China Stimulus?! So You Are Saying There Is A Chance!

Key News

Mainland equities ended the month and the quarter largely lower, but Japan outperformed, while Thailand and the Philippines underperformed. Today was the last trading day in Mainland China for a week, while Hong Kong will be closed tomorrow and reopen on Friday. Three important items to discuss today:

Several local desks noted the market’s reaction to potential Chinese government policy, which helped to overcome negative macro issues. Hong Kong opened lower, mirroring the performance of US-listed China stocks yesterday. However, the market rallied into the close, while the Mainland market mitigated intraday losses.

Although US-China relations are improving, i.e. there are potentially two more Trump-Xi meetings this year, stabilizing the real estate sector domestically is key to unlocking a bull market and enticing foreign investors because of its knock-on effect on consumption. Overnight, Mainland media reported that the State Council’s Financial Stability and Development Committee held an “emergency meeting” to urge local governments to implement real estate policy reforms. Clearly, policy is pivoting, which is a welcome sign. Separately, the National Development and Reform Commission (NDRC) and the Ministry of Finance (MoF) announced that the 4th round of RMB 62.5 billion in ultra-long Treasury bonds will be issued for consumer trade-in subsidies, bringing this year’s total to RMB 250 billion.

September PMIs were better than expected and improved month-over-month. The “official” PMI survey, which is conducted by the National Bureau of Statistics, for Manufacturing was 50.1 from August’s 49.8 and expectations of 50.1, while the Non-Manufacturing PMI was 50.2 from August’s 49 and expectations of 49.2. The “private” PMI survey, which is conducted by S&P, saw the Manufacturing PMI improve to 52.1 from August’s 51.5, versus expectations of 51.7, while the Services PMI was 51.6, versus August’s 51.4 and expectations of 51.3. It is worth noting that export orders were not the primary driver of growth in September, as had been the case in the prior few months.

Healthcare stocks had another strong day as another blockbuster drug announcement was made following yesterday’s Akeso and AstraZeneca partnership. Novo Nordisk announced it will pay Mainland-listed Jiangsu Hengrui, which gained +3.36%, potentially up to $2.6 billion to license its GLP-1 obesity drug internationally. At the same time a Mainland media outlet stated that the Hong Kong-listed Sinopharm, which gained +0.81%, had received FDA approval for a shingles vaccine. I suspect the timing of these announcements, i.e. directly following the Trump-Xi summit, is not coincidental.

Real estate stocks were initially hit by profit-taking following yesterday’s mortgage reform, but they rallied to limit losses as further property support made the rounds. Steel and copper rallied, which is something to keep an eye on.

The International Data Corporation (IDC) released a report on China's AI cloud market. According to the IDC, Baidu, which gained +1.02% overnight, controlled 8% of China’s $9.9 billion AI cloud market in 2025. Alibaba, which gained +0.38% overnight, had a 30% market share.

The Central Internet Information Office said it will crack down on fake AI online videos, which seems logical. Mainland-listed AI supply chain sub-sectors were lower, despite a strong up day in the market, as the Science and Technology (STAR) Board declined by -2.51% versus the Shanghai Composite, which was up +0.37%, and the Shenzhen Component, which was down -0.23%.

President Xi wrote an article in the Qiushi Journal titled "Strengthening the Construction of Inclusive, Basic and Foundational People". The article stated that the purpose of the government and the economy is to benefit the people.

Hong Kong-listed buybacks that took place today, but were announced after the close, included share repurchases from Tencent, which bought back 234,000 shares, Baidu, which bought back 586,600 shares, and KE Holdings, which bought back 546,189 shares.

Last Night's Performance

Country / Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	0.4%
Hang Seng Tech	HSTECH Index	0.1%
Hong Kong Turnover	HKTurn Index	1.4%
Hong Kong Short Sale Turnover	HKSST Index	-13.2%
Short Turnover as a % of Hong Kong Turnover	N/A	0.2254
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	876.58
China (Shanghai)	SHCOMP Index	0.3%
China (Shenzhen)	SZCOMP Index	-0.2%
China (STAR Board)	Star50 Index	-2.5%
Mainland Turnover	.chturn Index	2.1%
Japan	NKY Index	1.9%
India	SENSEX Index	-0.1%
Indonesia	JCI Index	-0.8%
Malaysia	FBMKLCI Index	0.4%
Pakistan	KSE100 Index	0.2%
Philippines	PCOMP Index	-1%
South Korea	KOSPI Index	-0.5%
Taiwan	TWSE Index	0.6%
Thailand	SET Index	-2.2%
Singapore	STI Index	-0.7%
Australia	AS51 Index	0.9%
Vietnam	VNINDEX Index	-0.5%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	71%	61%
Advancing Stocks	386	2428
Declining Stocks	177	2597
Outperforming Factors	Growth, Liquidity, ESG Score	Dividend Yield, Low Volatility, ESG Score
Underperforming Factors	None	Liquidity, EPS Revision, Growth
Top Sectors	Pharmaceutical/Biotech, Media/Entertainment, Steel	Healthcare, Staples, Energy
Bottom Sectors	Semis, Consumer Durables/Apparel, Tech Hardware	Tech, Real Estate
Top Subsectors	Healthcare, Materials, Utilities	Biotech, Pharmaceutical, Liquor
Bottom Subsectors	Tech, Energy, Real Estate	Semis, Electronic Components, Computer Hardware
Southbound Connect Buys	Tencent (Large), Wuxi Biologics (Small)	N/A
Southbound Connect Sells	Minimax, SMIC (Large), Z AI (Small)	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	152	0.54
Communication Services	7	-0.07
Consumer Discretionary	27	0.35
Consumer Staples	12	0.53
Energy	7	-0.15
Financials	24	0.63
Health Care	15	3.97
Industrials	16	0.51
Information Technology	14	-0.31
Materials	14	1.35
Real Estate	6	-0.15
Utilities	10	1.06
Mainland China Listed	419	0.16
Communication Services	9	0.16
Consumer Discretionary	21	0.66
Consumer Staples	16	1.69
Energy	11	1.14
Financials	60	1.12
Health Care	26	3.03
Industrials	62	0.9
Information Technology	126	-1.72
Materials	69	0.46

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	-0.2
Alibaba HK	9988 HK Equity	0.4
JD.com HK	9618 HK Equity	1.2
NetEase HK	9999 HK Equity	-0.1
Yum China HK	9987 HK Equity	0.5
Baozun HK	9991 HK Equity	0.1
Baidu HK	9888 HK Equity	1.1
Autohome HK	2518 HK Equity	-1.4
Bilibili HK	9626 HK Equity	1.4
Trip.com HK	9961 HK Equity	0.4
EDU HK	9901 HK Equity	-1
Xpeng HK	9868 HK Equity	1
Weibo HK	9898 HK Equity	-0.6
Li Auto HK	2015 HK Equity	1.1
Nio Auto HK	9866 HK Equity	-1.9
Zhihu HK	2390 HK Equity	-1.3
KE HK	2423 HK Equity	0.4
Tencent Music Entertainment HK	1698 HK Equity	-2.7
Meituan HK	3690 HK Equity	1.8

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
TENCENT HOLDINGS LTD	-0.2
ALIBABA GROUP HOLDING LTD	0.4
SEMICONDUCTOR MANUFACTURI-H	-0.7
XIAOMI CORP-CLASS B	0.2
AIA GROUP LTD	-0.4
WUXI BIOLOGICS CAYMAN INC	4.8
KINGBOARD LAMINATES HLDG LTD	-0.3
MEITUAN-CLASS B	1.8
CHINA CONSTRUCTION BANK-H	1.3
LENOVO GROUP LTD	-2.6

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
VISUAL CHINA GROUP CO LTD-A	-1.5
SHANTUI CONSTRUCTION MACHI-A	2.7
ZHONGJI INNOLIGHT CO LTD-A	-0.6
EOPTOLINK TECHNOLOGY INC L-A	-1
HENGTONG OPTIC-ELECTRIC CO-A	-3.9
CAMBRICON TECHNOLOGIES-A	-3.5
GIGADEVICE SEMICONDUCTO-CL A	-3.7
CONTEMPORARY AMPEREX TECHN-A	1.5
LYGEND RESOURCES & TECHNOL-A	206.6
SUZHOU TFC OPTICAL COMMUNI-A	1.9

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 6.70 versus 6.70 yesterday
• CNY per EUR 7.61 versus 7.61 yesterday
• Yield on 10-Year Government Bond 1.68% versus 1.67% yesterday
• Yield on 10-Year China Development Bank Bond 1.76% versus 1.74% yesterday
• Copper Price +0.25%
• Steel Price +0.23%