Is the National Team Cavalry Coming? Week In Review
7 Min. Read Time
Week in Review
- Asian equities were mixed but mostly lower for the week amid light summer volumes and continued tensions in the Middle East.
- August trade data proved that China remains the world’s factory. Both exports and imports were strong as exports of “high tech products” increased +56% year-over-year (YoY), led by integrated circuit export, which increased +130% YoY in August to $40.7 billion, bringing the year-to-date (YTD) total to $256.70 billion.
- DeepSeek has hired Citic Securities as its lead underwriter for its STAR Board IPO, though a date has yet to be set in stone for the listing. The company also announced price cuts for legacy large language models (LLMs) ahead of the release of its V4.1 Flash AI LLM.
- August's producer price index (PPI) was up +3.8% year-over-year (YoY) versus July’s +3.5% and expectations of +3.6%. CPI was up +0.8% YoY versus July’s +0.5% and expectations of +0.8%. Core CPI, which excludes energy and food, was +1% versus July’s +0.9% and expectations of +0.9%.
Key News
Asian equities were a sea of red amid continued and escalating tensions in the Middle East and the specter of higher US interest rates following this morning’s US CPI print.
Taiwan, Korea, and Japan underperformed their regional peers. Yesterday, we noted the below-average volume in the Mainland-listed China equity ETFs favored by the National Team, strategic long-term investors affiliated with the government that tend to buy on market weakness. While both Hong Kong and Mainland China followed regional peers lower in morning trading, they grinded higher to curtail intra-day losses, accompanied by above average volumes in the Mainland-listed ETFs that are favored by the National Team. Coincidental? I think not.
It was still a down day on weak breadth as decliners outpaced advancers significantly, but losses were mitigated. Mainland investors bought the Hong Kong dip with $565 million worth of net buying, which brings the week’s total to $2.56 billion and year-to-date (YTD) total to $51 billion.
Today’s Science and Technology (STAR) Board IPO of “little GPU Dragon” Enflame went as expected, rising +179%. The company sold 43 million shares, raising RMB 6.12 billion, giving it a total market cap of RMB 176 billion. Tencent gained +0.66% and was Hong Kong’s most heavily traded stock by value, and owns ~18% of Enflame.
CATL fell by -2.49% in Hong Kong and -2.33% in Mainland China on reports of new battery storage projects due to capacity concerns. After the close, CATL reported buying 604,293 of its Mainland shares. Alibaba gained +0.56% and bucked the downdraft, along with Meituan (+0.47%), Bilibili (+0.08%), and JD.com (+0.66%). However, Z.ai fell by -3.17%, and Minimax fell by -7.53% on an analyst downgrade, though the former announced earnings after the close, selling 21.97 million shares at a 10% discount to today’s close, along with a $3 billion convertible bond sale.
There was no reaction from the electric vehicle (EV) and auto sectors after nine government agencies released the “15th Five-Year Plan for the Development of Intelligent Networked New Energy Vehicle Industry,” providing the goal of 70% of new car sales and 40% of new commercial vehicle sales will be EVs or hybrids by 2030. There was also no reaction from either software or AI names to the release of the “Implementation Plan for the 'Artificial Intelligence + Software' Special Action” from the Ministry of Industry & Information Technology (MIIT). There was a reaction from the US’ FCC, with no ban on Chinese optical communication companies, as companies like Innolight (+4.37%) and YOFC (+3.44%) were higher in Hong Kong, and up +4.03% and +8.78% in Mainland China.
The Ministry of Commerce stated that US-China trade talks include removing $30 billion of reciprocal tariffs. Aren’t Trump and Xi supposed to announce that in two weeks?
The South China Morning Post reported that Chinese corporate executives from tech, EVs/autos, and aerospace might join President Xi’s trip to the US. Speculation on my part, but how do you announce corporate partnerships without corporate executives? Historically, when President Xi has visited countries, corporations in both countries are pushed into doing deals. Examples would be Xi’s trips to Brazil, Vietnam, and Saudi Arabia. Why would this time be different?
I stumbled upon a piece titled "U.S.-China Trade Relations" on Congress.gov, published on August 17, 2026. By far the most startling data point is: “In 2023, sales in China by majority U.S.-owned affiliate firms were $475.2 billion.” That’s a massive number! An element of that revenue comes from US-owned factories in China, so it doesn’t show up in trade data. If a US factory makes something in China and then sends it to the US, it is still a Chinese export, even if the revenue goes to the US company. Exhibit A: your iPhone! A Chinese export despite revenue going to Cupertino. This is similar to recent headlines about Canadian auto companies. Can you name a Canadian auto company? Of course not, because they supply GM and Ford! It is amazing that the media doesn’t look at this.
It is the 25th anniversary of 9/11. Time may go by, but some wounds don’t. Rest in peace BQ. Our continued sympathies to the families affected.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.6% |
| Hang Seng Tech | HSTECH Index | -0.2% |
| Hong Kong Turnover | HKTurn Index | 14.9% |
| Hong Kong Short Sale Turnover | HKSST Index | 12.8% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 565.90 |
| China (Shanghai) | SHCOMP Index | -1.2% |
| China (Shenzhen) | SZCOMP Index | -1.4% |
| China (STAR Board) | Star50 Index | -1% |
| Mainland Turnover | .chturn Index | 19.3% |
| Japan | NKY Index | -1.9% |
| India | SENSEX Index | -0.2% |
| Indonesia | JCI Index | -0.7% |
| Malaysia | FBMKLCI Index | -1.1% |
| Pakistan | KSE100 Index | 1% |
| Philippines | PCOMP Index | -0.6% |
| South Korea | KOSPI Index | -1.8% |
| Taiwan | TWSE Index | -1.6% |
| Thailand | SET Index | -0.7% |
| Singapore | STI Index | 0.1% |
| Australia | AS51 Index | -0.9% |
| Vietnam | VNINDEX Index | -1.9% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 84% | 80% |
| Advancing Stocks | 153 | 585 |
| Declining Stocks | 411 | 3529 |
| Outperforming Factors | None | None |
| Underperforming Factors | Liquidity, Momentum, EPS Revision | EPS Revision, Momentum, Buyback |
| Top Sectors | Communication, Discretionary | Utilities |
| Bottom Sectors | Materials, Utilities, Real Estate | Materials, Real Estate, Industrials |
| Top Subsectors | Tech Hardware, Environmental Protection, Consumer Services | Communication Equipment, Telecom, Power Generation Equipment |
| Bottom Subsectors | Non Ferrous Metal, Chemical, Real Estate Management/Development | Petrochemical, Forest, Precious Metals |
| Southbound Connect Buys | HS Tech ETF (Large), YOFC, Z AI, Innolight (Moderate), KB Laminates, Tencent (Small) | N/A |
| Southbound Connect Sells | SMIC (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -0.39 |
| Communication Services | 11 | 0.42 |
| Consumer Discretionary | 28 | 0.34 |
| Consumer Staples | 13 | -0.1 |
| Energy | 6 | -1.3 |
| Financials | 25 | -0.39 |
| Health Care | 16 | -1.26 |
| Industrials | 22 | -1.16 |
| Information Technology | 12 | -0.14 |
| Materials | 14 | -5.06 |
| Real Estate | 7 | -1.36 |
| Utilities | 11 | -2.16 |
| Mainland China Listed | 386 | -0.98 |
| Communication Services | 8 | -0.87 |
| Consumer Discretionary | 26 | -0.19 |
| Consumer Staples | 19 | -0.65 |
| Energy | 12 | -1.08 |
| Financials | 64 | -1.21 |
| Health Care | 31 | -1.29 |
| Industrials | 58 | -1.3 |
| Information Technology | 95 | -0.08 |
| Materials | 52 | -3.21 |
| 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 | 0.7 |
| NetEase HK | 9999 HK Equity | -0.5 |
| Yum China HK | 9987 HK Equity | 1.6 |
| Baozun HK | 9991 HK Equity | -0.5 |
| Baidu HK | 9888 HK Equity | -0.1 |
| Autohome HK | 2518 HK Equity | 4.2 |
| Bilibili HK | 9626 HK Equity | 0.1 |
| Trip.com HK | 9961 HK Equity | -1 |
| EDU HK | 9901 HK Equity | -0.1 |
| Xpeng HK | 9868 HK Equity | -0.6 |
| Weibo HK | 9898 HK Equity | -0.7 |
| Li Auto HK | 2015 HK Equity | -0.3 |
| Nio Auto HK | 9866 HK Equity | 0.5 |
| Zhihu HK | 2390 HK Equity | -1.1 |
| KE HK | 2423 HK Equity | 1 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.8 |
| Meituan HK | 3690 HK Equity | 0.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 0.7 |
| ALIBABA GROUP HOLDING LTD | 0.6 |
| Z AI CO LTD | -3.2 |
| YANGTZE OPTICAL FIBRE AND-H | 3.4 |
| MINIMAX GROUP INC | -7.5 |
| ZHONGJI INNOLIGHT CO LTD-H | 4.4 |
| KINGBOARD LAMINATES HLDG LTD | -1.5 |
| ZIJIN MINING GROUP CO LTD-H | -6.7 |
| XIAOMI CORP-CLASS B | 1.7 |
| SEMICONDUCTOR MANUFACTURI-H | -0.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 4 |
| EOPTOLINK TECHNOLOGY INC L-A | 2.9 |
| SUZHOU DONGSHAN PRECISION-A | 0.4 |
| ZIJIN MINING GROUP CO LTD-A | -5.4 |
| SUZHOU TFC OPTICAL COMMUNI-A | -2.6 |
| CXMT CORP-A | -0.8 |
| SHENGYI TECHNOLOGY CO LTD -A | 1 |
| CHINA JUSHI CO LTD -A | 2.8 |
| CAMBRICON TECHNOLOGIES-A | -0.4 |
| HENGTONG OPTIC-ELECTRIC CO-A | 2.1 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.70 versus 6.70 yesterday
- CNY per EUR 7.78 versus 7.79 yesterday
- Yield on 10-Year Government Bond 1.69% versuss 1.68% yesterday
- Yield on 10-Year China Development Bank Bond 1.77% versus 1.77% yesterday
- Copper Price -2.75%
- Steel Price -0.95%
