Internet Companies’ AI Efforts Finally Recognized By Investors
7 Min. Read Time
China GDP Data:
- Q2 GDP was 4.3% versus Q2 2025’s 5% and expectations of 4.5%.
- GDP year-to-date (YTD) was 4.7% versus 2025’s 5% and expectations of 4.8%.
My thoughts:
1) The GDP data did not seem to be a factor in today’s trading.
2) Western media headlines are universally negative (FT “China’s economy grows at one of the lowest rates in decades”, WSJ “China’s Economy Grows at Weakest Pace Since 2022”, Bloomberg “China’s Economy Stumbles With Growth Unexpectedly Below Target”), though the GDP numbers were not that bad IMO. Yes, China’s domestic consumption remains tepid, though there is hope that policy support is coming following the State Council’s recent approval of the 15th Five-Year Plan for Expanding Consumption. The month-end Politburo would be an opportunity to announce more policy, though that is TBD. According to the National Bureau of Statistics, 40% of economic growth was due to “new growth drivers represented by high-end manufacturing, digital economy and modern services”. China is still the world's factory as yesterday’s 1st half of 2026 trade data showed with exports +13.4% to RMB 14.73T and imports +22.1% to RMB 10.74T. Remember, commodity prices influence imports. 63.5% of exports were “mechanical and electrical products,” which grew +20.1% YoY to RMB 9.36T, of which “high-tech” exports +39% YoY to RMB 3.29T.
China June Data:
- Retail Sales were 1% versus May’s -0.6% and expectations of -0.1% (auto sales +3%)
- Online Retail Sales were +4.8% and +5.2% YTD (a China Last Night exclusive as we dig into the data)
- Industrial Production YoY was 5.3% versus May’s 4.5% and expectations of 4.6%
- Electricity consumption was +3.7% YoY and +5.3% YTD
- Fixed Asset Investment YTD was -5.7% versus May’s 4.5%, and expectations of 4.6%; driven by property investment’s drop
- Property Investment YTD was -18% from May’s -16.2% and expectations -16.8%
- Residential Property Sales YTD were -13.7% from May’s -14.1%
- June New Home Prices Month over Month (MoM) were -0.15% from May’s -0.2%; 20 cities had MoM increase, which is the highest number since May 2025
- Used Home Prices MoM were -0.32% from May’s -0.26%
Key News
Apple will use AI models from Alibaba and Baidu, the company announced after the close. Today was a strong day for internet stocks in Hong Kong before the Apple news.
Asian equities had a good day, led by Korea’s rebound, as Hong Kong, Taiwan, Japan, and Singapore outperformed while Mainland China underperformed.
Mainland China and Hong Kong investors appeared to take profits in the AI supply chain sub-sectors such as semiconductors, semiconductor equipment, tech hardware, electronic equipment, and communications equipment in advance of ChangXin Memory Technologies’ (CXMT) IPO tomorrow.
The overall market was off slightly, though the Science and Technology (STAR) Board fell by -4.25%. CXMT will sell 10% of shares (6.688 billion shares) at RMB 8.66, raising RMB 29.5B ($4.36B). If the full allocation is utilized, which one would expect, the total raise will be $9.8B. In a roadshow event, the company stated: “The global Total Amount of DRAM on servers is expected to increase from approximately 19953MGB in 2025 to approximately 69340MGB in 2030, with a CAGR of approximately 28.29% from 2025 to 2030.”
One beneficiary we wrote about on July 9th is Alibaba (+2.35%), which invested $1.1B and will be worth $19.2B!
Today was a very interesting day in Hong Kong as multiple firms reported AI-related news as Mainland investors bought $1.704B of Hong Kong stocks, with Alibaba having $394 million (HK $3.090B) of net inflows, Tencent gained +3.9% on $230 million (HK $1.805B) of net inflows, and Meituan gained +5.3% on $164 million (HK $1.286B) of net buying.
Alibaba will launch an AI-enabled phone with domestic maker Honor. Tencent and JD.com (+1.67%) are collaborating on AI. Meituan announced AI implementation in its food delivery business, while Minimax gained +13.3% after announcing a new AI LLM model, and Knowledge Atlas gained +6.69% after announcing new clients in banking and insurance. YOFC gained +1.62% in Hong Kong and +6.31% in Mainland China, bucking the AI supply chain decline after announcing 1st half profits will increase between 711%/RMB 2.4B to 914%/RMB 3B, which led to an analyst upgrade.
Healthcare had a strong day in both markets following the recent drug approvals for the national insurance program. All in all, a strong day!
After the close, the Science and Technology (STAR) Board-listed chip maker Biwin Storage Technology (688525 CH) announced 1st half profits will increase between RMB 7B to RMB 7.5B, which is an increase YoY between 3,200% and 3,421%, while revenue will be between RMB 15B and RMB 16B, which is a YoY increase of 283% and 308%. The stock fell -15% today to 304, which is -40% from its high of 508 on June 29th. We are one of the largest non-Chinese fund family stock owners.
President Xi visited Shanghai, focusing on local housing conditions.
The State Council Information Office held a press conference and Q&A with reporters with the PBOC on monetary policy and the economy’s performance in the 1st half of 2026.
Mainland-listed Optical Zhongji Innolight’s Hong Kong IPO is close to approval, according to Mainland media.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 1.4% |
| Hang Seng Tech | HSTECH Index | 1.3% |
| Hong Kong Turnover | HKTurn Index | -2.8% |
| Hong Kong Short Sale Turnover | HKSST Index | 1.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1706.74 |
| China (Shanghai) | SHCOMP Index | -0.3% |
| China (Shenzhen) | SZCOMP Index | -0.7% |
| China (STAR Board) | Star50 Index | -4.3% |
| Mainland Turnover | .chturn Index | -4.9% |
| Japan | NKY Index | 1.5% |
| India | SENSEX Index | 0.2% |
| Indonesia | JCI Index | 0% |
| Malaysia | FBMKLCI Index | -0.4% |
| Pakistan | KSE100 Index | 0.9% |
| Philippines | PCOMP Index | 0.7% |
| South Korea | KOSPI Index | 6.2% |
| Taiwan | TWSE Index | 2% |
| Thailand | SET Index | 0.3% |
| Singapore | STI Index | 1.2% |
| Australia | AS51 Index | 0.4% |
| Vietnam | VNINDEX Index | -0.0005 |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 110% | 105% |
| Advancing Stocks | 408 | 2900 |
| Declining Stocks | 110 | 2147 |
| Outperforming Factors | Growth, EPS Revision, Large Caps | Dividend Yield, ESG Score, Quality |
| Underperforming Factors | None | Momentum, Liquidity, Growth |
| Top Sectors | Healthcare, Communication, Discretionary | Healthcare, Communication, Staples |
| Bottom Sectors | Materials | Tech, Materials |
| Top Subsectors | Pharmaceuticals, Household/Personal Products, Software | Biotech, Liquor, Pharmaceutical |
| Bottom Subsectors | Non Ferrous Metal, Machinery, Chemical Industry | Semis, Computer Hardware, Energy Equipment |
| Southbound Connect Buys | Alibaba, Tencent (Very Large), Knowledge Atlas, Meituan, YOFC (Large) | N/A |
| Southbound Connect Sells | HK Tracker ETF (Large), SMIC (Moderate), Hua Hong Semi (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 1.63 |
| Communication Services | 11 | 3.25 |
| Consumer Discretionary | 28 | 1.88 |
| Consumer Staples | 13 | 1.27 |
| Energy | 6 | 0.31 |
| Financials | 25 | 0.27 |
| Health Care | 16 | 4.3 |
| Industrials | 22 | 0.83 |
| Information Technology | 12 | 0.09 |
| Materials | 14 | -1.4 |
| Real Estate | 7 | 1.85 |
| Utilities | 11 | 0.43 |
| Mainland China Listed | 386 | -0.29 |
| Communication Services | 8 | 4.22 |
| Consumer Discretionary | 26 | 2.59 |
| Consumer Staples | 19 | 3.63 |
| Energy | 12 | 0.32 |
| Financials | 64 | 1.77 |
| Health Care | 31 | 4.32 |
| Industrials | 58 | 0.86 |
| Information Technology | 95 | -3.4 |
| Materials | 52 | -1.2 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 3.9 |
| Alibaba HK | 9988 HK Equity | 2.3 |
| JD.com HK | 9618 HK Equity | 1.7 |
| NetEase HK | 9999 HK Equity | 0.4 |
| Yum China HK | 9987 HK Equity | -2 |
| Baozun HK | 9991 HK Equity | 0 |
| Baidu HK | 9888 HK Equity | 1.4 |
| Autohome HK | 2518 HK Equity | 2.3 |
| Bilibili HK | 9626 HK Equity | 2 |
| Trip.com HK | 9961 HK Equity | 0 |
| EDU HK | 9901 HK Equity | 0.8 |
| Xpeng HK | 9868 HK Equity | 0.4 |
| Weibo HK | 9898 HK Equity | 1.2 |
| Li Auto HK | 2015 HK Equity | 0.5 |
| Nio Auto HK | 9866 HK Equity | -2.6 |
| Zhihu HK | 2390 HK Equity | 0.8 |
| KE HK | 2423 HK Equity | 3.8 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1 |
| Meituan HK | 3690 HK Equity | 5.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 3.9 |
| ALIBABA GROUP HOLDING LTD | 2.3 |
| YANGTZE OPTICAL FIBRE AND-H | 1.6 |
| KNOWLEDGE ATLAS TECHNOLOGY-H | 6.7 |
| MEITUAN-CLASS B | 5.3 |
| SEMICONDUCTOR MANUFACTURI-H | -2.6 |
| HUA HONG GRACE SEMICONDUCTOR | -1.3 |
| GIGADEVICE SEMICONDUCTOR I-H | -4.6 |
| CHINA LIFE INSURANCE CO-H | -2.2 |
| XIAOMI CORP-CLASS B | -0.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | 0.5 |
| SHANTUI CONSTRUCTION MACHI-A | 3.7 |
| SUZHOU DONGSHAN PRECISION-A | 0.8 |
| GIGADEVICE SEMICONDUCTO-CL A | -2.1 |
| ZHONGJI INNOLIGHT CO LTD-A | -1.2 |
| EOPTOLINK TECHNOLOGY INC L-A | -2.3 |
| TONGFU MICROELECTRONIC CO-A | 1.1 |
| JCET GROUP CO LTD-A | -10 |
| BOE TECHNOLOGY GROUP CO LT-A | -9.1 |
| BIWIN STORAGE TECHNOLOGY C-A | -15.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.77 versus 6.78 yesterday
- CNY per EUR 7.73 versus 7.73 yesterday
- Yield on 10-Year Government Bond 1.74% versus 1.74% yesterday
- Yield on 10-Year China Development Bank Bond 1.82% versus 1.82% yesterday
- Copper Price +0.56%
- Steel Price +1.07%
