Anti-Involution Comes To Battery Industry

Key News

Asian equities were mixed on rising expectations of another US interest rate cut, though Japan and Taiwan underperformed. China's currency, the renminbi (CNY), appreciated versus the US dollar (USD) to another 52-week high of 7.07 per USD.

Media headlines are focused on November's purchasing managers' indexes (PMIs), which missed expectations. The “official” National Bureau of Statistics (NBS) survey Manufacturing PMI was 49.2, which is up from October’s 49.0 but short of an expected 49.4. The “official” Non-Manufacturing PMI was 49.5, which is down from October’s 50.1 and below an expected 50. Meanwhile, the “private” Manufacturing survey, conducted by S&P and Rating Dog, was 49.9, down from October’s 50.6 and short of an expected 50.5.

Both Hong Kong and Mainland China were higher, despite the PMIs, as our trader buddy says, “if the market doesn't care, we don't care.” The Hang Seng Index closed above the 26,000 level. Investors appear to be more focused on further supportive policies from the China Economic Work Conference (CEWC) following the release of the pro-stimulus 15^th Year Plan draft.

Battery giant Contemporary Amperex Technology (CATL) gained +2.33% in Hong Kong and +2.62% in Mainland China, as the Ministry of Industry and Information Technology (MIIT) announced a symposium attended by twelve companies to address “irrational competition in power and energy storage battery industry”.  It is great to see the MIIT expanding the anti-involution effort beyond the solar panel industry.

Shareholders of Meituan, which fell -2.88% overnight, would love to see more anti-involution nudging applied to instant commerce and food delivery, after the company’s bottom line collapsed due to subsidies to fend off competitors. The stock is down -78% from its 2021 high, despite revenue doubling since then, although net income swung back into a loss.

ZTE gained +13.94% in Hong Kong and 10% in Mainland China after partnering with ByteDance on an AI-enabled cell phone. The news, along with speculation that Apple’s foldable phone is set to launch by 2026, has lifted the mobile phone supply chain and technology hardware in both Hong Kong and Mainland China.

Hong Kong-listed automaker Seres gained +5.22% after being added to Southbound Stock Connect.

Tencent gained +1.31% on another big stock buyback announcement after the close.

Non-ferrous metals in both Hong Kong and Mainland China were higher as silver prices rose.

The China Index Academy announced that new home prices increased by 0.37% month-over-month (MoM) in November and by 2.68% year-over-year (YoY), while used home prices decreased by -0.94% MoM and by -7.95% YoY.  That represents a slight improvement following the disappointing October numbers from the NBS.

The China Securities Regulatory Commission (CSRC), China’s SEC, appears to be greenlighting Commercial real estate investment trusts (REITs).

Hunan and Guangdong provinces initiated the “direct payment of maternity allowances”.

November Vehicles Sales (Top Manufacturers):

% Changes are year-over-year (YoY) based on number of units

• BYD -5.25% to 480,186
• Xpeng +18.88% to 36,728
• Nio -45.62% to 36,275
• Li Auto -31.92% to 33,181
• Zeeker +6.78% to 63,902
• Great Wall Motors +4.57% to 133,216
• Geely +76.33% to 310,428

Last Night's Performance

Country / Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	0.7%
Hang Seng Tech	HSTECH Index	0.8%
Hong Kong Turnover	HKTurn Index	37.4%
Hong Kong Short Sale Turnover	HKSST Index	81.9%
Short Turnover as a % of Hong Kong Turnover	N/A	15.6%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	274.36
China (Shanghai)	SHCOMP Index	0.7%
China (Shenzhen)	SZCOMP Index	1%
China (STAR Board)	Star50 Index	0.7%
Mainland Turnover	.chturn Index	18.1%
Northbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	0.1%
Japan	NKY Index	-1.9%
India	SENSEX Index	-0.1%
Indonesia	JCI Index	0.5%
Malaysia	FBMKLCI Index	1.3%
Pakistan	KSE100 Index	0.8%
Philippines	PCOMP Index	-0.5%
South Korea	KOSPI Index	-0.2%
Taiwan	TWSE Index	-1%
Thailand	SET Index	1.6%
Singapore	STI Index	0%
Australia	AS51 Index	-0.6%
Vietnam	VNINDEX Index	0.6%

Indicator	Hong Kong	Mainland China
Today's Volume as % of 1-Year Average	81	100
Advancing Stocks	302	3117
Declining Stocks	170	1836
Outperforming Factors	Momentum, Liquidity, Quality	Momentum, Liquidity, EPS Revision
Underperforming Factors	Growth	Growth
Top Sectors	Communication Services, Materials, Consumer Staples	Materials, Energy, Information Technology
Bottom Sectors	Information Technology, Health Care, Financials	Real Estate, Consumer Staples, Health Care
Top Subsectors	Non Ferrous Metals, Consumer Staples Distribution, Transportation	Precious Metals, Marine, Energy Equipment
Bottom Subsectors	Consumer Durables/Apparel, Healthcare Equipment, Paper/Packaging	Power Generation Equipment, Highway, Construction Machinery
Southbound Connect Buys	Alibaba (Large), Metiuan, ZTE (Moderate), Pop Mart, Tencent, Xiaomi (Small)	N/A
Southbound Connect Sells	Semiconductor Manufacturing International (Small)	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	151	0.92
Communication Services	9	1.42
Consumer Discretionary	28	0.93
Consumer Staples	13	1.4
Energy	7	0.93
Financials	23	-0.06
Health Care	13	-0.06
Industrials	20	1.28
Information Technology	10	-0.36
Materials	10	5.23
Real Estate	6	0.33
Utilities	12	0.39
Mainland China Listed	404	1.17
Communication Services	6	1.14
Consumer Discretionary	31	1.27
Consumer Staples	24	-0.13
Energy	13	2.29
Financials	64	0.56
Health Care	31	0.25
Industrials	64	1.29
Information Technology	91	1.78
Materials	58	2.67
Real Estate	6	-0.26
Utilities	16	0.38

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	1.3
Alibaba HK	9988 HK Equity	2.2
JD.com HK	9618 HK Equity	0.5
NetEase HK	9999 HK Equity	3.9
Yum China HK	9987 HK Equity	0.8
Baozun HK	9991 HK Equity	-0.4
Baidu HK	9888 HK Equity	1.6
Autohome HK	2518 HK Equity	-1.7
Bilibili HK	9626 HK Equity	0.5
Trip.com HK	9961 HK Equity	1.7
EDU HK	9901 HK Equity	3.5
Xpeng HK	9868 HK Equity	-0.7
Weibo HK	9898 HK Equity	2.9
Li Auto HK	2015 HK Equity	-2.3
Nio Auto HK	9866 HK Equity	-0.5
Zhihu HK	2390 HK Equity	0.4
KE HK	2423 HK Equity	-1.4
Tencent Music Entertainment HK	1698 HK Equity	0.8
Meituan HK	3690 HK Equity	-2.9

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
ALIBABA GROUP HOLDING LTD	2.2
MEITUAN-CLASS B	-2.9
XIAOMI CORP-CLASS B	-1.8
TENCENT HOLDINGS LTD	1.3
ZTE CORP-H	13.9
POP MART INTERNATIONAL GROUP	-4.3
ZIJIN MINING GROUP CO LTD-H	5.3
SEMICONDUCTOR MANUFACTURI-H	0.9
CHINA CONSTRUCTION BANK-H	-0.2
PICC PROPERTY & CASUALTY-H	-2.7

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
VISUAL CHINA GROUP CO LTD-A	2
SHANTUI CONSTRUCTION MACHI-A	1
ZHONGJI INNOLIGHT CO LTD-A	4.6
ZTE CORP-A	10
EOPTOLINK TECHNOLOGY INC L-A	2.2
ZIJIN MINING GROUP CO LTD-A	5.2
FOXCONN INDUSTRIAL INTERNE-A	-1.5
SUNGROW POWER SUPPLY CO LT-A	-1.8
CONTEMPORARY AMPEREX TECHN-A	2.6
CAMBRICON TECHNOLOGIES-A	2.4

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 7.07 versus 7.07 Friday
• CNY per EUR 8.23 versus 8.21 Friday
• Yield on 10-Year Government Bond 1.84% versus 1.94% Friday
• Yield on 10-Year China Development Bank Bond 1.90% versus 1.90% Friday
• Copper Price +1.86%
• Steel Price +0.77%