CEWC-Favored Growth & Consumption Stocks Higher, Week In Review
7 Min. Read Time
Week in Review
- Asian equities were mostly mixed but mostly higher for the week as the Philippines and Mainland China's STAR Market outperformed, while Vietnam and Thailand underperformed.
- The Central Economic Work Conference was held this week. Key goals that came out of the important government meeting included boosting domestic demand, stabilizing real estate, and supporting growth through moderate policy easing and new economic drivers.
- China's currency the renminbi (CNY) continued to notch new 1-year highs versus the US dollar this week, as the central bank indicated efforts to stabilize the currency's appreciation.
- An industry group of solar panel input makers agreed this week to reduce capacity by one million tons in hopes that increased input costs will reverberate down the supply chain to raise prices for panels.
Friday's Key News
Hong Kong had a strong day, as advancers beat decliners by 4 to 1 led by growth stocks and subsectors, following yesterday’s Central Economic Work Conference (CEWC).
Didn’t anybody notice in yesterday’s note that I emphasized the CEWC release was “after the close”? I’m not a day trader nor can I predict the future, but seeing China stocks off during US trading hours was a head scratcher to me, considering how positive the release was. Local investors read the release and bought subsectors and stocks aligned with the release’s emphasis on domestic consumption, “innovation-driven development”, and “deepening the expansion of Artificial Intelligence”.
Hong Kong’s most heavily traded stocks by value were Alibaba, which gained +2.32% and had a very large and rare net sell day from Mainland investors via Southbound Stock Connect, Tencent, which gained +2.41% and experienced a decently-sized Connect sell, Xiaomi, which gained +1.85% on a very large net buy from Mainland investors, and Meituan, which gained +0.89% and also saw significant net buying via Southbound Stock Connect.
Insurance, electric vehicles, other autos, semiconductors, non-ferrous metals, and household appliances all outperformed overnight. November auto production and sales increased year-over-year (YoY) by 2.8% and 3.4%, respectively, with monthly totals of 3.53 million produced and 3.43 million sold. That brings the year-to-date production and sales total increase YoY to 11.9% and 11.4%, respectively, and totals of 31.23 million sold and 31.13 million sold. Wow!
Energy, banks, coal, and real estate were among the few sectors with stocks lower.
JD.com gained +1.14%, though a Mainland media source says the company is increasing its buyback by $10 billion, which brings the total to $12 billion. I have not seen this confirmed elsewhere, nor do I see a Hong Kong Exchange (HKEX) regulatory filing. If I do, I’ll put it up on X (Twitter) (@ahern_brendan). The listing of JD Industrial marks the fifth Hong Kong-listed stock from the JD and Richard Liu ecosystem.
Mainland China was also led by policy favorites, including insurance, communication equipment, power generation equipment, industrial machinery, autos, household appliances, and batteries. Battery giant Contemporary Amperex Technology gained +0.72%.
Semiconductors were largely higher, though Moore Threads fell -13.41% after yesterday’s warning about the stock’s rise from the company, which appears to have weighed on Cambricon, which fell -2.75%, as well. Mainland-listed shares of ZTE fell -0.19%, though, after the close, the company announced a RMB 1.2 billion stock buyback.
Polycrystalline Silicon futures were up +2.89% overnight, as the China Photovoltaic Industry Association stated that this week’s formation of the Beijing Gunaghe Qiancheng Technology Co. Ltd. is a step to “solving the vicious competition in photovoltaic industry”. Solar is definitely getting the anti-involution effort! Solar panel makers impacted in last night's market action included Sungrow, which gained +0.53%, LONGi, which gained +1.73%, and Tongwei, which gained +1.69%.
The National Financial System Work Conference took place to study the impact of yesterday’s CEWC on financial markets and included a speech from Politburo Committee Leader, Director of the Office of the Central Financial Committee, and lead trade envoy He Lifeng. The PBOC and its head Pan Gongsheng also had a meeting to study the CEWC release and how the PBOC will “solidly implement the monetary and financial policies decided by the Party Central Committee.” Additionally the PBOC will “continue to implement moderate loose monetary policy and accelerate the structural reform of the financial supply side” and “prevent and resolve financial risks in key areas and maintain financial stability”. The State-owned Assets Supervision and Administration Commission of the State Council also had a “special meeting” to study the CEWC.
November credit data was released after the close. Headlines will tell you that China’s credit “missed estimates” (maybe the people who provide estimates aren’t very good at forecasting?) and credit demand is weak. Yes, credit demand is weak, but an element of that is engineered. During our interview with Gavekal Dragonomics Head of Research Arthur Kroeber yesterday, he spoke about how China's government is deliberating limiting credit to housing while steering it toward high-end manufacturing and technology. The interview is a worthwhile listen, in my opinion! Click here to view the replay.
There is so much good stuff happening, but so little Western media coverage. That is obviously job security for me, though it makes you wonder why good news in China is not getting reported. On that deep thought, enjoy your weekend!
November Credit Data Release Overview
- New Loans YTD RMB 15.36 trillion versus October’s RMB 14.97T and estimates of RMB 15.417T
- Aggregate Financing YTD RMB 33.39T versus October’s RMB 30.9T and estimates of RMB 33.099T
- M2 YoY +8% versus October’s 8% and estimates of 8.2%
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 1.7% |
| Hang Seng Tech | HSTECH Index | 1.9% |
| Hong Kong Turnover | HKTurn Index | 33% |
| Hong Kong Short Sale Turnover | HKSST Index | 39.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -675.18 |
| China (Shanghai) | SHCOMP Index | 0.4% |
| China (Shenzhen) | SZCOMP Index | 0.7% |
| China (STAR Board) | Star50 Index | 1.7% |
| Mainland Turnover | .chturn Index | 12.9% |
| 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 | 1.4% |
| India | SENSEX Index | 0.5% |
| Indonesia | JCI Index | 0.5% |
| Malaysia | FBMKLCI Index | 0.8% |
| Pakistan | KSE100 Index | 0.6% |
| Philippines | PCOMP Index | 0.8% |
| South Korea | KOSPI Index | 1.4% |
| Taiwan | TWSE Index | 0.6% |
| Thailand | SET Index | 0% |
| Singapore | STI Index | 1.5% |
| Australia | AS51 Index | 1.2% |
| Vietnam | VNINDEX Index | -3.1% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 98 | 100 |
| Advancing Stocks | 410 | 2533 |
| Declining Stocks | 82 | 2448 |
| Outperforming Factors | EPS Revision, Buyback, Quality | Growth, Liquidity, Momentum |
| Underperforming Factors | Value | Value |
| Top Sectors | Materials, Communication, Industrials | Industrials, Tech, Materials |
| Bottom Sectors | Real Estate, Energy, Utilities | Energy, Health Care, Financials |
| Top Subsectors | National Defense, Consumer Staples Distribution, Non Ferrous Metal | Precious Metals, Power Generation Equipment, Communication Equipment |
| Bottom Subsectors | Environmental Protection | Airport, Retail, Highway |
| Southbound Connect Buys | Meituan, Xiaomi (Very Large) | N/A |
| Southbound Connect Sells | Alibaba (Very Large), Tencent (Large), Hua Hong, SMIC (Moderate) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | 0.72 |
| Communication Services | 9 | 0.78 |
| Consumer Discretionary | 28 | 0.67 |
| Consumer Staples | 13 | 0.53 |
| Energy | 7 | 0.14 |
| Financials | 23 | 0.28 |
| Health Care | 13 | 0.16 |
| Industrials | 20 | 1.26 |
| Information Technology | 10 | 1.01 |
| Materials | 10 | 0.92 |
| Real Estate | 6 | 0.38 |
| Utilities | 12 | 0.63 |
| Mainland China Listed | 404 | 1.85 |
| Communication Services | 6 | 2.42 |
| Consumer Discretionary | 31 | 1.83 |
| Consumer Staples | 24 | 1.83 |
| Energy | 13 | 0.07 |
| Financials | 64 | 1.42 |
| Health Care | 31 | 1.25 |
| Industrials | 64 | 2.13 |
| Information Technology | 91 | 1.67 |
| Materials | 58 | 3.22 |
| Real Estate | 6 | -0.32 |
| Utilities | 16 | 1.14 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 2.4 |
| Alibaba HK | 9988 HK Equity | 2.3 |
| JD.com HK | 9618 HK Equity | 1.1 |
| NetEase HK | 9999 HK Equity | 4.2 |
| Yum China HK | 9987 HK Equity | 2.5 |
| Baozun HK | 9991 HK Equity | 0.7 |
| Baidu HK | 9888 HK Equity | 1.8 |
| Autohome HK | 2518 HK Equity | 0.1 |
| Bilibili HK | 9626 HK Equity | 0.9 |
| Trip.com HK | 9961 HK Equity | 1.6 |
| EDU HK | 9901 HK Equity | 0.4 |
| Xpeng HK | 9868 HK Equity | 1.1 |
| Weibo HK | 9898 HK Equity | 1.1 |
| Li Auto HK | 2015 HK Equity | 2.9 |
| Nio Auto HK | 9866 HK Equity | 2.6 |
| Zhihu HK | 2390 HK Equity | 1.5 |
| KE HK | 2423 HK Equity | -2.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2.4 |
| Meituan HK | 3690 HK Equity | 0.9 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 2.3 |
| TENCENT HOLDINGS LTD | 2.4 |
| XIAOMI CORP-CLASS B | 1.8 |
| MEITUAN-CLASS B | 0.9 |
| PING AN INSURANCE GROUP CO-H | 3.7 |
| SEMICONDUCTOR MANUFACTURI-H | 0.8 |
| HSBC HOLDINGS PLC | 2.9 |
| NETEASE INC | 4.2 |
| HUA HONG SEMICONDUCTOR LTD-H | -0.7 |
| CHINA LIFE INSURANCE CO-H | 5.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -0.8 |
| EOPTOLINK TECHNOLOGY INC L-A | 2.8 |
| VICTORY GIANT TECHNOLOGY -A | 1.5 |
| SUNGROW POWER SUPPLY CO LT-A | 0.5 |
| CAMBRICON TECHNOLOGIES-A | -2.8 |
| SUZHOU DONGSHAN PRECISION-A | 7.7 |
| ZTE CORP-A | -0.2 |
| ADDSINO CO LTD -A | 5.2 |
| SUZHOU TFC OPTICAL COMMUNI-A | -2.1 |
| MOORE THREADS TECHNOLOGY C-A | -13.4 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.05 versus 7.06 yesterday
- CNY per EUR 8.28 versus 8.29 yesterday
- Yield on 10-Year Government Bond 1.84% versus 1.84% yesterday
- Yield on 10-Year China Development Bank Bond 1.92% versus 1.90% yesterday
- Copper Price 1.36%
- Steel Price -0.55%
