Semiconductor Stocks Surge, Southbound Spigot Turns On
6 Min. Read Time
Key News
Asian equities were off to the races, as Japan, China, Taiwan, and South Korea all outperformed. Meanwhile, India lagged. China's currency, the renminbi (CNY) hit another 52-week high value versus the US dollar, closing at 6.99 per USD.
Mainland China played catch-up to its Hong Kong and US-listed counterparts overnight after their strong performance on Friday. The Mainland market was closed for New Year's and key catalysts including President Xi’s speech highlighting technology and AI, Biren Technology’s successful IPO, and Baidu's filing for a spin-off IPO of its chip unit. As such, Mainland-listed semiconductor and technology hardware stocks had a very strong day. The technology-heavy STAR Market gained +4.41%, led by Semiconductor Manufacturing (SMIC), which gained +5.80%, Cambricon, which gained +2.54%, and Moore Threads, which gained +5.40%.
Video streaming and AI-enabled content generation platform Kuaishou Technology gained+11.09% on reports of a substantial uptick in overseas (i.e., non-China) app downloads. Its Kling AI has become quite popular globally.
Mainland investors purchased a healthy net $2.4 billion worth of Hong Kong-listed stocks and ETFs via Southbound Stock Connect. The Hong Kong Tracker ETF was the main beneficiary, as Mainland investors appear to be betting on a broad rally in Hong Kong.
AI large language model (LLM) provider MiniMax Group will list shares publicly for the first time in Hong Kong on Friday. It is estimated that the company will raise $712 million, which includes the "green shoe" overallotment at a share price of HKD 165 ($21), which is at the upper limit of the range.
Elon Musk said that Neuralink will begin production of "brain-computer interfaces" in 2026. The announcement received widespread coverage in Mainland China's financial media outlets.
There was some chatter that Samsung and SK Hynix will raise memory chip prices by 70% in the first quarter. Robust AI compute demand globally is currently being cited as a reason for the potential massive price increase. The companies may announce this increase after today's close in the US.
On December 31st, Reuters reported that “The U.S. government has granted an annual license to Taiwan Semiconductor Manufacturing (TSMC) to import U.S. chip manufacturing equipment to its facilities in Nanjing, China.” Not many folks noticed, including myself, though Chinese financial media picked up on it today.
Mainland China managed a far broader rally than Hong Kong, as non-ferrous metals, insurance, pharmaceuticals, software, and healthcare equipment all had a strong day. Hong Kong was led higher by Alibaba, which gained 2.55%, as well as pharmaceutical and insurance stocks. In both markets, banks and oil lagged, due to the former’s potential exposure to Venezuela.
Real estate stocks gained in both Hong Kong and Mainland China. The Qiushi Journal published an article on New Year’s Day titled "Expecting Improvement and Stability of the Real Estate Market". The article, acknowledges “the real estate industry is an important source of industry and residents' wealth”. The article also acknowledges that distressed real estate developers face “the possibility of bankruptcy reorganization,” though “inventory reduction” would help ease oversupply. Following Beijing’s adjustment of real estate policies, we can expect more cities to follow suit. A stabilization of real estate prices could help with domestic consumption efforts.
President Xi met with South Korea’s President Lee Jae-Myung. Meanwhile, Vice Premier He Lifeng attended a China-South Korea Business Forum.
The NDRC announced the issuance of CNY 100 billion in long-term government bonds. The proceeds will be earmarked for "green" projects.
December's private survey purchasing managers' index (PMI) came in at 52.0, versus November’s 52.1, and expectations of 52.0. Sounds pretty good, right? Did you see all the headlines about it? Neither did I...
Trip.com reported strong New Year’s holiday travel in China. “Domestic scenic spot ticket bookings” were reportedly up 4X year-over-year.
The following is an "out-of-the-box" thought. If the US refines Venezuelan crude oil and then sells it to China, wouldn’t that increase US exports to China? A fundamental issue in US-China trade accounting is that it focuses entirely on the trade in physical goods and excludes the massive export of US services to China, as well as goods produced by US companies in China that are then sold within China. Examples of the latter include Tesla, which builds cars in China, as well as Nike, Apple, and ExxonMobil.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0% |
| Hang Seng Tech | HSTECH Index | 0.1% |
| Hong Kong Turnover | HKTurn Index | 101.2% |
| Hong Kong Short Sale Turnover | HKSST Index | 167.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 19.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 2,391.18 |
| China (Shanghai) | SHCOMP Index | 1.4% |
| China (Shenzhen) | SZCOMP Index | 2% |
| China (STAR Board) | Star50 Index | 4.4% |
| Mainland Turnover | .chturn Index | 24.5% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0.1% |
| Japan | NKY Index | 3% |
| India | SENSEX Index | -0.4% |
| Indonesia | JCI Index | 1.3% |
| Malaysia | FBMKLCI Index | 0.6% |
| Pakistan | KSE100 Index | 1.9% |
| Philippines | PCOMP Index | 0.5% |
| South Korea | KOSPI Index | 3.4% |
| Taiwan | TWSE Index | 2.6% |
| Thailand | SET Index | 1.6% |
| Singapore | STI Index | 0.5% |
| Australia | AS51 Index | 0% |
| Vietnam | VNINDEX Index | 0.2% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 113 | 148 |
| Advancing Stocks | 270 | 3933 |
| Declining Stocks | 217 | 1111 |
| Outperforming Factors | Momentum, Liquidity, EPS Revisions | Momentum, Liquidity, EPS Revision |
| Underperforming Factors | Dividend Yield, Large Caps, Low Volatility | Value |
| Top Sectors | Healthcare, Real Estate, Staples | Healthcare, Tech, Communication |
| Bottom Sectors | Energy, Tech, Materials | Energy |
| Top Subsectors | Media/Entertainment, Pharmaceuticals, Healthcare Equipment | Insurance, Healthcare, Internet |
| Bottom Subsectors | Petroleum/Petrochemical, Auto, REITs | Oil/Gas, Marine, Catering/Tourism |
| Southbound Connect Buys | HK ETF Tracker (Massive), Xiaomi (Large), CNOOC, Hua Hong Semi, SMIC (Moderate), Alibaba (Small) | N/A |
| Southbound Connect Sells | Tencent (Large) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | 0.4 |
| Communication Services | 9 | 0.45 |
| Consumer Discretionary | 28 | 0.53 |
| Consumer Staples | 13 | 0.57 |
| Energy | 7 | -2.3 |
| Financials | 23 | -0.05 |
| Health Care | 13 | 4.46 |
| Industrials | 20 | 0.02 |
| Information Technology | 10 | -1.25 |
| Materials | 10 | -0.78 |
| Real Estate | 6 | 4.32 |
| Utilities | 12 | 0.54 |
| Mainland China Listed | 404 | 1.88 |
| Communication Services | 6 | 2.49 |
| Consumer Discretionary | 31 | 0.48 |
| Consumer Staples | 24 | 2.31 |
| Energy | 13 | -0.27 |
| Financials | 64 | 1.19 |
| Health Care | 31 | 3.45 |
| Industrials | 64 | 1.41 |
| Information Technology | 91 | 3.17 |
| Materials | 58 | 2.01 |
| Real Estate | 6 | 1.16 |
| Utilities | 16 | 0.44 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.2 |
| Alibaba HK | 9988 HK Equity | 2.6 |
| JD.com HK | 9618 HK Equity | -1.2 |
| NetEase HK | 9999 HK Equity | -2.7 |
| Yum China HK | 9987 HK Equity | -3.3 |
| Baozun HK | 9991 HK Equity | -0.8 |
| Baidu HK | 9888 HK Equity | -0.3 |
| Autohome HK | 2518 HK Equity | 2.4 |
| Bilibili HK | 9626 HK Equity | 5.1 |
| Trip.com HK | 9961 HK Equity | -1.1 |
| EDU HK | 9901 HK Equity | -3 |
| Xpeng HK | 9868 HK Equity | -4.6 |
| Weibo HK | 9898 HK Equity | 0.4 |
| Li Auto HK | 2015 HK Equity | -2.5 |
| Nio Auto HK | 9866 HK Equity | -6 |
| Zhihu HK | 2390 HK Equity | 0 |
| KE HK | 2423 HK Equity | 5.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.9 |
| Meituan HK | 3690 HK Equity | 0.8 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURI-H | 1.9 |
| TENCENT HOLDINGS LTD | 0.2 |
| ALIBABA GROUP HOLDING LTD | 2.6 |
| CHINA MOBILE LTD-H | -1.4 |
| HUA HONG SEMICONDUCTOR LTD-H | 3.3 |
| XIAOMI CORP-CLASS B | -2.3 |
| HSBC HOLDINGS PLC | 0.5 |
| MEITUAN-CLASS B | 0.8 |
| PING AN INSURANCE GROUP CO-H | 2.7 |
| YANGTZE OPTICAL FIBRE AND-H | -2.6 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| CHINA SPACESAT CO LTD -A | 4.7 |
| ZHEJIANG SANHUA INTELLIGEN-A | 1.8 |
| ZHONGJI INNOLIGHT CO LTD-A | 2.2 |
| BLUEFOCUS INTELLIGENT COMM-A | 20 |
| ADDSINO CO LTD -A | 0.2 |
| VICTORY GIANT TECHNOLOGY -A | 7.8 |
| CHINA AEROSPACE TIMES ELEC-A | 2 |
| EOPTOLINK TECHNOLOGY INC L-A | -1 |
| GOLDWIND SCIENCE & TECHNOL-A | 7 |
| SHENZHEN SUNWAY COMMUNICAT-A | 5.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.99 versus 6.99 yesterday
- CNY per EUR 8.16 versus 8.21 yesterday
- Yield on 10-Year Government Bond 1.86% versus 1.84% yesterday
- Yield on 10-Year China Development Bank Bond 1.95% versus 1.96% yesterday
- Copper Price 1.74%
- Steel Price -0.45%
