
Asian Markets Surge As US CPI Fuels Optimism
6 Min. Read Time
Key News
Asian equities followed US stocks higher following yesterday’s US CPI print, with Taiwan also higher in advance of TSCM’s financial results, which beat expectations. South Korea and Hong Kong outperformed while the Philippines underperformed as Chinese and Philippine government officials met to cool down South China Sea disputes. Although both Hong Kong and China had a broad rally, they came off their intra-day highs. A few interesting items to discuss:
- The materials sector led both Hong Kong and Mainland China higher on increased commodity prices, driven by Biden's further tightening of sanctions on Russia.
- The Ministry of Industry and Information Technology reported that the extension of trade-in subsidies of 15% on new mobile phones, tablets, and smartwatches purchases was an effort to “stimulate domestic demand" as those industries employ lots of people (proving our thesis on why auto and home appliances were targeted). According to the release, China had 1.727B mobile phones, so if 10% of those phones were replaced, it would generate RMB 100B of purchases. Electronics-focused JD.com Hong Kong outperformed peers today by +2.19%, though several Apple/mobile phone ecosystem stocks were off, such as AAC -1.5% and Sunny Optical -0.24%.
- Hong Kong and China pared intra-day gains as the Ministry of Commerce press conference noted US chip subsidies as the tit-for-tat escalates. The MoC did clarify the new electronic subsidies will start on January 20th.
- Chatter on Biden and Trump efforts to save TikTok as Bloomberg reports rival Xiaohongshu’s value soars to $20 billion as Red Note new users skyrocket.
- China semis were weak after Cambricon plunged 14.65% after lowering its 2024 forecast. Revenues will only grow between 50% and 69%, while net loss will be between RMB 396mm and RMB 484mm, which is down from the 2023 loss of 42% to 53%.
- SOE developer Vanke’s bonds plunged on reports that their CEO was arrested as the company struggles under a mountain of debt. A Mainland media source noted transactions in the week of Jan 6th—10th; new home transactions were up 20% YoY, and second home transactions increased 50% YoY.
- Tencent +0.63% as Mainland investors continue to buy the stock via Southbound Stock Connect while the company buys stock hand over fist. Time is constrained now, but I will provide the numbers tomorrow.
It is great to return home after a trip to Hong Kong, Macao, and Shanghai. As usual, China’s economy appeared fine visually compared to Western media’s daily apocalypse forecast. Even pre-Chinese New Year’s, the crowds at Macao’s St. Paul’s, Senado Square, and Rua do Cunha were packed with a mass of humanity. My only observation from Macao was that a high-end casino was busy while a lower-end casino was bursting at the seams.
I was shocked at the amount of construction in east Shanghai on the road leading into Pudong despite several newly constructed buildings being clearly empty. Shanghai is a very wealthy city, so I do not doubt that those buildings will fill as the skyscrapers march east toward the airport. The boat traffic on the Huangpu River and crowds across the Bund were as busy as my last Shanghai visit in January 2020. Conversations on China’s economy and capital markets were constructive as local investors anticipate further stimulus at the upcoming Two Sessions in March. Trump/tariffs, the outgoing Biden throwing Molotov cocktails at every fire on the way out, and China’s real estate remain concerns. The real estate policy pivot is helping to stabilize prices as transaction volumes pick up, though the size and scale of the real estate issue will require a similar-sized policy response. Q4 earnings should be interesting as the extended Singles Day was an apparent success.
My colleagues and I were greeted in all three cities with great hospitality, food (the clams at Fernando’s in Macao are excellent!), inquisitiveness, and great conversation. I made my first store purchase using Tencent’s WeChat Pay to celebrate my fifty trips around the sun. I now need reading glasses (I previously used the mobile payment system in local taxis after meeting with Tencent in Shenzhen last year).
The Hang Seng and Hang Seng Tech gained +1.23% and +1.23% on volume +10.72% from yesterday, which is 105% of the 1-year average. 368 stocks advanced, while 110 declined. Main Board short turnover increased by +8.87% from yesterday, which is 107% 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 caps gained more than growth and small caps. All sectors were positive, led by materials +2.86%, tech +1.57%, and discretionary +1.38%. The top sub-sectors were consumer durables, nonferrous metals, and steel, while semis, commercial services, and national defense were the worst. Southbound Stock Connect volumes were at 1.5X pre-stimulus levels as Mainland investors bought $808mm of Hong Kong stocks and ETFs with Tencent and SMIC large/moderate net buy, Alibaba, Xiaomi, and Meituan and CNOOC net small/moderate buy, ZTE and XPeng small net sells.
Shanghai, Shenzhen, and STAR Board were mixed +0.28%, +0.44%, and -2.17% on volume +7.3% from yesterday, which is 119% of the 1-year average. 3,169 stocks advanced, while 1,759 declined. Growth and small caps gained more than value and large caps. The top sectors were materials +1.27%, energy +1.16%, and financials +0.49%, while staples -1.08%, healthcare -0.29%, and tech -0.29%. The top sub-sectors were precious metals, communication, and construction, while semis, liquor, and computer hardware were the worst. Northbound Stock Connect volumes were just above average. CNY and the Asia dollar index were slightly lower versus the US dollar. Treasury bonds fell. Copper and steel rose.
Last Night's Performance
Country/Index | Ticker | 1-Day Change |
---|---|---|
China (Hong Kong) | HSI Index | 1.2% |
Hang Seng Tech | HSTECH Index | 1.2% |
Hong Kong Turnover | HKTurn Index | 10.7% |
HK Short Sale Turnover | HKSST Index | 9% |
Short Turnover as a % of HK Turnovr | N/A | 15.8% |
Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 806.4 |
China (Shanghai) | SHCOMP Index | 0.3% |
China (Shenzhen) | SZCOMP Index | 0.4% |
China (STAR Board) | Star50 Index | -2.2% |
Mainland Turnover | .chturn Index | 7.3% |
Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
Jing Daily China Global Luxury Index | CHINALUX Index | 1.4% |
Japan | NKY Index | 0.3% |
India | SENSEX Index | 0.4% |
Indonesia | JCI Index | 0.4% |
Malaysia | FBMKLCI Index | -0.4% |
Pakistan | KSE100 Index | -0.4% |
Philippines | PCOMP Index | -1% |
South Korea | KOSPI Index | 1.2% |
Taiwan | TWSE Index | 2.3% |
Thailand | SET Index | 0% |
Singapore | STI Index | 0.8% |
Australia | AS51 Index | 1.4% |
MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
---|---|---|
Hong Kong Listed | 152 | 1.08 |
Communication Services | 9 | 0.72 |
Consumer Discretionary | 30 | 1.38 |
Consumer Staples | 13 | 0.3 |
Energy | 7 | 0.85 |
Financials | 23 | 1.27 |
Health Care | 13 | 0.07 |
Industrials | 19 | 0.46 |
Information Technology | 10 | 1.57 |
Materials | 10 | 2.86 |
Real Estate | 6 | 1.31 |
Utilities | 12 | 0.15 |
Mainland China Listed | 432 | 0.13 |
Communication Services | 9 | 0.49 |
Consumer Discretionary | 31 | 0.34 |
Consumer Staples | 27 | -1.08 |
Energy | 16 | 1.18 |
Financials | 63 | 0.49 |
Health Care | 40 | -0.29 |
Industrials | 69 | 0.1 |
Information Technology | 85 | -0.29 |
Materials | 68 | 1.27 |
Real Estate | 7 | 0.07 |
Utilities | 17 | -0.03 |
US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
---|---|---|
Tencent HK | 700 HK Equity | 0.6 |
Alibaba HK | 9988 HK Equity | 0.6 |
JD.com HK | 9618 HK Equity | 2.2 |
NetEase HK | 9999 HK Equity | 1.4 |
Yum China HK | 9987 HK Equity | 0.4 |
Baozun HK | 9991 HK Equity | 2.3 |
Baidu HK | 9888 HK Equity | 0.8 |
Autohome HK | 2518 HK Equity | 3.1 |
Bilibili HK | 9626 HK Equity | 5 |
Trip.com HK | 9961 HK Equity | 1.1 |
EDU HK | 9901 HK Equity | -0.1 |
Xpeng HK | 9868 HK Equity | 7 |
Weibo HK | 9898 HK Equity | 1.4 |
Li Auto HK | 2015 HK Equity | 0 |
Nio Auto HK | 9866 HK Equity | 1.7 |
Zhihu HK | 2390 HK Equity | -0.4 |
KE HK | 2423 HK Equity | 0.1 |
Tencent Music Entertainment HK | 1698 HK Equity | 1.5 |
Meituan HK | 3690 HK Equity | 2.1 |
Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
---|---|
SEMICONDUCTOR MANUFACTURING | -3.2 |
TENCENT HOLDINGS LTD | 0.6 |
MEITUAN-CLASS B | 2.1 |
XIAOMI CORP-CLASS B | 2.2 |
ALIBABA GROUP HOLDING LTD | 0.6 |
HSBC HOLDINGS PLC | 1.8 |
HUA HONG SEMICONDUCTOR LTD | 4 |
CNOOC LTD | 1.4 |
NETEASE INC | 1.4 |
XPENG INC - CLASS A SHARES | 7 |
Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
---|---|
CAMBRICON TECHNOLOGIES-A | -14.7 |
ZTE CORP-A | -2.3 |
LEO GROUP CO LTD-A | 1.7 |
EAST MONEY INFORMATION CO-A | 0.3 |
SEMICONDUCTOR MANUFACTURIN-A | -3 |
ZHONGJI INNOLIGHT CO LTD-A | 8.1 |
HYGON INFORMATION TECHNOLO-A | -9.8 |
ZHEJIANG SANHUA INTELLIGEN-A | -3.5 |
ZHEJIANG XCC GROUP CO LTD-A | 6.1 |
SHENZHEN INFOGEM TECHNOLOG-A | 3.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.33 versus 7.33 yesterday
- CNY per EUR 7.54 versus 7.55 yesterday
- Yield on 10-Year Government Bond 1.64% versus 1.63% yesterday
- Yield on 10-Year China Development Bank Bond 1.67% versus 1.67% yesterday
- Copper Price +0.70%
- Steel Price +0.64%