No Executive Order Means No Problem For US Investors
5 Min. Read Time
Key News
Asian equities were mixed but mostly higher overnight as Mainland China outperformed while Hong Kong and the Philippines underperformed.
The US Department of Defense (DOD) added CATL and Tencent to its Blacklist. Tencent fell -7.28% in Hong Kong overnight while CATL fell by only -2.84% in Mainland China. This reflects the differences in reactivity to foreign breaking news for international investors in Hong Kong versus mostly local investors in Mainland China. Neither company has a sponsored American depositary receipt (ADR) though Tencent has unsponsored ADRs, which fell over -6% in the US yesterday. Many brokers reiterated their Buy ratings on the stocks following the news.
Crucially, the blacklist is only a list of companies that the DOD cannot do business with. It is not an investment ban. An executive order would be required for the additions to this list to be added to a restricted investment list. The Biden Administration is likely trying to push through as much policy as possible before Trump takes office. As we have said before, we have good reason to believe that Trump’s approach to China will differ significantly.
It is also important to note that Xiaomi successfully challenged the designation a while back. Both CATL and Tencent have protested the inclusion on the list, saying it was a "mistake" and that they do not do any defense-related business.
Camera security company Sense Time says being added to the list has absolutely no impact on its business. The company has been restricted for US investors since a Trump Executive Order.
Semiconductor company Luxshare rose +3.77% on the approval of its acquisition of automotive supplier Leoni.
According to Sina Finance, live streaming is estimated to have accounted for 80% of the growth in China’s E-Commerce industry in 2024. That is impressive as most people in the West have never purchased an item from a live stream. Douyin, China's "TikTok", increased its online gross merchandise volume (GMV) by over +80% in 2024. Bytedance has also launched the TikTok Shop, which includes live streaming E-Commerce, globally. This could be a driver of more online spending globally. Giants JD and Alibaba are also competing in the space to remain competitive.
The Hang Seng and Hang Seng Tech indexes fell -1.22% and -0.92%, respectively, on volume that increased +69% from yesterday. Mainland investors bought a net $1.65 billion worth of Hong Kong-listed stocks overnight via Southbound Stock Connect. The top-performing sectors were Materials, which gained +1.88%, Consumer Staples, which gained +0.38%, and Real Estate, which gained +0.04%. Meanwhile, the worst-performing sectors were Communication Services, which fell -5.77%, Information Technology, which fell -3.65%, and Health Care, which fell -1.66%.
Shanghai, Shenzhen, and the STAR Board all closed higher by +0.71%, +1.60%, and +2.86%, respectively. The top-performing sectors were Information Technology, which gained +3.69%, Consumer Discretionary, which gained +1.62%, and Materials, which gained +1.03%. Meanwhile, the worst-performing sectors were Health Care, which fell -1.60%, Energy, which fell -1.02%, and Utilities, which fell -0.67%.
Last Night’s Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.2% |
| Hang Seng Tech | HSTECH Index | -0.9% |
| Hong Kong Turnover | HKTurn Index | 69.1% |
| HK Short Sale Turnover | HKSST Index | 50.5% |
| Short Turnover as a % of HK Turnovr | N/A | 14.3% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -48.1 |
| China (Shanghai) | SHCOMP Index | 0.7% |
| China (Shenzhen) | SZCOMP Index | 1.6% |
| China (STAR Board) | Star50 Index | 2.9% |
| Mainland Turnover | .chturn Index | 1.7% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.2% |
| Japan | NKY Index | 2% |
| India | SENSEX Index | 0.3% |
| Indonesia | JCI Index | 0% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | -0.4% |
| Philippines | PCOMP Index | -1.2% |
| South Korea | KOSPI Index | 0.1% |
| Taiwan | TWSE Index | 0.4% |
| Thailand | SET Index | 1.3% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | 0.3% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -2.12 |
| Communication Services | 9 | -5.77 |
| Consumer Discretionary | 30 | -0.72 |
| Consumer Staples | 13 | 0.38 |
| Energy | 7 | -1.16 |
| Financials | 23 | -0.27 |
| Health Care | 13 | -1.66 |
| Industrials | 19 | -0.74 |
| Information Technology | 10 | -3.65 |
| Materials | 10 | 1.88 |
| Real Estate | 6 | 0.04 |
| Utilities | 12 | -1.13 |
| Mainland China Listed | 432 | 0.8 |
| Communication Services | 9 | 0.82 |
| Consumer Discretionary | 31 | 1.62 |
| Consumer Staples | 27 | 0.11 |
| Energy | 16 | -1.02 |
| Financials | 63 | 0.79 |
| Health Care | 40 | -1.6 |
| Industrials | 69 | -0.27 |
| Information Technology | 85 | 3.69 |
| Materials | 68 | 1.03 |
| Real Estate | 7 | 0.69 |
| Utilities | 17 | -0.67 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -7.3 |
| Alibaba HK | 9988 HK Equity | -0.9 |
| JD.com HK | 9618 HK Equity | -0.5 |
| NetEase HK | 9999 HK Equity | 0.1 |
| Yum China HK | 9987 HK Equity | 1.5 |
| Baozun HK | 9991 HK Equity | 7.6 |
| Baidu HK | 9888 HK Equity | -0.4 |
| Autohome HK | 2518 HK Equity | -0.7 |
| Bilibili HK | 9626 HK Equity | 0.5 |
| Trip.com HK | 9961 HK Equity | -2.5 |
| EDU HK | 9901 HK Equity | 0.2 |
| Xpeng HK | 9868 HK Equity | 2.7 |
| Weibo HK | 9898 HK Equity | 0.8 |
| Li Auto HK | 2015 HK Equity | -1.6 |
| Nio Auto HK | 9866 HK Equity | -0.4 |
| Zhihu HK | 2390 HK Equity | -6.7 |
| KE HK | 2423 HK Equity | -2.6 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.6 |
| Meituan HK | 3690 HK Equity | -1.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -7.3 |
| XIAOMI CORP-CLASS B | -5.9 |
| ALIBABA GROUP HOLDING LTD | -0.9 |
| MEITUAN-CLASS B | -1.3 |
| SEMICONDUCTOR MANUFACTURING | 5.1 |
| CHINA CONSTRUCTION BANK-H | -0.2 |
| PING AN INSURANCE GROUP CO-H | -1.5 |
| IND & COMM BK OF CHINA-H | 0.4 |
| CHINA MOBILE LTD | -0.4 |
| CNOOC LTD | -0.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| CONTEMPORARY AMPEREX TECHN-A | -2.8 |
| EAST MONEY INFORMATION CO-A | 2.1 |
| ZTE CORP-A | 1.8 |
| SEMICONDUCTOR MANUFACTURIN-A | 4.2 |
| CAMBRICON TECHNOLOGIES-A | 10.5 |
| SHENZHEN WOER HEAT-SHRINK -A | 8.9 |
| HYGON INFORMATION TECHNOLO-A | 9.7 |
| IEIT SYSTEMS CO LTD-A | 5.8 |
| BOE TECHNOLOGY GROUP CO LT-A | 6 |
| SHANDONG LUKANG PHARMA-A | -0.4 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.33 versus 7.33 yesterday
- CNY per EUR 7.61 versus 7.62 yesterday
- Yield on 10-Year Government Bond 1.61% versus 1.60% yesterday
- Yield on 10-Year China Development Bank Bond 1.66% versus 1.64% yesterday
- Copper Price +0.08%
- Steel Price -0.09%
