Xi Says “Expanding Domestic Demand Is A Strategic Move”
6 Min. Read Time
Key News
Asian equities started the week mostly lower, as US technology valuation concerns weighed on growth stocks globally, though volumes were light.
November economic data did not help sentiment as the release was broadly lighter versus expectations. The end of the year and holiday season likely didn’t help either, as some investors locked in profits.
The Financial Times’ article based on the People’s Daily's article in which President Xi attacks “reckless spending” was not big news, but it was out there. The piece was basically regurgitated by other Western media outlets. Ironically, I don’t see the People’s Daily article! What I did see is the pre-release of President Xi’s article in Qiushi magazine that will be published soon, titled “Expanding domestic demand is a strategic move”.
You may recall President Xi wrote an article back in July that sparked the ani-involution push with a solar industry group convening several days later. The article states “the expansion of domestic demand is related to both economic stability and economic security” and “insufficient total demand is a prominent contradiction facing the current economic operation.” How? By “ implementing the outline of the strategic plan for expanding domestic demand” indicating there is a game plan. The best way to expand consumption is to “promote employment, improve social security, optimize the income distribution structure, expand the middle-income group and solidly promote common prosperity.” More jobs equals more spending makes sense in addition to increasing China’s social safety net which is why citizens save so much.
The article’s pre-release was a non-factor as Hong Kong's breadth was terrible and Hong Kong's heatmap looked like Omaha Beach. Insurance stocks were a rare bright spot as comments from the China Securities Regulatory Commission (CSRC) on the 15th Five Year Plan draft were a catalyst. Non-Ferrous metals continued their relentless trend higher.
The Ministry of Industry and Information Technology (MIIT) approved “level three autonomous driving”, allowing two electric vehicle (EV) makers to allow their driverless vehicles to reach speeds of 50 kilometers on a Chongqing highway and 80 kilometers per hour on a Beijing highway. Nonetheless, Hong Kong-listed EV stocks were not spared the downdraft, though battery giant CATL gained +0.58%, while BYD fell -2.54%, Li Auto fell -2.89%, Geely fell -3.15%, Chery fell -1.53%, and XPeng fell -2.25%.
Mainland investors bought the Hong Kong dip with $469 million worth of net buying via Southbound Stock Connect. Mainland markets were off, but not nearly as much as Hong Kong. Technology hardware, semiconductors, software, and autos and EVs were thoroughly rinsed through. Similar to insurance, a few consumption plays bucked the trend, as investors aren’t completely ignoring the government’s consumption rhetoric. Mainland-listed household appliances and Hong Kong-listed food products were both higher overnight.
FTSE’s index rebalance takes place this Friday, marking the last liquidity event of the year.
November Economic Data Release:
% changes are year-over-year unless otherwise indicated
- New Home Prices -0.39% versus October’s -0.45%
- Used Home Prices -0.66% versus October’s -0.66%
- Retail Sales 1.3% versus October’s 2.9% and expectations 2.9%
- Online Retail Sales year-to-date (YTD) 9.1%, accounting for 25.9% of consumer goods sales
- Industrial Production 4.8% versus October’s 4.9% and expectations 5%
- Fixed Asset Investment YTD -2.6% versus October’s -1.7% and expectations of -2.3%
- Property Investment YTD -15.9% versus October’s -14.7% and expectations of -15.4%
- Jobless Rate 5.1% versus October’s 5.1% and expectations of 5.1%
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.3% |
| Hang Seng Tech | HSTECH Index | -2.5% |
| Hong Kong Turnover | HKTurn Index | -15.8% |
| Hong Kong Short Sale Turnover | HKSST Index | -3.3% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 17.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 466.72656449553 |
| China (Shanghai) | SHCOMP Index | -0.6% |
| China (Shenzhen) | SZCOMP Index | -0.8% |
| China (STAR Board) | Star50 Index | -2.2% |
| Mainland Turnover | .chturn Index | -15% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.4% |
| Japan | NKY Index | -1.3% |
| India | SENSEX Index | -0.1% |
| Indonesia | JCI Index | -0.1% |
| Malaysia | FBMKLCI Index | 0.4% |
| Pakistan | KSE100 Index | 0.7% |
| Philippines | PCOMP Index | 0.4% |
| South Korea | KOSPI Index | -1.8% |
| Taiwan | TWSE Index | -1.2% |
| Thailand | SET Index | 1.5% |
| Singapore | STI Index | 0.1% |
| Australia | AS51 Index | -0.7% |
| Vietnam | VNINDEX Index | -0.1% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 82 | 100 |
| Advancing Stocks | 166 | 2190 |
| Declining Stocks | 309 | 2789 |
| Outperforming Factors | EPS Revision, Buyback, Quality | Value, Dividend Yield, Low Volatility |
| Underperforming Factors | Value | Liquidity, Momentum, Growth |
| Top Sectors | Materials, Communication, Industrials | Financials, Staples, Materials |
| Bottom Sectors | Real Estate, Energy, Utilities | Tech, Real Estate, Healthcare |
| Top Subsectors | National Defense, Consumer Staples Distribution, Non Ferrous Metal | Insurance, Forest, Soft Drink |
| Bottom Subsectors | Environmental Protection | Computer Hardware, Electronic Components, Semis |
| 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 | -1.76 |
| Communication Services | 9 | -0.31 |
| Consumer Discretionary | 28 | -1.25 |
| Consumer Staples | 13 | -2.24 |
| Energy | 7 | -0.23 |
| Financials | 23 | -2.25 |
| Health Care | 13 | -1.47 |
| Industrials | 20 | -0.05 |
| Information Technology | 10 | -4.8 |
| Materials | 10 | -1.03 |
| Real Estate | 6 | -0.12 |
| Utilities | 12 | -2.23 |
| Mainland China Listed | 404 | -0.53 |
| Communication Services | 6 | -1.64 |
| Consumer Discretionary | 31 | -0.92 |
| Consumer Staples | 24 | 0.07 |
| Energy | 13 | 0.01 |
| Financials | 64 | 0.59 |
| Health Care | 31 | -0.53 |
| Industrials | 64 | -1.37 |
| Information Technology | 91 | 0.19 |
| Materials | 58 | -0.87 |
| Real Estate | 6 | 0.73 |
| Utilities | 16 | -2.23 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -2.1 |
| Alibaba HK | 9988 HK Equity | -3.6 |
| JD.com HK | 9618 HK Equity | -1.8 |
| NetEase HK | 9999 HK Equity | -0.8 |
| Yum China HK | 9987 HK Equity | 1 |
| Baozun HK | 9991 HK Equity | -2.7 |
| Baidu HK | 9888 HK Equity | -5.8 |
| Autohome HK | 2518 HK Equity | 1.2 |
| Bilibili HK | 9626 HK Equity | -1 |
| Trip.com HK | 9961 HK Equity | 0.7 |
| EDU HK | 9901 HK Equity | 2.8 |
| Xpeng HK | 9868 HK Equity | -2.3 |
| Weibo HK | 9898 HK Equity | -0.6 |
| Li Auto HK | 2015 HK Equity | -2.9 |
| Nio Auto HK | 9866 HK Equity | -2.5 |
| Zhihu HK | 2390 HK Equity | -0.7 |
| KE HK | 2423 HK Equity | -1.7 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.1 |
| Meituan HK | 3690 HK Equity | -1.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -3.6 |
| TENCENT HOLDINGS LTD | -2.1 |
| XIAOMI CORP-CLASS B | -2.6 |
| PING AN INSURANCE GROUP CO-H | 2.4 |
| SEMICONDUCTOR MANUFACTURI-H | -4.4 |
| MEITUAN-CLASS B | -1.5 |
| HUA HONG SEMICONDUCTOR LTD-H | -6.4 |
| ZIJIN GOLD INTERNATIONAL CO | 7.8 |
| CHINA LIFE INSURANCE CO-H | 0.9 |
| KUAISHOU TECHNOLOGY | -4.4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -1.9 |
| EOPTOLINK TECHNOLOGY INC L-A | -0.3 |
| VICTORY GIANT TECHNOLOGY -A | -4.8 |
| ADDSINO CO LTD -A | 1.1 |
| PING AN INSURANCE GROUP CO-A | 5 |
| SUNGROW POWER SUPPLY CO LT-A | -2.7 |
| CAMBRICON TECHNOLOGIES-A | -0.9 |
| SAI MICROELECTRONICS INC-A | 4.8 |
| FOXCONN INDUSTRIAL INTERNE-A | -4.2 |
| CHINA AEROSPACE TIMES ELEC-A | 10 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.05 versus 7.06 Friday
- CNY per EUR 8.29 versus 8.28 Friday
- Yield on 10-Year Government Bond 1.85% versus 1.84% Friday
- Yield on 10-Year China Development Bank Bond 1.94% versus 1.92% Friday
- Copper Price -1.06%
- Steel Price -0.20%
