It’s The Economy Stupid! Week in Review
6 Min. Read Time
Week in Review
- Alibaba's Qwen AI model surpassed 3 billion global downloads in the past six months, topping Hugging Face's most-downloaded rankings after coming in ahead of Google and Meta over the period, while the company's Q2 AI Cloud & Compute Services surged 45%, as profitability more than doubled for the business segment.
- Unitree's STAR Board IPO was a landmark moment for China's humanoid robotics sector, with shares surging over 460% on debut, giving the profitable company a market cap of approximately $50 billion.
- July economic data disappointed across retail sales, industrial production, and real estate, though policymakers responded swiftly with RMB 100 billion in consumption subsidies and a State Council press conference on stimulus expected Friday.
- Q2 earnings season delivered mixed but notable results, with Full Truck Alliance beating expectations and raising guidance, Gigadevice posting explosive profit growth, and Baidu missing on the bottom line as legacy search advertising declines faster than AI cloud can offset.
Key News
Asian equities ended a mixed week largely higher, as Hong Kong outperformed, while the Philippines was closed for Ninoy Aquino Day.
Despite Alibaba falling -2.54% and Mainland investors selling Hong Kong via Southbound Stock Connect (net selling of -$1.478B this week), the Hang Seng Index closed above 26,000! Should I be so bold as to say foreign investors were buyers? Evidence suggests that Southbound Connect volumes were only 20% of Hong Kong volumes.
I had been anticipating today's State Council Information Office press conference, as it reviewed and provided a report card after seven months of implementing RMB 100 billion in domestic consumption stimulus by supporting small businesses. The Ministry of Finance (MoF) Vice Minister Liao Min stated that the Politburo's July 30th meeting called for "optimizing the implementation of fiscal and financial policies to promote domestic demand." He noted, "We are continuing to study new policies and measures for fiscal and financial coordination, which will be launched in the second half of this year."
Following this meeting, further policies on access and loan caps will be expanded, as the Ministry of Finance (MoF), People's Bank of China (PBOC), and the State Administration of Financial Regulation (SAMR) jointly released the "Notice on Further Improving the Work of Fiscal-Financial Coordination to Boost Domestic Demand." Premier Li and the State Council met today to discuss "scientific and technological revolution." National Development & Reform Commission (NDRC) Chairman Zheng Shanjie met with private companies to discuss "stabilizing economic performance." There was a great deal of economic chatter from policymakers in China overnight, though it would be great to see more action. I suspect more policies on domestic consumption could be announced around the Trump-Xi meeting in September, though only time will tell.
Alibaba fell -2.54% following yesterday's results on high volumes, as Mainland investors sold a net -$163 million (HKD 1.28 billion) via Southbound Stock Connect. Hong Kong-listed internet names had a good day otherwise, led by Tencent, whcih gained +1.24% after buying 667,000 shares overnight. Kuaishou gained +2.32% after yesterday's disaster, NetEase gained +4.45%, and Baidu gained +1.14%. AI large language model (LLM) providers Z.ai and Minimax gained +10.36% and +11.86%, respectively, on potentially being included in Hang Seng Indices. Ping An Insurance gained +3.88% after yesterday's post-close strong results. Precious metals had a very strong day in both markets, along with Hong Kong and Mainland China-listed AI "picks and shovels", which rebounded after yesterday's downdraft. Mainland China is not quite as strong as Hong Kong, as telecom, healthcare, and utilities all underperformed. The Mainland-listed China equity ETFs favored by China's "National Team", i.e. investment firms associated with sovereign wealth, had average volumes, though inflows have picked up slightly. It is hard to know who is behind the buying, as we cannot say for certain that it is the National Team, though it is an interesting development.
The National Energy Administration stated that year-to-date(YTD) year-over-year (YoY) electricity consumption increased +4.7%.
The saga of China Evergrande is officially over, as the Guangzhou Intermediate People's Court approved the bankruptcy and liquidation of the indebted property developer.
After the close of the first half of 2026, profit announcements from Mainland listed companies have included:
- Optical communications giant Zhongji Innolight increased revenue +182% YoY to RMB 41.78 billion, net profit by +241% YoY to RMB 13.65 billion, and earnings per shar (EPS) +238% to RMB 12.31. (The company’s revenues have grinded higher each year as 2021’s revenues were only RMB 7.70billion!)
- YOFC, another optical communications firm, icnreased revenue +53% to RMB 9.81 billion, net profit by +888% to RMB 2.93 billion, and EPS by +812% to RMB 3.56. (YOFC’s financials have been volatile over the last several years.)
- Hardware technology manufacturer Suzhou Dongshan Precision increased revenue +63.95% to RMB 27.80 billion, net profit by +290% to RMB 2.96 billion, and EPS by +260% to RMB 1.62.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 1.2% |
| Hang Seng Tech | HSTECH Index | 1.4% |
| Hong Kong Turnover | HKTurn Index | -4.4% |
| Hong Kong Short Sale Turnover | HKSST Index | -14.2% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -974.41 |
| China (Shanghai) | SHCOMP Index | 0% |
| China (Shenzhen) | SZCOMP Index | 0.5% |
| China (STAR Board) | Star50 Index | 0% |
| Mainland Turnover | .chturn Index | -9.4% |
| Japan | NKY Index | -0.3% |
| India | SENSEX Index | 0% |
| Indonesia | JCI Index | 0.4% |
| Malaysia | FBMKLCI Index | 0% |
| Pakistan | KSE100 Index | 0.3% |
| Philippines | PCOMP Index | 1.3% |
| South Korea | KOSPI Index | 0.9% |
| Taiwan | TWSE Index | 0.6% |
| Thailand | SET Index | 0.2% |
| Singapore | STI Index | 0.3% |
| Australia | AS51 Index | -0.3% |
| Vietnam | VNINDEX Index | -0.0005 |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 90 | 75 |
| Advancing Stocks | 374 | 1992 |
| Declining Stocks | 146 | 2997 |
| Outperforming Factors | Momentum, Large Caps, EPS Revision | Momentum, EPS Revision, Liquidity |
| Underperforming Factors | None | Quality, Low Volatility, ESG Score |
| Top Sectors | Materials, Industrials, Tech | Materials, Energy, Tech |
| Bottom Sectors | Discretionary | Healthcare, Staples, Real Estate |
| Top Subsectors | Non Ferrous Metal, Paper/Packaging, Industry Conglomerates | Marine, Precious Metals, Communication Equipment |
| Bottom Subsectors | Consumer Durables/Apparel, Consumer Discretionary Distribution Retail, Household/Personal Products | Pharmaceutical, Biotech, Agricultural |
| Southbound Connect Buys | Minimax (Moderate) | |
| Southbound Connect Sells | Alibaba (Large), Tencent, Xiaomi (Moderate), SMIC, Z AI (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 1.06 |
| Communication Services | 11 | 1.63 |
| Consumer Discretionary | 28 | -1.05 |
| Consumer Staples | 13 | 0.65 |
| Energy | 6 | 1.3 |
| Financials | 25 | 1.66 |
| Health Care | 16 | 0.7 |
| Industrials | 22 | 3.01 |
| Information Technology | 12 | 2.94 |
| Materials | 14 | 4.43 |
| Real Estate | 7 | 1.17 |
| Utilities | 11 | 1.01 |
| Mainland China Listed | 386 | 0.54 |
| Communication Services | 8 | -0.68 |
| Consumer Discretionary | 26 | -0.68 |
| Consumer Staples | 19 | -1.43 |
| Energy | 12 | 1.56 |
| Financials | 64 | 0.15 |
| Health Care | 31 | -3.61 |
| Industrials | 58 | 0.7 |
| Information Technology | 95 | 1.47 |
| Materials | 52 | 1.98 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 1.2 |
| Alibaba HK | 9988 HK Equity | -2.5 |
| JD.com HK | 9618 HK Equity | 0.6 |
| NetEase HK | 9999 HK Equity | 4.4 |
| Yum China HK | 9987 HK Equity | 2.6 |
| Baozun HK | 9991 HK Equity | 1.3 |
| Baidu HK | 9888 HK Equity | 1.1 |
| Autohome HK | 2518 HK Equity | -0.1 |
| Bilibili HK | 9626 HK Equity | 2.5 |
| Trip.com HK | 9961 HK Equity | 0.4 |
| EDU HK | 9901 HK Equity | -0.2 |
| Xpeng HK | 9868 HK Equity | 0.6 |
| Weibo HK | 9898 HK Equity | -0.7 |
| Li Auto HK | 2015 HK Equity | 1.3 |
| Nio Auto HK | 9866 HK Equity | -1.9 |
| Zhihu HK | 2390 HK Equity | 2.1 |
| KE HK | 2423 HK Equity | 2.9 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.8 |
| Meituan HK | 3690 HK Equity | -1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -2.5 |
| TENCENT HOLDINGS LTD | 1.2 |
| Z AI CO LTD | 10.4 |
| POP MART INTERNATIONAL GROUP | -3.1 |
| MINIMAX GROUP INC | 6.2 |
| XIAOMI CORP-CLASS B | 1.2 |
| MEITUAN-CLASS B | -1 |
| KUAISHOU TECHNOLOGY | -11 |
| PING AN INSURANCE GROUP CO-H | 3.9 |
| ZIJIN MINING GROUP CO LTD-H | 4.9 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 1 |
| EOPTOLINK TECHNOLOGY INC L-A | 0.6 |
| CXMT CORP-A | 0 |
| SUZHOU TFC OPTICAL COMMUNI-A | -0.4 |
| GIGADEVICE SEMICONDUCTO-CL A | -0.1 |
| CAMBRICON TECHNOLOGIES-A | -3.8 |
| SUZHOU DONGSHAN PRECISION-A | 1.7 |
| ZIJIN MINING GROUP CO LTD-A | 4.5 |
| HENGTONG OPTIC-ELECTRIC CO-A | 5.3 |
| WUXI APPTEC CO LTD-A | 2.4 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.72 versus 6.72 yesterday
- CNY per EUR 7.86 versus 7.86 yesterday
- Yield on 10-Year Government Bond 1.68% versus 1.68% yesterday
- Yield on 10-Year China Development Bank Bond 1.76% versus 1.76% yesterday
- Copper Price +0.10%
- Steel Price +0.43%
