Fund Flows Highlight Curbed Enthusiasm
6 Min. Read Time
Key News
Asian equities had mixed performance overnight as the US dollar weakened and South Korea led gains in the region.
Neither Hong Kong nor Mainland China managed to hold onto early morning gains, as both markets slid to post small losses. Hong Kong’s decline was driven by PDD’s significant financial results miss and large investments that weighed on the company’s bottom line. Sell-side analysts' estimates were off by a wide margin; in their defense, the company has never broken out Temu’s results from domestic China revenue, making transparency an ongoing issue. PDD's investment plans raised concerns about margin contraction and the potential for a price war, which weighed on E-Commerce stocks including Alibaba (-1.95%), Meituan (-0.53%), and JD.com Inc. (-1.4%).
The downdraft was despite a Mainland China media report noting that early sales for the 618 (June 18th) shopping festival, similar to Singles Day, were up fourfold year-over-year (YoY), with 80,000 brands seeing double the turnover and 500 million orders already placed.
The decline in Hong Kong largely matched the performance of US-listed China stocks, though not all internet stocks were down. Kuaishou Technology (+5.95%) rose after strong first-quarter results driven by its Kling artificial intelligence initiative. Other notable gainers included NetEase Inc. (+2.81%), Tencent Music Entertainment Group (+1.36%), Bilibili Inc. (+2.29%), and Trip.com Group Limited (+1.48%). Trip.com and other consumer-related stocks were higher on a government report estimating that 2.15 million people, an increase of 12.2% year-over-year, will travel overseas or visit China during the upcoming Dragon Boat Festival.
Pop Mart International Group Limited (-7.12%) declined, though there was no clear catalyst aside from the stock’s 141% year-to-date gain. Electric vehicles (EVs) and autos were mixed and continued to face pressure following reports that dealers sold new cars as old inventory to lower prices. BYD Company Limited (-2.68% in Hong Kong) refuted claims of an aggressive dealer buildout in Shandong Province that had attracted significant attention in Mainland China.
In a weekend interview, Great Wall Motor Company Limited’s Chairman Wei Jianjun stated, “The ‘Evergrande’ in the automobile industry already exists, it just hasn’t exploded yet.” Reports cited April car production at 2.23 million units versus 1.75 million in sales, with EV inventories rising to 850,000 units from 660,000 at year-end. Following a sharp rally, BYD appeared due for a pullback, though the 50-day moving average may act as support.
Hong Kong saw relative strength in air freight, coal, beverages, restaurants, and oil and gas, while banks, Tencent, Alibaba, Meituan, JD.com, and BYD weighed on the indices. In Mainland China, healthcare, precious metals, oil, coal, and transportation/ air freight outperformed.
The Mainland China fund industry reached assets under management of RMB 33.12 trillion after an increase of RMB 900 billion in April. Most flows went into money market funds (RMB 664 billion), followed by fixed income (RMB 140 billion) and stock funds (RMB 112 billion), reflecting a lack of risk appetite. A Reuters article yesterday highlighted that “Chinese savers decry falling deposit rates but still won’t spend more,” noting that “at the end of March, total household deposits surpassed 160 trillion yuan ($22.3 trillion), up 10.3% from a year before, and equivalent to 118% of last year’s gross domestic product (GDP).” The ongoing decline in real estate prices and the absence of a social safety net remain key issues.
The summit of the Association of Southeast Asian Nations (ASEAN), the Cooperation Council for the Arab States of the Gulf, and China concluded a joint summit in Kuala Lumpur overnight. While there may be headlines about China waiving visas, the joint statement focused on economic integration, connectivity, energy security, sustainability, digital transformation, innovation, agriculture, and people-to-people exchange.
As I observed during my recent travels in Asia, there is a big world out there conducting business with one another, largely unconcerned with developments in Washington, DC.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.5% |
| Hang Seng Tech | HSTECH Index | -0.2% |
| Hong Kong Turnover | HKTurn Index | -11% |
| Hong Kong Short Sale Turnover | HKSST Index | -21.9% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 16.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -44.3 |
| China (Shanghai) | SHCOMP Index | 0% |
| China (Shenzhen) | SZCOMP Index | -0.3% |
| China (STAR Board) | Star50 Index | -0.2% |
| Mainland Turnover | .chturn Index | 1.1% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.1% |
| Japan | NKY Index | 0% |
| India | SENSEX Index | -0.3% |
| Indonesia | JCI Index | -0.3% |
| Malaysia | FBMKLCI Index | -0.2% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | 0.6% |
| South Korea | KOSPI Index | 1.2% |
| Taiwan | TWSE Index | 0.1% |
| Thailand | SET Index | -0.2% |
| Singapore | STI Index | 0.4% |
| Australia | AS51 Index | -0.1% |
| Vietnam | VNINDEX Index | 0.2% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 97% | 81% |
| Advancing Stocks | 235 | 1610 |
| Declining Stocks | 213 | 3354 |
| Outperforming Factors | Buybacks, Low Volatility, Growth | Quality, Value, Dividend Yield |
| Underperforming Factors | Momentum, Quality, Large Caps | Liquidity, Momentum, Buyback |
| Top Sectors | Staples, Industrials, Energy | Energy, Staples, Health Care |
| Bottom Sectors | Discretionary, Health Care, Communication | Communication, Consumer Discretionary, Tech |
| Top Subsectors | Media/Entertainment, Food, Environmental Protection | Soft Drink, Office Supplies, Energy Equipment |
| Bottom Subsectors | Consumer Durables, Consumer Services, Semis | Auto, Education, Agricultural |
| Southbound Connect Buys | Meituan (Large)Pop Mart, Tencent (Small) | |
| Southbound Connect Sells | Alibaba, Kuaishou, SMIC, Xiaomi (Sells) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | -0.49 |
| Communication Services | 9 | -0.49 |
| Consumer Discretionary | 28 | -1.36 |
| Consumer Staples | 13 | 1.15 |
| Energy | 7 | 0.94 |
| Financials | 23 | -0.09 |
| Health Care | 13 | -0.6 |
| Industrials | 20 | 0.97 |
| Information Technology | 10 | 0.07 |
| Materials | 10 | 0.43 |
| Real Estate | 6 | 0 |
| Utilities | 12 | 0.02 |
| Mainland China Listed | 404 | -0.05 |
| Communication Services | 6 | -0.84 |
| Consumer Discretionary | 31 | -0.74 |
| Consumer Staples | 24 | 0.23 |
| Energy | 13 | 1.42 |
| Financials | 64 | -0.2 |
| Health Care | 31 | 0.21 |
| Industrials | 64 | 0.19 |
| Information Technology | 91 | -0.25 |
| Materials | 58 | -0.15 |
| Real Estate | 6 | -0.11 |
| Utilities | 16 | 0.08 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.2 |
| Alibaba HK | 9988 HK Equity | -1.9 |
| JD.com HK | 9618 HK Equity | -1.4 |
| NetEase HK | 9999 HK Equity | 2.8 |
| Yum China HK | 9987 HK Equity | 2 |
| Baozun HK | 9991 HK Equity | 0 |
| Baidu HK | 9888 HK Equity | 0.9 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | 2.3 |
| Trip.com HK | 9961 HK Equity | 1.5 |
| EDU HK | 9901 HK Equity | -0.9 |
| Xpeng HK | 9868 HK Equity | 1.2 |
| Weibo HK | 9898 HK Equity | -0.1 |
| Li Auto HK | 2015 HK Equity | -2.5 |
| Nio Auto HK | 9866 HK Equity | -0.7 |
| Zhihu HK | 2390 HK Equity | 0.2 |
| KE HK | 2423 HK Equity | 2.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.4 |
| Meituan HK | 3690 HK Equity | -0.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| XIAOMI CORP-CLASS B | 0.4 |
| TENCENT HOLDINGS LTD | -1.2 |
| ALIBABA GROUP HOLDING LTD | -1.9 |
| MEITUAN-CLASS B | -0.5 |
| BYD CO LTD-H | -2.7 |
| POP MART INTERNATIONAL GROUP | -7.1 |
| KUAISHOU TECHNOLOGY | 5.9 |
| HONG KONG EXCHANGES & CLEAR | -1.8 |
| SEMICONDUCTOR MANUFACTURING | -2.5 |
| HORIZON ROBOTICS INC | -5.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| BYD CO LTD -A | -2.6 |
| EOPTOLINK TECHNOLOGY INC L-A | 6.2 |
| VICTORY GIANT TECHNOLOGY -A | 4.2 |
| CONTEMPORARY AMPEREX TECHN-A | -0.2 |
| JIANGSU ZHONGCHAO HOLDING -A | -3.3 |
| ANHUI JIANGHUAI AUTO GROUP-A | -5.6 |
| FUJIAN SNOWMAN GROUP CO-A | 10 |
| SERES GROUP CO L-A | -3 |
| CHINA GREATWALL TECHNOLOGY-A | -5.7 |
| HONG BO CO LTD -A | 4.7 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.19 versus 7.19 yesterday
- CNY per EUR 8.14 versus 8.16 yesterday
- Yield on 10-Year Government Bond 1.68% versus 1.73% yesterday
- Yield on 10-Year China Development Bank Bond 1.71% versus 1.71% yesterday
- Copper Price +0.08%
- Steel Price -0.77%
