5-Point Consensus On Trump-Xi Summit
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Key News
Asian equities were mixed but mostly lower overnight as Hong Kong and Singapore outperformed, while Mainland China's STAR (Science & Technology) Board and Shenzhen Component Index underperformed.
China's AI supply chain was hit with profit taking in advance of the Mainland’s market holiday that will begin on Thursday and last until next week, as the market will reopen next Thursday. Hong Kong will only be closed this Thursday, though we should anticipate volumes will decline. Mainland investors were net sellers of Hong Kong-listed stocks and ETFs via Southbound Stock Connect, as Hong Kong-listed ETFs saw positions unwound.
One factor in today’s AI drawdown was the US Senate introducing the Securing National Security Systems from Chinese Optical Transceivers Act, which would ban Chinese optical network companies, including Zhongji Innolight, which fell -9.03% in Mainland China and -12.21% in Hong Kong. Hengtong Optic also fell -10% after annuncing a private placement. The selling, in advance of the week long holiday, hit similar names like YOFC, which fell -16.42% and Kingboard Laminates, which fell -10.01% in Hong Kong, while the Mainland's Science and Technology (STAR) Board fell -4.06%, as semiconductors underperformed.
Tencent gained +0.73% and was Hong Kong’s most heavily traded stock by value, while Alibaba fell -0.65%. Hong Kong held up better than the Mainland, as non-ferrous metals underperformed in both markets. Battery giant CATL fell -0.98%, despite the Ministry of Industry and Information Technology (MIIT) releasing 15th Five-Year Plan for the Development of the New-type Battery Industry. It was a fairly quiet day, overall!
Mainland media released its takeaways on the Trump-Xi summit overnight. The coverage was exceedingly positive, versus almost non-existent here in the US. With two more Trump Xi meetings at the APEC and G20, one would have thought that more good news is likely, as the relationship goes from stabilization to improving. The two sides agreed to "a constructive strategic and stable relationship between China and the United States based on respect, fairness, and reciprocity." This is a big improvement from the previous administration, in my opinion. Those US business executives were at the White House dinner for a reason, after all!
China's media outlets highlighted the below five-point consensus following President Trump and President Xi’s meeting:
- Establish the China-US Trade Council
- "$30 Billion vs. $30 Billion" Matching Tariff Reduction
- Establish Agricultural Working Group
- Increase China's Import of US Coal
- Increase Direct Passenger Flights
Premier Li and the State Council meeting today include studying “the work of macro policies to improve efficiency and promote effective investment”. The release acknowledged “the problems emerging in the current economic operation”, which is why iit is “necessary to increase the counter-cyclical adjustment of macro policies
The State-Owned Assets Supervision and Administration (SASAC) issued the 15th Five-Year Plan for central state-owned enterprises (SOEs), targeting a 5% increase in "strategic emerging industries" as a percentage of SOE revenues through 2030. the goal is to be supported by nearly RMB 2 trillion in investments.
Tencent bought back 227,000 shares overnight for a total cost of HKD 100 million. Baidu also bought back 583,700 shares, and Kuaishou bought back 326,000 shares.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.5% |
| Hang Seng Tech | HSTECH Index | -0.4% |
| Hong Kong Turnover | HKTurn Index | 73.7% |
| Hong Kong Short Sale Turnover | HKSST Index | 35.6% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 19.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -837.02 |
| China (Shanghai) | SHCOMP Index | -1.7% |
| China (Shenzhen) | SZCOMP Index | -3.1% |
| China (STAR Board) | Star50 Index | -4.1% |
| Mainland Turnover | .chturn Index | 2% |
| Japan | NKY Index | -0.7% |
| India | SENSEX Index | -1.5% |
| Indonesia | JCI Index | -1.5% |
| Malaysia | FBMKLCI Index | -0.1% |
| Pakistan | KSE100 Index | -0.2% |
| Philippines | PCOMP Index | -0.6% |
| South Korea | KOSPI Index | -2.7% |
| Taiwan | TWSE Index | -0.3% |
| Thailand | SET Index | -0.3% |
| Singapore | STI Index | 0.3% |
| Australia | AS51 Index | 0.2% |
| Vietnam | VNINDEX Index | -0.2% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 39 | 70 |
| Advancing Stocks | 70 (Hang Seng) | 75 (CSI 300) |
| Declining Stocks | 25 (Hang Seng) | 218 (CSI 300) |
| Outperforming Factors | Value | Value |
| Underperforming Factors | Growth | Growth |
| Top Sectors | Real Estate, Energy, Utilities | Utilities, Health Care, Consumer Staples |
| Bottom Sectors | Information Technology, Materials, Health Care | Information Technology, Materials, Communication Services |
| Top Subsectors | Coal, Petroleum & Petrochemicals, Food | Power, Oil & Gas, Banks |
| Bottom Subsectors | Technology Hardware, Semiconductors, Non-Ferrous Metals | Communication Equipment, Computer Hardware, Electronic Components |
| Southbound Connect Buys | KB Laminates, CNOOC, MiniMax | N/A |
| Southbound Connect Sells | Tencent, SMIC, YOFC | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.22 |
| Communication Services | 11 | 1.17 |
| Consumer Discretionary | 28 | 0.08 |
| Consumer Staples | 13 | 1.95 |
| Energy | 6 | 2.2 |
| Financials | 25 | 0.83 |
| Health Care | 16 | -0.93 |
| Industrials | 22 | 0.34 |
| Information Technology | 12 | -3.55 |
| Materials | 14 | -2.41 |
| Real Estate | 7 | 2.94 |
| Utilities | 11 | 2.04 |
| Mainland China Listed | 386 | -2.44 |
| Communication Services | 8 | -2.06 |
| Consumer Discretionary | 26 | -0.54 |
| Consumer Staples | 19 | 0.24 |
| Energy | 12 | 0.07 |
| Financials | 64 | -0.78 |
| Health Care | 31 | 0.4 |
| Industrials | 58 | -1.41 |
| Information Technology | 95 | -5.29 |
| Materials | 52 | -3.05 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.7 |
| Alibaba HK | 9988 HK Equity | -0.6 |
| JD.com HK | 9618 HK Equity | 0.8 |
| NetEase HK | 9999 HK Equity | 4.9 |
| Yum China HK | 9987 HK Equity | 2 |
| Baozun HK | 9991 HK Equity | 0.7 |
| Baidu HK | 9888 HK Equity | 0.3 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | 2.8 |
| Trip.com HK | 9961 HK Equity | 1.6 |
| EDU HK | 9901 HK Equity | -0.6 |
| Xpeng HK | 9868 HK Equity | -0.9 |
| Weibo HK | 9898 HK Equity | 0.9 |
| Li Auto HK | 2015 HK Equity | 1.1 |
| Nio Auto HK | 9866 HK Equity | 1.4 |
| Zhihu HK | 2390 HK Equity | 0.6 |
| KE HK | 2423 HK Equity | 2.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2.2 |
| Meituan HK | 3690 HK Equity | 0.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 0.7 |
| YANGTZE OPTICAL FIBRE AND-H | -16.6 |
| ALIBABA GROUP HOLDING LTD | -0.6 |
| KINGBOARD LAMINATES HLDG LTD | -10 |
| SEMICONDUCTOR MANUFACTURI-H | -3.6 |
| Z AI CO LTD | -1.8 |
| XIAOMI CORP-CLASS B | -0.2 |
| MINIMAX GROUP INC | -9.1 |
| CNOOC LTD-H | 1.2 |
| ZHONGJI INNOLIGHT CO LTD-H | -12.2 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -9 |
| EOPTOLINK TECHNOLOGY INC L-A | -8.1 |
| CXMT CORP-A | -4.3 |
| GIGADEVICE SEMICONDUCTO-CL A | -6.6 |
| SUZHOU DONGSHAN PRECISION-A | -9.5 |
| CONTEMPORARY AMPEREX TECHN-A | -0.5 |
| CAMBRICON TECHNOLOGIES-A | -6.5 |
| CHINA JUSHI CO LTD -A | -8.8 |
| SUZHOU TFC OPTICAL COMMUNI-A | -8.6 |
| BOE TECHNOLOGY GROUP CO LT-A | -0.9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.71 versus 6.71 Thursday
- CNY per EUR 7.63 versus 7.65 Thursday
- Yield on 10-Year Government Bond 1.68% versus 1.67% Thursday
- Yield on 10-Year China Development Bank Bond 1.76% versus 1.76% Thursday
- Copper Price -0.27%
- Steel Price 0.45%
