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More Details On Electronic Device Subsidies Announced After China Close

6 Min. Read Time

Key News

Asian equities were mixed overnight on light volumes ahead of the US Consumer Price Index (CPI) print this morning as Indonesia outperformed and Taiwan underperformed.

Following the release of the US' consumer price index (CPI) for December, Hong Kong and Mainland China futures rose, including Hang Seng Tech futures, which rose almost 2%.

After the China close, the Ministry of Commerce (MoC) issued an “Implementation Plan for the Purchase Subsidy of Mobile Phones, Tablets, Smart Watches,” which stated that consumers will receive a 15% discount on new purchases up to RMB 500 as long as the device doesn’t exceed RMB 6,000. JD.com, which focuses on online electronic goods sales, rose today on the new details on the subsidies.

It is worth noting that hardware companies were weak overnight in the Mainland market. The Biden Administration is mimicking Walter Matthau and Jack Lemmon’s classic Grumpy Old Men by not going quietly into the night. Rather, they are throwing gasoline on every fire to welcome the incoming administration. China electric vehicle stocks and CATL were off on a potential US ban, though I thought that was already assumed to be in the cards.

Zijin Mining fell by -3.83% in Mainland China and fell by -5.85% in Hong Kong as the US added the company to the Uyghur forced labor list.

Taiwan Semiconductor Manufacturing Co. (TSMC) was off on export controls, though Chinese semiconductor stocks outperformed on the new business that Biden & Company created for them.

Meanwhile, the SEC is now suing Elon Musk, the latest gift presented at Biden's going away party. This makes the outrage at the Clinton staff for removing the "W" from the White House keyboards look like child’s play.  

Hong Kong managed to hold onto its gains, though the Mainland market had a broadly weak day following yesterday’s rebound. Mainland investors bought a healthy $1.2 billion worth of Hong Kongstocks today via Southbound Stock Connect, though Southbound was only 31% of total volume. UBTech Robotics gained +9.24% on a humanoid robot partnership with Foxconn, which was announced. Wuxi XDC Cayman gained +2.04% and BeiGene gained +2.96% on positive financial guidance. Hong Kong banks were higher as high dividend payers have been a bright spot over the last year. December New loans year to date (YTD) and aggregate financing YTD beat estimates and increased from November, though they didn’t appear to be a market mover.

The craze in the US over the China social media app Little Red Book (Xiao Hong Shu), which is being called "Red Note" continued overnight with American users posting saying they want to learn more about life in China. The protest over the potential TikTok ban, which includes moving to this app whose data is entirely housed in China, should get Congress thinking. The app is backed by both Tencent and Alibaba and also counts Singapore's Temasek as one of its largest investors. This is a watershed moment for China's internet sector as "Red Note" is currently the number one most downloaded free app in the United States on the Apple app store. China's internet appears to have bridged the gap to integrate more with the US' internet.

The Hang Seng and Hang Seng Tech indexes gained +0.34% and +0.27%, respectively, on volume that declined -18.49% from yesterday, which is 95% of the 1-year average. 191 stocks advanced, while 294 declined. Main Board short turnover decreased by -12.83% from yesterday, which is 98% of the 1-year average, as 16% 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 gained more than growth and small capitalization stocks. The top sectors were communication services, up +1.45%, financials, up +0.78%, and real estate, up +0.52%, while materials fell -2.25%, industrials fell -0.49%, and consumer staples fell -0.39%. The top sub-sectors were semiconductors, construction materials, and software, while nonferrous metals, consumer durables, and pharmaceuticals were the worst. Southbound Stock Connect volumes were at 1.5X pre-stimulus levels as Mainland investors bought $1.2 billion of Hong Kong stocks and ETFs with Tencent and SMIC large net buys, Alibaba, Zijin Mining, and China Mobile moderate net buys, Xiaomi a small net buy, Weibmob and Ubtech Robotics very small net buys and Meituan a moderate net sell.

Shanghai, Shenzhen, and STAR Board fell -0.43%, -0.77%, and -0.42%, respectively, on volume down -12.05% from yesterday, which is 111% of the 1-year average. 1,543 stocks advanced while 3425 declined. Value and small capitalization stocks fell less than growth and large capitalization stocks. Financials gained +0.03% while consumer discretionary fell -1.06%, and technology and industrials fell by -1.05%. The top sub-sectors were leisure products, cultural media, and banking, while precious metals, soft drinks, and electronic components were the worst. Northbound Stock Connect volumes were just above average. CNY was off small, while the Asia dollar index made a small gain versus the US dollar. Treasury bonds rallied. Copper fell while and steel rose.

Last Night's Performance

Country/IndexTicker1-Day Change
China (Hong Kong)HSI Index0.3%
Hang Seng TechHSTECH Index0.3%
Hong Kong TurnoverHKTurn Index-18.5%
HK Short Sale TurnoverHKSST Index-12.8%
Short Turnover as a % of HK TurnovrN/A16.1%
Southbound Stock Connect Net Buy/Sell (US $ Millions)N/A1197.2
China (Shanghai)SHCOMP Index-0.4%
China (Shenzhen)SZCOMP Index-0.8%
China (STAR Board)Star50 Index-0.4%
Mainland Turnover.chturn Index-12%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)N/ANot Available
Jing Daily China Global Luxury IndexCHINALUX Index0.2%
JapanNKY Index-0.1%
IndiaSENSEX Index0.3%
IndonesiaJCI Index1.8%
MalaysiaFBMKLCI Index-0.9%
PakistanKSE100 Index-0.5%
PhilippinesPCOMP Index0.5%
South KoreaKOSPI Index0%
TaiwanTWSE Index-1.2%
ThailandSET Index1%
SingaporeSTI Index-0.4%
AustraliaAS51 Index-0.2%
MSCI China All Shares Index# of StocksAverage 1-Day Change (%)
Hong Kong Listed1520.35
Communication Services91.44
Consumer Discretionary30-0.21
Consumer Staples13-0.39
Energy7-0.32
Financials230.77
Health Care13-0.35
Industrials19-0.49
Information Technology10-0.14
Materials10-2.26
Real Estate60.51
Utilities120.27
Mainland China Listed432-0.67
Communication Services9-0.59
Consumer Discretionary31-1.08
Consumer Staples27-0.54
Energy16-0.34
Financials630.01
Health Care40-1.04
Industrials69-1.06
Information Technology85-1.07
Materials68-0.94
Real Estate7-0.67
Utilities17-0.12
US & Hong Kong Dually ListedTicker1-Day Change (%)
Tencent HK700 HK Equity1.3
Alibaba HK9988 HK Equity0
JD.com HK9618 HK Equity0.9
NetEase HK9999 HK Equity4
Yum China HK9987 HK Equity-0.9
Baozun HK9991 HK Equity-2.9
Baidu HK9888 HK Equity1.2
Autohome HK2518 HK Equity1.3
Bilibili HK9626 HK Equity-1.2
Trip.com HK9961 HK Equity0.3
EDU HK9901 HK Equity-0.1
Xpeng HK9868 HK Equity-1
Weibo HK9898 HK Equity0.2
Li Auto HK2015 HK Equity-3.1
Nio Auto HK9866 HK Equity-2.3
Zhihu HK2390 HK Equity-2.3
KE HK2423 HK Equity-3
Tencent Music Entertainment HK1698 HK Equity-0.6
Meituan HK3690 HK Equity0.1
Hong Kong's Most Heavily Traded by Value 1-Day Change (%)
TENCENT HOLDINGS LTD1.3
SEMICONDUCTOR MANUFACTURING6
MEITUAN-CLASS B0.1
ZIJIN MINING GROUP CO LTD-H-5.9
ALIBABA GROUP HOLDING LTD0
XIAOMI CORP-CLASS B-0.4
NETEASE INC4
AIA GROUP LTD0.7
PING AN INSURANCE GROUP CO-H-0.6
CHINA MOBILE LTD0.3
Shanghai and Shenzhen's Most Heavily Traded by Value 1-Day Change (%)
EAST MONEY INFORMATION CO-A-2.3
ZTE CORP-A-1.4
ZHEJIANG SANHUA INTELLIGEN-A2.2
SEMICONDUCTOR MANUFACTURIN-A0.8
GIGADEVICE SEMICONDUCTO-CL A2.5
CAMBRICON TECHNOLOGIES-A0.3
BLUEFOCUS INTELLIGENT COMM-A4.4
LENS TECHNOLOGY CO LTD-A-10.6
SHENZHEN INFOGEM TECHNOLOG-A3.9
IEIT SYSTEMS CO LTD-A1

Last Night's Exchange Rates, Prices, & Yields

  • CNY per USD 7.33 versus 7.33 yesterday
  • CNY per EUR 7.55 versus 7.52 yesterday
  • Yield on 10-Year Government Bond 1.63% versus 1.64% yesterday
  • Yield on 10-Year China Development Bank Bond 1.67% versus 1.67% yesterday
  • Copper Price -0.05%
  • Steel Price +0.58%