Instant Commerce Race Getting Government’s Attention
6 Min. Read Time
Key News
Asian equities delivered a mixed performance overnight, as the Philippines and Vietnam outperformed while Hong Kong underperformed. This occurred despite former President Donald Trump’s threats of new tariffs on copper and pharmaceuticals, as well as a stronger U.S. dollar.
June inflation data was also mixed. The Producer Price Index (PPI) declined by 3.6% year-over-year, which was steeper than expectations of -3.2% and May’s -3.3%. The Consumer Price Index (CPI) rose by 0.1%, ahead of expectations for a 0.1% decline and May’s -0.1%. The PPI’s decline was attributed to weaker domestic raw material manufacturing industries and the impact of increased green electricity, which is expected to drive down energy prices as coal use is reduced.
Both Hong Kong and Mainland China equity markets fell, with growth stocks in Hong Kong particularly weak. Internet stocks declined as concerns over a restaurant and food delivery price war weighed on sentiment. Alibaba Group Holding Limited fell 3.83%, Meituan dropped 2.45%, and JD.com declined 1.88%. The selloff spread to Tencent Holdings Limited, which fell 1.37%, and Xiaomi Corporation, which declined 2.13%.
After the close, the People’s Daily published an article on the “Takeaway War,” stating, “there is no winner in price war, only innovation can bring the future.” The article noted that while ultra-low prices may benefit consumers, the resulting “explosive orders” can lead to irrational consumption, dilute company profits, and exhaust delivery riders. I can relate to that exhaustion! Regulators are reportedly examining similar competitive dynamics in the auto sector. The original government release last week also referenced solar, steel, cement, and plastic industries, in addition to auto and e-commerce.
Despite above-average short selling in Alibaba and Meituan, both stocks saw significant buying from Mainland investors, who purchased the Hong Kong dip with a robust net inflow of $1.179 billion. It would be encouraging to see regulators address the ongoing takeaway war.
According to Bloomberg, JP Morgan’s Asia and China equity strategist Wendy Liu believes that regulatory scrutiny of “excess capacity” in auto, steel, and cement could ultimately benefit related stocks, as we discussed yesterday. Another factor weighing on Hong Kong was the funding required for five companies that went public today on the Hong Kong Exchanges and Clearing Limited, led by Apple supplier Lens Technology, which rose 9.13%. The capital needed for initial public offerings must come from somewhere. Eight companies have listed in Hong Kong month-to-date, raising a total of HK$16.8 billion, following 15 IPOs in July.
Henderson Land Development Company Limited fell 8.64% after raising US$1 billion in a convertible bond deal. The risk of real estate companies issuing convertible bonds and new stock to cover debt is why we continue to prefer their debt over their equity. Despite attractive yields on Asian high-yield bonds, investors remain enamored with U.S. high-yield bonds. #frustrating
Contemporary Amperex Technology Co. Limited gained 7.18% in Hong Kong and 2.84% in Mainland China after Bloomberg reported that Ford’s new plant will use CATL’s battery technology. Taiwanese pop star Jay Chou created an account on Douyin (TikTok), which led to his mother’s merchandise store, Star Plus Legend, surging 94.38%.
Healthcare stocks outperformed in both Hong Kong and Mainland China, despite the pharmaceutical tariff threat. Precious metals and mining stocks were weak across both markets.
Looking ahead, the State Council Information Office will hold a press conference and reporter Q&A next Tuesday at 10:00 a.m. to discuss the economy’s performance in the first half of 2025.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.1% |
| Hang Seng Tech | HSTECH Index | -1.8% |
| Hong Kong Turnover | HKTurn Index | 9.7% |
| Hong Kong Short Sale Turnover | HKSST Index | 14.8% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 13.1% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 96 |
| China (Shanghai) | SHCOMP Index | -0.1% |
| China (Shenzhen) | SZCOMP Index | 0% |
| China (STAR Board) | Star50 Index | -0.9% |
| Mainland Turnover | .chturn Index | 3.7% |
| 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 | 0.3% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | 0.6% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | -0.5% |
| Philippines | PCOMP Index | 1.1% |
| South Korea | KOSPI Index | 0.6% |
| Taiwan | TWSE Index | 0.7% |
| Thailand | SET Index | -0.5% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | -0.6% |
| Vietnam | VNINDEX Index | 1.1% |
| Indicator | A | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 117% | 114% |
| Advancing Stocks | 190 | 1818 |
| Declining Stocks | 279 | 2983 |
| Outperforming Factors | EPS Revision, Momentum, Low Volatility | Low Volatility, Quality, Dividend Yield |
| Underperforming Factors | Growth, Value, Liquidity | Liquidity, Growth, Momentum |
| Top Sectors | Healthcare, Industrials, Energy | Communication, Healthcare, Staples |
| Bottom Sectors | Materials, Discretionary, Tech | Materials, Tech, Real Estate |
| Top Subsectors | Electric Equipment, Pharmaceuticals, Machinery | Diversified Financials, Education, Cultural Media |
| Bottom Subsectors | Non Ferrous Metal, Consumer Discretionary, Semis | Precious Metals, Base Metals, Insurance |
| Southbound Connect Buys | Alibaba, Meituan (Large), Xiaomi (Moderate), China Travel, Guotai Junan, SMIC, Starplus Legend, Tencent (Small) | |
| Southbound Connect Sells |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -1.32 |
| Communication Services | 9 | -1.47 |
| Consumer Discretionary | 28 | -2.18 |
| Consumer Staples | 13 | -0.39 |
| Energy | 6 | 0.32 |
| Financials | 24 | -1.02 |
| Health Care | 12 | 2.01 |
| Industrials | 21 | 0.87 |
| Information Technology | 10 | -1.87 |
| Materials | 10 | -2.24 |
| Real Estate | 7 | 0.17 |
| Utilities | 12 | -0.92 |
| Mainland China Listed | 395 | -0.24 |
| Communication Services | 7 | 1.04 |
| Consumer Discretionary | 29 | -0.48 |
| Consumer Staples | 24 | 0.38 |
| Energy | 13 | -0.13 |
| Financials | 64 | -0.22 |
| Health Care | 32 | 0.77 |
| Industrials | 61 | 0.33 |
| Information Technology | 90 | -0.62 |
| Materials | 54 | -1.95 |
| Real Estate | 6 | -0.53 |
| Utilities | 15 | -0.29 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.4 |
| Alibaba HK | 9988 HK Equity | -3.8 |
| JD.com HK | 9618 HK Equity | -1.9 |
| NetEase HK | 9999 HK Equity | -2.9 |
| Yum China HK | 9987 HK Equity | -1.6 |
| Baozun HK | 9991 HK Equity | -0.7 |
| Baidu HK | 9888 HK Equity | -1.1 |
| Autohome HK | 2518 HK Equity | 1 |
| Bilibili HK | 9626 HK Equity | -2.2 |
| Trip.com HK | 9961 HK Equity | 0.1 |
| EDU HK | 9901 HK Equity | 1.5 |
| Xpeng HK | 9868 HK Equity | -2.1 |
| Weibo HK | 9898 HK Equity | -0.2 |
| Li Auto HK | 2015 HK Equity | -0.9 |
| Nio Auto HK | 9866 HK Equity | 2.4 |
| Zhihu HK | 2390 HK Equity | 2.8 |
| KE HK | 2423 HK Equity | -0.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.8 |
| Meituan HK | 3690 HK Equity | -2.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -3.8 |
| GUOTAI JUNAN INTERNATIONAL | -5.3 |
| STAR PLUS LEGEND HOLDINGS-H | 94.4 |
| TENCENT HOLDINGS LTD | -1.4 |
| XIAOMI CORP-CLASS B | -2.1 |
| MEITUAN-CLASS B | -2.5 |
| LENS TECHNOLOGY CO LTD | 9.1 |
| CHINA TRAVEL INTL INV HK | 19.9 |
| CHINA CONSTRUCTION BANK-H | -0.2 |
| PING AN INSURANCE GROUP CO-H | -2.4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| CONTEMPORARY AMPEREX TECHN-A | 2.8 |
| EAST MONEY INFORMATION CO-A | -1 |
| CNPC CAPITAL CO LTD-A | 3.5 |
| FOXCONN INDUSTRIAL INTERNE-A | 0.8 |
| JIANGSU HENGRUI PHARMACEUT-A | 7.1 |
| ZIJIN MINING GROUP CO LTD-A | -4.6 |
| ZHONGJI INNOLIGHT CO LTD-A | 0.3 |
| VICTORY GIANT TECHNOLOGY -A | -2.9 |
| SUZHOU DONGSHAN PRECISION-A | 6.8 |
| EOPTOLINK TECHNOLOGY INC L-A | 0.4 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.18 versus 7.17 yesterday
- CNY per EUR 8.40 versus 8.42 yesterday
- Yield on 10-Year Government Bond 1.64% versus 1.64% yesterday
- Yield on 10-Year China Development Bank Bond 1.70% versus 1.70% yesterday
- Copper Price -0.72%
- Steel Price +0.13%
