Key News

Asian equities were mixed overnight as South Korea underperformed in an unexpected political development, Taiwan and Indonesia outperformed, and the US dollar was weaker overnight while Thailand was closed for the King’s birthday.

Hong Kong and Mainland China had a lifeless session lacking catalysts as investors appear to be waiting for next week’s China Economic Work Conference (CEWC) for more economic policies and clarity around stimulus. Gaining clarity on the timing of the Politburo meeting would be helpful as a release coming out of it would help investors understand the policy trajectory. Today was a sequel to yesterday’s Revenge of the Nerds as slow growth sectors outperformed on higher oil prices due to OPEC production cuts, as the energy sector was the top performer in Mainland China and Hong Kong, up +2.79% and +2.99%, in eaxch market, respectively.

The “good stuff” (i.e. growth stocks), which tend to be foreign investor favorites, were off but not significantly.

The November Caixin Services PMI indicated growth, though slower growth month over month at 51.5 versus October’s 52 and expectations of 52.4. Don’t be fooled by headlines on the “miss” as only four economists submitted estimates.

Yesterday’s US-China tit-for-tat trade escalation and subsequent Chinese government warnings, but not banning, on buying US semiconductor chips were big news in China and may have weighed on sentiment.

Trip.com gained +2.52% on chatter that Japan will waive visas for Chinese tourists. Bilibili fell by -4.46% on chatter that the CEO sold stock, though the company did buy back a convertible note, i.e., less potential for share dilution. General Motors is in the news for writing down its China business by $5 billion, though, after the close, the China Passenger Car Association reported new energy vehicles (hybrid & electric vehicles) November retail sales reached 1.277 million, which is an increase of +52% year over year (YoY) and up +7% from October. Year-to-date (YTD) sales total 9.61 million, an increase of +41% YoY.

Would you believe GM’s US-listed stock has outperformed BYD’s Hong Kong-listed stock YTD by 26%?! GM is expected to grow revenue by 5% this year to $180 billion versus BYD’s expected revenue growth of 23% to $104 billion. I mention this as there isn’t much to write about today, but it also shows the massive overweight of US stocks and the massive underweight of Chinese equities.

A significant Wall Street firm's strategist’s 2025 forecast has China and, specifically, China tech as an overweight. Mainland investors were large net sellers of Hong Kong-listed stocks and ETFs, with -$1.33 billion in net outflow via Southbound Stock Connect, after $2.5 billion worth of net buying on Monday. Most of the Monday buy and Wednesday sell appeared in the Hong Kong Tracker ETF. The Mainland market sold off into the close, though ETFs favored by the National Team saw spikes in volume during the drawdown. This could indicate the National Team put money to work as "El Jefe" has said the stock market is up. The Shanghai, Shenzhen, Hang Seng, and Hang Seng Tech indexes are grinding slightly higher, into what readers of Investors Business Daily may recognize as potentially the bullish cup and handle chart.

The Hang Seng and Hang Seng Tech indexes fell by -0.02% and -0.32%, respectively, on volume that increased +3.56% from yesterday, which is 98% of the 1-year average. 179 stocks advanced, while 286 declined. Main Board short turnover decreased by -14.7% from yesterday, which is 87% of the 1-year average, as 11% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The value factor and large capitalization stocks outperformed (i.e. fell less than) the growth factor and small capitalization stocks. The top-performing sectors were Energy, which gained +2.99%, Materials, which gained +0.43%, and Financials, which gained +0.22%. Meanwhile, the worst-performing sectors were Health Care, which fell -1.0%, Consumer Staples, which fell -0.5%, and Technology, which fell -0.48%. The top-performing subsectors were coal, petroleum, and household appliances. Meanwhile, construction materials, consumer durables, and electrical equipment were among the worst-performing. Southbound Stock Connect volumes were light as Mainland investors sold a net -$1.33 billion worth of Hong Kong-listed stocks and ETFs, including the Hong Kong Tracker ETF, the China Enterprise ETF, a large net sell, Xiaomi, Tencent, and Meituan, which was a small net sell.

Shanghai, Shenzhen, and the STAR Board fell -0.42%, -1.22%, and -0.59%, respectively, on volume that declined -3.14% from yesterday, which is 169% of the 1-year average. 930 stocks advanced, while 4,128 declined. The value factor and large capitalization stocks fell less than the growth factor and small capitalization stocks. Energy and Utilities gained +2.84% and +0.91%, respectively, while real estate fell -2.30%. The top-performing subsectors were coal, oil & gas, and telecom. Meanwhile, office supplies, leisure products, and education were among the worst-performing subsectors. Northbound Stock Connect volumes were just above average. CNY and the Asia Dollar Index both gained versus the US dollar. Treasury bonds were rallied. Copper gained while steel fell.

Last Night's Performance

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 7.26 versus 7.28 yesterday
• CNY per EUR 7.63 versus 7.66 yesterday
• Yield on 10-Year Government Bond 1.96% versus 1.99% yesterday
• Yield on 10-Year China Development Bank Bond 2.04% versus 2.07% yesterday
• Copper Price +0.96%
• Steel Price -0.45%