Risk Off Despite Pick Up In Inflation, Consumer Spending
5 Min. Read Time
Key News
Asian equities were mostly lower overnight as Pakistan and Thailand outperformed and Hong Kong and Indonesia underperformed.
China’s markets took a breather last night after a strong run. It was a relatively slow news night without a key catalyst to bring markets lower. Mainland markets opened flat, but followed their Hong Kong counterparts south later in the session. Meanwhile, Hong Kong started to regain some ground mid-session, but ended near worst levels.
Profit taking may have been a culprit here as the latest popular trades were all lower, including technology, consumer discretionary, and the electric vehicle (EV) ecosystem. Also, Mainland investors were heavy net sellers of Hong Kong-listed stocks and ETFs, to the tune of over $1 billion.
Auto names fell broadly on concerns of competition from BYD’s new in-house assisted and smart driving features that it intends to roll out. The giant is China’s largest carmaker and, with the right software, could be a serious threat to autonomous-only competitors such as Baidu.
However, there were some positives. Shipping names were higher on data showing that container volume at Shanghai’s port reached a new record in January. Premier Li spoke on CCTV about increasing foreign investment and raising wages to promote domestic consumption. Meanwhile, DeepSeek was reported to be seeking to build a team to work on highly theoretical “Artificial General Intelligence”.
China’s CPI jump to 0.5% in January from 0.1% in December and negative inflation, or deflation, in recent periods is a positive sign for the consumer. This was the fastest-paced inflation reading in five months. Healthy Chinese (Lunar) New Year spending was the likely culprit in raising China’s inflation rate in January. Meanwhile, trade-in consumption subsidy policies continue to trickle down into the real economy. According to data from the Ministry of Commerce, more than 20 million applications for electronics trade-ins have been submitted, referencing purchases of over 25 million units.
Ilumina, a US-based genomic sequencing company with significant China revenues of 10% in 2022, was added to China’s retaliatory “Unreliable Entities” list. The company said it is engaging constructively with authorities and intends to adhere to all applicable laws and regulations in China’s jurisdiction.
Health care stocks have been on the rise lately. The end of a long-running antigraft campaign in hospital procurement was a likely catalyst. Meanwhile, the CEO of contract research organization Wuxi Biologics, which would have been targeted by the botched US Biosecure Act, said that new contracts are at an all-time high during JP Morgan’s Annual Conference last month.
The Hang Seng and Hang Seng Tech indexes both closed lower by -1.06% and -2.73%, respectively, on volume that declined by -9% from yesterday. Mainland investors sold a net -$1.14 billion worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Energy, which gained +0.15%, Materials, which fell -0.25%, and Financials, which fell -0.32%. Meanwhile, the worst-performing sectors were Consumer Staples, which fell -2.90%, Communication Services, which fell -2.23%, and Health Care, which fell -2.11%.
Shanghai, Shenzhen, and the STAR Board all closed lower by -0.12%, -0.49%, and -1.19%, respectively. The top-performing sectors were Materials, which gained +0.34%, Energy, which gained +0.15%, and Financials, which gained +0.13%. Meanwhile, the worst-performing sectors were Real Estate, which fell -1.64%, Industrials, which fell -1.04%, and Health Care, which fell -0.98.
Last Night’s Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.1% |
| Hang Seng Tech | HSTECH Index | -2.7% |
| Hong Kong Turnover | HKTurn Index | -9.4% |
| HK Short Sale Turnover | HKSST Index | -35.2% |
| Short Turnover as a % of HK Turnovr | N/A | 12.6% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -527 |
| China (Shanghai) | SHCOMP Index | -0.1% |
| China (Shenzhen) | SZCOMP Index | -0.5% |
| China (STAR Board) | Star50 Index | -1.2% |
| Mainland Turnover | .chturn Index | -5.5% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.3% |
| Japan | NKY Index | 0% |
| India | SENSEX Index | -1.3% |
| Indonesia | JCI Index | -1.7% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | 1.4% |
| Philippines | PCOMP Index | -0.8% |
| South Korea | KOSPI Index | 0.7% |
| Taiwan | TWSE Index | 0.6% |
| Thailand | SET Index | 1.1% |
| Singapore | STI Index | -0.4% |
| Australia | AS51 Index | 0% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -1.57 |
| Communication Services | 9 | -2.23 |
| Consumer Discretionary | 30 | -1.77 |
| Consumer Staples | 13 | -2.9 |
| Energy | 7 | 0.15 |
| Financials | 23 | -0.32 |
| Health Care | 13 | -2.11 |
| Industrials | 19 | -0.83 |
| Information Technology | 10 | -1.98 |
| Materials | 10 | -0.25 |
| Real Estate | 6 | -1.83 |
| Utilities | 12 | -1.29 |
| Mainland China Listed | 432 | -0.45 |
| Communication Services | 9 | 0.04 |
| Consumer Discretionary | 31 | -0.66 |
| Consumer Staples | 27 | -0.93 |
| Energy | 16 | 0.15 |
| Financials | 63 | 0.13 |
| Health Care | 40 | -0.98 |
| Industrials | 69 | -1.04 |
| Information Technology | 85 | -0.68 |
| Materials | 68 | 0.34 |
| Real Estate | 7 | -1.64 |
| Utilities | 17 | -0.16 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -2.2 |
| Alibaba HK | 9988 HK Equity | -0.6 |
| JD.com HK | 9618 HK Equity | -1.9 |
| NetEase HK | 9999 HK Equity | -2.4 |
| Yum China HK | 9987 HK Equity | -0.6 |
| Baozun HK | 9991 HK Equity | -6.8 |
| Baidu HK | 9888 HK Equity | -0.8 |
| Autohome HK | 2518 HK Equity | 1 |
| Bilibili HK | 9626 HK Equity | -6.1 |
| Trip.com HK | 9961 HK Equity | -4.9 |
| EDU HK | 9901 HK Equity | 2.2 |
| Xpeng HK | 9868 HK Equity | -9 |
| Weibo HK | 9898 HK Equity | -3.2 |
| Li Auto HK | 2015 HK Equity | -5.6 |
| Nio Auto HK | 9866 HK Equity | -2.2 |
| Zhihu HK | 2390 HK Equity | 15 |
| KE HK | 2423 HK Equity | 1.6 |
| Tencent Music Entertainment HK | 1698 HK Equity | -2.5 |
| Meituan HK | 3690 HK Equity | -0.6 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -0.6 |
| TENCENT HOLDINGS LTD | -2.2 |
| XIAOMI CORP-CLASS B | -2.7 |
| MEITUAN-CLASS B | -0.6 |
| BYD CO LTD-H | -0.7 |
| SEMICONDUCTOR MANUFACTURING | -5.2 |
| GEELY AUTOMOBILE HOLDINGS LT | -10.3 |
| XPENG INC - CLASS A SHARES | -9 |
| CHINA MOBILE LTD | -0.1 |
| HONG KONG EXCHANGES & CLEAR | -0.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| IEIT SYSTEMS CO LTD-A | 3.4 |
| SICHUAN CHANGHONG ELECTRIC-A | -4.1 |
| LEO GROUP CO LTD-A | 3.7 |
| SHIJIAZHUANG CHANGSHAN BEI-A | -2.1 |
| EAST MONEY INFORMATION CO-A | -1.6 |
| MERIT INTERACTIVE CO LTD-A | 8.6 |
| BYD CO LTD -A | -0.1 |
| ISOFTSTONE INFORMATION TEC-A | -7.5 |
| DIGITAL CHINA GROUP CO LTD-A | -0.4 |
| BEIJING ENLIGHT MEDIA CO L-A | 20 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.31 versus 7.31 yesterday
- CNY per EUR 7.55 versus 7.53 yesterday
- Yield on 10-Year Government Bond 1.63% versus 1.63% yesterday
- Yield on 10-Year China Development Bank Bond 1.62% versus 1.63% yesterday
- Copper Price -0.84%
- Steel Price -0.91%
