Alibaba Goes Ex-Dividend As Regulators Regulate
6 Min. Read Time
Key News
Asian equities were largely lower on light volumes as Middle East tensions continued to flare, US CPI came in hot, and Oracle’s fall on profit-taking post strong results amid higher costs.
A few factors are at play to end the week, including what investors sell to buy SpaceX’s IPO. Additionally, tomorrow’s Triple Witching (options and futures expiration and roll) also marks the “official” start to summer for Wall Street traders.
Alibaba fell by -5.37%, Hong Kong’s most heavily traded stock on strong volume, though remember, the stock is going ex-dividend today. Yes, it was down, just more than it would have been due to the $1.05 dividend payout. Bloomberg News noted that Alibaba’s weakness stemmed from the government’s data center build-out favoring Huawei over Alibaba and “pricing pressures in the AI token market.”
The Beijing Administration for Market Regulation, the local regulator under the State Administration for Market Regulation (SAMR), met with five E-Commerce companies, including Alibaba, JD.com, Pinduoduo, and Bytedance’s Douyin, in advance of the 618 (June 18th) E-Commerce sales event on subsidies, false promotions, and “cut-throat competition”. The preventive warning is arguably a good thing, as fewer subsidies mean better margins for the E-Commerce companies.
Investors likely shot first and will ask questions later. Additionally, SAMR, the Cyberspace Administration of China, and the National Railway Administration met with seven online travel companies, including Alibaba’s Fliggy, Meituan, Trip.com, and Tongcheng, on train ticket purchase policies. Thus far, neither of the companies has been accused of any wrongdoing nor fined. The Chinese government bureaucracy, like all government agencies, is keeping to its oversight mandate, though it only reinforces investor concerns.
Alibaba was heavily sold by Mainland investors via the Southbound Stock Connect, with $278mm (Hong Kong $2.182B) following yesterday’s net sale of $271mm (Hong Kong $2.13B). I’ll have to check on their stock buyback program, though it feels quiet as AI capex spending is the focus.
There were light volumes in Hong Kong as semiconductor and metal stocks, except for precious metals, had a good day. CATL was up +1.30%, and Kingboard Lamines was up +9.80% on an analyst upgrade.
There was a similar move in Mainland China, with semiconductor, semiconductor-material, and semiconductor-equipment stocks higher, though tech hardware’s electronic equipment and communications equipment stocks were lower.
Mainland China held up a bit better, with pockets of green in household appliance, metal, and healthcare stocks, as they rebounded.
The Ministry of Industry and Information Technology (MIIT) and the SAMR interviewed car companies on “irrational competition”. CNevPost reported that NEV (EV and hybrid) auto sales in the first week of June fell by -14% YoY, but were up +8% MoM as NEV as a percentage of auto sales rose to 66.7%. I was surprised the percentage wasn't higher due to the ongoing Middle East conflict.
The State Council and Premier Li met to discuss the "15th Five-Year Plan for Building a Beautiful China," which focused on environmental policies.
An interesting conversation with an investor on the US Department of Defense list of Chinese companies with US operations affiliated with the Chinese military. Remember, the list has no investment implications as it prevents the DoD from buying from the companies. It was argued that the inclusion of auto and internet companies makes the list a bit of a joke, as one could argue that it's really composed of Chinese companies that US companies can’t compete with. Interesting opinion.
It’s hard not to see how the US is starting to implement many of the policies it historically accused China’s government of: protectionism, tariffs, exclusion of competitors, and state-owned enterprises (Intel, rare earths, etc.). Nobody is comparing Ford and GM to the USSR’s GAZ Volgas, so we’ve got a ways to go, I suppose.
With that said, it's hard not to remember all of those US executives on President Trump’s China trip. Really makes you wonder what those conversations were about. Maybe Chinese executives join President Xi on his September US visit?
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.7% |
| Hang Seng Tech | HSTECH Index | -1.5% |
| Hong Kong Turnover | HKTurn Index | -10% |
| Hong Kong Short Sale Turnover | HKSST Index | -9% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 19.4% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -351.76 |
| China (Shanghai) | SHCOMP Index | -0.2% |
| China (Shenzhen) | SZCOMP Index | -0.7% |
| China (STAR Board) | Star50 Index | 0.6% |
| Mainland Turnover | .chturn Index | -2.6% |
| Japan | NKY Index | 0.1% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | -0.3% |
| Malaysia | FBMKLCI Index | 0% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | -0.5% |
| South Korea | KOSPI Index | 0.4% |
| Taiwan | TWSE Index | -0.2% |
| Thailand | SET Index | 0.6% |
| Singapore | STI Index | 0.6% |
| Australia | AS51 Index | -0.2% |
| Vietnam | VNINDEX Index | -0.3% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 108% | 113% |
| Advancing Stocks | 166 | 1255 |
| Declining Stocks | 345 | 3809 |
| Outperforming Factors | EPS Revision | Value |
| Underperforming Factors | Growth, Liquidity, Dividend Yield | Liquidity, Growth, Buyback |
| Top Sectors | Real Estate, Materials, Energy | Materials, Utilities, Real Estate |
| Bottom Sectors | Discretionary, Utilities, Communication | Communication, Industrials, Discretionary |
| Top Subsectors | Chemical, Consumer Durables/Apparel, Semis | Base Metals, Fertilizer/Pesticide, Chemical Raw Materials |
| Bottom Subsectors | Consumer Discretionary Distribution, Paper/Packaging, National Defense | Internet, Leisure Products, Software |
| Southbound Connect Buys | Kingboard (Large), KB Laminates, Tencent (Moderate), Hua Hong Semi, SMIC (Small) | N/A |
| Southbound Connect Sells | Alibaba, CNOOC (Large), YOFC (Moderate) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -1.44 |
| Communication Services | 11 | -1.51 |
| Consumer Discretionary | 28 | -3.14 |
| Consumer Staples | 13 | -0.44 |
| Energy | 6 | 0.27 |
| Financials | 25 | -0.49 |
| Health Care | 16 | -1.18 |
| Industrials | 22 | -0.85 |
| Information Technology | 12 | -0.97 |
| Materials | 14 | 0.36 |
| Real Estate | 7 | 1.71 |
| Utilities | 11 | -1.74 |
| Mainland China Listed | 386 | -0.27 |
| Communication Services | 8 | -1.35 |
| Consumer Discretionary | 26 | -0.71 |
| Consumer Staples | 19 | 0.21 |
| Energy | 12 | 0.18 |
| Financials | 64 | -0.45 |
| Health Care | 31 | 0.22 |
| Industrials | 58 | -0.96 |
| Information Technology | 95 | -0.67 |
| Materials | 52 | 1.39 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.8 |
| Alibaba HK | 9988 HK Equity | -5.4 |
| JD.com HK | 9618 HK Equity | -2.9 |
| NetEase HK | 9999 HK Equity | 1.7 |
| Yum China HK | 9987 HK Equity | 0.6 |
| Baozun HK | 9991 HK Equity | -6.6 |
| Baidu HK | 9888 HK Equity | -3.1 |
| Autohome HK | 2518 HK Equity | -1.9 |
| Bilibili HK | 9626 HK Equity | -1 |
| Trip.com HK | 9961 HK Equity | -2.5 |
| EDU HK | 9901 HK Equity | -1.3 |
| Xpeng HK | 9868 HK Equity | -5.6 |
| Weibo HK | 9898 HK Equity | -0.4 |
| Li Auto HK | 2015 HK Equity | -2.8 |
| Nio Auto HK | 9866 HK Equity | 3.1 |
| Zhihu HK | 2390 HK Equity | 0.6 |
| KE HK | 2423 HK Equity | 1.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.8 |
| Meituan HK | 3690 HK Equity | -1.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -5.4 |
| TENCENT HOLDINGS LTD | -1.8 |
| SEMICONDUCTOR MANUFACTURI-H | 1.3 |
| AIA GROUP LTD | 5 |
| KINGBOARD LAMINATES HLDG LTD | 10.8 |
| KINGBOARD HOLDINGS LTD | 4.7 |
| HONG KONG EXCHANGES & CLEAR | -2.3 |
| HUA HONG GRACE SEMICONDUCTOR | 1.5 |
| POP MART INTERNATIONAL GROUP | 3 |
| CNOOC LTD-H | -1.2 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EOPTOLINK TECHNOLOGY INC L-A | -4.5 |
| ZHONGJI INNOLIGHT CO LTD-A | -2 |
| HENGTONG OPTIC-ELECTRIC CO-A | -4.2 |
| BOE TECHNOLOGY GROUP CO LT-A | -3.3 |
| JIANGSU ZHONGTIAN TECHNOLO-A | -1.9 |
| FIBERHOME TELECOM TECH CO-A | 9.5 |
| GIGADEVICE SEMICONDUCTO-CL A | 0.6 |
| SUZHOU DONGSHAN PRECISION-A | -0.6 |
| SUZHOU TFC OPTICAL COMMUNI-A | 0.3 |
| CAMBRICON TECHNOLOGIES-A | -0.9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.77 versus 6.77 yesterday
- CNY per EUR 7.82 versus 7.83 yesterday
- Yield on 10-Year Government Bond 1.75% versus 1.75% yesterday
- Yield on 10-Year China Development Bank Bond 1.82% versus 1.81% yesterday
- Copper Price -1.02%
- Steel Price -0.03%
