Hong Kong Rises Despite AI Anxiety
5 Min. Read Time
Key News
Asian equities were lower on continued Middle East tensions, the rising probability of a US rate hike on Wednesday, and Anthropic’s CEO saying that he is concerned AI development is moving too fast. These factors weighed on markets heavily skewed towards historical AI winners, such as Korea, Japan, Taiwan, and Mainland China’s Science and Technology (STAR) Board. Meanwhile, India was closed for Ganesh Chaturthi, which celebrates the appearance of the Hindu deity Ganesha.
AI-related subsectors, including semiconductors, semiconductor equipment, technology hardware, electronic equipment, and communication equipment, were all weak in both Hong Kong and Mainland China. Banks, oil & gas, and healthcare were also lower. However, biotech firm Akeso gained +5.98% overnight on positive cancer drug trials.
Both Hong Kong opened lower but grinded higher to mitigate losses and, in the case of Hong Kong, close in the green. Mainland investors bought a net $570 million worth of Hong Kong-listed stocks via Southbound Stock Connect.
Auto stocks were strong overnight. One potential catalyst was President Trump’s comments on possibly allowing China-based automakers to build cars and sell them in the US. Another potential support factor for the industry was Friday’s release of the Five-Year Plan on raising electric vehicle (EV) sales. Battery giant CATL gained +0.27% in Hong Kong and +2.00% in Mainland China, after Friday’s announcement of a RMB 200 million share buyback.
Appliance makers Haier, which gained +1.94%, and Midea, which gained +0.81%, benefited from policy announcements overnight. Eight government agencies jointly released the “Action Plan for Promoting Smart Home Consumption”, which placed particular emphasis on domestically produced high-tech appliances.
AI model maker Z.ai fell -9.08% following Friday’s $5 billion private placement and convertible bond issuance.
US-listed E-Commerce company PDD Holdings has started selling its own brand of home and apparel goods in Japan and Canada.
Mainland China was off as value plays outperformed. Meanwhile, several of the Mainland-listed China equity ETFs favored by China's "National Team", i.e., investment firms associated with China's sovereign wealth, experienced a pick-up in volumes, as several have started to see inflows. It was a very quiet night otherwise!
The qualified domestic institutional investor (QDII) program allows domestic mutual funds to buy foreign stocks. Overnight, these funds were granted permission to bring in new investors’ capital. However, the additional amounts appear to be very small. Officials could be worried about the expansion causing selling pressure on CNY.
August Credit Data Release Overview
- August New Loans year-to-date (YTD) were RMB 10.44 trillion versus July’s RMB 10.39 trillion and expectations of RMB 10.78 trillion.
- Aggregate Financing YTD was RMB 23.91 trillion versus July's RMB 22.25 trillion, and expectations of RMB 24.37 trillion.
- M2 increased +7.5% YoY as household deposits increased by RMB 6.00 trillion.
The data support our belief that supply is not the issue, but rather the lack of demand. Tomorrow, Retail Sales, Industrial Production, Fixed Asset Investment, and New & Existing Home sales will be released.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.5% |
| Hang Seng Tech | HSTECH Index | -0.1% |
| Hong Kong Turnover | HKTurn Index | -15.7% |
| Hong Kong Short Sale Turnover | HKSST Index | -4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 571.07 |
| China (Shanghai) | SHCOMP Index | -0.1% |
| China (Shenzhen) | SZCOMP Index | -0.1% |
| China (STAR Board) | Star50 Index | -1.6% |
| Mainland Turnover | .chturn Index | -17.3% |
| Japan | NKY Index | -0.8% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | -0.1% |
| Malaysia | FBMKLCI Index | 0.7% |
| Pakistan | KSE100 Index | -1.5% |
| Philippines | PCOMP Index | 0.2% |
| South Korea | KOSPI Index | -3.3% |
| Taiwan | TWSE Index | -0.7% |
| Thailand | SET Index | -0.8% |
| Singapore | STI Index | 0.4% |
| Australia | AS51 Index | 0.1% |
| Vietnam | VNINDEX Index | -0.4% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 71 | 66 |
| Advancing Stocks | 242 | 3790 |
| Declining Stocks | 329 | 2155 |
| Outperforming Factors | ESG Score, Buyback, Quality | Low Volatility, Dividend Yield, Value |
| Underperforming Factors | Growth, Momentum, Liquidity | Momentum, EPS Revision, Growth |
| Top Sectors | Healthcare, Utilities, Financials | Healthcare, Discretionary, Financials |
| Bottom Sectors | Materials, Energy, Real Estate | Tech, Communication, Energy |
| Top Subsectors | Pharmaceuticals, Auto, Banks | Motorcycle, Biotech, Pharmaceutical |
| Bottom Subsectors | Semis, Tech Hardware, Coal | Education, Communication Equipment, Agricultural |
| Southbound Connect Buys | Z AI (Large), YOFC (Small) | N/A |
| Southbound Connect Sells | SMIC (Moderate), Alibaba (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.27 |
| Communication Services | 11 | 0.35 |
| Consumer Discretionary | 28 | -0.34 |
| Consumer Staples | 13 | -0.07 |
| Energy | 6 | -1.07 |
| Financials | 25 | 0.61 |
| Health Care | 16 | 3.84 |
| Industrials | 22 | -0.36 |
| Information Technology | 12 | 0.31 |
| Materials | 14 | -1.58 |
| Real Estate | 7 | -0.45 |
| Utilities | 11 | 1.48 |
| Mainland China Listed | 386 | -0.58 |
| Communication Services | 8 | -1.48 |
| Consumer Discretionary | 26 | 0.77 |
| Consumer Staples | 19 | 0.09 |
| Energy | 12 | -1.29 |
| Financials | 64 | 0.36 |
| Health Care | 31 | 2.14 |
| Industrials | 58 | 0.12 |
| Information Technology | 95 | -2.15 |
| Materials | 52 | -0.35 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.5 |
| Alibaba HK | 9988 HK Equity | -1.5 |
| JD.com HK | 9618 HK Equity | -0.2 |
| NetEase HK | 9999 HK Equity | 0 |
| Yum China HK | 9987 HK Equity | -0.9 |
| Baozun HK | 9991 HK Equity | -0.3 |
| Baidu HK | 9888 HK Equity | 0.2 |
| Autohome HK | 2518 HK Equity | -3.1 |
| Bilibili HK | 9626 HK Equity | -0.1 |
| Trip.com HK | 9961 HK Equity | 1.6 |
| EDU HK | 9901 HK Equity | 2.8 |
| Xpeng HK | 9868 HK Equity | 1.6 |
| Weibo HK | 9898 HK Equity | 0.9 |
| Li Auto HK | 2015 HK Equity | 2.5 |
| Nio Auto HK | 9866 HK Equity | 2.9 |
| Zhihu HK | 2390 HK Equity | 0.1 |
| KE HK | 2423 HK Equity | -0.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2.6 |
| Meituan HK | 3690 HK Equity | -0.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| Z AI CO LTD | -9.1 |
| ALIBABA GROUP HOLDING LTD | -1.5 |
| TENCENT HOLDINGS LTD | 0.5 |
| YANGTZE OPTICAL FIBRE AND-H | -4.1 |
| SEMICONDUCTOR MANUFACTURI-H | -2.9 |
| XIAOMI CORP-CLASS B | 3 |
| KINGBOARD LAMINATES HLDG LTD | -3.6 |
| LENOVO GROUP LTD | 2.7 |
| CHINA CONSTRUCTION BANK-H | 1.4 |
| MINIMAX GROUP INC | -6.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -5.7 |
| EOPTOLINK TECHNOLOGY INC L-A | -5 |
| GUANGDONG FENGHUA ADVANCED-A | 5.2 |
| CHINA JUSHI CO LTD -A | 1.4 |
| SUZHOU DONGSHAN PRECISION-A | -4.8 |
| CXMT CORP-A | -3.9 |
| GIGADEVICE SEMICONDUCTO-CL A | -3.9 |
| CHAOZHOU THREE-CIRCLE GROU-A | 1.2 |
| CONTEMPORARY AMPEREX TECHN-A | 2 |
| CAMBRICON TECHNOLOGIES-A | 0 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.71 versus 6.71 yesterday
- CNY per EUR 7.75 versus 7.78 yesterday
- Yield on 10-Year Government Bond 1.69% versus 1.69% yesterday
- Yield on 10-Year China Development Bank Bond 1.77% versus 1.77% yesterday
- Copper Price -0.43%
- Steel Price -0.64%
