Alibaba & Baidu Finally “Shake Rodney Dangerfield” & Get AI Respect

Key News

Asian equities were largely higher on a weaker US dollar, except for Indonesia and Vietnam, which underperformed.

It was a fairly quiet night. August's trade data was light versus expectations, but it did not appear to be a factor in today’s trading. Mainland investors bought a very healthy net $2.14 billion worth of Hong Kong-listed stocks via Southbound Stock Connect, including Alibaba, which saw a very large net buy, per the below chart. Alibaba gained +4.17%, leading Hong Kong higher on volume that was 42% above its 52-week average, after announcing an update to its Qwen AI model and an investment in a robotics company, X Square Robot.

Internet stocks were largely higher, led by Tencent, which gained +1.98%, NetEase, which gained +4.38%, and Baidu, which gained +9.48% and had very high volumes, at 4 times the 1-year average. After announcing a RMB bond launch, these companies finally appear to be gaining some AI respect.

Growth subsectors, such as pharmaceuticals and biotech, also outperformed. Reuters is reporting that Unitree’s 4^th-quarter IPO could value the company at $7 billion (RMB 50 billion), though the listing exchange has not been disclosed. There is a rumor that the listing will be on the Mainland STAR Market, which is focused on pre-profit technology and healthcare startups.

Banks, insurance, and non-ferrous metals were all off. Labubu doll maker Pop Mart fell

-7.11% on a potential slack in demand, though Friday’s buying for today’s Hang Seng Index inclusion is likely the culprit. Ironically, the company was the largest detractor from the Hang Seng Index, accounting for a decline of -26 index points.

Biotech Akeso fell -7.89% on concerns that its lung cancer drug trials might have stalled.

Kuaishou fell -3.5%, though I am not seeing any news on the company.

Mainland China had a solid day, except for banks and several high-flying subsectors, including precious metals, mining, semiconductors, and technology hardware, including electronic equipment.

China Unicom gained +4.82% after the Ministry of Industry & Information Technology (MIIT) granted it a commercial satellite license, which was the big news.

There were several high-flyers (i.e., outperformers) that got the Icarus treatment, i.e., got their wings clipped, including Zhongji Innolight, which fell -9.09%, Eoptolink Technology, which fell -9.95%, and Victory Giant Technology, which fell -7.57%.

Mainland asset managers are expected to launch a dozen technology-focused bond funds, which is interesting, as it could deter the companies from diluting stock. It also shows the government’s focus on science and technology going into the 15^th Five Year Plan is already changing behavior. The NPC Standing Committee met to draft the new bankruptcy and network security laws.

Wind is reporting “the China Passenger Car Association released data showing that the retail sales of narrow sense passenger cars in August were 1.99 million units, an increase of 4.6% year-on-year; In August, the retail sales of New Energy Vehicles (NEVs) in the market reached 1.101 million units, an increase of 7.5% year-on-year.”

August Foreign Reserves increased to $3.32 trillion from July’s $3.29 trillion, beating economists’ expectations.

The South China Morning Post had a good article on LeBron James’s 16th visit to China! I had no idea he was in China or had been to China so many times. It's a worthwhile read!

Last Night's Performance

Country / Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	0.8%
Hang Seng Tech	HSTECH Index	1.2%
Hong Kong Turnover	HKTurn Index	-4.6%
Hong Kong Short Sale Turnover	HKSST Index	1.4%
Short Turnover as a % of Hong Kong Turnover	N/A	13.3%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	2,133.42
China (Shanghai)	SHCOMP Index	0.4%
China (Shenzhen)	SZCOMP Index	0.9%
China (STAR Board)	Star50 Index	0.6%
Mainland Turnover	.chturn Index	5.1%
Northbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	0.3%
Japan	NKY Index	1.5%
India	SENSEX Index	0.1%
Indonesia	JCI Index	-1.3%
Malaysia	FBMKLCI Index	0.5%
Pakistan	KSE100 Index	1.1%
Philippines	PCOMP Index	-0.8%
South Korea	KOSPI Index	0.5%
Taiwan	TWSE Index	0.2%
Thailand	SET Index	0.1%
Singapore	STI Index	0%
Australia	AS51 Index	-0.2%
Vietnam	VNINDEX Index	-2.5%

Indicator	Hong Kong	Mainland China
Today's Volume as % of 1-Year Average	130	166
Advancing Stocks	425	4438
Declining Stocks	62	589
Outperforming Factors	Momentum, EPS Revision, Liquidity	Liquidity, Growth, EPS Revision
Underperforming Factors
Top Sectors	Materials, Healthcare, Communication	Tech, Industrials, Materials
Bottom Sectors		Financials, Utilities
Top Subsectors	Non-Ferrous Metals, Semis, Pharmaceuticals	Electric Power Grid, Power Generation, Fine Chemical
Bottom Subsectors	Consumer Staples Distribution	Banking, Telecom, Highway
Southbound Connect Buys	Alibaba, Meituan (Very Large), Horizon Robot (Large), SMIC, Tencent, Xiaomi (Moderate)	N/A
Southbound Connect Sells	3SBio (Moderate)	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	151	1.72
Communication Services	9	2.06
Consumer Discretionary	28	1.4
Consumer Staples	13	0.71
Energy	7	1.19
Financials	23	0.61
Health Care	13	4.67
Industrials	20	1.56
Information Technology	10	1.56
Materials	10	5.03
Real Estate	6	1.4
Utilities	12	2.01
Mainland China Listed	404	2.24
Communication Services	6	1.56
Consumer Discretionary	31	1.82
Consumer Staples	24	0.77
Energy	13	0.75
Financials	64	-0.28
Health Care	31	2.98
Industrials	64	3.72
Information Technology	91	5.06
Materials	58	3.33
Real Estate	6	1.06
Utilities	16	-0.04

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	2
Alibaba HK	9988 HK Equity	4.2
JD.com HK	9618 HK Equity	1.1
NetEase HK	9999 HK Equity	4.4
Yum China HK	9987 HK Equity	1.6
Baozun HK	9991 HK Equity	-0.9
Baidu HK	9888 HK Equity	9.5
Autohome HK	2518 HK Equity	-0.6
Bilibili HK	9626 HK Equity	-0.8
Trip.com HK	9961 HK Equity	0
EDU HK	9901 HK Equity	1.8
Xpeng HK	9868 HK Equity	1.8
Weibo HK	9898 HK Equity	2.6
Li Auto HK	2015 HK Equity	-1
Nio Auto HK	9866 HK Equity	-1.4
Zhihu HK	2390 HK Equity	2.7
KE HK	2423 HK Equity	3.1
Tencent Music Entertainment HK	1698 HK Equity	0.5
Meituan HK	3690 HK Equity	-1

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
ALIBABA GROUP HOLDING LTD	4.2
TENCENT HOLDINGS LTD	2
POP MART INTERNATIONAL GROUP	-7.1
MEITUAN-CLASS B	-1
BAIDU INC-CLASS A	9.5
SEMICONDUCTOR MANUFACTURI-H	-0.9
HORIZON ROBOTICS INC	7
XIAOMI CORP-CLASS B	2.1
AKESO INC	-7.9
BYD CO LTD-H	0

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
VISUAL CHINA GROUP CO LTD-A	0
SHANTUI CONSTRUCTION MACHI-A	1.3
ZHONGJI INNOLIGHT CO LTD-A	-9.1
SUNGROW POWER SUPPLY CO LT-A	1.2
EOPTOLINK TECHNOLOGY INC L-A	-9.9
VICTORY GIANT TECHNOLOGY -A	-7.6
WUXI LEAD INTELLIGENT EQUI-A	6.7
CONTEMPORARY AMPEREX TECHN-A	0.1
CAMBRICON TECHNOLOGIES-A	-5.4
FOXCONN INDUSTRIAL INTERNE-A	-7.9

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 7.13 versus 7.13 yesterday
• CNY per EUR 8.36 versus 8.36 yesterday
• Yield on 10-Year Government Bond 1.85% versus 1.83% Friday
• Yield on 10-Year China Development Bank Bond 1.91% versus 1.88% Friday
• Copper Price -0.26%
• Steel Price -0.10%