Health Care Surges On Hengrui-GSK Deal, Market Cheers US-EU Trade Agreement
5 Min. Read Time
Key News
Asian equities were mostly higher overnight as Vietnam and Indonesia outperformed while Japan and India underperformed. Hong Kong and Mainland China were both higher overnight on high volumes as health care stocks outperformed, while internet and technology stocks were mixed.
China's markets celebrated the announcement of a trade agreement between the US and EU involving 15% tariffs on US-bound goods from the trade bloc. The announcement led to speculation and reports that the US and China will either reach a deal in the coming days, or extend the current state-of-affairs, and deal deadline, by another three months.
The China Securities Regulatory Commission (CSRC) held its mid-year work conference. The main takeaway from the work conference release was a continued focus on guiding more savings into the stock market. This follows recent reforms to pensions in China, which would make it easier for beneficiaries to direct investments into stocks and/or mutual funds and ETFs.
China's industrial profits in June, reported over the weekend, were down -4.3% from June 2024. While a decline, it is a reversal from the -9.1% decline in May. Exports continue to be volatile, after they came roaring back on the confirmation of exemptions from the US in May. A trade deal is likely to bolster profits at China's industrial firms.
Insurance companies surged on the lowering of interest rates for life insurance policies, which is expected to bring in significantly more customers for such policies. China is probably one of the only places globally where the cost of capital is still falling. Interest rates have hit rock-bottom as the yield on the 10-year China government bond continues at a low 1.7%. Could we have a reflation trade in China? Markets have rebounded this year, but is China's interest rate and inflation cycle being factored in? Anyway, it is very much out of sync with the rest of the world.
Jiangsu Hengrui Pharmaceuticals gained +24.54% after signing a licensing deal with GSK, permitting the British drug maker to sell 11 treatments developed by Hengrui outside of China. This follows the trend of more and more out-licensing deals, i.e. deals to sell China-developed drugs outside of China. In 2024, there were 70 such deals, up from only 2 in 2017. After China's drug development capabilities matured, it did not take long for the country to benefit from, among other comparative advantages, clinical trial data from an extremely large sample size.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.7% |
| Hang Seng Tech | HSTECH Index | -0.2% |
| Hong Kong Turnover | HKTurn Index | -11.2% |
| Hong Kong Short Sale Turnover | HKSST Index | -11.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.3% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 0 |
| China (Shanghai) | SHCOMP Index | 0.1% |
| China (Shenzhen) | SZCOMP Index | 0.5% |
| China (STAR Board) | Star50 Index | 0.1% |
| Mainland Turnover | .chturn Index | -2.4% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.2% |
| Japan | NKY Index | -1.1% |
| India | SENSEX Index | -0.7% |
| Indonesia | JCI Index | 0.9% |
| Malaysia | FBMKLCI Index | -0.3% |
| Pakistan | KSE100 Index | 0% |
| Philippines | PCOMP Index | -0.5% |
| South Korea | KOSPI Index | 0.4% |
| Taiwan | TWSE Index | 0.2% |
| Thailand | SET Index | 0.4% |
| Singapore | STI Index | -0.5% |
| Australia | AS51 Index | 0.4% |
| Vietnam | VNINDEX Index | 1.7% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 160 | 127 |
| Advancing Stocks | 52 (Hang Seng) | 122 (CSI 300) |
| Declining Stocks | 27 (Hang Seng) | 172 (CSI 300) |
| Outperforming Factors | Volume, Momentum | Volume, Momentum, Value, Low Volatility |
| Underperforming Factors | Growth | Growth |
| Top Sectors | Health Care, Financials, Real Estate | Health Care, Information Technology, Financials |
| Bottom Sectors | Energy, Materials, Information Technology | Energy, Consumer Staples, Materials |
| Top Subsectors | Pharmaceuticals, Electrical Equipment, Financial Services | Aerospace, Technology Hardware, Pharmaceuticals |
| Bottom Subsectors | Consumer Services, Coal, Petroleum & Petrochemicals | Coal, Steel, Transportation |
| Southbound Connect Buys | China Life Insurance. CCB, Tencent | N/A |
| Southbound Connect Sells | Meituan, Kuaishou, Xiaomi | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | 0.51 |
| Communication Services | 9 | 0.57 |
| Consumer Discretionary | 30 | 0.58 |
| Consumer Staples | 13 | -0.53 |
| Energy | 7 | -1.8 |
| Financials | 23 | 0.98 |
| Health Care | 13 | 3.42 |
| Industrials | 19 | -0.04 |
| Information Technology | 10 | -0.87 |
| Materials | 10 | -0.93 |
| Real Estate | 6 | 0.83 |
| Utilities | 12 | -0.06 |
| Mainland China Listed | 432 | 0.18 |
| Communication Services | 9 | -0.47 |
| Consumer Discretionary | 31 | 0 |
| Consumer Staples | 27 | -0.85 |
| Energy | 16 | -1.94 |
| Financials | 63 | 0.67 |
| Health Care | 40 | 1.93 |
| Industrials | 69 | -0.27 |
| Information Technology | 85 | 0.93 |
| Materials | 68 | -0.64 |
| Real Estate | 7 | 0.07 |
| Utilities | 17 | -0.41 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.9 |
| Alibaba HK | 9988 HK Equity | 2.2 |
| JD.com HK | 9618 HK Equity | 0.5 |
| NetEase HK | 9999 HK Equity | -1.4 |
| Yum China HK | 9987 HK Equity | -0.9 |
| Baozun HK | 9991 HK Equity | -0.1 |
| Baidu HK | 9888 HK Equity | 0.4 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -1.2 |
| Trip.com HK | 9961 HK Equity | -0.7 |
| EDU HK | 9901 HK Equity | 3.2 |
| Xpeng HK | 9868 HK Equity | -0.2 |
| Weibo HK | 9898 HK Equity | -0.9 |
| Li Auto HK | 2015 HK Equity | -0.9 |
| Nio Auto HK | 9866 HK Equity | 1.3 |
| Zhihu HK | 2390 HK Equity | -4 |
| KE HK | 2423 HK Equity | 2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.2 |
| Meituan HK | 3690 HK Equity | -0.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 2.2 |
| TENCENT HOLDINGS LTD | 0.9 |
| XIAOMI CORP-CLASS B | -1 |
| CHINA LIFE INSURANCE CO-H | 1.8 |
| PING AN INSURANCE GROUP CO-H | 3.5 |
| MEITUAN-CLASS B | -0.5 |
| SEMICONDUCTOR MANUFACTURI-H | 0.7 |
| AIA GROUP LTD | 5 |
| GUOTAI JUNAN INTERNATIONAL | 9.4 |
| HONG KONG EXCHANGES & CLEAR | 3.1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| CHINA NORTHERN RARE EARTH -A | 4.7 |
| VICTORY GIANT TECHNOLOGY -A | 17.5 |
| EOPTOLINK TECHNOLOGY INC L-A | 2.8 |
| JIANGSU HENGRUI PHARMACEUT-A | 10 |
| EAST MONEY INFORMATION CO-A | 0.5 |
| SUZHOU DONGSHAN PRECISION-A | 2.6 |
| ZHONGJI INNOLIGHT CO LTD-A | 3.6 |
| SHENGHE RESOURCES HOLDINGS-A | 10 |
| POWER CONSTRUCTION CORP OF-A | -2.6 |
| PING AN INSURANCE GROUP CO-A | 3.5 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.17 versus 7.17 yesterday
- CNY per EUR 8.35 versus 8.42 yesterday
- Yield on 10-Year Government Bond 1.71% versus 1.73% yesterday
- Yield on 10-Year China Development Bank Bond 1.79% versus 1.82% yesterday
- Copper Price 0.09%
- Steel Price -0.85%
