From TikTok to OpenAI: US-China Business Deals Surface
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Key News
Asian equities were mixed but mostly lower overnight as Mainland China's STAR Board and Taiwan outperformed, while Vietnam and the Philippines underperformed.
Multiple US-China deals are in the works, which is a powerful catalyst for the markets and overall relationship. According to President Trump, TikTok's sale to a group of US technology and media corporations may include a deal to sell its algorithm, a key part of what makes the US platform so valuable, to Oracle. Meanwhile, the China-based Luxshare is said to have been tapped by OpenAI to assemble a home device equipped with ChatGPT that would compete with Amazon's Alexa, Apple's Siri, etc.
Apple's iPhone 17 orders in China were better-than-expected, which led its supplier ecosystem to rally overnight. Sunny Optical gained nearly +7%. So much for slowing sales in China! Apple appears to be faring better than Nvidia when it comes to competing with domestic technology firms.
Mainland China saw gains overall on very high volume, at nearly 200% of the 1-year average, as the STAR Board led, especially on the Apple ecosystem boost, which lifted technology stocks generally. However, Hong Kong fell due, in part, to sellers of recently outperforming names, especially in the internet space, such as short-video platform Kuaishou. According to some brokers, this appeared to be a "sell the news" situation after the announcement of the US-China business deals. Alibaba and Baidu bucked the trend, though, and ended the session higher.
The People's Bank of China (PBOC) kept the 1 and 5-year loan prime rates (LPRs) unchanged overnight. This was not necessarily a surprise, though some may have been expecting a cut after the US Federal Reserve cut its interest rate targets last week. But, remember that the PBOC is on a completely different cycle and rates are already very low in China.
Mainland investors were strong net buyers of Hong Kong-listed stocks overnight on weakness, to the tune of $1.6 billion. However, they were net sellers of recent winners such as Pop Mart and Meituan, were among the top net sells.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.8% |
| Hang Seng Tech | HSTECH Index | -0.6% |
| Hong Kong Turnover | HKTurn Index | -22.9% |
| Hong Kong Short Sale Turnover | HKSST Index | -2% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 17.7% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1626.61277139208 |
| China (Shanghai) | SHCOMP Index | 0.2% |
| China (Shenzhen) | SZCOMP Index | 0.6% |
| China (STAR Board) | Star50 Index | 3.4% |
| Mainland Turnover | .chturn Index | -8.7% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.4% |
| Japan | NKY Index | 1% |
| India | SENSEX Index | -0.6% |
| Indonesia | JCI Index | -0.1% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | -0.1% |
| Philippines | PCOMP Index | -0.8% |
| South Korea | KOSPI Index | 0.7% |
| Taiwan | TWSE Index | 1.2% |
| Thailand | SET Index | -0.8% |
| Singapore | STI Index | -0.1% |
| Australia | AS51 Index | 0.4% |
| Vietnam | VNINDEX Index | -1.5% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 123 | 191 |
| Advancing Stocks | 17 (Hang Seng) | 113 (CSI 300) |
| Declining Stocks | 70 (Hang Seng) | 182 (CSI 300) |
| Outperforming Factors | ||
| Underperforming Factors | ||
| Top Sectors | Health Care, Materials, Information Technology | Information Technology, Real Estate, Materials |
| Bottom Sectors | Energy, Financials, Industrials | Consumer Staples, Communication Services, Energy |
| Top Subsectors | Semiconductors, Steel, Non-Ferrous Metals | Computer Hardware, Precious Metals, Semiconductors |
| Bottom Subsectors | Conglomerates, Coal, Household Appliances | Tourism, Soft Drinks, Paper |
| Southbound Connect Buys | Alibaba, Fit Hon Teng, SDHG | N/A |
| Southbound Connect Sells | Meituan, Pop Mart, Xtalpi | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | -0.61 |
| Communication Services | 9 | -0.15 |
| Consumer Discretionary | 28 | -1.01 |
| Consumer Staples | 13 | -1.18 |
| Energy | 7 | -1.97 |
| Financials | 23 | -1.7 |
| Health Care | 13 | 2.07 |
| Industrials | 20 | -1.46 |
| Information Technology | 10 | 0.12 |
| Materials | 10 | 1.72 |
| Real Estate | 6 | -1.35 |
| Utilities | 12 | -0.49 |
| Mainland China Listed | 404 | 0.47 |
| Communication Services | 6 | -1.19 |
| Consumer Discretionary | 31 | -0.77 |
| Consumer Staples | 24 | -1.19 |
| Energy | 13 | -0.93 |
| Financials | 64 | -0.18 |
| Health Care | 31 | 0.05 |
| Industrials | 64 | -0.2 |
| Information Technology | 91 | 3.37 |
| Materials | 58 | 0.21 |
| Real Estate | 6 | 0.93 |
| Utilities | 16 | -0.68 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.2 |
| Alibaba HK | 9988 HK Equity | 0.1 |
| JD.com HK | 9618 HK Equity | -3.3 |
| NetEase HK | 9999 HK Equity | -1.2 |
| Yum China HK | 9987 HK Equity | -0.9 |
| Baozun HK | 9991 HK Equity | -5.2 |
| Baidu HK | 9888 HK Equity | 3.2 |
| Autohome HK | 2518 HK Equity | -1.8 |
| Bilibili HK | 9626 HK Equity | -1.3 |
| Trip.com HK | 9961 HK Equity | -1.4 |
| EDU HK | 9901 HK Equity | -2.7 |
| Xpeng HK | 9868 HK Equity | -1.1 |
| Weibo HK | 9898 HK Equity | -0.1 |
| Li Auto HK | 2015 HK Equity | -1.1 |
| Nio Auto HK | 9866 HK Equity | -2.6 |
| Zhihu HK | 2390 HK Equity | -0.9 |
| KE HK | 2423 HK Equity | -1 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.1 |
| Meituan HK | 3690 HK Equity | -2.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 0.1 |
| SEMICONDUCTOR MANUFACTURI-H | 5.2 |
| TENCENT HOLDINGS LTD | -0.2 |
| MEITUAN-CLASS B | -2.3 |
| XIAOMI CORP-CLASS B | -1.1 |
| SHANDONG HI-SPEED HOLDINGS | 29.8 |
| KUAISHOU TECHNOLOGY | -2.4 |
| BAIDU INC-CLASS A | 3.2 |
| POP MART INTERNATIONAL GROUP | -1.4 |
| BYD CO LTD-H | -3.3 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURIN-A | 6.2 |
| CAMBRICON TECHNOLOGIES-A | 3.6 |
| HYGON INFORMATION TECHNOLO-A | 10.7 |
| ZHONGJI INNOLIGHT CO LTD-A | -0.8 |
| FOXCONN INDUSTRIAL INTERNE-A | 6.7 |
| EOPTOLINK TECHNOLOGY INC L-A | -2 |
| DAWNING INFORMATION INDUST-A | 10 |
| VICTORY GIANT TECHNOLOGY -A | -0.8 |
| ZHEJIANG SANHUA INTELLIGEN-A | 3.2 |
| WOLONG ELECTRIC GROUP CO L-A | 1.6 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.11 versus 7.12 yesterday
- CNY per EUR 8.38 versus 8.36 yesterday
- Yield on 10-Year Government Bond 1.86% versus 1.88% yesterday
- Yield on 10-Year China Development Bank Bond 1.93% versus 1.94% yesterday
- Copper Price 0.43%
- Steel Price 0.85%
