Services PMI Beats, Happy New Year!
6 Min. Read Time
Key News
Asian equities ended the last trading day of the year lower on light volumes and little news though Hong Kong managed a gain while Japan and South Korea were closed for New Year’s Eve.
2024 was a solid year for Asian stocks, including Mainland China and Hong Kong, though global investor allocations to the region are likely at all-time lows while US equities are at all-time highs. There are fewer bargain buyers as active mutual funds lost $413 billion in AUM as ETFs and index funds took in $1.7 trillion, according to the Financial Times. ETFs and index funds allocate based on market cap, which has a momentum bias.
December’s “official” PMI survey, conducted by the National Bureau of Statistics (NBS) was mixed as non-manufacturing beat November’s and expectations while manufacturing fell short.
Despite the media’s tariff front running narrative, new export orders declined month-over-month, like the month prior. On the strong non-manufacturing PMI, even Bloomberg News stated the beat was due to “improving domestic demand after Beijing’s stimulus blitz”. The tariff threat continues to keep investors sidelined.
The other big news overnight was President Xi’s New Year speech, which acknowledged the challenges facing China’s economy, though spoke to several of the highlights, including that GDP will exceed RMB 130 trillion, electric vehicle deliveries could rise to above 10 million, and that China is likely to make advances in “Integrated Circuits, Artificial Intelligence, and quantum communication.”
Hong Kong’s half day of trading was mixed as energy stocks outperformed while Alibaba gained +0.49% on reports that its cloud unit will cut prices dramatically and Tencent fell -0.48% on no news.
Mainland investors bought a net $829 million worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect, bringing the 2024 total to $103 billion versus 2023’s $40 billion.
Mainland China had a weak day despite ETFs favored by China’s “National Team”, i.e. investment firms associated with sovereign wealth, saw elevated volumes as stockbrokers, semiconductors, insurance, and growth stocks and sectors were all hit with profit taking.
The central bank and securities regulators announced that 20 firms have been awarded the first RMB 50 billion swap line to be used to purchase stocks. The second round, expected soon, will raise the total to 40 firms.
I am keeping today’s note short as now is a time to celebrate the new year with family and friends. We are looking forward to a strong 2025!
The Hang Seng and Hang Seng Tech indexes diverged to close +0.09% and -0.72%, respectively, on volume that decreased -42% from yesterday, which is 56% of the 1-year average. 263 stocks advanced while 209 stocks declined. Main Board short turnover decreased -31% from yesterday, which is 55% of the 1-year average, as 15% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The value factor and large caps both gained more than the growth factor and small caps. The top-performing sectors were Energy, which gained +1.89%, Consumer Staples, which gained +0.99%, and Utilities, which gained +0.79%. Meanwhile, the worst-performing sectors were Communication Services, which fell -0.66%, and Technology, which fell -0.45%. The top-performing subsectors were consumer durables, coal, and the chemical industry. Meanwhile, semiconductors and textiles were among the worst-performing subsectors. Southbound Stock Connect volumes were at pre-stimulus levels as Mainland investors bought a net $829 million worth of Hong Kong-listes stocks and ETFs, including Xiaomi, Weimob, Tencent, Semiconductor Manufacturing (SMIC), ICBC, CNOOC, and Alibaba. Meituan was net sold.
Shanghai, Shenzhen, and the STAR Board all closed lower by -1.63%, -2.54%, and -3.11%, respectively, on volume that increased +5.49% from yesterday, which is 128% of the 1-year average. 554 stocks advanced while 4,516 stocks declined. The value factor and large caps fell less than the growth factor and small caps. Utilities, which gained +0.13%, was the only positive sector. Meanwhile, the worst-performing sectors were Technology, which fell -3.41%, Financials, which fell -2.38%, and Materials, which fell -1.67%. The top-performing subsectors were oil & gas, highways, and soft drinks. Meanwhile, the securities industry, software, and semiconductors were among the worst-performing subsectors. Northbound Stock Connect volumes were just above average. CNY and the Asia Dollar Index both fell versus the US dollar. Treasury bonds rallied. Copper fell while steel rose.
Last Night's Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.1% |
| Hang Seng Tech | HSTECH Index | -0.7% |
| Hong Kong Turnover | HKTurn Index | -42% |
| HK Short Sale Turnover | HKSST Index | -31.6% |
| Short Turnover as a % of HK Turnovr | N/A | 15.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 824.7 |
| China (Shanghai) | SHCOMP Index | -1.6% |
| China (Shenzhen) | SZCOMP Index | -2.5% |
| China (STAR Board) | Star50 Index | -3.1% |
| Mainland Turnover | .chturn Index | 5.5% |
| 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 | -1% |
| India | SENSEX Index | -0.1% |
| Indonesia | JCI Index | 0.6% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | -0.3% |
| Philippines | PCOMP Index | -0.2% |
| South Korea | KOSPI Index | -0.2% |
| Taiwan | TWSE Index | -0.7% |
| Thailand | SET Index | -0.1% |
| Singapore | STI Index | -0.2% |
| Australia | AS51 Index | -0.9% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -0.03 |
| Communication Services | 9 | -0.67 |
| Consumer Discretionary | 30 | 0.11 |
| Consumer Staples | 13 | 0.98 |
| Energy | 7 | 1.88 |
| Financials | 23 | 0.14 |
| Health Care | 13 | 0.02 |
| Industrials | 19 | 0.03 |
| Information Technology | 10 | -0.45 |
| Materials | 10 | 0.03 |
| Real Estate | 6 | 0.42 |
| Utilities | 12 | 0.79 |
| Mainland China Listed | 432 | -1.67 |
| Communication Services | 9 | -1.43 |
| Consumer Discretionary | 31 | -1.12 |
| Consumer Staples | 27 | -0.3 |
| Energy | 16 | -0.19 |
| Financials | 63 | -2.38 |
| Health Care | 40 | -1.61 |
| Industrials | 69 | -0.95 |
| Information Technology | 85 | -3.41 |
| Materials | 68 | -1.67 |
| Real Estate | 7 | -1.11 |
| Utilities | 17 | 0.13 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.5 |
| Alibaba HK | 9988 HK Equity | 0.5 |
| JD.com HK | 9618 HK Equity | 1 |
| NetEase HK | 9999 HK Equity | -1.3 |
| Yum China HK | 9987 HK Equity | -0.1 |
| Baozun HK | 9991 HK Equity | -0.4 |
| Baidu HK | 9888 HK Equity | -1.3 |
| Autohome HK | 2518 HK Equity | 4 |
| Bilibili HK | 9626 HK Equity | -2.1 |
| Trip.com HK | 9961 HK Equity | 0.8 |
| EDU HK | 9901 HK Equity | 0.6 |
| Xpeng HK | 9868 HK Equity | 0.3 |
| Weibo HK | 9898 HK Equity | -2 |
| Li Auto HK | 2015 HK Equity | -4.2 |
| Nio Auto HK | 9866 HK Equity | -0.7 |
| Zhihu HK | 2390 HK Equity | 0.1 |
| KE HK | 2423 HK Equity | 0.7 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.6 |
| Meituan HK | 3690 HK Equity | -0.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -0.5 |
| SEMICONDUCTOR MANUFACTURING | -2.5 |
| ALIBABA GROUP HOLDING LTD | 0.5 |
| XIAOMI CORP-CLASS B | 0.1 |
| MEITUAN-CLASS B | -0.7 |
| IND & COMM BK OF CHINA-H | 0.8 |
| WEIMOB INC | -6.3 |
| CNOOC LTD | 1.4 |
| CHINA CONSTRUCTION BANK-H | 0.6 |
| CHINA MOBILE LTD | 0.6 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EAST MONEY INFORMATION CO-A | -4.9 |
| ZTE CORP-A | -1 |
| SEMICONDUCTOR MANUFACTURIN-A | -4.7 |
| SHENZHEN WOER HEAT-SHRINK -A | -9.2 |
| CONTEMPORARY AMPEREX TECHN-A | -0.2 |
| KWEICHOW MOUTAI CO LTD-A | -0.1 |
| CITIC SECURITIES CO-A | -4.4 |
| HITHINK ROYALFLUSH INFORMA-A | -6.7 |
| IEIT SYSTEMS CO LTD-A | -2.2 |
| ZHONGJI INNOLIGHT CO LTD-A | -5.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.30 versus 7.30 yesterday
- CNY per EUR 7.58 versus 7.63 yesterday
- Yield on 10-Year Government Bond 1.68% versus 1.71% yesterday
- Yield on 10-Year China Development Bank Bond 1.74% versus 1.77% yesterday
- Copper Price -0.50%
- Steel Price 0.49%
