Consumer & Technology Stocks Lead China Rally
5 Min. Read Time
Key News
Asian equities were mixed overnight as China’s markets outperformed significantly, following a lackluster start to the year.
All sectors were higher in Mainland China and Hong Kong. Technology and consumer stocks were leaders overnight as Alibaba gained +2.37%, Tencent gained +2.46%, the most-traded Hong Kong stock by value, and Meituan gained +5.02%.
Mainland investors were active in Hong Kong, buying $1.6 billion worth of stocks and ETFs, after massive buying of $6 billion last week. They did not sell this rally. Rather, they bought into it.
Comments from policymakers helped fuel the market rally. The China Securities Regulatory Commission (CSRC), China’s SEC, vowed to develop more market stabilization mechanisms. Meanwhile, China’s central bank governor Pan Gongsheng spoke at the Asian Financial Forum. The governor said that China’s fiscal expenditure should increase significantly to meet economic challenges.
On the US policy front, two positive catalysts emerged yesterday and this morning. Members of the incoming Trump Administration said that new tariffs could be introduced gradually, perhaps even on a month-to-month basis, to allow ample opportunity for negotiation. Meanwhile, Trump confidant Elon Musk is said to have been indicated by Bytedance as a suitable new owner for TikTok in the US, should the impending ban pass Supreme Court muster. Remember, though, that the President Elect has filed an amicus brief with the Supreme Court in support of Bytedance’s case.
Interestingly, American users of TikTok have been flocking to China’s “Little Red Book” or “Red Note” social media platform in protest of the potential ban. The social media platform is not yet fully available in English, so many are using translation services to interact with other users and operate the platform. The app is currently the #1 most downloaded app in Apple's app store in the United States.
President Xi will send a high-level delegate to Trump’s inauguration in Washington, DC. Beijing is considering sending foreign minister Wang Yi. But, Trump’s team requested that they send Cai Qi to the event. This is important as Cai Qi is not in China’s foreign service. Rather, he is an important member of the Politburo Standing Committee who has been involved in party messaging and internet regulation. This represents a deep understanding of China’s politics within the incoming administration and an effort to appeal to the party’s inner sanctum. Wang Yi would have been the natural choice, but the administration will be dealing with him a great deal anyway as foreign minister. So, having Cai Qi attend could create a positive voice from within the party during negotiations.
Travel companies were higher after multiple local governments indicated that they would expand tourism activity vouchers. The local government voucher programs are one of the most underrated methods of stimulating consumption as everyone focuses on the central government. The programs have been mostly successful and are likely to continue with implicit approval from the top.
Cloud service and online marketing platform Weimob surged nearly 30% overnight. The company’s shares had fallen after Tencent cut its stake in the company last week.
The Hang Seng and Hang Seng Tech indexes both closed higher by +1.83% and +3.08%, respectively, on volume that increased +18% from yesterday. Mainland investors bought a net $1.6 billion worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect. The top-performing sectors overnight were Health Care, which gained +3.34%, Consumer Discretionary, which gained +3.04%, and Information Technology, which gained 2.86%. Meanwhile, the worst-performing sectors were Materials, which gained +0.29%, Utilities, which gained +0.75%, and Real Estate, which gained +1.10%.
Shanghai, Shenzhen, and the STAR Board The top-performing sectors overnight were Information Technology, which gained +4.18%, Consumer Discretionary, which gained +3.54%, and Industrials, which gained +3.10%. Meanwhile, the worst-performing sectors were Utilities, which gained +1.15%, Energy, which gained +1.24%, and Materials, which gained +1.53%.
Last Night’s Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 1.8% |
| Hang Seng Tech | HSTECH Index | 3.1% |
| Hong Kong Turnover | HKTurn Index | 17.6% |
| HK Short Sale Turnover | HKSST Index | 4.1% |
| Short Turnover as a % of HK Turnovr | N/A | 15% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1319.9 |
| China (Shanghai) | SHCOMP Index | 2.5% |
| China (Shenzhen) | SZCOMP Index | 4.2% |
| China (STAR Board) | Star50 Index | 3.1% |
| Mainland Turnover | .chturn Index | 39.9% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.9% |
| Japan | NKY Index | -1.8% |
| India | SENSEX Index | 0.2% |
| Indonesia | JCI Index | -0.9% |
| Malaysia | FBMKLCI Index | -0.6% |
| Pakistan | KSE100 Index | 0.4% |
| Philippines | PCOMP Index | -0.7% |
| South Korea | KOSPI Index | 0.3% |
| Taiwan | TWSE Index | 1.4% |
| Thailand | SET Index | -1% |
| Singapore | STI Index | -0.1% |
| Australia | AS51 Index | 0.5% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | 2.32 |
| Communication Services | 9 | 2.28 |
| Consumer Discretionary | 30 | 3.04 |
| Consumer Staples | 13 | 2.43 |
| Energy | 7 | 1.11 |
| Financials | 23 | 1.54 |
| Health Care | 13 | 3.34 |
| Industrials | 19 | 2.39 |
| Information Technology | 10 | 2.86 |
| Materials | 10 | 0.29 |
| Real Estate | 6 | 1.1 |
| Utilities | 12 | 0.75 |
| Mainland China Listed | 432 | 2.67 |
| Communication Services | 9 | 2.9 |
| Consumer Discretionary | 31 | 3.54 |
| Consumer Staples | 27 | 1.97 |
| Energy | 16 | 1.24 |
| Financials | 63 | 2.43 |
| Health Care | 40 | 2.49 |
| Industrials | 69 | 3.1 |
| Information Technology | 85 | 4.18 |
| Materials | 68 | 1.53 |
| Real Estate | 7 | 2.22 |
| Utilities | 17 | 1.15 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 2.5 |
| Alibaba HK | 9988 HK Equity | 2.4 |
| JD.com HK | 9618 HK Equity | 5.3 |
| NetEase HK | 9999 HK Equity | 0.1 |
| Yum China HK | 9987 HK Equity | 4.1 |
| Baozun HK | 9991 HK Equity | 3 |
| Baidu HK | 9888 HK Equity | 2.2 |
| Autohome HK | 2518 HK Equity | 0.4 |
| Bilibili HK | 9626 HK Equity | 4.3 |
| Trip.com HK | 9961 HK Equity | 1.6 |
| EDU HK | 9901 HK Equity | -3.6 |
| Xpeng HK | 9868 HK Equity | 8.5 |
| Weibo HK | 9898 HK Equity | 3.9 |
| Li Auto HK | 2015 HK Equity | 3.3 |
| Nio Auto HK | 9866 HK Equity | -1.4 |
| Zhihu HK | 2390 HK Equity | -0.5 |
| KE HK | 2423 HK Equity | 3 |
| Tencent Music Entertainment HK | 1698 HK Equity | -2.4 |
| Meituan HK | 3690 HK Equity | 5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 2.5 |
| MEITUAN-CLASS B | 5 |
| SEMICONDUCTOR MANUFACTURING | 2.2 |
| ALIBABA GROUP HOLDING LTD | 2.4 |
| XIAOMI CORP-CLASS B | 2.9 |
| WEIMOB INC | 26.8 |
| PING AN INSURANCE GROUP CO-H | 1.1 |
| AIA GROUP LTD | 1.2 |
| CHINA MOBILE LTD | 0.2 |
| CHINA CONSTRUCTION BANK-H | 1.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EAST MONEY INFORMATION CO-A | 7.9 |
| ZTE CORP-A | 6.4 |
| SEMICONDUCTOR MANUFACTURIN-A | 3.9 |
| HITHINK ROYALFLUSH INFORMA-A | 14.7 |
| SERES GROUP CO L-A | 5.1 |
| LENS TECHNOLOGY CO LTD-A | 19 |
| GIGADEVICE SEMICONDUCTO-CL A | 10 |
| CAMBRICON TECHNOLOGIES-A | -3.5 |
| JIANGSU HOPERUN SOFTWARE C-A | 13.1 |
| IEIT SYSTEMS CO LTD-A | 8.2 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.33 versus 7.33 yesterday
- CNY per EUR 7.52 versus 7.49 yesterday
- Yield on 10-Year Government Bond 1.64% versus 1.66% yesterday
- Yield on 10-Year China Development Bank Bond 1.67% versus 1.67% yesterday
- Copper Price -0.07%
- Steel Price +0.34%
