EV Anti-Involution Drives Gains as Biotech Breaks Out
5 Min. Read Time
Key News
Asian equities had a good day as Thailand, Indonesia, and Pakistan outperformed, while India posted a small loss.
Hong Kong bounced around the room, while Shanghai and Shenzhen grinded higher, going from the lower left to the upper right.
It was a fairly quiet night, as Premier Li and the State Council’s meeting on “strengthening the domestic big cycle” and limiting EV price wars, i.e. ”anti-involution”, were front page news. The implications of the government curtailing “overcapacity” in the auto, steel, cement, E-Commerce, and solar industries are significant for corporate balance sheets, ending domestic deflation, and China not exporting deflation.
Li Auto gained +9.73% after announcing that a new model is open for pre-sales, as Geely Auto gained +4.16%, BYD gained +1.06%, XPeng gained +1.14%, though Xiaomi fell -2.01% and CATL fell -0.27%.
Biotech stocks in both Hong Kong and Mainland China continued to outperform overnight, as Akeso gained +10.71% after starting Phase 3 trials for a metastatic colorectal cancer treatment. The space continues to benefit from drug releases, distribution deals, and favorable policy support. BeOne, formerly known as Beigene, gained +10.6%, Jiangsu Hengrui gained +2.06%, Sino Biopharmaceutical gained +5.9%, CSPC Pharma gained +3.58%, and WuXi Apptec gained +2.42%.
Internet names were mixed, as Alibaba fell -1.14%, Meituan gained +1.13%, JD.com fell -0.16%, Trip.com fell -0.88%, Kuaishou fell -0.65%, and Tencent Music Entertainment gained +1.78%. South China Morning Post had an article about Meituan complaining about “irrational competition” from Alibaba and JD.com after the latter’s entrance into the restaurant delivery space sparked a price war. Another Chinese city announced local plans to curb the price war.
Mainland investors bought $236 million worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect, though Tencent, which gained +0.10% overnight, remains a funding source and was sold by Mainland investors. Hong Kong and Mainland China-listed electronic equipment makers, software, and semiconductor stocks had very strong days. Nvidia’s Jensen Huang’s China trip and comments on chip sale approvals and the quality of Chinese electric vehicles (EVs) and AI garnered significant attention.
According to the China Association of Automobile Manufacturers (CAAM), China's auto exports increased +10.4% year-over-year (YoY) to 3.07 million in June.
After the close, the Ministry of Finance (MoF) adjusted the tax rate on ultra-luxury cars with price tags above RMB 900,000 and canceled taxes on used vehicles.
China and Australia singed a memorandum of understanding (MOU) to review the China-Australia Free Trade Agreement following Prime Minister Anthony Albanese’s six-day trip to China. There was also more media chatter of US-China trade deal percolating.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.1% |
| Hang Seng Tech | HSTECH Index | 0.6% |
| Hong Kong Turnover | HKTurn Index | -8.7% |
| Hong Kong Short Sale Turnover | HKSST Index | -14.7% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 11.3% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 0 |
| China (Shanghai) | SHCOMP Index | 0.4% |
| China (Shenzhen) | SZCOMP Index | 1.2% |
| China (STAR Board) | Star50 Index | 0.8% |
| Mainland Turnover | .chturn Index | 7.3% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0% |
| Japan | NKY Index | 0.6% |
| India | SENSEX Index | -0.5% |
| Indonesia | JCI Index | 1.3% |
| Malaysia | FBMKLCI Index | 0.6% |
| Pakistan | KSE100 Index | 1.9% |
| Philippines | PCOMP Index | -0.7% |
| South Korea | KOSPI Index | 0.2% |
| Taiwan | TWSE Index | 0.3% |
| Thailand | SET Index | 3.5% |
| Singapore | STI Index | 0.7% |
| Australia | AS51 Index | 0.9% |
| Vietnam | VNINDEX Index | 1% |
| Indicator | A | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 116 | 114 |
| Advancing Stocks | 272 | 3388 |
| Declining Stocks | 202 | 1567 |
| Outperforming Factors | EPS Revisions, Momentum, Growth | Liquidity, Buyback, Growth |
| Underperforming Factors | Large Caps, Low Volatility, Value | Dividend, Value, Low Volatility |
| Top Sectors | Healthcare, Staples, Industrials | Tech, Healthcare, Discretionary |
| Bottom Sectors | Materials, Tech, Utilities | Utilities, Energy, Financials |
| Top Subsectors | Pharmaceuticals, National Defense, Auto | Aerospace/Military, Communication Equipment, Electronic Components |
| Bottom Subsectors | Non Ferrous Metals, Construction Materials, Petroleum | Telecom, Marine, Precious Metals |
| Southbound Connect Buys | Meitun (Moderate), Alibaba, Chinasoft, Guotai Junan, Li Auto SMIC, Xiaomi (Small) | |
| Southbound Connect Sells | Pop Mart (Moderate) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | 0 |
| Communication Services | 9 | 0.01 |
| Consumer Discretionary | 28 | 0.1 |
| Consumer Staples | 13 | 1.21 |
| Energy | 6 | -0.64 |
| Financials | 24 | -0.8 |
| Health Care | 12 | 6.09 |
| Industrials | 21 | 0.13 |
| Information Technology | 10 | -1.25 |
| Materials | 10 | -1.26 |
| Real Estate | 7 | -0.65 |
| Utilities | 12 | -0.81 |
| Mainland China Listed | 395 | 0.69 |
| Communication Services | 7 | 0.08 |
| Consumer Discretionary | 29 | 1.23 |
| Consumer Staples | 24 | 0.44 |
| Energy | 13 | -0.18 |
| Financials | 64 | -0.01 |
| Health Care | 32 | 1.47 |
| Industrials | 61 | 0.23 |
| Information Technology | 90 | 2.46 |
| Materials | 54 | 0.41 |
| Real Estate | 6 | 0.4 |
| Utilities | 15 | -0.43 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.1 |
| Alibaba HK | 9988 HK Equity | -1.1 |
| JD.com HK | 9618 HK Equity | -0.2 |
| NetEase HK | 9999 HK Equity | 0.6 |
| Yum China HK | 9987 HK Equity | 0.9 |
| Baozun HK | 9991 HK Equity | 0.4 |
| Baidu HK | 9888 HK Equity | -3.3 |
| Autohome HK | 2518 HK Equity | 0.2 |
| Bilibili HK | 9626 HK Equity | 2 |
| Trip.com HK | 9961 HK Equity | -0.9 |
| EDU HK | 9901 HK Equity | -2.5 |
| Xpeng HK | 9868 HK Equity | 1.1 |
| Weibo HK | 9898 HK Equity | -1.1 |
| Li Auto HK | 2015 HK Equity | 9.7 |
| Nio Auto HK | 9866 HK Equity | -1.4 |
| Zhihu HK | 2390 HK Equity | 0.3 |
| KE HK | 2423 HK Equity | -0.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.8 |
| Meituan HK | 3690 HK Equity | 1.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| XIAOMI CORP-CLASS B | -2 |
| ALIBABA GROUP HOLDING LTD | -1.1 |
| TENCENT HOLDINGS LTD | 0.1 |
| MEITUAN-CLASS B | 1.1 |
| LI AUTO INC-CLASS A | 9.7 |
| POP MART INTERNATIONAL GROUP | -0.9 |
| GUOTAI JUNAN INTERNATIONAL | -0.2 |
| CHINA CONSTRUCTION BANK-H | -1 |
| SEMICONDUCTOR MANUFACTURI-H | 2 |
| GEELY AUTOMOBILE HOLDINGS LT | 4.2 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | 8.1 |
| ZHONGJI INNOLIGHT CO LTD-A | 3.6 |
| VICTORY GIANT TECHNOLOGY -A | 9.6 |
| CHINA NORTHERN RARE EARTH -A | 3.3 |
| TALKWEB INFORMATION SYSTEM-A | 5.3 |
| HUADIAN NEW ENERGY GROUP C-A | -9.2 |
| JIANGSU HOPERUN SOFTWARE C-A | 9.7 |
| ANHUI JIANGHUAI AUTO GROUP-A | 10 |
| EAST MONEY INFORMATION CO-A | 0.8 |
| LUXSHARE PRECISION INDUSTR-A | 6.3 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.18 versus 7.17 yesterday
- CNY per EUR 8.31 versus 8.34 yesterday
- Yield on 10-Year Government Bond 1.66% versus 1.66% yesterday
- Yield on 10-Year China Development Bank Bond 1.72% versus 1.72% yesterday
- Copper Price -0.08%
- Steel Price +0.51%
