Hong Kong Higher, Regulators Comment On Instant Commerce, Week in Review

Week in Review

• Asian equities were mostly higher for the week as Thailand, Indonesia, and the Hang Seng Tech index outperformed, while the Philippines, India, and Malaysia ended the week lower.
• China released better-than-expected June trade data on Monday, indicating that exports to the US increased 32% month-over-month, though they remain down -16% from June 2024.
• The US government assured Nvidia that it will be granted an export license for its H20 AI chips, marking a significant reversal of some of the restrictions implemented by the Biden administration and a potential boost to China’s AI ecosystem.
• Healthcare stocks, especially biotech, outperformed this week on clinical trial progress, new drug releases, and supportive policies.

Key News

Asian equities ended the week largely higher overnight, as Hong Kong and Australia outperformed, while India underperformed.

Positive momentum is driving the Hang Seng, Hang Seng Tech, Shanghai, and Shenzhen indexes higher as growth stocks and subsectors outperformed. Hong Kong was led higher by Alibaba, which gained +2.93%, Tencent, which gained +0.39%, Xiaomi, which gained +1.51%, and Meituan, which gained +1.43%. It was a broad rally as electric vehicles did well, including NIO, which gained +4.63% on its new model release, BYD, which gained +2.1%, and CATL gained +5.61%. Nonferrous metals, oil, insurance, and technology hardware also had positive performance.

The most important news came out after the close as the State Administration for Market Regulation (SAMR) announced that it had “carried out administrative interviews and required takeaway platform enterprises to compete rationally”. SAMR met with Ele.me, which is owned by Alibaba, Meituan, and JD.com. The agency urged the companies to “strictly abide by the laws and regulations such as the e-commerce law” and the Anti-Unfair Competition Law. UBS is predicting the restaurant delivery war between Alibaba, Meituan, and JD.com will peak in August. The consequence will be higher revenue year-over-year (YoY) in Q2 financial results, though net income is going to plunge, as Meituan’s net income is predicted to fall by -27% YoY, Alibaba -5% YoY, and JD.com -42% YoY.

Mainland investors bought a net $755 million worth of Hong Kong-listed stocks and ETFs today via Southbound Stock Connect. Southbound Stock Connect volume as a percentage of Hong Kong turnover has declined indicating that maybe, just maybe, foreign investors are starting to notice the rally. A US-China trade deal would be a significant catalyst, in my opinion. Mainland China had a good day as healthcare stocks kept their positive momentum, along with beverages, non-ferrous metals, and  the chemical industry.

The Ministry of Industry and Information Technology (MIIT) held a press conference focused on ten industries’ growth and “adjusting structure, optimizing supply and eliminating backward production capacity.” Industries in focus include steel, non-ferrous metals, petrochemicals, and building materials. AI, along with copper, aluminum, and gold, were cited as focus areas as well.

The South China Morning Post wrote today that some speculate further “anti-involution” policy direction could come from the month-end Politburo meeting, though we do not know the exact date yet.

Nvidia’s Jensen Huang met with the Ministry of Commerce’s Wang Wentao on the China AI opportunity. Huang also met with the founder of privately-held AI startup Minimax, a private company valued at $4B based on recent financing details, Yan Junjie.

Unitree Robotics, known officially as Hangzhou Yushu Technology, filed paperwork with the CSRC, indicating a path to an IPO that revealed founder Wang Xingxing owns 23.8% of the company.

The National Development and Reform Commission (NDRC) held a press conference on incentivizing foreign companies to invest in China, with an emphasis on capital markets.

The People’s Bank of China (PBOC), China’s central bank, will release its decision on the Loan Prime Rate (LPR), which helps set mortgage rates, on Monday, though most expect no change at this time.

Last Night’s Performance

Country/Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	1.3%
Hang Seng Tech	HSTECH Index	1.7%
Hong Kong Turnover	HKTurn Index	1%
Hong Kong Short Sale Turnover	HKSST Index	13%
Short Turnover as a % of Hong Kong Turnover	N/A	12.6%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	0
China (Shanghai)	SHCOMP Index	0.5%
China (Shenzhen)	SZCOMP Index	0.4%
China (STAR Board)	Star50 Index	0.2%
Mainland Turnover	.chturn Index	2.1%
Nouthbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	Not Available
Jing Daily China Global Luxury Index	CHINALUX Index	0.9%
Japan	NKY Index	-0.2%
India	SENSEX Index	-0.6%
Indonesia	JCI Index	0.3%
Malaysia	FBMKLCI Index	0.3%
Pakistan	KSE100 Index	-0.1%
Philippines	PCOMP Index	0.1%
South Korea	KOSPI Index	-0.1%
Taiwan	TWSE Index	1.2%
Thailand	SET Index	0.7%
Singapore	STI Index	0.7%
Australia	AS51 Index	1.4%
Vietnam	VNINDEX Index	0.5%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	116	100
Advancing Stocks	318	2131
Declining Stocks	157	2771
Outperforming Factors	Buybacks, Quality, Momentum	Buybacks, Quality, Momentum
Underperforming Factors
Top Sectors	Materials, Discretionary, Financials	Materials, Healthcare, Staples
Bottom Sectors		Tech
Top Subsectors	Electrical Equipment, Media/Entertainment, Non-Ferrous Metals	Base Metals, Fertilizer/Pesticides, Precious Metals
Bottom Subsectors	Consumer Durables, Household/Personal Products, Consumer Services	Motorcycle, Electronic Components, Computer Hardware
Southbound Connect Buys	SMIC (Moderate), Alibaba, Kingsoft, Meituan (Small)	N/A
Southbound Connect Sells	Guotai Junan, Hao Tian International, Tencent, Xiaomi (Small)	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	152	1.46
Communication Services	9	0.76
Consumer Discretionary	30	1.94
Consumer Staples	13	1.74
Energy	7	1.24
Financials	23	1.83
Health Care	13	0.98
Industrials	19	1.73
Information Technology	10	1.23
Materials	10	2.72
Real Estate	6	1.24
Utilities	12	0.49
Mainland China Listed	432	0.75
Communication Services	9	0.15
Consumer Discretionary	31	0.21
Consumer Staples	27	1.3
Energy	16	0.8
Financials	63	0.67
Health Care	40	1.42
Industrials	69	0.93
Information Technology	85	-0.29
Materials	68	2.21
Real Estate	7	1.15
Utilities	17	0.44

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	0.4
Alibaba HK	9988 HK Equity	2.9
JD.com HK	9618 HK Equity	3
NetEase HK	9999 HK Equity	2.5
Yum China HK	9987 HK Equity	3
Baozun HK	9991 HK Equity	4.1
Baidu HK	9888 HK Equity	0.5
Autohome HK	2518 HK Equity	-0.8
Bilibili HK	9626 HK Equity	4.1
Trip.com HK	9961 HK Equity	0.9
EDU HK	9901 HK Equity	1
Xpeng HK	9868 HK Equity	1.2
Weibo HK	9898 HK Equity	0.9
Li Auto HK	2015 HK Equity	0.3
Nio Auto HK	9866 HK Equity	4.6
Zhihu HK	2390 HK Equity	3.6
KE HK	2423 HK Equity	2.3
Tencent Music Entertainment HK	1698 HK Equity	2.2
Meituan HK	3690 HK Equity	1.4

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
ALIBABA GROUP HOLDING LTD	2.9
TENCENT HOLDINGS LTD	0.4
XIAOMI CORP-CLASS B	1.5
MEITUAN-CLASS B	1.4
KINGSOFT CLOUD HOLDINGS LTD	8.7
KUAISHOU TECHNOLOGY	2.2
GUOTAI JUNAN INTERNATIONAL	1.3
SEMICONDUCTOR MANUFACTURI-H	1.7
CHINA CONSTRUCTION BANK-H	1.9
POP MART INTERNATIONAL GROUP	-1.8

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
CHINA NORTHERN RARE EARTH -A	9.9
EOPTOLINK TECHNOLOGY INC L-A	-0.6
ZHONGJI INNOLIGHT CO LTD-A	2.1
VICTORY GIANT TECHNOLOGY -A	-4.6
SHIJIAZHUANG CHANGSHAN BEI-A	1.1
CNPC CAPITAL CO LTD-A	6
SUZHOU DONGSHAN PRECISION-A	-2
WANHUA CHEMICAL GROUP CO -A	8.3
EAST MONEY INFORMATION CO-A	-0.3
KWEICHOW MOUTAI CO LTD-A	1.5

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 7.18 versus 7.18 yesterday
• CNY per EUR 8.36 versus 8.32 yesterday
• Yield on 10-Year Government Bond 1.67% versus 1.66% yesterday
• Yield on 10-Year China Development Bank Bond 1.72% versus 1.72% yesterday
• Copper Price 0.53%
• Steel Price 1.02%