
Deep Seek “Deep-Sixes” Global Semiconductor Stocks
6 Min. Read Time
Key News
So much for the quiet pre-holiday trading session as Asian equities were mixed though Australia was closed for Australia Day, Indonesia was closed for Al Isra’ wal-Mi’raj, South Korea was closed for the Korean New Year, and Taiwan was closed for Chinese New Year.
Mainland China and Hong Kong-listed hardware and technology plays, especially semiconductors, were not immune to DeepSeek’s impact on the global AI ecosystem. The Hong Kong-listed Semiconductor Manufacturing International (SMIC) fell -7.63%. Meanwhile, Mainland-listed communication and electronic component makers were hit hard.
DeepSeek AI highlights the concentration risk of the S&P 500 and global overweight to US stocks globally. Does diversification make a comeback in 2025? We shall see! Mainland investors may have been more apt to hit sell today as it was the last trading day until next Wednesday. The ETFs favored by China’s “National Team”, i.e. investment firms associated with sovereign wealth, had above-average volumes, though they were unable to offset the selling as investors pocketed some vacation cash.
Mainland media outlet Yicai noted that the new electronics trade-in subsidy had led to 10.8 million smartphone and smartwatch purchases in the first four days! Amazing!
The China Securities Regulatory Commission (CSRC), China’s SEC, released the “Action Plan for Promoting the High-quality Development of Index Investment in the Capital Market” though clearly the release didn’t impact the market.
Hong Kong-listed internet stocks were largely higher led by Tencent, which gained +1.29%, Alibaba, which gained +2.95%, Meituan, which fell-0.20%, Kuaishou, which gained +3.82%, JD.com, which gained +1.03%, Baidu, which gained +3.92%, and Trip.com. which gained +1.75%. Mainland investors bought a very healthy net $1.17 billion worth of Hong Kong-listed stocks and ETFs today.
January’s “official” Manufacturing PMI was 49.1 versus an expected 50.1 and November’s 50.1 while the Non-Manufacturing PMI was 50.2 versus expectations of 52.2 and November’s 52.2. I didn’t submit an estimate, but, if tariff front running occurred, how do you not expect December PMIs to fall?
Hong Kong is open tomorrow but Mainland China is closed.
It is interesting to see US agriculture stocks and futures perking up. Last Tuesday, I noticed China's General Administration of Customs (GACC) stopped soybean imports from five Brazilian firms due to “plant health requirements”. I wonder if the US and China are further along in a trade deal talks as US agriculture purchases, along with Boeing airplanes, are obvious areas of where China can raise US imports?
The Hang Seng and Hang Seng Tech indexes gained +0.66% and +0.64%, respectively, on volume -7.81% from Friday, which is 108% of the 1-year average. 368 stocks advanced while 125 stocks declined. Main Board short turnover increased +4.25% from Friday, which is 108% 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 growth factor and small caps outpaced the value factor and large caps. The top-performing sectors were Utilities, which gained +1.65%, Real Estate, which gained +1.65%, and Consumer Discretionary, which gained +1.55%. Meanwhile, the worst-performing sector was Information Technology, which fell -0.27%. The top-performing subsectors were media, consumer durables, and paper & packaging. Meanwhile, semiconductors, electrical equipment, and technology hardware were among the worst-performing subsectors. Southbound Stock Connect volumes were 1.5x pre-stimulus levels, as Mainland investors bought a net $1.17 billion worth of Hong Kong-listed stocks and ETFs, including the Hong Kong Tracker ETF, a large net buy, Tencent, a moderate net buy, ZTE, Xiaomi, Meituan and Alibaba. Meanwhile, SMIC and Kingsoft Cloud were small net sells.
Shanghai, Shenzhen, and the STAR Board fell -0.06%, -1.30%, and -2.03%, respectively, on volume that decreased -8.61% from Friday, which is 102% of the 1-year average. 1,790 stocks advanced while 3,189 stocks declined. The value factor and large caps fell less than the growth factor and small caps. The top-performing sectors were Utilities, which gained +1.77%, Energy, which gained +1.05%, and Materials, which gained +0.77%. Meanwhile, the worst-performing sectors were Information Technology, which fell -2.94%, Real Estate, which fell -1.46%, and Industrials, which fell -0.73%. The top-performing subsectors were motorcycles, ports, and power equipment. Meanwhile, communication equipment, electronic components, and power generation equipment were among the worst-performing subsectors. Northbound Stock Connect volumes were just above average. CNY and the Asia Dollar Index posted small losses versus the US dollar. Treasury bonds rallied. Copper and steel rose.
Last Night's Performance
Country/Index | Ticker | 1-Day Change |
---|---|---|
China (Hong Kong) | HSI Index | 0.7% |
Hang Seng Tech | HSTECH Index | 0.6% |
Hong Kong Turnover | HKTurn Index | -7.8% |
HK Short Sale Turnover | HKSST Index | 4.3% |
Short Turnover as a % of HK Turnovr | N/A | 15.4% |
Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1053.6 |
China (Shanghai) | SHCOMP Index | -0.1% |
China (Shenzhen) | SZCOMP Index | -1.3% |
China (STAR Board) | Star50 Index | -2% |
Mainland Turnover | .chturn Index | -8.6% |
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 | -0.92% |
India | SENSEX Index | -1.1% |
Indonesia | JCI Index | Closed |
Malaysia | FBMKLCI Index | -0.9% |
Pakistan | KSE100 Index | -1.2% |
Philippines | PCOMP Index | -1.6% |
South Korea | KOSPI Index | Closed |
Taiwan | TWSE Index | Closed |
Thailand | SET Index | -1% |
Singapore | STI Index | -0.2% |
Australia | AS51 Index | Closed |
MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
---|---|---|
Hong Kong Listed | 152 | 1.21 |
Communication Services | 9 | 1.4 |
Consumer Discretionary | 30 | 1.54 |
Consumer Staples | 13 | 0.16 |
Energy | 7 | 0.97 |
Financials | 23 | 1.2 |
Health Care | 13 | 1.33 |
Industrials | 19 | 0.47 |
Information Technology | 10 | -0.23 |
Materials | 10 | 0.46 |
Real Estate | 6 | 1.64 |
Utilities | 12 | 1.65 |
Mainland China Listed | 432 | -0.55 |
Communication Services | 9 | 0.54 |
Consumer Discretionary | 31 | -0.26 |
Consumer Staples | 27 | -0.1 |
Energy | 16 | 1.05 |
Financials | 63 | -0.33 |
Health Care | 40 | -0.01 |
Industrials | 69 | -0.73 |
Information Technology | 85 | -2.94 |
Materials | 68 | 0.77 |
Real Estate | 7 | -1.46 |
Utilities | 17 | 1.76 |
US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
---|---|---|
Tencent HK | 700 HK Equity | 1.3 |
Alibaba HK | 9988 HK Equity | 2.9 |
JD.com HK | 9618 HK Equity | 1 |
NetEase HK | 9999 HK Equity | -0.1 |
Yum China HK | 9987 HK Equity | 2.9 |
Baozun HK | 9991 HK Equity | 4.2 |
Baidu HK | 9888 HK Equity | 3.9 |
Autohome HK | 2518 HK Equity | 0.1 |
Bilibili HK | 9626 HK Equity | 0.7 |
Trip.com HK | 9961 HK Equity | 1.8 |
EDU HK | 9901 HK Equity | 1.2 |
Xpeng HK | 9868 HK Equity | 1.7 |
Weibo HK | 9898 HK Equity | 0.8 |
Li Auto HK | 2015 HK Equity | 2.6 |
Nio Auto HK | 9866 HK Equity | 3.3 |
Zhihu HK | 2390 HK Equity | -1.4 |
KE HK | 2423 HK Equity | 0.7 |
Tencent Music Entertainment HK | 1698 HK Equity | 6.4 |
Meituan HK | 3690 HK Equity | -0.2 |
Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
---|---|
TENCENT HOLDINGS LTD | 1.3 |
SEMICONDUCTOR MANUFACTURING | -7.6 |
ALIBABA GROUP HOLDING LTD | 2.9 |
XIAOMI CORP-CLASS B | 0.7 |
MEITUAN-CLASS B | -0.2 |
SENSETIME GROUP INC-CLASS B | 7.2 |
KUAISHOU TECHNOLOGY | 3.8 |
IND & COMM BK OF CHINA-H | 1.7 |
AIA GROUP LTD | -1.5 |
HONG KONG EXCHANGES & CLEAR | 0.7 |
Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
---|---|
EAST MONEY INFORMATION CO-A | -4.8 |
ZTE CORP-A | -6.8 |
ZHONGJI INNOLIGHT CO LTD-A | -10.5 |
HAND ENTERPRISE SOLUTIONS-A | 0.2 |
CAMBRICON TECHNOLOGIES-A | -6.7 |
IEIT SYSTEMS CO LTD-A | -1.9 |
FOXCONN INDUSTRIAL INTERNE-A | -8.1 |
IFLYTEK CO LTD - A | 1.7 |
SEMICONDUCTOR MANUFACTURIN-A | -4 |
DAWNING INFORMATION INDUST-A | 0.7 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.25 versus 7/25 Friday
- CNY per EUR 7.63 versus 7.60 Friday
- Yield on 10-Year Government Bond 1.63% versus 1.66% Friday
- Yield on 10-Year China Development Bank Bond 1.66% versus 1.71% Friday
- Copper Price +0.15%
- Steel Price +0.54%