Solar Soars On Potential Consolidation
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Key News
Asian equities were mixed overnight as Vietnam and Mainland China's STAR Market outperformed, while Hong Kong's Hang Seng Tech Index and Japan underperformed.
Hong Kong was broadly lower overnight, while the Mainland was relatively flat. Growth, internet, and technology names fared better on the Mainland than in Hong Kong overnight, as Alibaba's Hong Kong-listing, one of Hong Kong's most heavily-traded stocks, fell -3% on new merchant protections and Tencent fell -1.3%. However, Trip.com and some consumer plays held up. Oil & gas companies continued to slide as investors continue to assess the outcome of Maduro's removal in Venezuela. Mainland investors were net buyers of Hong Kong-listed stocks and ETFs via Southbound Stock Connect, purchasing a healthy net $1.6 billion worth. Tencent was one of the top net buys within the program, on weakness overnight.
Last night's market action indicated that investors appear to be gaining confidence in overcapacity curbs in the solar industry. Solar panel maker Goldwind gained +10% on a JP Morgan report forecasting policy-driven industry consolidation this year. In December, an industry association called Guanghe Qiancheng Technology Co., Ltd. (GQT) was organized by nine solar panel companies at the request of government agencies. GQT said it will “buy and shut down more than 1 million tons of capacity” in 2026.
The State Administration for Market Regulation (SAMR) and the Cyberspace Administration of China (CAC) both released new rules for merchant protection overnight, which will take effect in February. The new rules specifically prohibit platforms from requiring merchants to participate in promotions. Although it sent E-Commerce firms lower overnight, we believe that this is long-term in the best interest of the companies and their investors. It is also the first major, tangible step that agencies have taken in addressing the "takeaway war", which has punished the margins of many E-Commerce firms as they compete for the same urban wallets through promotions for food delivery and instant commerce.
A company insider told us that Baidu is considering paying a dividend and making its Hong Kong listing a dual-primary with the US, which would open it up to Mainland investors through Stock Connect. The dividend could be a good move as the company has significant cash on its balance sheet, especially for a growth-oriented internet and technology platform. These moves and the impending IPO of its chip unit Kunlun indicate that the search, autonomous driving, and AI behemoth is becoming more shareholder-friendly than they have been in the past, in our opinion.
China's export controls on potential military-civil dual-use items bound for Japan also led to a risk-off mood in Hong Kong overnight. Hopefully, the needless spat will blow over soon.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.9% |
| Hang Seng Tech | HSTECH Index | -1.5% |
| Hong Kong Turnover | HKTurn Index | -5.4% |
| Hong Kong Short Sale Turnover | HKSST Index | -5.3% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 14.4% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1,647.96 |
| China (Shanghai) | SHCOMP Index | 0.1% |
| China (Shenzhen) | SZCOMP Index | 0.1% |
| China (STAR Board) | Star50 Index | 1% |
| Mainland Turnover | .chturn Index | 1.6% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.6% |
| Japan | NKY Index | -1.1% |
| India | SENSEX Index | -0.1% |
| Indonesia | JCI Index | 0.1% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | 0.7% |
| Philippines | PCOMP Index | -0.4% |
| South Korea | KOSPI Index | 0.6% |
| Taiwan | TWSE Index | -0.5% |
| Thailand | SET Index | 0.5% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | 0.1% |
| Vietnam | VNINDEX Index | 2.5% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 110 | 166 |
| Advancing Stocks | 38 (Hang Seng) | 100 (CSI 300) |
| Declining Stocks | 49 (Hang Seng) | 197 (CSI 300) |
| Outperforming Factors | Value | Growth |
| Underperforming Factors | Growth | Value |
| Top Sectors | Health Care, Consumer Staples, Industrials | Information Technology, Health Care, Industrials |
| Bottom Sectors | Consumer Discretionary, Communication Services, Real Estate | Financials, Consumer Staples, Communication Services |
| Top Subsectors | Paper & Packaging, Pharmaceuticals, Environmental Protection | Coal, Power Generation, Forest Industry |
| Bottom Subsectors | Media & Entertainment, Petroleum & Petrochemicals, Consumer Discretionary | Oil & Gas, Precious Metals, Securities Brokerage |
| Southbound Connect Buys | Tencent, Xiaomi, China Life Insurance | N/A |
| Southbound Connect Sells | China Mobile, Semiconductor Maufacturing (SMIC), Kuaishou | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | -0.94 |
| Communication Services | 9 | -1.34 |
| Consumer Discretionary | 28 | -2.09 |
| Consumer Staples | 13 | 0.26 |
| Energy | 7 | -0.19 |
| Financials | 23 | -0.64 |
| Health Care | 13 | 4.88 |
| Industrials | 20 | -0.12 |
| Information Technology | 10 | -0.59 |
| Materials | 10 | -0.46 |
| Real Estate | 6 | -1.17 |
| Utilities | 12 | -0.87 |
| Mainland China Listed | 404 | -0.22 |
| Communication Services | 6 | -0.7 |
| Consumer Discretionary | 31 | -0.5 |
| Consumer Staples | 24 | -0.8 |
| Energy | 13 | 0.06 |
| Financials | 64 | -1.05 |
| Health Care | 31 | 0.25 |
| Industrials | 64 | 0.22 |
| Information Technology | 91 | 0.41 |
| Materials | 58 | -0.09 |
| Real Estate | 6 | -0.39 |
| Utilities | 16 | -0.05 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.3 |
| Alibaba HK | 9988 HK Equity | -3.2 |
| JD.com HK | 9618 HK Equity | -1.3 |
| NetEase HK | 9999 HK Equity | -2.9 |
| Yum China HK | 9987 HK Equity | 2.3 |
| Baozun HK | 9991 HK Equity | -2 |
| Baidu HK | 9888 HK Equity | -0.5 |
| Autohome HK | 2518 HK Equity | -1.2 |
| Bilibili HK | 9626 HK Equity | -1.6 |
| Trip.com HK | 9961 HK Equity | 0.2 |
| EDU HK | 9901 HK Equity | -0.8 |
| Xpeng HK | 9868 HK Equity | -2.2 |
| Weibo HK | 9898 HK Equity | -1.4 |
| Li Auto HK | 2015 HK Equity | -1.7 |
| Nio Auto HK | 9866 HK Equity | -3.3 |
| Zhihu HK | 2390 HK Equity | 0.9 |
| KE HK | 2423 HK Equity | -1.5 |
| Tencent Music Entertainment HK | 1698 HK Equity | -5.5 |
| Meituan HK | 3690 HK Equity | -1.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURI-H | -1.2 |
| TENCENT HOLDINGS LTD | -1.3 |
| ALIBABA GROUP HOLDING LTD | -3.2 |
| CHINA MOBILE LTD-H | -1 |
| HUA HONG SEMICONDUCTOR LTD-H | 5 |
| XIAOMI CORP-CLASS B | -1.5 |
| HSBC HOLDINGS PLC | -1.2 |
| MEITUAN-CLASS B | -1.5 |
| PING AN INSURANCE GROUP CO-H | -1.3 |
| YANGTZE OPTICAL FIBRE AND-H | 6.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHEJIANG SANHUA INTELLIGEN-A | -1.9 |
| ADDSINO CO LTD -A | 7.7 |
| ZHONGJI INNOLIGHT CO LTD-A | 2.4 |
| GOLDWIND SCIENCE & TECHNOL-A | 10 |
| CHINA SPACESAT CO LTD -A | -6.3 |
| BLUEFOCUS INTELLIGENT COMM-A | 4.7 |
| GIGADEVICE SEMICONDUCTO-CL A | 4.7 |
| CHINA SATELLITE COMMUNICAT-A | 1.5 |
| CHINA NORTHERN RARE EARTH -A | 4.9 |
| CHINA AEROSPACE TIMES ELEC-A | -0.9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.99 versus 6.98 yesterday
- CNY per EUR 8.18 versus 8.16 yesterday
- Yield on 10-Year Government Bond 1.90% versus 1.88% yesterday
- Yield on 10-Year China Development Bank Bond 1.99% versus 1.98% yesterday
- Copper Price -1.07%
- Steel Price 1.27%
