Hong Kong Rebounds On MSCI’s Index Rebalance Day
5 Min. Read Time
Key News
Asian equities were mixed on higher volumes as passive investors traded at the market’s close due to MSCI’s index rebalance.
This morning, it was reported that President Trump and President Xi spoke. There seems to be a clear trajectory for better US-China relations under President Trump, which could reduce the geopolitical shadow cast over Chinese equities for US institutional investors.
Over the weekend, Chinese media noted that the US and Chinese militaries had a “frank and constructive” discussion in Hawaii from November 18–20, according to the Chinese Navy. I didn't see the meeting covered in any Western media outlets except for Reuters. Good news isn’t fit to print?
Hong Kong had a very broad rally on higher volumes, which was driven by the MSCI index rebalance. Alibaba gained +4.67%, as the company reports financial results after the Hong Kong close tomorrow. Alibaba recently shared an update on its improved Qwen AI model, which had 10 million downloads according to Bloomberg.
Alibaba had a very strong day of buying from Mainland investors, along with Tencent (+2.38%) and Kuiashou (+7.11%). JD.com gained +1.9% as it was announced that JD Industrial will list on the Hong Kong Stock Exchange December 11th, though I need to dive deeper into the details.
Lei Jun, founder and CEO of Xiaomi, purchased 2.6 million shares today according to a filing with the Hong Kong Exchange. Healthcare stocks were a very strong performer (again), along with non-ferrous metal stocks. Mainland China, which has a much smaller weight in MSCI indices due to its partial inclusion, had several large capitalization/value sectors underperform, including Shanghai stocks in the energy and banking sectors.
Mainland listed Foxconn fell -7.8% on chatter that the company had lowered its Q4 guidance, though the company denied the rumor. Obviously a big day tomorrow with Alibaba’s financial results being released.
I’ve advocated for using the Relative Strength Index (RSI) as a good indicator of when to rebalance a position in the China internet space. Over the last three years, using the RSI’s overbought (over 70) and oversold (under 30) has generated four trades. They’ve done well! Yes, knocking on wood. The indicator ignited its 5th trade during last week’s drawdown. I believe its worthwhile to look at for those not invested!
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 2% |
| Hang Seng Tech | HSTECH Index | 2.8% |
| Hong Kong Turnover | HKTurn Index | 5.9% |
| Hong Kong Short Sale Turnover | HKSST Index | 0.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.6% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1094.68 |
| China (Shanghai) | SHCOMP Index | 0% |
| China (Shenzhen) | SZCOMP Index | 0.9% |
| China (STAR Board) | Star50 Index | 0.8% |
| Mainland Turnover | .chturn Index | -12% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.7% |
| Japan | NKY Index | -2.4% |
| India | SENSEX Index | -0.4% |
| Indonesia | JCI Index | 1.9% |
| Malaysia | FBMKLCI Index | 0.1% |
| Pakistan | KSE100 Index | 0% |
| Philippines | PCOMP Index | 0.4% |
| South Korea | KOSPI Index | -0.2% |
| Taiwan | TWSE Index | 0.3% |
| Thailand | SET Index | -0.1% |
| Singapore | STI Index | 0.6% |
| Australia | AS51 Index | 1.3% |
| Vietnam | VNINDEX Index | 0.8% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 123% | 103% |
| Advancing Stocks | 385 | 3993 |
| Declining Stocks | 100 | 1043 |
| Outperforming Factors | Growth, Liquidity, Quality | Buyback, Growth, Quality |
| Underperforming Factors | Value, Dividend Yield, Small Caps | |
| Top Sectors | Healthcare, Discretionary, Communication | Communication, Healthcare, Discretionary |
| Bottom Sectors | Energy, Materials, Staples | |
| Top Subsectors | Media/Entertainment, National Defense, Pharmaceutical | Aerospace, Internet, Cultural Media |
| Bottom Subsectors | Semis, Petroleum/Petrochemical, Consumer Discretionary | Forest, Oil/Gas, Gas |
| Southbound Connect Buys | Alibaba (Very Large), Kuiashou, Tencent (Large), Meituan, Xiaomi (Moderate), HS Tech ETF (Small) | |
| Southbound Connect Sells | SMIC (Large), CNOOC, Hua Hong Semi (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 160 | 1.23 |
| Communication Services | 11 | 0.44 |
| Consumer Discretionary | 28 | 0.51 |
| Consumer Staples | 13 | 0.01 |
| Energy | 6 | 0 |
| Financials | 25 | 0.07 |
| Health Care | 15 | 0.09 |
| Industrials | 21 | 0.01 |
| Information Technology | 12 | 0.04 |
| Materials | 10 | 0.02 |
| Real Estate | 7 | 0.01 |
| Utilities | 12 | 0.01 |
| Mainland China Listed | 385 | -0.03 |
| Communication Services | 8 | 0.01 |
| Consumer Discretionary | 28 | 0.02 |
| Consumer Staples | 21 | -0.02 |
| Energy | 12 | -0.01 |
| Financials | 66 | -0.04 |
| Health Care | 33 | 0.02 |
| Industrials | 57 | 0.02 |
| Information Technology | 91 | 0 |
| Materials | 49 | -0.03 |
| Real Estate | 6 | 0 |
| Utilities | 14 | 0 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 2.4 |
| Alibaba HK | 9988 HK Equity | 4.7 |
| JD.com HK | 9618 HK Equity | 1.9 |
| NetEase HK | 9999 HK Equity | 5.9 |
| Yum China HK | 9987 HK Equity | 1.7 |
| Baozun HK | 9991 HK Equity | -1.1 |
| Baidu HK | 9888 HK Equity | 4.2 |
| Autohome HK | 2518 HK Equity | 7.5 |
| Bilibili HK | 9626 HK Equity | 5.7 |
| Trip.com HK | 9961 HK Equity | 0.8 |
| EDU HK | 9901 HK Equity | 1 |
| Xpeng HK | 9868 HK Equity | 3.6 |
| Weibo HK | 9898 HK Equity | 0.5 |
| Li Auto HK | 2015 HK Equity | 3.9 |
| Nio Auto HK | 9866 HK Equity | 5.8 |
| Zhihu HK | 2390 HK Equity | 1.7 |
| KE HK | 2423 HK Equity | -0.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 4.5 |
| Meituan HK | 3690 HK Equity | 2.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 4.7 |
| TENCENT HOLDINGS LTD | 2.4 |
| SEMICONDUCTOR MANUFACTURI-H | -1.1 |
| XIAOMI CORP-CLASS B | 1.5 |
| HUA HONG SEMICONDUCTOR LTD-H | -4.9 |
| KUAISHOU TECHNOLOGY | 7.1 |
| MEITUAN-CLASS B | 2.7 |
| GANFENG LITHIUM GROUP CO L-H | -5.7 |
| BYD CO LTD-H | 2.3 |
| CHINA CONSTRUCTION BANK-H | 1.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -1.6 |
| FOXCONN INDUSTRIAL INTERNE-A | -7.8 |
| EOPTOLINK TECHNOLOGY INC L-A | -2.3 |
| BLUEFOCUS INTELLIGENT COMM-A | 15.7 |
| SUNGROW POWER SUPPLY CO LT-A | -0.3 |
| CONTEMPORARY AMPEREX TECHN-A | 0.1 |
| CAMBRICON TECHNOLOGIES-A | 1 |
| GANFENG LITHIUM GROUP CO L-A | -8.6 |
| EASY CLICK WORLDWIDE NETWO-A | 7.8 |
| VICTORY GIANT TECHNOLOGY -A | -1.2 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.10 versus 7.11 Friday
- CNY per EUR 8.19 versus 8.21 Friday
- Yield on 10-Year Government Bond 1.82% versus 1.81% Friday
- Yield on 10-Year China Development Bank Bond 1.88% versus 1.88% Friday
- Copper Price -0.06%
- Steel Price +0.19%
