Alibaba Soars On Qwen Update, Non-US Exports Increase
6 Min. Read Time
Key News
Asian equities were largely higher on a weaker US dollar overnight.
Nvidia's H200 export approval was not news in China. Reuters reported that China's customs agency will not allow them in. It is likely that some will be permitted, as companies have been directed to purchase the chips "only if necessary". Alibaba has already said it will purchase the H200.
Alibaba’s Hong Kong-listed shares gained +5.69% on an expected update to its Qwen LLM this week. Notably, the December trade data shows that international E-Commerce increased by +69.7% to RMB 2.75 trillion since 2020. Ali Health gained +18.96% as an expected beneficiary, along with AI plays such as Kuaishou, up +4.46%, Bilibili, up +5.13%, and Baidu, up +1.9%.
If America doesn’t want inexpensive goods from China, there are plenty of people who do! While US exports are down -20% year-to-date (YTD), the exports to Association of Southeast Asian Nations (ASEAN) countries are up +13%, and exports to the EU are up +8.4%. In China, the focus was on a +11.4% YoY gain in the export and import of “high-tech products” with 60% of trade. Trade in electric vehicles (EVs), hybrid vehicles, solar panels, and batteries has increased 350% since 2020 to RMB 1.3 trillion. Commodities imports are driven by the increase in the higher value of commodities due to higher prices.
- Exports gained 6.6% YoY versus November’s 5.9% and expectations of 3.1%.
- Imports gained 5.7% YoY versus November’s 1.9% and expectations of 0.9%.
- Trade Balance was $114B versus November’s $111B and expectations of $114B.
At noon today, Mainland exchanges increased their minimum margin ratio to 100% from 80% on new trades as onshore margin balance increased recently to a high of RMB 2.67 trillion. Onshore markets came off intra-day highs on the news, with the Shanghai pushed into negative territory, though Shenzhen and STAR Board closed higher regardless. The key is to examine the percentage of margin versus the aggregate market capitalization. The margin as a percentage of the Mainland market cap was just shy of 24% at year-end, which is well below the highs seen in the 2014/2015 debt-induced margin bubble. Don’t fall for the clickbait “Margin is at all-time highs, so you should freak out”. A Mainland media article described the adjustment as a “valve” but not a “steering wheel,” i.e., the trend is higher though tapping the brakes on hot money. Onshore regulators would love a slow and steady bull market versus a giant rip higher. We mentioned that Shanghai broke its 17-day winning streak two days ago. Interesting that tech/growth stocks outperformed while value stocks underperformed. Are Mainland investors leveraging dividend plays?
Trip.com’s Hong Kong share class fell -6.49% after the State Administration for Market Regulation (SAMR) announced an investigation into the online travel company for “suspected abuse of its dominant market position and monopolistic practices”. This is very disappointing news, as it is a great company that has earned its dominant market share through strong management and execution. SAMR could reconsider this investigation, as it could weigh on foreign investor sentiment broadly.
Hong Kong-listed auto stocks were mixed to lower, despite the China Association of Automobile Manufacturers (CAAM) stating that 2025 auto sales will exceed 34 million vehicles, with 16 million being EVs or hybrids. This is due to domestic auto sales now being up by 50% for EVs and hybrids.
Tencent had a strong day, up 0.88%, driven by strong buying from Mainland investors via Southbound Stock Connect.
Hong Kong-listed oil stocks rebounded, while non-ferrous metals continued their relentless upward drive. Mainland China (Shanghai and Shenzhen) hit new all-time highs in the value of volume traded. Value plays were off, led by banks, insurance, and oil, while growth stocks within technology hardware, semiconductors, software, and non-ferrous metals were all higher.
The Ministry of Finance (MoF) tweaked tax rules on home sales to support the sector, but this clearly had no effect on real estate, which was the worst-performing sector in Mainland China. The MoF also held a conference to discuss “the comprehensive policy of fiscal and financial coordination to promote domestic demand” following the State Council’s directive. China’s government has received the directive from above and now needs to implement it.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.6% |
| Hang Seng Tech | HSTECH Index | 0.7% |
| Hong Kong Turnover | HKTurn Index | 8% |
| Hong Kong Short Sale Turnover | HKSST Index | 0.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 12.6% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 365.95 |
| China (Shanghai) | SHCOMP Index | -0.3% |
| China (Shenzhen) | SZCOMP Index | 0.6% |
| China (STAR Board) | Star50 Index | 2.1% |
| Mainland Turnover | .chturn Index | 8% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -1.3% |
| Japan | NKY Index | 1.5% |
| India | SENSEX Index | -0.3% |
| Indonesia | JCI Index | 0.9% |
| Malaysia | FBMKLCI Index | 0.2% |
| Pakistan | KSE100 Index | -0.7% |
| Philippines | PCOMP Index | -0.3% |
| South Korea | KOSPI Index | 0.6% |
| Taiwan | TWSE Index | 0.8% |
| Thailand | SET Index | 0.7% |
| Singapore | STI Index | 0.1% |
| Australia | AS51 Index | 0.1% |
| Vietnam | VNINDEX Index | -0.4% |
| Indicator | Hong Kong | Mainland |
|---|---|---|
| Today's Volume % of 1-Year Average | 134% | 223% |
| Advancing Stocks | 254 | 2547 |
| Declining Stocks | 228 | 2475 |
| Outperforming Factors | Growth, Momentum, EPS Revision | Growth, Liquidity, EPS Revision |
| Underperforming Factors | Quality, Value | Low Volatility, Value, Dividend Yield |
| Top Sectors | Staples, Discretionary, Energy | Tech, Materials, Energy |
| Bottom Sectors | Financials, Industrials, Utilities | Real Estate, Utilities, Financials |
| Top Subsectors | Consumer Staples Distribution, Healthcare Equipment, Consumer Discretionary Distribution | Internet, Energy Equipment, Software |
| Bottom Subsectors | National Defense, Building, Electrical Equipment | Telecom, Motorcycle, Banking |
| Southbound Connect Buys | Alibaba Health, Alibaba, Tencent (Large), Kuiashou (Moderate) | |
| Southbound Connect Sells | Xiaomi (Moderate), Meituan, SMIC, XtalPi (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.89 |
| Communication Services | 11 | 1.06 |
| Consumer Discretionary | 28 | 2.04 |
| Consumer Staples | 13 | 3.3 |
| Energy | 6 | 1.31 |
| Financials | 25 | -0.81 |
| Health Care | 15 | 0.45 |
| Industrials | 21 | -0.6 |
| Information Technology | 12 | 0.07 |
| Materials | 10 | 0.95 |
| Real Estate | 7 | -0.25 |
| Utilities | 12 | -0.41 |
| Mainland China Listed | 386 | -0.15 |
| Communication Services | 8 | -1.24 |
| Consumer Discretionary | 28 | -0.53 |
| Consumer Staples | 21 | -0.78 |
| Energy | 12 | 0.17 |
| Financials | 66 | -1.31 |
| Health Care | 33 | -0.76 |
| Industrials | 57 | -1.03 |
| Information Technology | 91 | 1.85 |
| Materials | 49 | 0.7 |
| Real Estate | 6 | -2.03 |
| Utilities | 14 | -1.31 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.9 |
| Alibaba HK | 9988 HK Equity | 5.7 |
| JD.com HK | 9618 HK Equity | -1.3 |
| NetEase HK | 9999 HK Equity | -1.1 |
| Yum China HK | 9987 HK Equity | -0.3 |
| Baozun HK | 9991 HK Equity | -0.4 |
| Baidu HK | 9888 HK Equity | 1.9 |
| Autohome HK | 2518 HK Equity | -1.3 |
| Bilibili HK | 9626 HK Equity | 5.1 |
| Trip.com HK | 9961 HK Equity | -6.5 |
| EDU HK | 9901 HK Equity | -1.7 |
| Xpeng HK | 9868 HK Equity | 0.1 |
| Weibo HK | 9898 HK Equity | 0.1 |
| Li Auto HK | 2015 HK Equity | -1.8 |
| Nio Auto HK | 9866 HK Equity | -3.1 |
| Zhihu HK | 2390 HK Equity | -4.1 |
| KE HK | 2423 HK Equity | -0.8 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.7 |
| Meituan HK | 3690 HK Equity | -3.2 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 5.7 |
| TENCENT HOLDINGS LTD | 0.9 |
| HANG SENG BANK LTD | 0 |
| MEITUAN-CLASS B | -3.2 |
| ALIBABA HEALTH INFORMATION T | 19 |
| XIAOMI CORP-CLASS B | -0.5 |
| SEMICONDUCTOR MANUFACTURI-H | 2 |
| KUAISHOU TECHNOLOGY | 4.5 |
| PING AN INSURANCE GROUP CO-H | -1.9 |
| CHINA LIFE INSURANCE CO-H | -0.9 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | 1.4 |
| SHANTUI CONSTRUCTION MACHI-A | 0.2 |
| TBEA CO LTD-A | -2 |
| GOLDWIND SCIENCE & TECHNOL-A | -1.7 |
| SHANGHAI STONEHILL TECHNOL-A | 10 |
| BLUEFOCUS INTELLIGENT COMM-A | 3.7 |
| ZHONGJI INNOLIGHT CO LTD-A | 1.2 |
| EAST MONEY INFORMATION CO-A | 0.9 |
| CHINA AEROSPACE TIMES ELEC-A | 4.8 |
| CHINA SPACESAT CO LTD -A | -2.3 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.97 versus 6.97 yesterday
- CNY per EUR 8.12 versus 8.14 yesterday
- Yield on 10-Year Government Bond 1.85% versus 1.85% yesterday
- Yield on 10-Year China Development Bank Bond 1.97% versus 1.97% yesterday
- Copper Price +0.90%
- Steel Price +0.09%
