Hong Kong Stocks Catch Their Breath
6 Min. Read Time
Key News
Asian equities were mixed, as Japan and Taiwan outperformed, while Singapore, Malaysia, and the Philippines underperformed. Hong Kong took a breather after last week’s sprint higher on light volume, as the market faded throughout the trading day.
Mainland investors bought the dip in Hong Kong via Southbound Stock Connect with $236 million worth of net buying. Alibaba fell -0.29% despite chatter that their AI chip unit T-Head could go public in Q1 of 2026 and raise $2 billion to $3 billion. With IPOs put on hold, the delay is not surprising, as we hope to get clarity during next Thursday’s financial results.
An analyst downgrade of Meituan, which fell -6.53%, JD.com, which fell -0.88%, and PDD Holdings on competition pressures likely weighed on Hong Kong sentiment overnight. It was certainly an interesting move to downgrade right before financial results start coming in next week.
Banks and coal gave the day a value bias as winter arrived in northern China. Autos, such as BYD fell -2.29% and battery giant CATL fell -2.68% after the China Passenger Car Association (CPCA) announced that October auto sales fell -27.3% year-over-year (YoY). However, auto sales are up +2.3% from September, reaching 1.65 million units, as hybrid and fully electric vehicles accounted for 1.11 million units or 67.5% of sales.
Healthcare outperformed (again)! Mainland China also had light volumes as banks, coal, and non-ferrous metals all outperformed. The AI supply chain was largely higher, though memory giant CXMT fell -1.0%. Meanwhile, semiconductors were mixed, electronic equipment was stronger, and communications equipment was higher, as YOFC gained +5.83%, Innolight gained +0.90%, and Eoptolink gained +2.27%.
It was unclear whether the Nvidia rumors about spying were a factor in last night's performance. China’s Ministry of Foreign Affairs spokesperson, when asked about it, stated that the “so-called "Chinese spy" claim is pure fabrication and slander.”
Unitree gained +9.04% after announcing a partnership with PetroChina, which fits with our belief that humanoid robots are perfect for dangerous jobs. Apple announced that it tested its HALO humanoid robot system on a Unitree G1. The news lifted the Hong Kong-listed robot maker UB Tech, which gained +8.99%.
The ETFs favored by China's "National Team", i.e. investment firms associated with sovereign wealth, had below-average volumes. However, one mid-cap ETF saw significant flow. None of the ETFs breached the RMB 10 billion value-traded level today. 18 domestic equity ETFs listed in China have had more than $1 billion worth of net inflow in the last month On Friday, these same 18 ETFs had $1.07 billion worth of net inflow. One STAR Board ETF garnered nearly 50% of the inflow, or $464 million. These 18 ETFs have had $76 billion worth of net inflow in the last month.
October's producer price index (PPI) rose 5.7% YoY versus September’s 5% and expectations of 5.3%, driven higher by mining prices, which increased 25.4%, raw materials prices, which increased 9.4%,consumer durables prices, which increased 1.6%, and manufacturing costs, which increased 3.4%. October's consumer price index (CPI) rose 0.7% YoY versus September’s 0.9% and expectations of 0.9%, led by transportation and communication, which both increased 5.5% while food prices declined -1.6%.
The Customs Tariff Commission extended the easing of tariffs on US imports, eloquently stating tariffs “will be suspended for 24% of the total amount of goods imported from the United States within two months, and 10% of the total amount of goods subject to tariff will be retained.”
Real estate platform KE Holdings (US Ticker: BEKE) bought back 237,444 shares.
Last Night's Performance
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.67 versus 6.67 yesterday
- CNY per EUR 7.47 versus 7.44 yesterday
- Yield on 10-Year Government Bond 1.59% versus 1.59% yesterday
- Yield on 10-Year China Development Bank Bond 1.64% versus 1.64% yesterday
- Copper Price 0.23%
- Steel Price -0.07%
