Rotation To China Chips?
5 Min. Read Time
Key News
Asian equities were mixed but mostly lower overnight as the Philippines and Australia underperformed, while Pakistan and Mainland China outperformed.
Mainland China outperformed Hong Kong significantly overnight, as the latter ended the session lower. Both markets saw elevated volumes, once again, overnight. Mainland China was led higher by hardware technology names, especially optical communications giant Zhongji Innolight, which was the most heavily traded stock by value. Meanwhile, Hong Kong was led lower by internet platforms, health care, and materials. Semiconductor Manufacturing International (SMIC) was Hong Kong's most heavily traded stock. Mainland investors flipped to buyers overnight, netting $972 million, with particularly strong buying in SMIC and other chipmakers. Meanwhile, Mainland investors were net sellers of Tencent. China's chipmakers outperformed the sector regionally, as Korea and Japan were lower on foreign selling, indicating a potential rotation into China-based chipmakers.
Bytedance, which owns China's most-used AI chatbot "Doubao", is said to be following in the footsteps of its publicly-traded counterparts Alibaba and Baidu and developing its own central processing units (CPUs) to support its own rising AI infrastructure demand. They are said to be looking to external partners for assistance in the effort. Currently, they buy mostly from AMD and Intel.
The European Union fined PDD Holdings $233 million for lapses in its product safety screening.
Automakers Li Auto and Xpeng reported unit delivery estimates for the first quarter at around 100,000 units each, which is mostly in line with recent quarters. Li Auto, which fell -3.5% overnight, missed revenue estimates in its Q1 earnings report overnight. Meanwhile, Xpeng also missed revenue estimates but managed to gain +3.2%. NIO gained 6% after launching a new model of the SU7 SUV.
Kuaishou Q1 Earnings Overview
Kuaishou beat estimates for both revenue and net income in the first quarter of 2026, driven by continued strong growth in online marketing revenue. Kuaishou also delivered an impressive 300% YoY revenue growth for its Kling AI video generation platform, which has essentially taken the reins from OpenAI's discontinued Sora as the global leader in video generation. However, live streaming remains weak, beset by intense competition. Looking ahead, we expect margin pressure from high investment, but overall growth to continue at a similar pace.
% changes are year-over-year unless otherwise indicated. Figures are adjusted (non-GAAP).
- Revenue +3% to RMB 33.7 billion
- Net Income RMB 2.89 billion
- Net Margin 8%
- Earnings per Share RMB 0.6
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.3% |
| Hang Seng Tech | HSTECH Index | -0.4% |
| Hong Kong Turnover | HKTurn Index | 11.1% |
| Hong Kong Short Sale Turnover | HKSST Index | 17.9% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 17% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 971.74 |
| China (Shanghai) | SHCOMP Index | 0.1% |
| China (Shenzhen) | SZCOMP Index | 0.9% |
| China (STAR Board) | Star50 Index | 1.6% |
| Mainland Turnover | .chturn Index | -8.3% |
| Japan | NKY Index | -0.5% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | -1.2% |
| Malaysia | FBMKLCI Index | -0.8% |
| Pakistan | KSE100 Index | 2.4% |
| Philippines | PCOMP Index | -1.7% |
| South Korea | KOSPI Index | -0.5% |
| Taiwan | TWSE Index | -1.4% |
| Thailand | SET Index | -0.1% |
| Singapore | STI Index | -0.8% |
| Australia | AS51 Index | -1.4% |
| Vietnam | VNINDEX Index | -0.6% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 136 | 135 |
| Advancing Stocks | 15 (Hang Seng) | 90 (CSI 300) |
| Declining Stocks | 75 (Hang Seng) | 200 (CSI 300) |
| Outperforming Factors | Value | Value |
| Underperforming Factors | Growth | Growth |
| Top Sectors | Information Technology, Energy, Industrials | Information Technology, Utilities, Energy |
| Bottom Sectors | Materials, Health Care, Communication Services | Health Care, Consumer Staples, Consumer Discretionary |
| Top Subsectors | Consumer Durables, Electrical Equipment, Technology Hardware | Communication Equipment, Building Materials, Electronic Components |
| Bottom Subsectors | Non-Ferrous Metals, Pharmaceuticals, Paper & Packaging | Precious Metals, Liquor, Brokers |
| Southbound Connect Buys | SMIC, Pop Mart, Hua Hong Semiconductor | N/A |
| Southbound Connect Sells | Alibaba, Xiaomi, YOFC | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | -1.55 |
| Communication Services | 11 | -2.02 |
| Consumer Discretionary | 28 | -1.61 |
| Consumer Staples | 12 | -1.15 |
| Energy | 6 | -0.12 |
| Financials | 25 | -1.43 |
| Health Care | 16 | -3.99 |
| Industrials | 19 | -0.84 |
| Information Technology | 15 | 1.68 |
| Materials | 14 | -4.13 |
| Real Estate | 1 | -1.09 |
| Utilities | 6 | -1.05 |
| Mainland China Listed | 11 | 0.17 |
| Communication Services | 11 | -0.7 |
| Consumer Discretionary | 26 | -1.35 |
| Consumer Staples | 18 | -1.97 |
| Energy | 11 | 0.43 |
| Financials | 64 | -1.16 |
| Health Care | 29 | -2.03 |
| Industrials | 60 | 0.11 |
| Information Technology | 113 | 2.09 |
| Materials | 58 | -0.58 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -2.2 |
| Alibaba HK | 9988 HK Equity | -2 |
| JD.com HK | 9618 HK Equity | -1.8 |
| NetEase HK | 9999 HK Equity | -1.4 |
| Yum China HK | 9987 HK Equity | 0.7 |
| Baozun HK | 9991 HK Equity | -0.2 |
| Baidu HK | 9888 HK Equity | -2 |
| Autohome HK | 2518 HK Equity | -1.9 |
| Bilibili HK | 9626 HK Equity | -2.1 |
| Trip.com HK | 9961 HK Equity | -1.5 |
| EDU HK | 9901 HK Equity | 0.4 |
| Xpeng HK | 9868 HK Equity | 5.6 |
| Weibo HK | 9898 HK Equity | -1.9 |
| Li Auto HK | 2015 HK Equity | 0.4 |
| Nio Auto HK | 9866 HK Equity | 6.3 |
| Zhihu HK | 2390 HK Equity | -2.2 |
| KE HK | 2423 HK Equity | 0 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.9 |
| Meituan HK | 3690 HK Equity | -5.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURI-H | 3.6 |
| TENCENT HOLDINGS LTD | -2.2 |
| ALIBABA GROUP HOLDING LTD | -2 |
| HUA HONG SEMICONDUCTOR LTD-H | 11.5 |
| MEITUAN-CLASS B | -5.7 |
| XIAOMI CORP-CLASS B | 0.6 |
| POP MART INTERNATIONAL GROUP | 4.7 |
| AIA GROUP LTD | -1.2 |
| LENOVO GROUP LTD | 3.6 |
| YANGTZE OPTICAL FIBRE AND-H | 1.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 7.8 |
| GIGADEVICE SEMICONDUCTO-CL A | -6.1 |
| FOXCONN INDUSTRIAL INTERNE-A | 7 |
| SEMICONDUCTOR MANUFACTURIN-A | 5.1 |
| EOPTOLINK TECHNOLOGY INC L-A | 3.4 |
| JCET GROUP CO LTD-A | -1.6 |
| SUZHOU TFC OPTICAL COMMUNI-A | 4.4 |
| TIANSHUI HUATIAN TECHNOLOG-A | 6.7 |
| BOE TECHNOLOGY GROUP CO LT-A | -0.7 |
| CAMBRICON TECHNOLOGIES-A | 3.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.78 versus 6.78 yesterday
- CNY per EUR 7.89 versus 7.88 yesterday
- Yield on 10-Year Government Bond 1.72% versus 1.72% yesterday
- Yield on 10-Year China Development Bank Bond 1.77% versus 1.79% yesterday
- Copper Price 0.45%
- Steel Price 0.06%
