Markets Waiting For Catalyst & Clarity
6 Min. Read Time
Key News
Asian equities were mixed as Japan and Korea outperformed while Hong Kong and the Philippines underperformed.
It was another down day for the US dollar as the renminbi (CNY) hit yet another 52-week high against the US dollar overnight. Hong Kong and Mainland China drifted lower across the trading day on light volumes, as investors await US economic data today. This data could determine the path of US interest rate cuts.
The Hang Seng Index closed below the 26,000 level. Investors appear to be sitting on their hands waiting for domestic and/or global catalysts. The Central Economic Work Conference (CEWC) should be a catalyst domestically, though the exact dates have not been released yet. Also, the 15th Five-Year Plan release in the first quarter will be a major factor.
President Trump signed the Taiwan Assurance Implementation Act, which requires the US State Department to review Taiwanese government contacts at least every five years, which might have had investors worried about an escalation in US-China tensions. Neither the US nor China made a big deal out of the Act. President Trump is still set to visit China in April, which provides a clear path toward better relations.
Bloomberg published an article, stating that several Vanke bondholders are resisting kicking the can on a bond payment. This garnered attention, though the article’s sources were unnamed “people familiar with the matter”. Would the bondholders prefer a default? I doubt it.
Financials, which represent a heavy weight in indexes, were off in both Mainland China and Hong Kong, as Reuters reported banks have eliminated 5 year certificates of deposit (CDs) “in an effort to cut costs and offset margin pressure.” HSBC gained +0.18% and bucked the downdraft after naming a new Chairman, though remember HSBC isn’t part of MSCI China.
Materials were lifted higher by non-ferrous metal stocks, which were one of the few bright spots in both markets.
Hong Kong’s media and entertainment subsector was down -1.98% after the Internet Information Department provided guidance on online and AI celebrity accounts. Kuaishou fell -2.25% on the guidance, Bilibili fell -3.00%, and Meituan fell -4.59%. JD.com fell -0.43% despite taking a controlling interest in German retailer Ceconomy, which has more than 1,000 brick-and-mortar stores in Europe.
JD Industry is headed to a Hong Kong IPO that will raise $412 million.
China Uranium’s Shenzhen IPO rose a mere +280%, giving the company a market cap of $19.9 billion.
A few positive things that didn’t make a difference in today’s trading:
- The November “private” PMI survey, conducted by S&P, now called the Rating Dog Services was 52.1 versus October’s 52.6 and matching economist expectations of 52.1 (7 economists submitted estimates). New export orders were a strong standout. The Bloomberg News headline on this release only reconfirms why I no longer utilize it a credible news source. Take a look for yourself. I believe Reuters is the best balanced China news source, much more so than the Wall Street Journal or Financial Times.
- Chinese media noted JP Morgan upgraded China to overweight from neutral in their 2026 EM outlook.
- The Ministry of Commerce reported that RMB 2.5 trillion of sales were driven by the consumer subsidies for replacing home appliances, mobile phones and electronics, electric bikes, and home/kitchen goods. 360mm citizens made purchases.
- The State Council green lighted the Ministry of Natural Resources’ “Yangtze River Delta Land and Space Planning (2023-2035)”.
- President Macron of France arrived in Beijing today, while Reuters reported British PM Starmer will visit in January.
- I stumbled across a Mainland media article about how Brazilian soybean farmers are “shocked” at the prices China is paying for 67 shipments/35% of 12mm tons of US soybean purchases. The prices imply “these purchases are politically motivated” due to the US-China trade deal, as it is clear “state-owned enterprises will buy regardless of price.” The article speculates “2026 is expected to be a year where political factors will determine the soybean market.”
- My colleague Henry shared a valuation comparison of US and China internet. While P/Es are significantly wide, the PEG ratio of US internet sitting at 2X China internet is hard to ignore. Woof!
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.3% |
| Hang Seng Tech | HSTECH Index | -1.6% |
| Hong Kong Turnover | HKTurn Index | -7.8% |
| Hong Kong Short Sale Turnover | HKSST Index | -8.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 291.10 |
| China (Shanghai) | SHCOMP Index | -0.5% |
| China (Shenzhen) | SZCOMP Index | -0.9% |
| China (STAR Board) | Star50 Index | -0.9% |
| Mainland Turnover | .chturn Index | 4.9% |
| Northbound 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% |
| Indonesia | JCI Index | -0.1% |
| Malaysia | FBMKLCI Index | -0.5% |
| Pakistan | KSE100 Index | -1% |
| Philippines | PCOMP Index | -1.5% |
| South Korea | KOSPI Index | 1% |
| Taiwan | TWSE Index | 0.8% |
| Thailand | SET Index | -0.2% |
| Singapore | STI Index | 0.4% |
| Australia | AS51 Index | 0.2% |
| Vietnam | VNINDEX Index | 0.9% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 66% | 99% |
| Advancing Stocks | 97 | 1371 |
| Declining Stocks | 389 | 3620 |
| Outperforming Factors | ||
| Underperforming Factors | Liquidity, Large Caps, Quality | Liquidity, Large Caps, Growth |
| Top Sectors | Materials | Materials, Energy, Utilities |
| Bottom Sectors | Real Estate, Staples, Healthcare | Real Estate, Communication, Financials |
| Top Subsectors | National Defense, Non Ferrous Metals, Household Appliances | Energy Equipment, Motorcycle, Highway |
| Bottom Subsectors | Household/Personal Products, Media/Entertainment, Financials Services/Insurance | Forest, Internet, Software |
| Southbound Connect Buys | Xiaomi (Large), Alibaba (Moderate), Meituan, Xpeng (Small) | |
| Southbound Connect Sells | SMIC, Tencent (Moderate), Hua Hong Sem, XtalPi, ZTEi (Tiny) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 160 | -1.37 |
| Communication Services | 11 | -1.22 |
| Consumer Discretionary | 28 | -1.67 |
| Consumer Staples | 13 | -1.9 |
| Energy | 6 | -0.47 |
| Financials | 25 | -1.81 |
| Health Care | 15 | -1.91 |
| Industrials | 21 | -0.25 |
| Information Technology | 12 | -1.27 |
| Materials | 10 | 1.2 |
| Real Estate | 7 | -2.04 |
| Utilities | 12 | -0.37 |
| Mainland China Listed | 385 | -0.43 |
| Communication Services | 8 | -1.66 |
| Consumer Discretionary | 28 | -0.51 |
| Consumer Staples | 21 | -0.63 |
| Energy | 12 | 0.44 |
| Financials | 66 | -0.85 |
| Health Care | 33 | -0.37 |
| Industrials | 57 | -0.22 |
| Information Technology | 91 | -0.8 |
| Materials | 49 | 0.84 |
| Real Estate | 6 | -1.7 |
| Utilities | 14 | 0.33 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1 |
| Alibaba HK | 9988 HK Equity | -2.2 |
| JD.com HK | 9618 HK Equity | -0.4 |
| NetEase HK | 9999 HK Equity | -2.9 |
| Yum China HK | 9987 HK Equity | -0.6 |
| Baozun HK | 9991 HK Equity | 1 |
| Baidu HK | 9888 HK Equity | -1 |
| Autohome HK | 2518 HK Equity | -0.2 |
| Bilibili HK | 9626 HK Equity | -3 |
| Trip.com HK | 9961 HK Equity | -1.5 |
| EDU HK | 9901 HK Equity | -2.4 |
| Xpeng HK | 9868 HK Equity | -4.3 |
| Weibo HK | 9898 HK Equity | -0.2 |
| Li Auto HK | 2015 HK Equity | 0 |
| Nio Auto HK | 9866 HK Equity | -3.3 |
| Zhihu HK | 2390 HK Equity | -1.5 |
| KE HK | 2423 HK Equity | -1.7 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.8 |
| Meituan HK | 3690 HK Equity | -0.6 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -2.2 |
| TENCENT HOLDINGS LTD | -1 |
| XIAOMI CORP-CLASS B | -1.2 |
| MEITUAN-CLASS B | -0.6 |
| SEMICONDUCTOR MANUFACTURI-H | -2.1 |
| KUAISHOU TECHNOLOGY | -2.2 |
| CHINA CONSTRUCTION BANK-H | -1.4 |
| AIA GROUP LTD | -1.5 |
| HONG KONG EXCHANGES & CLEAR | -1.5 |
| ZIJIN MINING GROUP CO LTD-H | 0.2 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | 2.2 |
| ZHONGJI INNOLIGHT CO LTD-A | -3.4 |
| ZTE CORP-A | -4.8 |
| ADDSINO CO LTD -A | 5.2 |
| SUZHOU TFC OPTICAL COMMUNI-A | 7.1 |
| FOXCONN INDUSTRIAL INTERNE-A | 1.2 |
| SAI MICROELECTRONICS INC-A | -19.6 |
| ZHONGFU STRAITS PINGTAN DE-A | -9.9 |
| VICTORY GIANT TECHNOLOGY -A | -1.5 |
| SUNGROW POWER SUPPLY CO LT-A | -0.9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.06 versus 7.06 yesterday
- CNY per EUR 8.23 versus 8.20 yesterday
- Yield on 10-Year Government Bond 1.85% versus 1.84% yesterday
- Yield on 10-Year China Development Bank Bond 1.92% versus 1.91% yesterday
- Copper Price -0.13%
- Steel Price -0.16%
