Alibaba’s Qwen Logs More Downloads Than China Has People
6 Min. Read Time
Key News
Asian equities were largely higher overnight, led by Hong Kong, Mainland China, and Thailand, while Korea was closed for Liberation Day and Indonesia was closed for Independence Day.
Hong Kong-listed internet stocks, and Hong Kong and Mainland-listed AI supply chain stocks, i.e., the AI "picks and shovels", a.k.a. the "Four Horsemen" of AI, i.e., semiconductors, semiconductor equipment, technology hardware, and communications equipment, as investors shrugged off comments that the US did not want Apple buying Chinese semiconductor chips. This is likely the "Art of the Deal", in advance of the Trump-Xi meeting next month.
After the close, Premier Li and the State Council met today to discuss implementing the 15th Five-Year Plan. The post-meeting release states:
- “We should clearly see that the problem of insufficient domestic demand is still prominent, and some industries are facing more difficulties, while external environment uncertainty is rising.”
- “We should speed up the implementation of the plan, which includes expanding domestic demand.”
These comments sound positive to me and are clearly a reaction to today’s underwhelming economic data, which was released at 3 pm local time and is summarized below. Mainland China closes at 3 pm, while Hong Kong faded slightly off intra-day highs on the fairly dismal July data.
The National Bureau of Statistics’ (NBS) press conference points out that very hot weather, heavy rains, and typhoons were factors, along with the fact that summer tends to be a weak season for real estate sales. It is impossible to ignore weakness in domestic demand, credit demand, and real estate. China’s economy is supported by foreign demand as exports amounted to CNY 17,440 billion, an increase of 14% year-over-year (YoY), driven by high-end technology and other high-value manufactured goods, including 3-D printing equipment, lithium-ion batteries, and industrial robotics. These categories increased by 52.3%, 40.2%, and 28.5% YoY, respectively. China is becoming more dependent on the global economy as they produce physical goods (hybrid and fully-electric vehicles, AI picks and shovels, humanoid robots, etc.) that are exported and cannot be sold in China. This runs counter to efforts to make China less reliant on foreign economies.
The NBS press conference notes:
- “External shocks and internal difficulties, focuses on implementing more proactive and promising macro policies” as it is difficult to ignore “the contradiction between strong domestic supply and weak demand is prominent”.
- "The [July Poilitburo] meeting emphasized that we should optimize and implement the policy of fiscal and financial coordination to promote domestic demand”
- “In the next stage, various policies to expand domestic demand and promote consumption will be implemented in succession, the potential of service consumption will be continuously released, and new products will rapidly iterate and stimulate new consumer demand, which will continue to support the reasonable recovery of the CPI [consumer price index]”
Why do I seem happy? Because today’s data should be a kick in the butt for policymakers to get moving and start announcing stimulus.
Alibaba gained +1.92% as the latest version of their Qwen open-source AI large language model (LLM) achieved one million downloads in only 48 hours, which brings the total downloads to 3 billion globally over the last six months. AI model marketplace Hugging Face is reporting that it is the most downloaded AI model globally, more than Google or Meta. Alibaba also sold Lingxi Interactive, its online gaming unit, to Trustar Capital for $1.5 billion to “focus resources on its core AI and cloud infrastructure strategy.” Mainland investors bought $53 million (HKD 422 million) worth of Alibaba via Southbound Stock Connect today.
Alibaba's strong AI efforts weighed on Z.ai, which fell -5.28%, and Baidu, which fell -0.50%, despite chatter of legendary investor Stanley Druckenmiller’s family office, Duquesne, filing an 88,000-share position. Hong Kong’s most heavily traded stock was semiconductor foundry Semiconductor Manufacturing International (SMIC), which gained +6.14%, followed by Tencent, which gained +1.45%. Breadth was strong as growth stocks had a strong day in both markets, led by AI "picks and shovels" and CATL, which gained +1.64% in Hong Kong and +1.54% in Mainland China. Semiconductors were led by ChangXin Memory (CXMT), which gained +12.00%, leading gains in the Science & Technology (STAR) Board, which rose +4.14% overall.
Energy was higher, as the National Development & Reform Commission (NDRC) and National Energy Administration jointly released the 15th Five-Year Plan for Oil & Gas Development.
Lithium battery maker Youngy, which gained +0.93% overnight, reported first-half revenue growth of +402% to RMB 1.52 billion and net profit growth of +1,076% to RMB 1 billion.
Economic Data Release:
- July New Home Prices MoM -0.18% versus June’s -0.15%
- July Used Home Prices MoM -0.29% versus June’s -0.32%
- Property Investment YTD YoY -19.2% versus June’s 18% and expectations -18.9%
- Residential Property Sales YTD -13.2% versus June’s -13.7%
- Retail Sales +0.6% versus June’s 1% and expectations 1.5%
- Online Retail Sales YTD YoY +4.8%
- Industrial Production +4.5% versus June’s 5.3% and expectations 5%
- Fixed Asset Investment -6.7% versus June’s -5.7% and expectations -6.2%
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 1.3% |
| Hang Seng Tech | HSTECH Index | 1.6% |
| Hong Kong Turnover | HKTurn Index | -17.1% |
| Hong Kong Short Sale Turnover | HKSST Index | -5.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 392.97 |
| China (Shanghai) | SHCOMP Index | 1.4% |
| China (Shenzhen) | SZCOMP Index | 2.2% |
| China (STAR Board) | Star50 Index | 4.1% |
| Mainland Turnover | .chturn Index | 10.7% |
| Japan | NKY Index | 0.7% |
| India | SENSEX Index | -0.4% |
| Indonesia | JCI Index | 1.6% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | 0.2% |
| Philippines | PCOMP Index | -0.6% |
| South Korea | KOSPI Index | 2.4% |
| Taiwan | TWSE Index | 0.1% |
| Thailand | SET Index | 1.1% |
| Singapore | STI Index | 0.4% |
| Australia | AS51 Index | -0.5% |
| Vietnam | VNINDEX Index | -0.0005 |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 74 | 94 |
| Advancing Stocks | 372 | 3879 |
| Declining Stocks | 145 | 1109 |
| Outperforming Factors | Momentum, Liquidity, EPS Revision | Momentum, Growth, Liquidity |
| Underperforming Factors | None | Short Interest, Dividend Yield, Low Volatility |
| Top Sectors | Materials, Tech, Industrials | Tech, Materials, Energy |
| Bottom Sectors | None | Staples, Communication, Real Estate |
| Top Subsectors | Semis, Tech Hardware, Aerospace | Energy Equipment, Semiconductors, Communication Equipment |
| Bottom Subsectors | Paper/Packaging, Food/Beverage/Tobacco, Consumer Staples Distribution | Liquor, Coal, Banking |
| Southbound Connect Buys | SMIC, Z.ai (Large), Alibaba, Tencent (Moderate), CIG, Minimax (Small) | N/A |
| Southbound Connect Sells | Hua Hong Semi (Large), KB Laminates, YOFC(Moderate), Gigadevice (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 1.46 |
| Communication Services | 11 | 1.18 |
| Consumer Discretionary | 28 | 1.67 |
| Consumer Staples | 13 | 0.17 |
| Energy | 6 | 1.07 |
| Financials | 25 | 1.28 |
| Health Care | 16 | 1.12 |
| Industrials | 22 | 1.85 |
| Information Technology | 12 | 2 |
| Materials | 14 | 3.64 |
| Real Estate | 7 | 0.04 |
| Utilities | 11 | 0.55 |
| Mainland China Listed | 386 | 1.9 |
| Communication Services | 8 | -1.4 |
| Consumer Discretionary | 26 | 0.56 |
| Consumer Staples | 19 | -2.38 |
| Energy | 12 | 1.75 |
| Financials | 64 | 0.25 |
| Health Care | 31 | 1.1 |
| Industrials | 58 | 1.44 |
| Information Technology | 95 | 4.46 |
| Materials | 52 | 2.3 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 1.5 |
| Alibaba HK | 9988 HK Equity | 1.9 |
| JD.com HK | 9618 HK Equity | 2.5 |
| NetEase HK | 9999 HK Equity | 0.3 |
| Yum China HK | 9987 HK Equity | 0.3 |
| Baozun HK | 9991 HK Equity | -0.3 |
| Baidu HK | 9888 HK Equity | -0.5 |
| Autohome HK | 2518 HK Equity | 0.8 |
| Bilibili HK | 9626 HK Equity | 1.9 |
| Trip.com HK | 9961 HK Equity | 1.7 |
| EDU HK | 9901 HK Equity | 3.7 |
| Xpeng HK | 9868 HK Equity | 2.4 |
| Weibo HK | 9898 HK Equity | 0.3 |
| Li Auto HK | 2015 HK Equity | 2.1 |
| Nio Auto HK | 9866 HK Equity | 2.7 |
| Zhihu HK | 2390 HK Equity | 1.3 |
| KE HK | 2423 HK Equity | 0.8 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2.4 |
| Meituan HK | 3690 HK Equity | 0.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURI-H | 6.1 |
| TENCENT HOLDINGS LTD | 1.5 |
| Z AI CO LTD | -5.3 |
| ALIBABA GROUP HOLDING LTD | 1.9 |
| HUA HONG GRACE SEMICONDUCTOR | 7.5 |
| YANGTZE OPTICAL FIBRE AND-H | 12.1 |
| KINGBOARD LAMINATES HLDG LTD | 9.1 |
| LENOVO GROUP LTD | -1.7 |
| MINIMAX GROUP INC | 1.5 |
| GIGADEVICE SEMICONDUCTOR I-H | 8.4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 6.2 |
| CXMT CORP-A | 12 |
| EOPTOLINK TECHNOLOGY INC L-A | 4.2 |
| GIGADEVICE SEMICONDUCTO-CL A | 6.4 |
| HENGTONG OPTIC-ELECTRIC CO-A | 3.3 |
| SUZHOU TFC OPTICAL COMMUNI-A | 7 |
| CAMBRICON TECHNOLOGIES-A | 5.8 |
| JCET GROUP CO LTD-A | 9.1 |
| SUZHOU DONGSHAN PRECISION-A | 6.1 |
| BOE TECHNOLOGY GROUP CO LT-A | 4.6 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.74 versus 6.74 Friday
- CNY per EUR 7.82 versus 7.80 Friday
- Yield on 10-Year Government Bond 1.69% versus 1.70% Friday
- Yield on 10-Year China Development Bank Bond 1.76% versus 1.76% Friday
- Copper Price 1.23%
- Steel Price -0.03%
