Dividends Are This Year’s Stocking Stuffer

Key News

Asian markets were mixed overnight before today’s hawkish US Fed cut as South Korea outperformed, while Pakistan was down -3.41%, bringing its year-to-date return to +80%.

Surprisingly, there is little commentary on whether the PBOC will cut rates as the Loan Prime Rate will be announced tomorrow, while the medium-term lending facility rate date hasn’t been released yet. The PBOC mimicking a Fed cut might limit currency depreciation versus the US dollar. An argument against the cut would be the action taken overnight by the PBOC to rein in speculation on China’s 10-year Treasury bond. The yield on the 10 Year Treasury bond intra-day fell to another all-time low of 1.721%, which is a 0.48% move from yesterday’s close before the PBOC called in traders in the early afternoon to say “no mas,” which led to a closing yield of 1.765% which is up +2.06% from yesterday’s close. A 250bps intra-day move is significant.

Hong Kong and Mainland China rebounded from oversold territory following the current pullback following the post-Politburo release spike. The market has continued in an uptrend since its January bottom, with higher highs and higher lows, though the two steps forward and one back are a bit frustrating.

Dividend stocks had a strong day following the concise release “Several Opinions on Improving and Strengthening the Management of Market Value of Central Enterprises Holding Listed Companies” from the State-owned Assets Supervision and Administration Commission (SASAC). The administrative fee companies have to pay dividends was cut. In addition to the “recommendation” that SOEs pay dividends, Mainland media reported that more than two hundred companies have taken out bank loans to buy back stock following the September policy announcement.

Semiconductor stocks rallied following chatter that President Biden will tighten export controls on his way out as US semiconductor companies’ loss is another company’s gain. Volumes were light as Hong Kong growth stocks didn’t rally as much as US-listed China ADRs overnight.

Brilliance Auto led Automobile stocks higher after the company raised its dividend payout to double-digit yields. Mainland investors bought $266 million of Hong Kong stocks today via Southbound Stock Connect. There was some chatter that Alibaba could use the sale proceeds of the department store chain Intime as a special dividend. The dearth of coverage on Chinese company's shareholder-friendly buybacks and dividends is a bit perplexing. Job security for me, I suppose!  

The Hang Seng and Hang Seng Tech gained +0.83% and +1.82%, respectively, on volume down -18.52% from yesterday, which is 82% of the 1-year average. 358 stocks advanced, while 121 declined. Main Board short turnover decreased by -46% from yesterday, which is 75% of the 1-year average, as 14% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Value and large capitalization stocks outperformed growth and small capitalization stocks. All sectors were higher as technology gained +2.34%, utilities gained +2.04%, and healthcare gained +1.8%. The top sub-sectors were buildings, automobiles, and machinery, while the chemical industry, industry conglomerates, and paper were the worst. Southbound Stock Connect volumes were just above September pre-stimulus levels as Mainland investors bought $266 million of Hong Kong stocks and ETFs with XtalPi, Xiaomi, Robosense, CNOOC, and CCB were small net buys, China Mobile a moderate net buy, Tencent and Meituan were small net sells.

Shanghai, Shenzhen, and the STAR Board diverged +0.62%, +0.58%, and +1.47%, respectively, on volume down -9.89% from yesterday, which is 133% of the 1-year average. 1,773 stocks advanced, while 2,127 declined. Value and large capitalization stocks outperformed growth and small capitalization stocks. The top sectors were technology, up +1.19%, communication services, up +0.97%, and utilities, up +0.79%, while real estate fell -0.63% and industrials fell -0.03%. The top sub-sectors were semiconductors, internet, and computer hardware, while office supplies, forest, and catering were the worst. Northbound Stock Connect volumes were slightly above average. CNY and the Asia dollar index were off small versus the US dollar. Treasury bond prices fell. Copper and steel fell.

Last Night's Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	0.8%
Hang Seng Tech	HSTECH Index	1.8%
Hong Kong Turnover	HKTurn Index	-18.5%
HK Short Sale Turnover	HKSST Index	-26.3%
Short Turnover as a % of HK Turnovr	N/A	14.2%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	265.1
China (Shanghai)	SHCOMP Index	0.6%
China (Shenzhen)	SZCOMP Index	0.6%
China (STAR Board)	Star50 Index	1.5%
Mainland Turnover	.chturn Index	-9.9%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	0.1%
Japan	NKY Index	-0.7%
India	SENSEX Index	-0.6%
Indonesia	JCI Index	-0.7%
Malaysia	FBMKLCI Index	0.1%
Pakistan	KSE100 Index	-3.4%
Philippines	PCOMP Index	-0.5%
South Korea	KOSPI Index	1.1%
Taiwan	TWSE Index	0.7%
Thailand	SET Index	0.2%
Singapore	STI Index	-0.5%
Australia	AS51 Index	-0.1%

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	152	1.12
Communication Services	9	0.97
Consumer Discretionary	30	1.26
Consumer Staples	13	0.17
Energy	7	0.2
Financials	23	0.83
Health Care	13	1.81
Industrials	19	1.63
Information Technology	10	2.34
Materials	10	0.47
Real Estate	6	0.17
Utilities	12	2.05
Mainland China Listed	432	0.48
Communication Services	9	0.98
Consumer Discretionary	31	0.65
Consumer Staples	27	0.24
Energy	16	0.41
Financials	63	0.59
Health Care	40	0.18
Industrials	69	-0.03
Information Technology	85	1.2
Materials	68	0.14
Real Estate	7	-0.63
Utilities	17	0.79

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	0.8
Alibaba HK	9988 HK Equity	0.8
JD.com HK	9618 HK Equity	1.3
NetEase HK	9999 HK Equity	0.7
Yum China HK	9987 HK Equity	0.6
Baozun HK	9991 HK Equity	-8.4
Baidu HK	9888 HK Equity	1.7
Autohome HK	2518 HK Equity	1
Bilibili HK	9626 HK Equity	1.2
Trip.com HK	9961 HK Equity	1.9
EDU HK	9901 HK Equity	1.3
Xpeng HK	9868 HK Equity	4
Weibo HK	9898 HK Equity	3.3
Li Auto HK	2015 HK Equity	5.5
Nio Auto HK	9866 HK Equity	3.5
Zhihu HK	2390 HK Equity	4.5
KE HK	2423 HK Equity	1.1
Tencent Music Entertainment HK	1698 HK Equity	3
Meituan HK	3690 HK Equity	0.9

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
TENCENT HOLDINGS LTD	0.8
ALIBABA GROUP HOLDING LTD	0.8
MEITUAN-CLASS B	0.9
XIAOMI CORP-CLASS B	2.8
XTALPI HOLDINGS LTD	29.8
CHINA CONSTRUCTION BANK-H	0.3
ROBOSENSE TECHNOLOGY CO LTD	17.9
CHINA MOBILE LTD	0.7
CNOOC LTD	0.2
AIA GROUP LTD	0.8

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
ZTE CORP-A	5.8
VISUAL CHINA GROUP CO LTD-A	4
EAST MONEY INFORMATION CO-A	0.5
TIANYU DIGITAL TECHNOLOGY-A	10
KWEICHOW MOUTAI CO LTD-A	2
YONGHUI SUPERSTORES CO LTD-A	-0.1
SHANGHAI FORTUNE TECHGROUP-A	20
GIGADEVICE SEMICONDUCTO-CL A	10
SHENZHEN H&T INTELLIGENT-A	6.2
CAMBRICON TECHNOLOGIES-A	8.3

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.28 versus 7.28 yesterday
• CNY per EUR 7.64 versus 7.64 yesterday
• Yield on 10-Year Government Bond 1.76% versus 1.72% yesterday
• Yield on 10-Year China Development Bank Bond 1.84% versus 1.79% yesterday
• Copper Price -0.71%
• Steel Price -0.80%