Knowledge Atlas Surges On Pricing Power
5 Min. Read Time
Key News
Asia was a sea of green overnight as a tentative agreement between the US and Iran was announced, as the Philippines and Korea outperformed, while Thailand and Vietnam underperformed.
Hong Kong closed off of best levels during the session, outdone by Mainland China, which rallied significantly as the STAR (Science & Technology) Board gained 5%. Growth outperformed value in both Hong Kong and Mainland China. Mainland investors bought a net $269 million worth of Hong Kong-listed stocks and ETFs overnight, as large language model (LLM) provider Knowledge Atlas, also known as Zhipu, was the top net buy. However, Mainland investors were net sellers of Alibaba and Tencent. The net buy was refreshing after several sessions of net sells. Volumes were slightly elevated, i.e. above 1-year averages, in both markets.
LLM provider Zhipu (Knowledge Atlas) surged 33% overnight after JP Morgan raised its price target for the Hong Kong-listed stock. The company's latest model is seeing increasing pricing power that appears to exceed that of rivals. Meanwhile, discussion of model access curbs coming out of the US also likely benefited shares. China's open-source model for AI LLMs could be coming to an end, which could lead to more profit for digital AI plays, including Alibaba. We noted that, during Alibaba's Q1 earnings call, management also eluded to this change and their potential to increase prices and charge more for model use tokens for its LLM Qwen. Digital AI plays have underperformed hardware plays this year, so increased profits could help reverse this trend.
The AI "picks and shovels" trade, i.e. hardware, did well in China overnight, in addition to the broader ecosystem, as Japanese and Jorean counterparts also surged on the positive news from the US-Iran conflict. Hua Hong Semiconductor gained 7% in Mainland China and optical communications provider Zhongji Innolight gained 8%.
The People's Bank of China (PBOC) conducted an RMB 600 billion reverse repo operation overnight, ensuring decent liquidity in the markets. Meanwhile, the Shanghai local government reported RMB 149 billion in loans to technology companies in Q1, a strong indicatoor, as loan growth has been sluggish overall, despite lower interest rates.
Share repurchases were strong in Hong Kong overnight, as WuXi AppTec repurchased HKD 225 million worth of shares and Tencent repurchased HKD 500 million worth of shares.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.5% |
| Hang Seng Tech | HSTECH Index | 1.3% |
| Hong Kong Turnover | HKTurn Index | -10.5% |
| Hong Kong Short Sale Turnover | HKSST Index | -15.7% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.7% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 269.47 |
| China (Shanghai) | SHCOMP Index | 1.6% |
| China (Shenzhen) | SZCOMP Index | 3.4% |
| China (STAR Board) | Star50 Index | 5.1% |
| Mainland Turnover | .chturn Index | -5.6% |
| Japan | NKY Index | 5% |
| India | SENSEX Index | 1% |
| Indonesia | JCI Index | 4.1% |
| Malaysia | FBMKLCI Index | 0.5% |
| Pakistan | KSE100 Index | 2.7% |
| Philippines | PCOMP Index | 6.1% |
| South Korea | KOSPI Index | 5.2% |
| Taiwan | TWSE Index | 2.8% |
| Thailand | SET Index | 0% |
| Singapore | STI Index | 1% |
| Australia | AS51 Index | 1.2% |
| Vietnam | VNINDEX Index | 0.4% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 134 | 106 |
| Advancing Stocks | 52 (Hang Seng) | 185 (CSI 300) |
| Declining Stocks | 41 (Hang Seng) | 107 (CSI 300) |
| Outperforming Factors | Growth | Growth |
| Underperforming Factors | Value | Value |
| Top Sectors | Materials, Information Technology, Industrials | Information Technology, Materials, Industrials |
| Bottom Sectors | Energy, Utilities, Real Estate | Energy, Consumer Staples, Health Care |
| Top Subsectors | Semiconductors, Technology Hardware, Non-Ferrous Metals | Electronic Components, Precious Metals, Communication Equipment |
| Bottom Subsectors | Coal, Consumer Durables, Petroleum & Petrochemicals | Coal, Oil & Gas, Banking |
| Southbound Connect Buys | Knowledge Atlas, KB Laminates, Kingboard Holdings | N/A |
| Southbound Connect Sells | Alibaba, CNOOC, Tencent | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.35 |
| Communication Services | 11 | 4.78 |
| Consumer Discretionary | 28 | 4.57 |
| Consumer Staples | 13 | 3.54 |
| Energy | 6 | 0.35 |
| Financials | 25 | -0.04 |
| Health Care | 16 | -0.29 |
| Industrials | 22 | -0.43 |
| Information Technology | 12 | -0.58 |
| Materials | 14 | -0.82 |
| Real Estate | 7 | -1.47 |
| Utilities | 11 | -2.49 |
| Mainland China Listed | 386 | 2.56 |
| Communication Services | 8 | 6.33 |
| Consumer Discretionary | 26 | 4.16 |
| Consumer Staples | 19 | 1.54 |
| Energy | 12 | 1.01 |
| Financials | 64 | -0.04 |
| Health Care | 31 | -0.06 |
| Industrials | 58 | -0.83 |
| Information Technology | 95 | -0.99 |
| Materials | 52 | -0.99 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.9 |
| Alibaba HK | 9988 HK Equity | -0.8 |
| JD.com HK | 9618 HK Equity | -0.1 |
| NetEase HK | 9999 HK Equity | 0.4 |
| Yum China HK | 9987 HK Equity | 1.2 |
| Baozun HK | 9991 HK Equity | 4.4 |
| Baidu HK | 9888 HK Equity | -0.8 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -1 |
| Trip.com HK | 9961 HK Equity | -0.5 |
| EDU HK | 9901 HK Equity | 0.9 |
| Xpeng HK | 9868 HK Equity | -3.5 |
| Weibo HK | 9898 HK Equity | 1.3 |
| Li Auto HK | 2015 HK Equity | -0.3 |
| Nio Auto HK | 9866 HK Equity | -1 |
| Zhihu HK | 2390 HK Equity | 3.1 |
| KE HK | 2423 HK Equity | -1 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1 |
| Meituan HK | 3690 HK Equity | 0.4 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -0.9 |
| ALIBABA GROUP HOLDING LTD | -0.8 |
| KNOWLEDGE ATLAS TECHNOLOGY-H | 32.8 |
| SEMICONDUCTOR MANUFACTURI-H | 7 |
| KINGBOARD LAMINATES HLDG LTD | 22.3 |
| HUA HONG GRACE SEMICONDUCTOR | 10.1 |
| AIA GROUP LTD | 2.6 |
| YANGTZE OPTICAL FIBRE AND-H | 5.6 |
| KINGBOARD HOLDINGS LTD | 12.7 |
| CNOOC LTD-H | -2.9 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 8.4 |
| EOPTOLINK TECHNOLOGY INC L-A | 6.7 |
| GIGADEVICE SEMICONDUCTO-CL A | 7.6 |
| HENGTONG OPTIC-ELECTRIC CO-A | 2.4 |
| CAMBRICON TECHNOLOGIES-A | 7.7 |
| SUZHOU DONGSHAN PRECISION-A | 10 |
| ZIJIN MINING GROUP CO LTD-A | 7.6 |
| BOE TECHNOLOGY GROUP CO LT-A | 6.3 |
| SUZHOU TFC OPTICAL COMMUNI-A | 8.6 |
| JIANGSU ZHONGTIAN TECHNOLO-A | 5.7 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.76 versus 6.76 yesterday
- CNY per EUR 7.85 versus 7.83 yesterday
- Yield on 10-Year Government Bond 1.74% versus 1.74% yesterday
- Yield on 10-Year China Development Bank Bond 1.82%
- Copper Price 0.06%
- Steel Price 0.03%
