CATL (Cattle) Stock Giddyup Pre-Earnings, Week in Review
7 Min. Read Time
Week in Review
- Asian equities were mostly higher for the week as Pakistan, and Korea outperformed with double-digit gains, while Malaysia and Singapore underperformed. Meanwhile, China had a shortened week thanks to Easter Monday and the Ching Ming Festival.
- Baidu filed for Hong Kong listings of its chipmaking unit Kunlunxin, its biotech division, and video streaming platform iQiyi.
- Alibaba had a strong week on multiple catalysts including the launch of a new text-to-video AI model and broker upgrades.
- The State Administration of Market Regulation (SAMR), along with partner ministries, issued a definitive statement on reducing margin-crushing price competition for online platforms after a meeting with top platforms on Thursday.
Key News
Asian equities closed on a strong note, marking a good week despite a weaker US dollar, although volumes were light, suggesting a hint of nervousness about the longevity of the Iran truce. China's currency, the renminbi (CNY), hit a 52-week high versus the US dollar today, which should be a good sign for risk assets. Mainland China and Hong Kong were up on light volumes, though faded from intra-day highs, as the Shanghai Composite dipped back below the 4,000 level.
The world's largest battery maker is Contemporary Amperex Technology Co Ltd., known as CATL, which some pronounce as "cattle". Its Mainland-listed shares gained +6.67% overnight and its Hong Kong-listed shares gained +7.66%. There were multiple potential catalysts for the stock's surge, including yesterday’s "anti-involution" regulator meetings. CATL will report earnings next Wednesday, and some are pointing to short-covering as a factor. Another factor might be Mainland media, which noted that CATL, which is the largest foreign holding in Northbound Stock Connect, had a large increase in foreign-held shares in the first quarter. Q1 March revenue and adjusted earnings per share (EPS) are expected to grow 41% year-over-year (YoY) for the quarter to $0.55. In the first quarter of 2021, the company made $2.96 billion and adjusted EPS was only $0.07. Competitor Ningbo Deye gained +10% following strong a strong Q1 profit forecast due to “strong demand from Europe, Middle East and Southeast Asia due to power shortages” despite a disappointing 2025 financials.
Do you think more consumers are going to want a hybrid or fully-electric vehicle after paying these high prices for gas? Remember, despite strong adoption relative to the rest of the world, only 12% of China’s cars are electric! I think countries will want to insulate themselves from Middle East oil by adopting renewables, including nuclear. As such, there could be significant upside to the China clean technology and renewable energy story, in my opinion.
Alibaba gained +2.12% overnight on a broker upgrade and the strong performance of its text-to-video AI model HappyHorse 1.0. It also had its third day in a row of net buying via Southbound Stock Connect. Baidu fell -0.91, despite the updated “Fa Mou” Agent 2.0 outperforming Claude Opus 4.6 in some tests, according to reports.
New energy vehicle stocks werte broadly higher, including BYD, which gained +3.24% on strong March auto export data. Semiconductors and hardware technology were higher in Hong Kong and Mainland China, as foreign investors' AI "picks and shovels" trade in Korea and Taiwan unwinds, which may have weighed on some of the Hong Kong-listed internet stocks. Hong Kong an Mainland-listed brokers were higher following Citic’s strong financial results.
President Xi will meet with the leader of the KMT from Taiwan Cheng Li-wun in Beijing. Premier Li met with “economic experts and entrepreneurs” to “solicit their opinions and suggestions on the current economic situation and next steps in economic work.”
March's producer price index (PPI) gained +0.5% year-over-year (YoY) versus February’s -0.9% and expectations of +0.4%, breaking 41 months of consecutive declines that began back in October of 2022! Higher commodity prices, beyond oil and gas, led to an increase of +5.2% for commmodity inputs, up from last month’s -12.9% chang. Demand was a factor beyond oil & gas supply pressure, as solar equipment prices increased +5.2%, lithium-ion battery prices increased 2.5%, and fiber optic manufacturing gained +76.1%
March's consumer price index (CPI) increased 1% YoY versus February’s +1.3% and expectations of 1.1%, as gold jewelry prices surged +65.8% YoY and food prices increased +0.30%. Meanwhile, travel prices fell following Chinese New Year vacation demand.
The Wall Street Journal had a good article on President Trump’s China policy. I like the line taken from a government document that states “President Trump seeks stable, peaceful, fair, and respectful relations with China”. Remember, US investors are woefully underallocated to Chinese equities versus their global peers. Positive developments here make the pain trade higher!
In the past, I’ve mentioned the emphasis on China's supply of new energy vehicles, with little mention of the demand for high-quality, inexpensive cars. Have you ever heard of German auto excess capacity? BMW and Mercedes-Benz sell more cars in the US than in Germany. Have you ever heard of South Korean auto excess capacity? Both Kia and Hyundai sell more cars in the US than in South Korea. Do you hear about Japanese auto excess capacity? Toyota and Nissan sell more cars in the US than in Japan. Do you see my point? The lack of analysis or thought reminds me of Daniel Kahneman’s Thinking Fast and Thinking Slow. I recommend thinking slowly, i.e., looking at the data versus accepting the clickbait.
The Shanghai Stock Exchange proposed a host of rule adjustments overnight. One that jumps out is the establishment of a closing auction versus the current “continuous bidding”. Why is this important? Index funds and ETFs want the closing price to rebalance days, which a closing auction provides, versus fighting it out. It has been a while since we last spoke about MSCI adding Mainland China-listed tocks to their indexes. Remember that only 20% of Mainland stocks' potential weight is in MSCI indexes today, which artificially reduces China’s potential overal weight significantly. It could be interesting if we have a good Trump-Xi meeting and this issue comes up. I suspect we need a period of significant Mainland China equity outperformance to “force” the issue for global index providers and financial institutions.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.5% |
| Hang Seng Tech | HSTECH Index | 0.8% |
| Hong Kong Turnover | HKTurn Index | 0.5% |
| Hong Kong Short Sale Turnover | HKSST Index | -11.8% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 16.2% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -359.56 |
| China (Shanghai) | SHCOMP Index | 0.5% |
| China (Shenzhen) | SZCOMP Index | 1.5% |
| China (STAR Board) | Star50 Index | 1.5% |
| Mainland Turnover | .chturn Index | 8.8% |
| Japan | NKY Index | 1.8% |
| India | SENSEX Index | 1.2% |
| Indonesia | JCI Index | 2.1% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | 1.3% |
| Philippines | PCOMP Index | 0.1% |
| South Korea | KOSPI Index | 1.4% |
| Taiwan | TWSE Index | 1.6% |
| Thailand | SET Index | 1.2% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | -0.1% |
| Vietnam | VNINDEX Index | 0.8% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 96 | 118 |
| Advancing Stocks | 320 | 3910 |
| Declining Stocks | 186 | 1149 |
| Outperforming Factors | Growth, Liquidity | Liquidity, Growth, Momentum |
| Underperforming Factors | Value | Low Volatility |
| Top Sectors | Industrials, Discretionary, Healthcare | Industrials, Tech, Communication |
| Bottom Sectors | Tech, Materials, Staples | Energy, Staples |
| Top Subsectors | Electrical Equipment, Semis, Machinery | Electric Power Grid, Securities, Electronic Components |
| Bottom Subsectors | Paper/Packaging, Steel, Consumer Durables/Apparel | Marine, Precious Metals, Forest |
| Southbound Connect Buys | Alibaba (Large), Guotai Junan (Moderate), SMIC (Small) | N/A |
| Southbound Connect Sells | HK Tracker ETF (Very Large), HS Tech ETF (Large), YOFC (Moderate) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | 0.4 |
| Communication Services | 11 | -0.6 |
| Consumer Discretionary | 28 | 1.29 |
| Consumer Staples | 12 | -0.62 |
| Energy | 6 | 0.07 |
| Financials | 25 | 0.8 |
| Health Care | 16 | 0.87 |
| Industrials | 19 | 2.77 |
| Information Technology | 15 | -0.87 |
| Materials | 14 | -0.62 |
| Real Estate | 1 | 0.14 |
| Utilities | 6 | -0.51 |
| Mainland China Listed | 11 | 1.49 |
| Communication Services | 11 | 1.54 |
| Consumer Discretionary | 26 | 1.48 |
| Consumer Staples | 18 | -0.24 |
| Energy | 11 | -0.52 |
| Financials | 64 | 1.19 |
| Health Care | 29 | 0.67 |
| Industrials | 60 | 2.94 |
| Information Technology | 113 | 2.72 |
| Materials | 58 | 0.14 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.8 |
| Alibaba HK | 9988 HK Equity | 2.1 |
| JD.com HK | 9618 HK Equity | -0.3 |
| NetEase HK | 9999 HK Equity | 0.8 |
| Yum China HK | 9987 HK Equity | 0.1 |
| Baozun HK | 9991 HK Equity | 4.1 |
| Baidu HK | 9888 HK Equity | -0.9 |
| Autohome HK | 2518 HK Equity | 0.6 |
| Bilibili HK | 9626 HK Equity | -1.3 |
| Trip.com HK | 9961 HK Equity | -0.2 |
| EDU HK | 9901 HK Equity | -1.1 |
| Xpeng HK | 9868 HK Equity | 0.1 |
| Weibo HK | 9898 HK Equity | 1.2 |
| Li Auto HK | 2015 HK Equity | 3.2 |
| Nio Auto HK | 9866 HK Equity | -6 |
| Zhihu HK | 2390 HK Equity | -1.4 |
| KE HK | 2423 HK Equity | -0.6 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.5 |
| Meituan HK | 3690 HK Equity | -0.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -0.8 |
| ALIBABA GROUP HOLDING LTD | 2.1 |
| YANGTZE OPTICAL FIBRE AND-H | -7.5 |
| SEMICONDUCTOR MANUFACTURI-H | 4.6 |
| GUOTAI JUNAN INTERNATIONAL | 27.7 |
| XIAOMI CORP-CLASS B | -1.5 |
| BYD CO LTD-H | 3.2 |
| POP MART INTERNATIONAL GROUP | -1.2 |
| MEITUAN-CLASS B | -0.5 |
| DEEPEXI TECHNOLOGY CO LTD-H | 48.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 6 |
| EOPTOLINK TECHNOLOGY INC L-A | 6.6 |
| LUXSHARE PRECISION INDUSTR-A | 5.6 |
| CONTEMPORARY AMPEREX TECHN-A | 6.7 |
| SUZHOU DONGSHAN PRECISION-A | 8.8 |
| SUZHOU TFC OPTICAL COMMUNI-A | 3.5 |
| GIGADEVICE SEMICONDUCTO-CL A | 5.8 |
| VICTORY GIANT TECHNOLOGY -A | 4.2 |
| SUNGROW POWER SUPPLY CO LT-A | 5.6 |
| HENGTONG OPTIC-ELECTRIC CO-A | -6 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.83 versus 6.83 yesterday
- CNY per EUR 8.01 versus 7.99 yesterday
- Yield on 10-Year Government Bond 1.81% versus 1.82% yesterday
- Yield on 10-Year China Development Bank Bond 1.92% versus 1.94% yesterday
- Copper Price 0.42%
- Steel Price -0.39%
