
| ISOFTSTONE INFORMATION TEC-A | 5.4 |
| WULIANGYE YIBIN CO LTD-A | -1.5 |
| HITHINK ROYALFLUSH INFORMA-A | -4.4 |
| BYD CO LTD -A | -5 |
| CHINA YANGTZE POWER CO LTD-A | 0.1 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.07 versus 7.08 yesterday
- CNY per EUR 7.73 versus 7.73 yesterday
- Yield on 10-Year Government Bond 2.14% versus 2.14% yesterday
- Yield on 10-Year China Development Bank Bond 2.23% versus 2.23% yesterday
- Copper Price 0.35%
- Steel Price -0.14%
