Markets Say “Wrong Kevin”, Xiaomi & Ford Could Partner Up
6 Min. Read Time
Key News
Asian equities gave President Trump’s Fed nominee Kevin Warsh a resounding thumbs down, as his historically hawkish views weighed on AI and precious metals in a widespread risk-off rout. While the US dollar rallied versus most Asian equities, China's currency, the renminbi (CNY), hit a 52-week high value against the US dollar, closing at 6.94 per US dollar.
The good news ends at the currency appreciation. Hong Kong and Mainland China suffered broad equity sell-offs as both heat maps resembled the Battle of The Somme. Mainland-listed commodity futures plunged during local hours, as platinum and palladium hit limit down at -16%, silver limit down at -20%, and gold was down nearly -2.5%. Non-ferrous metals stocks followed commodity prices lower, as Zijin Mining fell -8.79% in Mainland China and -5.58% in Hong Kong. Similarly, semiconductors were hit hard, with Semiconductor Manufacturing International (SMIC) falling 4.81% in Mainland China and 4.42% in Hong Kong amid a sell-off in growth stocks.
The Mainland-listed Cambricon “outperformed” by falling only -1.34%. The chipmaker reported preliminary 2025 revenue increased by 410% to 496%, and net income will be between RMB 1.85 billion and RMB 2.15 billion.
The State Administration of Taxation adjusted the value-added tax (VAT) higher for telecom companies. This move weighed heavily on the historically defensive sector.
Hong Kong-listed internet stocks were off following the release of lower-than-expected official purchasing managers' index (PMI) readings for January. Alibaba fell -3.49% and Tencent fell -1.24%, though the latter experienced strong net buying from Mainland investors via Southbound Stock Connect and had several large call option trades.
Auto names were off after the weekend’s release of January sales. BYD fell -6.91% after reporting a -30.11% year-over-year (YoY) decline in vehicle deliveries to only 210,051 units. Li Auto fell -2.27% after reporting a decline of -7.55% YoY to 27,668 units. Xpeng fell -6.77% on a -34.07% YoY decline in deliveries to 20,011 units. However, it was not all bad: NIO fell by 4.51% despite announcing a 96.08% YoY increase in January deliveries to 27,182 units. Tesla’s move to cut two auto models to make room for humanoid robot production at its Fremont factory also garnered attention.
The Mainland-listed China equity ETFs favored by the "National Team", i.e., investment firms associated with China's sovereign wealth, had below-average volumes. There appeared to be no intervention to support the Mainland market.
Over the weekend, before markets opened, China reported the “official” National Bureau of Statistics (NBS) Manufacturing Purchasing Managers' Index (PMI) for January, which came in at 49.3, down from December’s 50.1 and expectations of 50.1. Meanwhile, the Non-Manufacturing PMI was 49.4 versus December’s 50.2 and expectations of 50.3. Readings below 50 indicate contraction, while readings above 50 indicate expansion. This bad news could be good news, though. It could focus policymakers on supporting the economy in a significant way. Also, the “private” survey conducted by S&P and Rating Dog recorded a manufacturing PMI of 50.3, versus December’s 50.1 and expectations of 50.0, indicating light expansion and contradicting the "official" diagnosis of contraction, i.e., values under 50.
Hong Kong’s regulator, the Securities and Futures Commission (SFC), is examining 16 potential IPOs. This could be a sign that IPO quality is deteriorating as corporations and bankers rush to capitalize on the bull market. Meanwhile, another 15 firms applied for listings.
The Financial Times reported yesterday that Ford held talks with China’s Xiaomi to partner on US-made electric vehicles (EVs). However, both firms denied the report. Last week, the Financial Times published an article titled “Ford’s move to expand ties with China battery giant CATL angers US lawmakers” that speaks to Ford utilizing CATL’s technology. These are the types of deals that Trump and Xi should announce in April!
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -2.2% |
| Hang Seng Tech | HSTECH Index | -3.4% |
| Hong Kong Turnover | HKTurn Index | 15.3% |
| Hong Kong Short Sale Turnover | HKSST Index | 10.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 243.567432950192 |
| China (Shanghai) | SHCOMP Index | -2.5% |
| China (Shenzhen) | SZCOMP Index | -2.5% |
| China (STAR Board) | Star50 Index | -3.9% |
| Mainland Turnover | .chturn Index | -8.8% |
| Japan | NKY Index | -1.3% |
| India | SENSEX Index | 1.2% |
| Indonesia | JCI Index | -4.9% |
| Malaysia | FBMKLCI Index | 0.6% |
| Pakistan | KSE100 Index | 0.7% |
| Philippines | PCOMP Index | -0.5% |
| South Korea | KOSPI Index | -5.3% |
| Taiwan | TWSE Index | -1.4% |
| Thailand | SET Index | -0.3% |
| Singapore | STI Index | -0.3% |
| Australia | AS51 Index | -1% |
| Vietnam | VNINDEX Index | -1.2% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 133 | 139 |
| Advancing Stocks | 59 | 822 |
| Declining Stocks | 442 | 4387 |
| Outperforming Factors | Growth | |
| Underperforming Factors | Liquidity, Momentum, EPS Revision | Momentum, Buyback, EPS Revision |
| Top Sectors | Consumer Staples, Financials, Communication Services | Consumer Staples, Financials, Utilities |
| Bottom Sectors | Materials, Health Care, Energy | Materials, Energy, Real Estate |
| Top Subsectors | Consumer Durables, Apparel | Liquor, Soft Drinks, Banking |
| Bottom Subsectors | Non Ferrous Metal, Steel, Semiconductors | Precious Metals, Petrochemical, Fertilizers & Pesticides |
| Southbound Connect Buys | Tencent (Large), Xiaomi (Small) | N/A |
| Southbound Connect Sells | Hua Hong Semiconductor, Zijin Mining (Moderate), Alibaba, Semiconductor Manufacturing International (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -2.56 |
| Communication Services | 11 | -1.79 |
| Consumer Discretionary | 28 | -3.05 |
| Consumer Staples | 13 | -1.08 |
| Energy | 6 | -3.59 |
| Financials | 25 | -1.65 |
| Health Care | 16 | -3.83 |
| Industrials | 22 | -2.08 |
| Information Technology | 12 | -2.53 |
| Materials | 14 | -6.37 |
| Real Estate | 7 | -3.11 |
| Utilities | 11 | -2.02 |
| Mainland China Listed | 386 | -2.28 |
| Communication Services | 8 | -2.81 |
| Consumer Discretionary | 26 | -1.87 |
| Consumer Staples | 19 | 1.25 |
| Energy | 12 | -4.19 |
| Financials | 64 | -0.43 |
| Health Care | 31 | -1.84 |
| Industrials | 58 | -1.07 |
| Information Technology | 95 | -3.12 |
| Materials | 52 | -7.51 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.2 |
| Alibaba HK | 9988 HK Equity | -3.5 |
| JD.com HK | 9618 HK Equity | -1.7 |
| NetEase HK | 9999 HK Equity | -3.5 |
| Yum China HK | 9987 HK Equity | -0.7 |
| Baozun HK | 9991 HK Equity | -0.7 |
| Baidu HK | 9888 HK Equity | -4 |
| Autohome HK | 2518 HK Equity | -3.6 |
| Bilibili HK | 9626 HK Equity | -4.9 |
| Trip.com HK | 9961 HK Equity | -0.9 |
| EDU HK | 9901 HK Equity | -3.2 |
| Xpeng HK | 9868 HK Equity | -6.8 |
| Weibo HK | 9898 HK Equity | -2.7 |
| Li Auto HK | 2015 HK Equity | -2.3 |
| Nio Auto HK | 9866 HK Equity | -4.5 |
| Zhihu HK | 2390 HK Equity | -2.6 |
| KE HK | 2423 HK Equity | -3.9 |
| Tencent Music Entertainment HK | 1698 HK Equity | -2 |
| Meituan HK | 3690 HK Equity | -2.4 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -3.5 |
| TENCENT HOLDINGS LTD | -1.2 |
| ZIJIN MINING GROUP CO LTD-H | -5.6 |
| SEMICONDUCTOR MANUFACTURI-H | -4.2 |
| CHINA MOBILE LTD-H | -2.3 |
| XIAOMI CORP-CLASS B | -1.2 |
| BYD CO LTD-H | -6.9 |
| MEITUAN-CLASS B | -2.4 |
| HUA HONG SEMICONDUCTOR LTD-H | -11.2 |
| PING AN INSURANCE GROUP CO-H | -2.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | 4.7 |
| ZHONGJI INNOLIGHT CO LTD-A | -8.9 |
| ZIJIN MINING GROUP CO LTD-A | -8.8 |
| BLUEFOCUS INTELLIGENT COMM-A | -8.4 |
| TBEA CO LTD-A | 4.2 |
| SUZHOU TFC OPTICAL COMMUNI-A | -4 |
| CONTEMPORARY AMPEREX TECHN-A | -0.3 |
| MONTAGE TECHNOLOGY CO LTD-A | -2.2 |
| LEO GROUP CO LTD-A | 6.3 |
| KWEICHOW MOUTAI CO LTD-A | 1.9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.94 versus 6.96 Friday
- CNY per EUR 8.20 versus 8.26 Friday
- Yield on 10-Year Government Bond 1.82% versus 1.81% Friday
- Yield on 10-Year China Development Bank Bond 1.96% versus 1.96% Friday
- Copper Price -5.99%
- Steel Price -1.02%
