Tencent & Apple Partnership Rumor
7 Min. Read Time
Key News
Asian equities and currencies had a rough night following the Fed’s hawkish cut as Chairman Powell played the Grinch yesterday.
Hong Kong and Mainland China were not immune to the downdraft but were not off nearly as much as US-listed China stocks. Several factors contributed to relative regional outperformance and minimal downdraft as the same two sectors were higher in both markets: Tech and Communication Services.
Reuters is reporting that Tencent, which gained +2.27% in Hong Kong overnight versus its unsponsored US listing's fall of -1.43% yesterday, along with Bytedance, are working with Apple to incorporate their AI for iPhones sold in China. With a market cap of $495 billion, Tencent is a major index heavyweight, adding 36 index points to the Hang Seng Index and 8 points to the Hang Seng Tech Index. Tencent, today’s most heavily traded by value by almost 3X, also contributed to the +32% increase in Hong Kong turnover from Wednesday, trading 34 million shares, worth $1.8 billion versus yesterday's 14.9 million shares worth $779 million. The news sent Baidu lower by -4.16% versus its US listing, which fell -2.03% yesterday, despite the company’s early pivot to AI. Baidu subtracted 21 points from the Hang Seng and 5 from the Hang Seng Tech.
Hong Kong-listed growth stocks were not off nearly as much as their US-listed counterparts, as Alibaba fell -1.31% versus its US listing, which fell -2.47%, Meituan, which fell -1.06% versus its unsponsored US listing, which fell -2.97%, Trip.com, which fell -2.8% versus -2.81% for its US listing, despite reports that early Chinese New Year travel bookings are strong, JD.com fell -1.6% versus -2.23% for its US listing yesterday, NetEase, which fell -1.24% versus -2.38% for its US listing yesterday and Bilibili, which fell -2.59% versus -3.58% for its US listing yesterday.
Cloud company Weimob gained +35% on volume of 1.405 billion shares (not a typo) versus yesterday's volume of 17 million shares (a +7,827% change in volume!) on speculation it will benefit from the Tencent Apple news. In China, the reason for the skyrocket/Christmas miracle is based on reports that the company will facilitate the delivery of Tencent’s electronic red envelopes, which are monetary gifts, on WeChat.
Mainland investors bought a healthy $1.9 billion worth of Hong Kong-listed stocks and ETFs today.
Mainland China tech stocks ripped higher, led by tech hardware and equipment makers, software, e-commerce, internet, and semiconductors. Yes, there was the Apple news and reports that Shenzhen will provide subsidies to local AI companies. The Ministry of Commerce held a press conference stating it will “implement policy documents to promote high-quality development of service consumption,” “cultivate and strengthen new consumption,” and “promote digital consumption.” Another potential factor was the Central Rural Work Conference’s discussion of “scientific and technological achievements.” It feels like policy alignment push post-CEWC is being pushed down to agencies. Mainland investors appear to be noticing.
CATL has developed swappable electric vehicle batteries it could offer to carmakers, a technology that NIO has been the leader in so far. CATL will also relist in Hong Kong.
China's Treasury bonds rallied after the one-day PBOC jawboning.
Onshore and offshore real estate underperformed, with HK’s New World Development apparently in trouble, and onshore Vanke is getting much attention from the government—no sign of National Team support today. China’s Renminbi was off slightly versus the dollar, though several currencies were hit hard, including the Yen, which fell -1.34% versus the dollar, and the Indonesian Rupiah -1.23%.
The National People’s Congress Standing Committee will meet from December 21st to 25th to review several draft laws, including amending the Value-added Tax Law. More to come as we need to investigate further!
The Hang Seng and Hang Seng Tech fell -0.56% and -0.66%, respectively, on volume that increased +32.85% from yesterday, which is 109% of the 1-year average. 100 stocks advanced, while 391 stocks declined. Main Board short turnover increased 68% from yesterday, which is 123% of the 1-year average, as 17% 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 caps “outperformed” (i.e. fell less than) the growth factor and small caps. The top-performing sectors were Communication Services, which gained +1.40%, and Technology, which gained +0.05%. Meanwhile, the worst-performing sectors were Real Estate, which fell -1.63%, Utilities, which fell -1.45%, and Consumer Discretionary, which fell -1.18%. The top-performing sub-sectors were software, technology hardware, and chemical industry. Meanwhile, industry construction materials, REITs, and electric equipment were among the worst-performing subsectors. Southbound Stock Connect volumes were 1.5x pre-stimulus levels as Mainland investors bought a net +$1,879 million worth of Hong Kong-listed stocks and ETFs, including the Hong Kong Tracker ETF, which was a large net buy, Tencent, China Mobile, and the China Enterprise ETF, which were moderate net buys, ZTE, Alibaba, XtalPi, and Weimob, which were small net buys.
Shanghai, Shenzhen, and the STAR Board diverged to close -0.36%, +0.36%, and +1.17%, respectively, on volume that increased +6% from yesterday, which is 141% of the 1-year average. 2,219 stocks advanced, while 2,741 declined. Growth and small caps outperformed value and large caps. The top-performing sectors were Technology, which gained +2.45%, and Communication Services, which gained +0.37%. Meanwhile, the worst-performing sectors were Energy, which fell -1.64%, Consumer Staples, which fell -1.34%, and Utilities, which fell -1.28%. The top-performing subsectors were computer hardware, internet, and communication equipment. Meanwhile, retail, leisure products, and soft drinks were among the worst-performing. Northbound Stock Connect volumes were just above average. CNY and the Asia Dollar Index fell versus the US dollar. Treasury bonds rallied. Copper and steel fell.
Last Night's Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.6% |
| Hang Seng Tech | HSTECH Index | -0.7% |
| Hong Kong Turnover | HKTurn Index | 32.9% |
| HK Short Sale Turnover | HKSST Index | 61.9% |
| Short Turnover as a % of HK Turnovr | N/A | 17.3% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1486.6 |
| China (Shanghai) | SHCOMP Index | -0.4% |
| China (Shenzhen) | SZCOMP Index | 0.4% |
| China (STAR Board) | Star50 Index | 1.2% |
| Mainland Turnover | .chturn Index | 6.2% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.8% |
| Japan | NKY Index | -0.7% |
| India | SENSEX Index | -1.2% |
| Indonesia | JCI Index | -1.8% |
| Malaysia | FBMKLCI Index | 0% |
| Pakistan | KSE100 Index | -4.4% |
| Philippines | PCOMP Index | -1.1% |
| South Korea | KOSPI Index | -2% |
| Taiwan | TWSE Index | -1% |
| Thailand | SET Index | -1.5% |
| Singapore | STI Index | -0.4% |
| Australia | AS51 Index | -1.7% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -0.25 |
| Communication Services | 9 | 1.4 |
| Consumer Discretionary | 30 | -1.18 |
| Consumer Staples | 13 | -1.09 |
| Energy | 7 | -0.52 |
| Financials | 23 | -0.47 |
| Health Care | 13 | -1.07 |
| Industrials | 19 | -0.64 |
| Information Technology | 10 | 0.05 |
| Materials | 10 | -0.33 |
| Real Estate | 6 | -1.63 |
| Utilities | 12 | -1.45 |
| Mainland China Listed | 432 | -0.18 |
| Communication Services | 9 | 0.38 |
| Consumer Discretionary | 31 | -0.26 |
| Consumer Staples | 27 | -1.34 |
| Energy | 16 | -1.64 |
| Financials | 63 | -0.71 |
| Health Care | 40 | -0.29 |
| Industrials | 69 | -0.13 |
| Information Technology | 85 | 2.45 |
| Materials | 68 | -0.76 |
| Real Estate | 7 | -1 |
| Utilities | 17 | -1.28 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 2.3 |
| Alibaba HK | 9988 HK Equity | -1.3 |
| JD.com HK | 9618 HK Equity | -1.6 |
| NetEase HK | 9999 HK Equity | -1.2 |
| Yum China HK | 9987 HK Equity | -1.3 |
| Baozun HK | 9991 HK Equity | -3.3 |
| Baidu HK | 9888 HK Equity | -4.2 |
| Autohome HK | 2518 HK Equity | -2.4 |
| Bilibili HK | 9626 HK Equity | -2.6 |
| Trip.com HK | 9961 HK Equity | -2.8 |
| EDU HK | 9901 HK Equity | 1.1 |
| Xpeng HK | 9868 HK Equity | -3.2 |
| Weibo HK | 9898 HK Equity | -2.3 |
| Li Auto HK | 2015 HK Equity | 1.3 |
| Nio Auto HK | 9866 HK Equity | -3.3 |
| Zhihu HK | 2390 HK Equity | -1.3 |
| KE HK | 2423 HK Equity | -1.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | 1.3 |
| Meituan HK | 3690 HK Equity | -1.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 2.3 |
| ALIBABA GROUP HOLDING LTD | -1.3 |
| MEITUAN-CLASS B | -1.1 |
| WEIMOB INC | 35.8 |
| XIAOMI CORP-CLASS B | 0 |
| XTALPI HOLDINGS LTD | -4.4 |
| CHINA MOBILE LTD | -0.2 |
| ZTE CORP-H | 6 |
| AIA GROUP LTD | -1 |
| CHINA CONSTRUCTION BANK-H | -0.3 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZTE CORP-A | 9.4 |
| GIGADEVICE SEMICONDUCTO-CL A | 8.8 |
| IEIT SYSTEMS CO LTD-A | 10 |
| HYTERA COMMUNICATIONS CORP-A | -0.8 |
| EAST MONEY INFORMATION CO-A | 0.2 |
| DAWNING INFORMATION INDUST-A | 6.1 |
| VISUAL CHINA GROUP CO LTD-A | 0.9 |
| UNISPLENDOUR CORP LTD-A | 6 |
| SHANGHAI STONEHILL TECHNOL-A | 2.1 |
| SEMICONDUCTOR MANUFACTURIN-A | 2.4 |
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.29 versus 7.28 yesterday
- CNY per EUR 7.59 versus 7.64 yesterday
- Yield on 10-Year Government Bond 1.74% versus 1.76% yesterday
- Yield on 10-Year China Development Bank Bond 1.82% versus 1.84% yesterday
- Copper Price -0.07%
- Steel Price -1.47%
