AI Stocks Rise In Japan and Korea & “National Team” No-Show
6 Min. Read Time
Key News
Asian equities were mixed, as the AI picks-and-shovels markets of Japan and Korea outperformed, along with the Philippines, while Mainland China, Hong Kong, and Indonesia underperformed.
The Chinese Yuan (CNY) hit another 52-week high against the US dollar at 6.67, though positives were, unfortunately, few and far between today. The big news today was what did not happen: China's "National Team", i.e., investment firms associated with sovereign wealth, failed to ride to the rescue at the Mainland market’s close, exacerbating the sell-off. The National Team put $1.97 billion into one of their favorite Mainland-listed ETFs (510310 CH) yesterday, which brings its 1-month net inflow total to $6 billion.
A negative factor for Mainland stocks was semiconductor company Cambricon, which fell by -5.68% after announcing Q3 revenue was up +104% year-over-year (YoY) to $530 million (RMB 3.531 billion) and net profit was up +147% YoY to $210 million (RMB 1.40 billion). Cambricon's shares sold off because its revenue massively missed analysts’ widely optimistic expectations, likely due to a shortage of high-bandwidth memory chips. The Mainland AI supply chain ecosystem (semiconductors, semiconductor equipment, electronic equipment, and communications equipment) fell hard, as the Science & Technology (STAR) Board fell -4.81%. Memory chip maker CXMT gained +0.8% and managed to buck the trend, though Naura fell -5.51%, AMEC fell -5.3%, and Eptolink fell -5.6%.
A negative factor in Hong Kong trading was HSBC, which fell by -5.56% after reporting Q3 results at midday and barely missed analyst expectations on revenue, adjusted net income, and adjusted EPS. I suppose barely missing on all three adds up despite a healthy stock buyback announcement.
Healthcare stocks were weak in both markets. Wuxi AppTec fell -3.1% in Mainland China and -1.43% in Hong Kong, despite yesterday’s strong results and positive guidance.
Anthropic’s S-1 initial public offering (IPO) filing lifted AI large language model provider Z.AI, which gained +8.9%, though its peer MiniMax fell -1.09%. Tencent fell by -0.31%, though internet names were mostly mixed or lower. Alibaba fell by -0.97%, despite winning its court appeal of the Pentagon’s ridiculous China military affiliation label.
Hong Kong-listed auto stocks were lower on no news, though CATL fell by -2.3% and was hit with multiple downgrades. Mainland investors sold -$157 million worth of Hong Kong-listed stocks (again), which brings the daily net sell to the 10th consecutive day, totaling -$3.77 billion, though the year-to-date (YTD) total is +$53 billion worth of net buying. Uncle!
One positive that clearly was a non-factor was that September Industrial Profits were up +14.4% YoY, led by high-tech manufacturing, which was up +52% YoY. The CSRC’s former head Wang Huimin was sentenced to death on bribery charges, though commuted to a life-in-prison sentence. Yikes!
It looks like just about every Chinese equity index has an RSI below 30, typically an indication of oversold.
Baidu and KE Holdings will report earnings on Monday, November 16th, while Tencent will report on November 18th.
KE Holdings (US Ticker: BEKE) bought back 425,391 shares in Hong Kong overnight.
Last Night's Performance
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.66 versus 6.67 yesterday
- CNY per EUR 7.42 versus 7.46 yesterday
- Yield on 10-Year Government Bond 1.63% versus 1.64% yesterday
- Yield on 10-Year China Development Bank Bond 1.67% versus 1.67% yesterday
- Copper Price +0.43%
- Steel Price -0.49%
