Apple Ecosystem Higher on Foldable iPhone
7 Min. Read Time
Key News
Asian equities were mixed, led higher by South Korea and Thailand.
Hong Kong was off, as growth stocks underperformed, though growth stocks were higher in Mainland China. The Caixin Services PMI was 50.6 versus expectations of 50.9 and May’s 51.1 as growth momentum slowed. Electric vehicle (EV) battery giant CATL gained +2.69% and most EV names were higher, less Li Auto, which fell -0.48%. June new energy vehicle (NEV) sales were 1.26 million, up +29% year-over-year (YoY) and +3% month-over-month (MoM), which brings the YTD total to 6.47 million units, which is up +38% YoY, according to the China Automobile Dealers Association.
Mainland-listed Foxconn Industrial gained +10.2%, as the Apple supplier ecosystem and technology hardware overall rose on news of Apple’s foldable iPhone coming next year.
Meanwhile, the US' trade deal with Vietnam might also have been a factor, indicating China is well-positioned for the July 9th Trump Tariff Tweet bombs coming. Semiconductors outperformed after the US Commerce Department lifted semiconductor chip design software export restrictions. Baidu gained +0.77% after announcing “Baidu Revamps Search with New AI Features in Its Biggest Overhaul in a Decade, Launches Image-to-Video Model Muse Steamer”. The demo looks great!
Alibaba fell -2.93% and was today’s most heavily traded stock by value in Hong Kong, as Goldman Sachs’ China internet analyst lowered his price target to $150 from $158. Mainland investors were large net sellers via Southbound. Alibaba's $7 billion subsidy announcement from yesterday raises fears of a race to the bottom in food delivery, restaurant delivery, and instant commerce between Alibaba, JD, and Meituan. This will inevitably weigh on profitability, though buybacks could limit the damage to earnings per share (EPS).
On Tuesday, the government sought to address this issue in E-Commerce, auto, solar, and lithium batteries. Several factors explain the recent weakness of the Hong Kong internet and Hang Seng Tech. Mainland investors were net sellers of Hong Kong today for the first time in weeks. Although Alibaba has been a net seller since May, Tencent and Xiaomi have been selling down all year. That money could be put back to work in mainland equities, which are lagging Hong Kong considerably year to date.
Hong Kong’s IPO frenzy requires funding as significant holdings are sold to fund IPO participation. On deck for a Hong Kong IPO is Apple AirPod maker Luxshare, which could raise $1 billion. We also have a few new “hot” names listed publicly that have been on a tear lately, including Labubu doll-maker Pop Mart, Guotai Junan, and Laopu Gold. Also, the healthcare sector’s strong performance is due to government policy support, deal-making, and biotech drug success. Nonetheless, the US stock rebound and the recent strong performance in South Korea might be pulling some funds away.
The Big Beautiful Bill would eliminate the de minimis trade exemption, though tariffs ended it, which has been well telegraphed, leaving PDD's Temu E-Commerce platform exposed.
The reality is that China stocks remain out of sight and out of mind for many global investors, despite the YTD outperformance versus the US. Chinese equities have continued to grind higher since they bottomed in mid-January 2024, though no one seems to know! Hong Kong’s volume is nearly 50% from Southbound Connect, which indicates light foreign investor participation. I’m optimistic that the Chinese government stimulus should be filtering through to the economy and corporate balance sheets. While my patience is being tested, I am confident it will be rewarded!
Per yesterday’s move in Chinese solar stocks following a production cut, polycrystalline silicon, a primary ingredient in making solar cells, gained +2.14% following yesterday’s 6.99% closing at 35,050. Futures on the Guangzhou Futures Exchange reached a YTD high of 43,188 on July 1st after hitting a low of 30,400 on June 25. My weekend homework will be to see if there is any correlation between the futures and solar stocks. The chart of solar giant Tongwei (600438 CH) and the futures indicate there is.
Today, the Ministry of Commerce (MoC) spokesperson was asked if the US would send a trade delegation to China, but he didn’t know. Could the US and China be making progress on their own Big Beautiful Deal? There has been chatter about a Xi-Trump visit as China is hosting a big military parade in Beijing on September 9th to mark the 80th anniversary of World War 2. We know President Trump loves military parades, while President Xi has often cited the American pilots of the Flying Tigers and their role in World War II. As my kids frequently remind me, no one likes to be told what to do. Are the recent Chinese government policies pivots on addressing overcapacity and raising domestic consumption for internal and external purposes? Trump frequently cites those two issues. There are highly speculative rumors that August’s 4th Plenum could include government leadership and responsibilities broadening. There are signs, though nothing definitive yet.
For those celebrating the 4th of July, have a great holiday! ChinaLastNight.com is a team effort, with Joe, Henry, and Cole getting a well-deserved day off. We hope you come back with all ten fingers on Monday!
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.6% |
| Hang Seng Tech | HSTECH Index | -0.7% |
| Hong Kong Turnover | HKTurn Index | -3.7% |
| Hong Kong Short Sale Turnover | HKSST Index | -13.9% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 11.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 0 |
| China (Shanghai) | SHCOMP Index | 0.2% |
| China (Shenzhen) | SZCOMP Index | 1% |
| China (STAR Board) | Star50 Index | 0.2% |
| Mainland Turnover | .chturn Index | -4.9% |
| 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 | 0.1% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | 0% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | 0.8% |
| South Korea | KOSPI Index | 1.3% |
| Taiwan | TWSE Index | 0.6% |
| Thailand | SET Index | 1% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | 0% |
| Vietnam | VNINDEX Index | -0.2% |
| Indicator | A | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 117 | 100 |
| Advancing Stocks | 285 | 3058 |
| Declining Stocks | 187 | 1789 |
| Outperforming Factors | Revisions, Dividend Yield, Low Volatility | Liquidity, Growth, Quality |
| Underperforming Factors | Large Caps, Growth, Momentum | Low Volatility, Value, Momentum |
| Top Sectors | Healthcare, Materials, Industrials | Tech, Industrials, Discretionary |
| Bottom Sectors | Tech, Discretionary, Financials | Energy, Utilities, Real Estate |
| Top Subsectors | Pharmaceuticals, REITs, Non Ferrous Metals | Motorcycle, Electronic Components, Pharmaceutical |
| Bottom Subsectors | Steel, Consumer Durables/Apparel, Consumer Services | Coal, Energy Equipment, Diversified Financial |
| Southbound Connect Buys | Meituan (Large), Xiaomi (Small) | |
| Southbound Connect Sells | Alibaba, Tencent (Large), Akeso (Moderate), Guotai Junan, Pop Mart (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -0.52 |
| Communication Services | 9 | -0.09 |
| Consumer Discretionary | 28 | -1.61 |
| Consumer Staples | 13 | -0.07 |
| Energy | 6 | 0.17 |
| Financials | 24 | -0.41 |
| Health Care | 12 | 3.75 |
| Industrials | 21 | 0.72 |
| Information Technology | 10 | -2.12 |
| Materials | 10 | 2.17 |
| Real Estate | 7 | 0.41 |
| Utilities | 12 | 0.15 |
| Mainland China Listed | 395 | 0.7 |
| Communication Services | 7 | 0.27 |
| Consumer Discretionary | 29 | 0.65 |
| Consumer Staples | 24 | 0.43 |
| Energy | 13 | -1.14 |
| Financials | 64 | 0.19 |
| Health Care | 32 | 0.49 |
| Industrials | 61 | 1.11 |
| Information Technology | 90 | 2.21 |
| Materials | 54 | 0.49 |
| Real Estate | 6 | -0.06 |
| Utilities | 15 | -0.12 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.1 |
| Alibaba HK | 9988 HK Equity | -2.9 |
| JD.com HK | 9618 HK Equity | -2.1 |
| NetEase HK | 9999 HK Equity | 0.3 |
| Yum China HK | 9987 HK Equity | -1 |
| Baozun HK | 9991 HK Equity | 0.1 |
| Baidu HK | 9888 HK Equity | 0.8 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -0.1 |
| Trip.com HK | 9961 HK Equity | -0.8 |
| EDU HK | 9901 HK Equity | -3 |
| Xpeng HK | 9868 HK Equity | 2.5 |
| Weibo HK | 9898 HK Equity | -0.9 |
| Li Auto HK | 2015 HK Equity | -0.5 |
| Nio Auto HK | 9866 HK Equity | 1.3 |
| Zhihu HK | 2390 HK Equity | 1.1 |
| KE HK | 2423 HK Equity | 0.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.2 |
| Meituan HK | 3690 HK Equity | -2.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -2.9 |
| XIAOMI CORP-CLASS B | -3.4 |
| TENCENT HOLDINGS LTD | -0.1 |
| MEITUAN-CLASS B | -2.5 |
| GUOTAI JUNAN INTERNATIONAL | 11.6 |
| POP MART INTERNATIONAL GROUP | -3.3 |
| AKESO INC | 14.3 |
| SEMICONDUCTOR MANUFACTURING | -0.6 |
| CHINA CONSTRUCTION BANK-H | 0 |
| INNOVENT BIOLOGICS INC | 6.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| CONTEMPORARY AMPEREX TECHN-A | 4.8 |
| FOXCONN INDUSTRIAL INTERNE-A | 10 |
| LUXSHARE PRECISION INDUSTR-A | 5.5 |
| EAST MONEY INFORMATION CO-A | 0.7 |
| EOPTOLINK TECHNOLOGY INC L-A | 3.7 |
| SUZHOU DONGSHAN PRECISION-A | 9.3 |
| ZHONGJI INNOLIGHT CO LTD-A | 2.4 |
| VICTORY GIANT TECHNOLOGY -A | 6 |
| HENGBAO CO LTD-A | 6 |
| LENS TECHNOLOGY CO LTD-A | 11.4 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.16 versus 7.16 yesterday
- CNY per EUR 8.43 versus 8.44 yesterday
- Yield on 10-Year Government Bond 1.64% versus 1.64% yesterday
- Yield on 10-Year China Development Bank Bond 1.68% versus 1.68% yesterday
- Copper Price 0.17%
- Steel Price 1.09%
