It’s Hard to Put Animal Spirits Back In The Bottle, Week In Review
6 Min. Read Time
Week in Review
- Asian equities were mixed for the week as Korea and Thailand outperformed, while India and the Philippines underperformed.
- China reported 2025 GDP this week, indicating that overall economic output reached RMB 140 trillion for the first time, growing by 5% year-over-year (YoY), which was at the target.
- Alibaba saw major tailwinds this week after announcing a partnership with China Nuclear Power Co. on energy for data centers as well as a rumor that the company is considering spinning off its T-Head chipmaking division in an IPO.
- At the World Economic Forum in Davos, China's Vice Premier he Lifeng reaffirmed the country's commitment to free trade and multilateralism.
Friday's Key News
Asian equities were largely higher led by Singapore while India and the Philippines underperformed despite a weaker US dollar overnight.
In today’s "let’s not bury the lead", Mainland-listed China ETFs favored by the National Team, i.e. investment firms associated with sovereign wealth, had another massive volume day as the desire to tap the brakes included pulling the parking brake today. 510310 traded 6.96 million shares today, versus a 30-day average of 628,000. 510300 has 68 billion shares outstanding today versus 88 billion at the end of 2025. The top nine Mainland-listed ETFs had $10 billion worth of outflows, which brings the weekly outflow to $49.94 billion and the 1-month outflow to $59.91 billion. I highlighted Mainland as these efforts are focused on Shanghai and Shenzhen, which are 95% owned by local investors. The intervention is not focused on offshore China, which is mostly Hong Kong and US listings and represents foreign investors' definition of China, as the MSCI China Index is composed of only ~14% Mainland China-listed stocks. Mainland China was up today despite this effort, indicating strong investor demand.
Mega-cap banks and insurance were lower, due to their high weights in indices such as the Shanghai Composite and CSI 300. Therefore, they are prime targets for ETFs during redemptions. The Shenzhen and STAR Board posted nice returns due to their growth tilt. Hong Kong-listed banks and insurance companies were mixed because there is no National Team ownership in Hong Kong.
The Japanese Yen’s weakness and potential intervention dominated FX conversations overnight.
The TikTok drama is coming to end as hopefully the US private equity investors that own the majority of Bytedance got a good deal. The Wall Street Journal had an article on Trump’s softening stance toward China being exhibited by his dismissal of several policy hawks.
Hong Kong and Mainland China posted small gains on decent volumes and breadth. Alibaba gained 2.25% on yesterday’s unconfirmed rumor that the company will spin off its AI chip unit, with some chatter suggesting it won't happen until 2027, given its dependence on its parent for today's revenue. Mainland investors took profits, net-selling Alibaba after buying over the previous two days.
BYD fell -0.15% in Hong Kong and -0.50% on the Mainland, despite the company selling 4.6 million units in 2025, an increase of 7.7% year-over-year (YoY). JD.com gained +1.06% as its CEO stated that 2026 will be the year of China’s “AI consumption explosion” at Davos. Meituan gained +0.57% on very strong call option volumes.
Technology hardware stocks mostly performed well in Hong Kong overnight. Xiaomi gained +2.84% after announcing a HKD 2.5 billion buyback, with HKD 1.4 billion to be allocated in 2026. However, Foxconn fell -4.21% and Zhongji Innolight fell -5.80%. Semiconductor stocks were off on the Mainland, but were up in Hong Kong!
Hong Kong and Mainland-listed energy stocks, including oil & gas, were down after the recent rebound on profit-taking. Solar had a positive day in both markets on Elon Musk’s Davos solar comments, though my thesis of China clean tech as an AI play is far from a popular idea.
The non-ferrous metals drawdown did not last another day, as precious metals and mining rebounded across both markets overnight.
Southbound Stock Connect was a rare net seller, totaling -$205 million.
There was a fair amount of chatter on China’s space ambitions, as I suspect stocks remotely related are set to take off. On that terrible joke, enjoy your weekend!
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.4% |
| Hang Seng Tech | HSTECH Index | 0.6% |
| Hong Kong Turnover | HKTurn Index | 2.6% |
| Hong Kong Short Sale Turnover | HKSST Index | -6.9% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 13.7% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -205 |
| China (Shanghai) | SHCOMP Index | 0.3% |
| China (Shenzhen) | SZCOMP Index | 1.2% |
| China (STAR Board) | Star50 Index | 0.8% |
| Mainland Turnover | .chturn Index | 14.8% |
| Japan | NKY Index | 0.3% |
| India | SENSEX Index | -0.9% |
| Indonesia | JCI Index | -0.5% |
| Malaysia | FBMKLCI Index | 0.2% |
| Pakistan | KSE100 Index | 1% |
| Philippines | PCOMP Index | -1% |
| South Korea | KOSPI Index | 0.8% |
| Taiwan | TWSE Index | 0.7% |
| Thailand | SET Index | 0.2% |
| Singapore | STI Index | 1.3% |
| Australia | AS51 Index | 0.1% |
| Vietnam | VNINDEX Index | -0.6% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 93 | 200 |
| Advancing Stocks | 242 | 3699 |
| Declining Stocks | 241 | 1318 |
| Outperforming Factors | Growth, Momentum, Liquidity | Liquidity, Growth, Quality |
| Underperforming Factors | Dividend Yield, Quality, Low Volatility | Large Caps, Low Volatility, Dividend Yield |
| Top Sectors | Tech, Materials, Healthcare | Communication, Materials, Real Estate |
| Bottom Sectors | Energy, Utilities, Staples | Energy, Financials, Utilities |
| Top Subsectors | Consumer Durables/Apparel, Non Ferrous Metals, Tech Hardware | Forest, Power Generation Equipment, Base Metals |
| Bottom Subsectors | Petroleum/Petrochemical, Household/Personal Products, Coal | Insurance, Oil/Gas, Energy Equipment |
| Southbound Connect Buys | Pop Mart, Xiaomi (Moderate), Tencent (Small), Drinda, SMIC (Tiny) | N/A |
| Southbound Connect Sells | Alibaba (Large) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | 0.55 |
| Communication Services | 9 | -0.24 |
| Consumer Discretionary | 28 | 1.49 |
| Consumer Staples | 13 | -0.78 |
| Energy | 7 | -1.45 |
| Financials | 23 | -0.25 |
| Health Care | 13 | 1.73 |
| Industrials | 20 | 0.01 |
| Information Technology | 10 | 2.36 |
| Materials | 10 | 2.08 |
| Real Estate | 6 | -0.56 |
| Utilities | 12 | -1.42 |
| Mainland China Listed | 404 | -0.08 |
| Communication Services | 6 | 1.11 |
| Consumer Discretionary | 31 | 0.28 |
| Consumer Staples | 24 | -0.27 |
| Energy | 13 | -1.72 |
| Financials | 64 | -0.75 |
| Health Care | 31 | 0.29 |
| Industrials | 64 | 0.47 |
| Information Technology | 91 | -0.33 |
| Materials | 58 | 1.04 |
| Real Estate | 6 | 0.74 |
| Utilities | 16 | -0.73 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.4 |
| Alibaba HK | 9988 HK Equity | 2.2 |
| JD.com HK | 9618 HK Equity | 0.8 |
| NetEase HK | 9999 HK Equity | -1 |
| Yum China HK | 9987 HK Equity | 0.4 |
| Baozun HK | 9991 HK Equity | 1.1 |
| Baidu HK | 9888 HK Equity | 0.3 |
| Autohome HK | 2518 HK Equity | 0.6 |
| Bilibili HK | 9626 HK Equity | 2.2 |
| Trip.com HK | 9961 HK Equity | 0.8 |
| EDU HK | 9901 HK Equity | 3.8 |
| Xpeng HK | 9868 HK Equity | -0.2 |
| Weibo HK | 9898 HK Equity | -0.5 |
| Li Auto HK | 2015 HK Equity | 0.5 |
| Nio Auto HK | 9866 HK Equity | 1.1 |
| Zhihu HK | 2390 HK Equity | 0 |
| KE HK | 2423 HK Equity | 1.1 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.5 |
| Meituan HK | 3690 HK Equity | 0.6 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| SEMICONDUCTOR MANUFACTURI-H | 0.3 |
| TENCENT HOLDINGS LTD | -0.4 |
| ALIBABA GROUP HOLDING LTD | 2.2 |
| CHINA MOBILE LTD-H | 0.6 |
| HUA HONG SEMICONDUCTOR LTD-H | 0.5 |
| XIAOMI CORP-CLASS B | 2.8 |
| HSBC HOLDINGS PLC | 0.2 |
| MEITUAN-CLASS B | 0.6 |
| PING AN INSURANCE GROUP CO-H | 0.1 |
| YANGTZE OPTICAL FIBRE AND-H | 2.4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -5.8 |
| CHINA AEROSPACE TIMES ELEC-A | 10 |
| EOPTOLINK TECHNOLOGY INC L-A | -6.5 |
| SHENZHEN SUNWAY COMMUNICAT-A | 15.4 |
| BLUEFOCUS INTELLIGENT COMM-A | 7.7 |
| LEO GROUP CO LTD-A | -0.2 |
| TBEA CO LTD-A | -1.2 |
| CHINA SPACESAT CO LTD -A | 10 |
| ZHEJIANG SANHUA INTELLIGEN-A | -3.6 |
| ZIJIN MINING GROUP CO LTD-A | -0.3 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.96 versus 6.97 yesterday
- CNY per EUR 8.18 versus 8.19 yesterday
- Yield on 10-Year Government Bond 1.83% versus 1.84% yesterday
- Yield on 10-Year China Development Bank Bond 1.95% versus 1.96% yesterday
- Copper Price -0.09%
- Steel Price 0.32%
