Healthcare & Internet Stocks Drive Hong Kong Higher
6 Min. Read Time
Key News
Asian equities had a strong day on light volumes, as Middle East peace optimism and a weaker US dollar led to several markets rising by 1% or more, including Taiwan, South Korea, Hang Seng Tech, India, Vietnam, and Pakistan. Thailand was closed (again) for Songkran.
Hong Kong was led by growth stocks, with a strong emphasis on healthcare, following the State Council and multiple healthcare agencies releasing “The Opinions on Improving the Formation of Drug Prices”. The rules allow for fast-tracking of “innovative” drugs, along with pricing rules that should facilitate wider adoption. Hong Kong- and Mainland-listed pharmaceutical and biotech stocks ripped higher, led in Hong Kong by Innovement Biologics (+5.91%), 2SBio (+8.16%), and Akeso (+6.89%).
Hong Kong internet stocks had a strong day, led by JD.com, which rose by +4.59% after one analyst raised their price target and another upgraded the stock. Government regulators have been discussing ending the restaurant delivery war, which would help curb losses for JD, Meituan, and other E-Commerce companies. There has been talk that the regulators could fine the companies in a strong signal to end the self-destructive behavior (subsidies have wreaked havoc on net income and EPS) following the April 9th release by the State Administration for Market Regulation, the National Development and Reform Commission, and the Cyberspace Administration of China.
The groups jointly guided platform companies to implement the "Rules on Pricing Behavior of Internet Platforms”. Remember, the regulator isn’t doing this to help investors but to help Mom-and-Pop restaurants that can’t convince anyone to eat out, thus hurting their profits, since delivery subsidies are so significant.
Alibaba gained +3.29%, Hong Kong’s most heavily traded by value, after announcing cloud pricing will increase for the DDoS High Defense and DDoS Native Protection 2.0 services, and the launch of their Qwen AI Glasses S1 at a price of RMB 3,499. Tencent, the 2nd most heavily traded by value, gained +1.18%.
Tech hardware giant Huaqin (603296 CH) will list in Hong Kong on April 23rd after selling $580 million of shares to investors. A Hong Kong government leader, Lee, mentioned that there are 500 companies in the HKeX at various stages of listing, with the majority from tech sectors such as AI, robotics, and semis.
Oil and gas were weak in both markets, along with auto stocks, which could be related to export data. The Mainland was also weighed down by insurance and tech hardware stocks, though banks had a good day. The Mainland-listed China equity ETFs favored by the National Team had below-average volumes, suggesting a lack of support, yet the market has remained quite resilient without them. Interesting that these ETFs continue to see outflows.
March Exports softened to 2.5% YoY versus expectations of 8.6% while Imports were up +27.8% YoY versus expectations of 13.9%. Notice any headlines about the strong increase in imports? Nope, it was all negative on exports. President Xi met with Vietnam’s President Su Lin and Russian Foreign Minister Lavrov.
I recently stumbled upon the work of the Oxford Institute for Energy Studies, which did excellent work on countries/regions' dependence on Middle East oil and LNG. Great data as opposed to hyperbole. In reading their January 2023 report titled “Nuclear Power in China: its role in national energy policy” the very first sentence jumped out to me. “China has the world’s third largest fleet of civil nuclear power reactors after the United States and France. In June 2022, the 54 operable reactors had a total capacity of 55.8 Gigawatt electric power (GWe). This was only marginally less than France’s 56 operable reactors totaling 61.4 GWe. A further 23.5 GWe of capacity was under construction in late 2022, nearly 40% of the global total. In 2021, nuclear power provided roughly 4.8% of China’s electricity supply, 2.3% of primary commercial energy supply, and 25% of non-hydro, low-carbon electricity.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.3% |
| Hang Seng Tech | HSTECH Index | 1.2% |
| Hong Kong Turnover | HKTurn Index | 3.7% |
| Hong Kong Short Sale Turnover | HKSST Index | 1.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.4% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 539.04 |
| China (Shanghai) | SHCOMP Index | 0% |
| China (Shenzhen) | SZCOMP Index | -0.7% |
| China (STAR Board) | Star50 Index | 0.1% |
| Mainland Turnover | .chturn Index | 1.2% |
| Japan | NKY Index | 0.4% |
| India | SENSEX Index | 1.6% |
| Indonesia | JCI Index | -0.7% |
| Malaysia | FBMKLCI Index | -0.3% |
| Pakistan | KSE100 Index | 1.9% |
| Philippines | PCOMP Index | 0.8% |
| South Korea | KOSPI Index | 2.1% |
| Taiwan | TWSE Index | 1.2% |
| Thailand | SET Index | Closed |
| Singapore | STI Index | 0.3% |
| Australia | AS51 Index | 0.1% |
| Vietnam | VNINDEX Index | 1.4% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 96% | 121% |
| Advancing Stocks | 273 | 1806 |
| Declining Stocks | 226 | 3233 |
| Outperforming Factors | Liquidity, Growth, Momentum | Low Volatility, Dividend Yield, Value |
| Underperforming Factors | Low Volatility, Dividend Yield, Small Caps | Liquidity, Momentum, EPS Revision |
| Top Sectors | Healthcare, Discretionary, Communication | Heartcare, Staples, Utilities |
| Bottom Sectors | Energy, Utilities, Real Estate | Materials, Tech, Real Estate |
| Top Subsectors | Pharmaceuticals, Consumer Discretionary Distribution, Consumer Staples Distribution | Pharmaceutical, Aviation, Highway |
| Bottom Subsectors | Petroleum, Auto, Chemical | Fertilizer, Energy Equipment, Cultural Media |
| Southbound Connect Buys | Pop Mart, SMIC (Moderate), CNOOC (Small) | N/A |
| Southbound Connect Sells | Alibaba, Tencent, YOFC (Moderate) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | 0.87 |
| Communication Services | 11 | 1.32 |
| Consumer Discretionary | 28 | 1.52 |
| Consumer Staples | 12 | 0.75 |
| Energy | 6 | -1.56 |
| Financials | 25 | -0.17 |
| Health Care | 16 | 3.68 |
| Industrials | 19 | 0.73 |
| Information Technology | 15 | -0.1 |
| Materials | 14 | -0.08 |
| Real Estate | 1 | -0.27 |
| Utilities | 6 | -0.37 |
| Mainland China Listed | 11 | -0.4 |
| Communication Services | 11 | -0.67 |
| Consumer Discretionary | 26 | -0.26 |
| Consumer Staples | 18 | 0.77 |
| Energy | 11 | -0.44 |
| Financials | 64 | 0.32 |
| Health Care | 29 | 1.23 |
| Industrials | 60 | -0.35 |
| Information Technology | 113 | -1.11 |
| Materials | 58 | -1.63 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 1.2 |
| Alibaba HK | 9988 HK Equity | 3.3 |
| JD.com HK | 9618 HK Equity | 4.6 |
| NetEase HK | 9999 HK Equity | 1.4 |
| Yum China HK | 9987 HK Equity | -0.4 |
| Baozun HK | 9991 HK Equity | 1.4 |
| Baidu HK | 9888 HK Equity | 3.1 |
| Autohome HK | 2518 HK Equity | -0.7 |
| Bilibili HK | 9626 HK Equity | 2.2 |
| Trip.com HK | 9961 HK Equity | 3.2 |
| EDU HK | 9901 HK Equity | -5.9 |
| Xpeng HK | 9868 HK Equity | 1.3 |
| Weibo HK | 9898 HK Equity | 1.4 |
| Li Auto HK | 2015 HK Equity | -2.9 |
| Nio Auto HK | 9866 HK Equity | -0.9 |
| Zhihu HK | 2390 HK Equity | 1 |
| KE HK | 2423 HK Equity | 0.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | 3.3 |
| Meituan HK | 3690 HK Equity | 1.4 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | 3.3 |
| TENCENT HOLDINGS LTD | 1.2 |
| POP MART INTERNATIONAL GROUP | 1.2 |
| YANGTZE OPTICAL FIBRE AND-H | -5 |
| SEMICONDUCTOR MANUFACTURI-H | 2.3 |
| CNOOC LTD-H | -1.4 |
| AIA GROUP LTD | -3.6 |
| XIAOMI CORP-CLASS B | 0.1 |
| MEITUAN-CLASS B | 1.4 |
| JD.COM INC-CLASS A | 4.6 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 0.9 |
| EOPTOLINK TECHNOLOGY INC L-A | -4.4 |
| CONTEMPORARY AMPEREX TECHN-A | 0 |
| CAMBRICON TECHNOLOGIES-A | 2.6 |
| HGTECH CO LTD-A | -6.9 |
| SUZHOU TFC OPTICAL COMMUNI-A | -4.4 |
| VICTORY GIANT TECHNOLOGY -A | -4.1 |
| WUS PRINTED CIRCUIT KUNSHA-A | -4.9 |
| SUNGROW POWER SUPPLY CO LT-A | -4 |
| SUZHOU DONGSHAN PRECISION-A | -0.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.82 versus 6.82 yesterday
- CNY per EUR 8.03 versus 8.04 yesterday
- Yield on 10-Year Government Bond 1.78% versus 1.78% yesterday
- Yield on 10-Year China Development Bank Bond 1.88% versus 1.88% yesterday
- Copper Price +1.57%
- Steel Price +0.16%
