Beijing Auto Show Highlights Local EVs, Week in Review

Week in Review

• Asian equities were mixed but mostly lower for the week as Taiwan and Korea outperformed, while Indonesia and Hong Kong underperformed.
• On Monday, the Beijing Half Marathon featured robot runners, showcasing humanoid movement technology.
• On Tuesday, Nvidia supplier Victory Giant's Hong Kong IPO surged 50%, raising $2.6 billion.
• Tencent and Alibaba are seeking investments in large language model provider DeepSeek at a valuation of $20 billion, according to reports Wednesday.

Key News

Asian equities were largely lower, except for Taiwan’s surge, as the security regulator increased the single stock limit up to 25% from 10%, as India and Indonesia underperformed. Hong Kong managed a gain on light volume and poor breadth while Mainland China was off.

The Beijing Auto Show kicked off overnight, as Xpeng gained +3.38% after announcing interest in their self-driving technology with “overseas” auto companies. Xiaomi gained +0.06% after announcing their new SU7 car had more than 60,000 cars pre-sold. The South China Morning Post had the most obvious headline ever stating “Chinese EV makers target global expansion at Auto China amid energy shock”. Has anybody filled their gas guzzler up recently? My daughter turns 16 soon and she will not be getting a car (sorry!) though the probability the next Ahern family auto is a hybrid stands at 100%, according to Kalshi Prediction Markets.

Alibaba gained +1.07% and was Hong Kong’s most heavily traded stock by value, as BMW announced its AI self-driving will be powered by Alibaba’s Qwen large language model (LLM) and similar deals with BYD, Geely Li Auto, Changan, Dongfeng, BAIC, Great Wall and SAIC. Volkswagen will do the same.

Semiconductor Manufacturing International (SMIC) gained +10.01% in Hong Kong and +4.7% in Mainland China, as Hong Kong volumes increased +268% from yesterday, reaching more than 2X the 1-year average.

I was a bit surprised that Tencent fell -0.36% after yesterday’s new LLM release and potential investment in DeepSeek. DeepSeek’s potential Alibaba and Tencent investment and the upcoming launch of its V4 LLM hit Knowledge Atlas, which fell -9.05%, and Minimax, which fell -9.44%. Semiconductors were strong following Intel's results.

Mainland investors bought a net $441 million worth of Hong Kong-listed stocks and ETFs today, which brings this week’s net buy to $2.14 billion and the year-to-date (YTD) total to $33.12 billion. Mainland China was a sea of red, as technology hardware was crushed. Eoptolink Technology fell -11.67%, after the stock gained 731% in the last year with a current market cap of RMB 534 billion. The decline followed yesterday’s after-the-close reporting of net income and earnings per share (EPS) expectations, despite a revenue beat and a +106% year-over-year (YoY) increase in revenue to RMB 8.3 billion and a 77% YoY increase in net income to RMB 2.8 billion. Many of these Mainland-listed tech stocks are priced to perfection, so they had better deliver, as local investors are unable to diversify internationally, due to capital controls.

Zhongji Innolight fell -1.12%, despite Bloomberg News reporting that its Hong Kong-listing will occur in June. Liquor giant Kweichow Moutai gained +2.78%, thought it has lost -21% in the last year with a current market cap of RMB 1.83 trillion, after reporting revenue +6% YoY to RMB 54.7 billion and net income that increased +1% to RMB 27.23 billion.

China Telecom’s net income declined -17.08% to RMB 7.35 billion on increased competition and weak consumer spending. Utilities, insurance, and communication equipment software all underperformed, while the few bright spots were semiconductors, chemicals, metals & mining, and battery maker CATL, which gained +1.37% in Mainland China, though it off -1.07% in Hong Kong.

Polycrystalline silicon futures fell -9%. The State Council issued an “Assessment Measures for the Comprehensive Evaluation of Carbon Peak and Carbon Neutrality”, outlining the path to cutting carbon emissions from the 2005 level to 65% by 2030.

The Mainland-listed China equity ETFs utilized by the National Team had above average volumes, though continue to experience outflows. The 480 Mainland-listed China equity ETFs have had $157 billion of outflows YTD, with $29.612B of outflow over the last month after the "National Team", i.e. investment firms associated with China's sovereign wealth, took profits in their ETF positions earlier this year. I assume whatever 2026 game plans Chinese asset managers had gone out the window after the National Team’s liquidation. The PBOC announced foreign investors will be allowed to trade Treasury futures for hedging purposes.

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 6.83 versus 6.83 yesterday
• CNY per EUR 8.00 versus 7.99 yesterday
• Yield on 10-Year Government Bond 1.76% versus 1.75% yesterday
• Yield on 10-Year China Development Bank Bond 1.87% versus 1.85% yesterday
• Copper Price -0.31%
• Steel Price 0.03%