Solar Anti-Involution, CPI Data, & Renminbi Hits New 52-Week High Versus US Dollar
6 Min. Read Time
Key News
Asian equities were mixed overnight on light volumes as investors wait for today’s US Fed decision and Powell’s press conference for further rate guidance. Thailand was closed for Constitution Day.
CNY hit a new 52-week high per US dollar, closing at 7.0631, though the US dollar was mixed regionally. Maybe a stronger renminbi was part of the US-China trade deal? It would make the cost of buying US soybeans and Boeing airplanes cheaper while addressing the “currency manipulator” narrative.
Both Hong Kong and Mainland China opened lower but grinded higher in afternoon trading, led higher by news that Vanke bond holders were meeting to find a solution to several payments due. It is very likely they’ll kick the can, though the news lifted sentiment especially with growth stocks. Yes, Vanke’s Mainland listing gained +10.06%, but real estate stocks have been kicked out of indices and we still like property bonds.
The Hong Kong Exchange and the Securities and Futures Commission (local security regulator) are looking to ensure Hong Kong’s robust IPO pipeline includes an element of “quality” control. Sina noted that 180 to 200 companies could go public next year on the Hong Kong Exchange, raising HK $ 350B.
More supply while keeping demand constant means lower prices! US companies have been actively reducing supply through stock buybacks, raising the S&P 500’s EPS. A factor in emerging market underperformance is that companies are issuing more stock once things start moving higher. Exhibit A: Yangtze Optical Fibre and Cable will sell 70mm shares at a 14.9% discount to today’s close, raising HK $2.26B. The stock is up from HK $10 a year ago to HK $42, so you understand the CFO’s motivation. A risk to keep an eye on.
Worth mentioning that Mainland media noted that Mainland-listed Chinese companies have bought RMB 140B of stock in a sign of shareholder friendliness. Meituan gained +2.72% after poaching an AI expert from Bytedance. Alibaba gained +1.52% and was Hong Kong’s most heavily traded stock on news that Alibaba Cloud’s CTO and head of Tongyi Labs, Zhou Jingren, was made a partner in a strong indication of the company’s growth drivers going forward. The company’s Qwen app has 30mm monthly active users, according to a Mainland media source.
Mainland investors were net sellers of Hong Kong in a rare Southbound Stock Connect net sell day driven by a large sell in the Hong Kong Tracker ETF. Non-ferrous metal stocks rebounded in both Hong Kong and Mainland China after yesterday’s fall. Mainland China was weighed down by underperformance of bank stocks, while tech hardware was hit with profit taking after yesterday’s pop as Foxconn fell -4.09%. Newly listed Moore Thread’s gained +16.98%, though Cambricon fell by -1.05%.
Polycrystalline silicon futures gained another +1.62% on the Guangzhou Futures Exchange after yesterday’s formation of Beijing-based Beijing Guanghe Qiancheng Technology Co., Ltd. The polysilicon storage platform, owned by nine solar panel makers, including Tongwei, apparently will “buy and shut down more than 1 million tons of capacity” according to Bloomberg. Back in November, Tongwei’s Chairman noted that "anti-internal roll and anti-excessive competition" was a key issue as 90% of production capacity resides in China with five photovoltaic companies controlling 80%.
Mainland listed solar companies were lower as Sungrow fell -4.25%, Tongwei fell -3.00%, CSI Solar fell -3.94%, Jinko Solar fell -1.28%, and Longi was flat. However, this anti-involution effort could be beneficial to these companies' profitability IMO.
November PPI was -2.2% versus October’s -2.1% and expectations of -2.0%, while CPI was +0.7% versus October's +0.2% and expectations of +0.7% (22 economists submitted estimates). PPI was driven lower by mining, raw material, and manufacturing input prices falling. CPI was driven higher by clothing and household services, i.e., durable goods. The IMF raised China’s 2025 and 2026 GDP estimates to 5% and 4.5%.
History doesn’t repeat but it does rhyme. Monday’s announcement that Carvana will be added to the S&P 500 reminded me of Yahoo being added to the index in December 2009. It didn’t mark the top but was close as it gave you an indication of what inning we are in. Market timing is tough, but as an index geek it is hard for me to ignore this.
In poker there is a tell. In US-China relations, there is President Trump approving Nvidia chips for sale in China.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.4% |
| Hang Seng Tech | HSTECH Index | 0.5% |
| Hong Kong Turnover | HKTurn Index | -8% |
| Hong Kong Short Sale Turnover | HKSST Index | 2.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 19.4% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -130.07 |
| China (Shanghai) | SHCOMP Index | -0.2% |
| China (Shenzhen) | SZCOMP Index | 0.3% |
| China (STAR Board) | Star50 Index | 0% |
| Mainland Turnover | .chturn Index | -7% |
| 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 | -0.1% |
| India | SENSEX Index | -0.3% |
| Indonesia | JCI Index | 0.5% |
| Malaysia | FBMKLCI Index | -0.2% |
| Pakistan | KSE100 Index | -0.1% |
| Philippines | PCOMP Index | -0.3% |
| South Korea | KOSPI Index | -0.2% |
| Taiwan | TWSE Index | 0.8% |
| Thailand | SET Index | 0.7% |
| Singapore | STI Index | 0% |
| Australia | AS51 Index | -0.1% |
| Vietnam | VNINDEX Index | -1.6% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 78% | 105% |
| Advancing Stocks | 217 | 2333 |
| Declining Stocks | 265 | 2641 |
| Outperforming Factors | Liquidity, EPS Revision, Momentum | Buyback, Quality, EPS Revision |
| Underperforming Factors | Dividend Yield, Value, Large Cap | Large Cap, Liquidity, Momentum |
| Top Sectors | Real Estate, Materials, Discretionary | Real Estate, Communication, Materials |
| Bottom Sectors | Energy, Staples, Healthcare | Financials, Tech, Energy |
| Top Subsectors | Non Ferrous Metals, Consumer Discretionary Distribution, Machinery | Education, Motorcycle, Real Estate |
| Bottom Subsectors | Paper/Packaging, Petroleum/Petrochemical, REITs | Computer Hardware, Banking, Office Supplies |
| Southbound Connect Buys | Xiaomi (Moderate), Alibaba, Pop Mart, YOFC (Small) | |
| Southbound Connect Sells | HK Tracker ETF (Large), Tencent (Moderate) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.36 |
| Communication Services | 11 | 0.04 |
| Consumer Discretionary | 28 | 1.13 |
| Consumer Staples | 13 | -0.76 |
| Energy | 6 | -0.85 |
| Financials | 25 | -0.29 |
| Health Care | 15 | -0.45 |
| Industrials | 21 | -0.41 |
| Information Technology | 12 | 0.9 |
| Materials | 10 | 1.63 |
| Real Estate | 7 | 1.8 |
| Utilities | 12 | -0.3 |
| Mainland China Listed | 386 | -0.02 |
| Communication Services | 8 | 0.88 |
| Consumer Discretionary | 28 | 0.71 |
| Consumer Staples | 21 | 0.42 |
| Energy | 12 | -0.26 |
| Financials | 66 | -0.73 |
| Health Care | 33 | 0.39 |
| Industrials | 57 | 0.1 |
| Information Technology | 91 | -0.42 |
| Materials | 49 | 0.72 |
| Real Estate | 6 | 3.99 |
| Utilities | 14 | 0.22 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.1 |
| Alibaba HK | 9988 HK Equity | 1.5 |
| JD.com HK | 9618 HK Equity | -0.1 |
| NetEase HK | 9999 HK Equity | -0.8 |
| Yum China HK | 9987 HK Equity | 2 |
| Baozun HK | 9991 HK Equity | -2 |
| Baidu HK | 9888 HK Equity | 1.8 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -1.1 |
| Trip.com HK | 9961 HK Equity | 1.5 |
| EDU HK | 9901 HK Equity | 0 |
| Xpeng HK | 9868 HK Equity | -1.6 |
| Weibo HK | 9898 HK Equity | -1.4 |
| Li Auto HK | 2015 HK Equity | -1.4 |
| Nio Auto HK | 9866 HK Equity | -2.2 |
| Zhihu HK | 2390 HK Equity | -1.2 |
| KE HK | 2423 HK Equity | 4.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.8 |
| Meituan HK | 3690 HK Equity | 2.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 1.5 |
| #N/A Connection | 0.1 |
| #N/A Connection | 2.7 |
| XIAOMI CORP-CLASS B | 1.3 |
| YANGTZE OPTICAL FIBRE AND-H | 11 |
| SEMICONDUCTOR MANUFACTURI-H | -0.2 |
| POP MART INTERNATIONAL GROUP | 0.1 |
| #N/A Connection | 3.2 |
| CHINA CONSTRUCTION BANK-H | -0.5 |
| CHINA MERCHANTS BANK-H | -3.1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | 3.1 |
| ZHONGJI INNOLIGHT CO LTD-A | 1.7 |
| VICTORY GIANT TECHNOLOGY -A | -4.7 |
| #N/A Connection | -4.1 |
| SUNGROW POWER SUPPLY CO LT-A | -4.3 |
| SUZHOU TFC OPTICAL COMMUNI-A | -2 |
| MOORE THREADS TECHNOLOGY C-A | 17 |
| ADDSINO CO LTD -A | -6.3 |
| HYGON INFORMATION TECHNOLO-A | -0.4 |
| CAMBRICON TECHNOLOGIES-A | -1.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.06 versus 7.06 yesterday
- CNY per EUR 8.21 versus 8.22 yesterday
- Yield on 10-Year Government Bond 1.84% versus 1.84% yesterday
- Yield on 10-Year China Development Bank Bond 1.91% versus 1.93% yesterday
- Copper Price -0.63%
- Steel Price +0.75%
