US Jobs Data Weighs On Global Markets, Guoxia Technology IPO Rises
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Key News
Asian markets were led lower by growth and technology stocks, as South Korea was down more than 2%, though Vietnam managed a gain.
The US dollar was mixed regionally, although the renminbi (CNY) hit another 52-week high against the US dollar. Yesterday’s disappointing economic data and the lack of a policy bazooka announcement, along with the US AI trade unwinding, combined to deliver a one-two punch to markets in Hong Kong and Mainland China, which experienced very poor breadth, i.e. advancers versus decliners, on light volumes.
It is also possible that investors were waiting for clarity on US jobs data, which will influence the US Fed's cuts in 2026. We are also at year's end as some investors lock in profits. Arguably, we are experiencing a buyer’s strike, as investors who have made investments look to lock in profits, while those on the sidelines are not necessarily making big decisions at year's end. This likely explains the pickup in shorting activity.
President Xi’s article titled “Expanding Domestic Demand Is a Strategic Move” was published, indicating that the government is focused on raising domestic consumption in 2026, as the Mainland-listed consumer staples and consumer discretionary were the only positive sectors. Hong Kong-listed consumer staples and consumer discretionary sectors apparently did not read the article, as they sank, along with Alibaba, which fell -2.96%, on high volume.
An afternoon rumor that technology companies will have their tax rates increased only exacerbated losses, despite the lack of a credible source behind it. Really, there was nowhere to hide, including non-ferrous metals, which were hit with profit-taking. Baidu fell -1.77% despite talk that it will spin off its Kunlun AI chip unit in a 2026 IPO. If management commits to buybacks, paying a dividend, and spinning off undervalued business units, Baidu might become 2026’s sleeper winner, in my opinion.
Guoxia Technology’s IPO was a bright spot, with a 117% increase, which was not surprising given that it was oversubscribed by 1,890 times. The National Team’s favored ETFs saw below-average volumes. I’m a little surprised that on the day President Xi wrote a very high-profile piece, there was so little support from the National Team, nor to a lesser degree, the Southbound Stock Connect. Southbound Stock Connect saw a net buy of only $10 million today, as discussed below. Market indices appear to be at the low end of their range and support levels.
Regardless of where they are listed, whether in Shanghai, Shenzhen, Hong Kong, or New York, China-based businesses have most of their revenues denominated in the renminbi (CNY). If you chart offshore stocks versus CNY, you will notice that, as the renminbi appreciates, Hong Kong stocks usually rally, and vice versa. This pattern stopped working after "Golden Week", the October National holiday. The renminbi has continued to appreciate, but Hong Kong stocks, especially growth stocks, have fallen.
A pillar of support for Hong Kong this year has been the Southbound Stock Connect program, which allows Mainland investors to purchase Hong Kong-listed stocks and ETFs. Year-to-date, $178 billion of net buying has occurred, with an average of $787 million of net buying daily. In December, the average fell to $135 million, with today's net buying at just $10 million. Southbound net buying was strong in October and November, but the Hong Kong market still rolled over despite the support. In December, the Southbound spigot was turned off, a seasonal occurrence as investors close their books for the year. Without this pillar of support, the market lacks a key piece of offensive firepower.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.5% |
| Hang Seng Tech | HSTECH Index | -1.7% |
| Hong Kong Turnover | HKTurn Index | -1.4% |
| Hong Kong Short Sale Turnover | HKSST Index | 7.2% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 19% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 10.48 |
| China (Shanghai) | SHCOMP Index | -1.1% |
| China (Shenzhen) | SZCOMP Index | -1.5% |
| China (STAR Board) | Star50 Index | -1.9% |
| Mainland Turnover | .chturn Index | -2.8% |
| 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 | -1.6% |
| India | SENSEX Index | -0.6% |
| Indonesia | JCI Index | 0.4% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | -0.2% |
| Philippines | PCOMP Index | 0% |
| South Korea | KOSPI Index | -2.2% |
| Taiwan | TWSE Index | -1.2% |
| Thailand | SET Index | -1% |
| Singapore | STI Index | -0.2% |
| Australia | AS51 Index | -0.4% |
| Vietnam | VNINDEX Index | 2% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 81% | 102% |
| Advancing Stocks | 59 | 875 |
| Declining Stocks | 435 | 4212 |
| Outperforming Factors | ||
| Underperforming Factors | Liquidity, Large Caps, Value | Momentum, Liquidity, EPS Revision |
| Top Sectors | Discretionary, Staples | |
| Bottom Sectors | Materials, Financials, Discretionary | Materials, Communication, Tech |
| Top Subsectors | Paper/Packaging | Retail, Education, Daily Chemical |
| Bottom Subsectors | Non Ferrous Metals, National Defense, Steel | Precious Metals, Energy Equipment, Communication Equipment |
| Southbound Connect Buys | Xiaomi (Moderate), Tencent, XPeng (Small) | |
| Southbound Connect Sells | Alibaba, China Mobile, SMIC (Moderate), CNOOC (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -1.73 |
| Communication Services | 11 | -0.87 |
| Consumer Discretionary | 28 | -1.92 |
| Consumer Staples | 13 | -1.2 |
| Energy | 6 | -1.23 |
| Financials | 25 | -1.69 |
| Health Care | 15 | -0.62 |
| Industrials | 21 | -3.34 |
| Information Technology | 12 | -0.53 |
| Materials | 10 | -1.94 |
| Real Estate | 7 | -2.15 |
| Utilities | 12 | -2.11 |
| Mainland China Listed | 386 | -1.02 |
| Communication Services | 8 | -0.88 |
| Consumer Discretionary | 28 | -1.65 |
| Consumer Staples | 21 | -0.58 |
| Energy | 12 | -0.58 |
| Financials | 66 | 0.08 |
| Health Care | 33 | 0.19 |
| Industrials | 57 | -1.37 |
| Information Technology | 91 | -1.88 |
| Materials | 49 | -1.47 |
| Real Estate | 6 | -0.49 |
| Utilities | 14 | -1.61 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.1 |
| Alibaba HK | 9988 HK Equity | -3 |
| JD.com HK | 9618 HK Equity | -2.3 |
| NetEase HK | 9999 HK Equity | -2.6 |
| Yum China HK | 9987 HK Equity | -2.3 |
| Baozun HK | 9991 HK Equity | -2.9 |
| Baidu HK | 9888 HK Equity | -1.8 |
| Autohome HK | 2518 HK Equity | -3.2 |
| Bilibili HK | 9626 HK Equity | -2.3 |
| Trip.com HK | 9961 HK Equity | -0.5 |
| EDU HK | 9901 HK Equity | -1.7 |
| Xpeng HK | 9868 HK Equity | -1.8 |
| Weibo HK | 9898 HK Equity | -2 |
| Li Auto HK | 2015 HK Equity | -2.1 |
| Nio Auto HK | 9866 HK Equity | -1 |
| Zhihu HK | 2390 HK Equity | -4.9 |
| KE HK | 2423 HK Equity | -2.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | -3.4 |
| Meituan HK | 3690 HK Equity | -1.4 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -3 |
| TENCENT HOLDINGS LTD | -1.1 |
| XIAOMI CORP-CLASS B | -2.2 |
| SEMICONDUCTOR MANUFACTURI-H | -1.9 |
| PING AN INSURANCE GROUP CO-H | -2.1 |
| MEITUAN-CLASS B | -1.4 |
| HONG KONG EXCHANGES & CLEAR | -1.9 |
| CHINA CONSTRUCTION BANK-H | -2.1 |
| CHINA LIFE INSURANCE CO-H | -4.1 |
| XPENG INC - CLASS A SHARES | -1.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | -4.6 |
| ZHONGJI INNOLIGHT CO LTD-A | -3.3 |
| ADDSINO CO LTD -A | 6.4 |
| SUNGROW POWER SUPPLY CO LT-A | -3.7 |
| CHINA AEROSPACE TIMES ELEC-A | 10 |
| VICTORY GIANT TECHNOLOGY -A | -0.3 |
| CAMBRICON TECHNOLOGIES-A | -4.4 |
| SAI MICROELECTRONICS INC-A | -1.4 |
| ZHONGFU STRAITS PINGTAN DE-A | 3.7 |
| FOXCONN INDUSTRIAL INTERNE-A | -0.3 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.04 versus 7.05 yesterday
- CNY per EUR 8.27 versus 8.29 yesterday
- Yield on 10-Year Government Bond 1.85% versus 1.85% yesterday
- Yield on 10-Year China Development Bank Bond 1.94% versus 1.94% yesterday
- Copper Price -0.22%
- Steel Price +0.55%
