Middle East Tensions Weigh On Risk Sentiment
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Key News
Asian equities were lower as Middle East tensions flared (again) and rising oil and US Treasury yields weighed on AI supply chain markets such as Japan, Taiwan, Korea, and China’s Science and Technology (STAR) Board, while Vietnam remained on Independence Day holiday (again).
Hong Kong and Mainland China were lower except for bank stocks, though volumes were anemic in light summer trading. Arguably, Hong Kong “outperformed” its regional peers in a pyrrhic victory. There was some chatter in China about the US raising semiconductor export controls, though I can’t seem to find anything tangible.
There was a fairly wide downdraft in Hong Kong as real estate outperformed amid chatter that recent city-easing policies should kick in this month. Alibaba fell by -0.72%, though not nearly as much as yesterday’s US ADR drop of -1.03%. Mainland investors were net buyers of Hong Kong but sold -$97 million (HK $764 million) of Alibaba. Tencent was down -0.72% and was Hong Kong’s most heavily traded stock by value, but was 50% of non-summer volumes, as Mainland investors were net buyers.
It was interesting that Tencent’s daily buyback has been 200k shares this week, versus the usual 600k. Does this mean an AI-driven private placement is coming? Maybe Prosus has slowed their years-long selling in Tencent? Will investigate and report back!
Minimax gained +1.72% as data showed that Mainland investors bought most of the stock via the Southbound Stock Connect (HK $10.6 billion) in August, which raises the percentage owned by Mainland investors to 9.7%. CATL fell by -4.65% in Hong Kong and -2.74% in Mainland China after its Hungary plant was closed following nine employees testing positive for high nickel exposure due to a lack of protective safety gear.
The auto sector was off due to yesterday’s announcement on overseas sales, which included guidance not offering deep discounts. Good luck with that, though clearly the G20 statement on overcapacity was geared to China.
Shein fell by -5.15% following yesterday’s IPO, though after the close, it was announced its inclusion in the Hang Seng Composite Index on September 15th. Yes, it has been a rough go for the company as its valuation was $100 billion as US tariffs, EU regulation, and competition weighed on its valuation. Regardless, a very innovative company.
The STAR Board fell by -1.82% as semis, semi equipment, electronic equipment, and communication equipment all underperformed. It was a broad sell-off, with oil and gas and non-ferrous metals lower. There was no sign of China’s National Team based on volumes and outflows in their favorite Mainland-listed China equity ETFs.
PBOC Governor Pan Gongsheng stated at the G20 that there is no intention to devalue the renminbi. Funny how few have noticed its +3.95% YTD and +6.19% 1-year return versus the US dollar.
The Ministry of Foreign Affairs spokesperson stated they were unaware of US-China-Russia meetings, per some chatter yesterday.
Post his Egypt visit, President Xi is headed to the BRICS conference in New Delhi, India, followed by his US visit with President Trump. Shockingly little coverage thus far.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.1% |
| Hang Seng Tech | HSTECH Index | -0.7% |
| Hong Kong Turnover | HKTurn Index | -9.2% |
| Hong Kong Short Sale Turnover | HKSST Index | -10.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 522.77 |
| China (Shanghai) | SHCOMP Index | -1% |
| China (Shenzhen) | SZCOMP Index | -1.4% |
| China (STAR Board) | Star50 Index | -1.8% |
| Mainland Turnover | .chturn Index | -12% |
| Japan | NKY Index | -2.9% |
| India | SENSEX Index | -0.5% |
| Indonesia | JCI Index | -0.1% |
| Malaysia | FBMKLCI Index | 0.5% |
| Pakistan | KSE100 Index | -1% |
| Philippines | PCOMP Index | -0.7% |
| South Korea | KOSPI Index | -4% |
| Taiwan | TWSE Index | -1.7% |
| Thailand | SET Index | -0.9% |
| Singapore | STI Index | 0.6% |
| Australia | AS51 Index | -1% |
| Vietnam | VNINDEX Index | -0.0005 |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 79% | 72% |
| Advancing Stocks | 161 | 1352 |
| Declining Stocks | 357 | 3692 |
| Outperforming Factors | None | None |
| Underperforming Factors | Liquidity, Growth, EPS Revision | Liquidity, EPS Revision, ESG Score |
| Top Sectors | Real Estate, Healthcare, Tech | Utilities, Healthcare, Staples |
| Bottom Sectors | Materials, Industrials, Energy | Materials, Energy, Industrials |
| Top Subsectors | Real Estate, Banks, REITs | Education, Aerospace/Military, Gas |
| Bottom Subsectors | Electrical Equipment, Media/Entertainment, Auto | Agricultural, Fertilizer/Pesticide, Cultural Media |
| Southbound Connect Buys | Meituan, Minimax, Tencent, YOFC, Z AI (Small) | N/A |
| Southbound Connect Sells | Alibaba (Large) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -0.46 |
| Communication Services | 11 | -0.87 |
| Consumer Discretionary | 28 | -0.6 |
| Consumer Staples | 13 | 0.08 |
| Energy | 6 | -1.11 |
| Financials | 25 | -0.01 |
| Health Care | 16 | 0.55 |
| Industrials | 22 | -1.87 |
| Information Technology | 12 | 0.17 |
| Materials | 14 | -1.89 |
| Real Estate | 7 | 1.51 |
| Utilities | 11 | -0.02 |
| Mainland China Listed | 386 | -1.44 |
| Communication Services | 8 | -1.6 |
| Consumer Discretionary | 26 | -1.49 |
| Consumer Staples | 19 | -0.58 |
| Energy | 12 | -1.95 |
| Financials | 64 | -0.72 |
| Health Care | 31 | -0.25 |
| Industrials | 58 | -1.88 |
| Information Technology | 95 | -1.87 |
| Materials | 52 | -2.2 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.7 |
| Alibaba HK | 9988 HK Equity | -0.5 |
| JD.com HK | 9618 HK Equity | 0 |
| NetEase HK | 9999 HK Equity | -0.7 |
| Yum China HK | 9987 HK Equity | 0.9 |
| Baozun HK | 9991 HK Equity | -3.5 |
| Baidu HK | 9888 HK Equity | -1.4 |
| Autohome HK | 2518 HK Equity | -2.6 |
| Bilibili HK | 9626 HK Equity | -3 |
| Trip.com HK | 9961 HK Equity | -1.5 |
| EDU HK | 9901 HK Equity | 2.2 |
| Xpeng HK | 9868 HK Equity | -2.3 |
| Weibo HK | 9898 HK Equity | -0.6 |
| Li Auto HK | 2015 HK Equity | -2.5 |
| Nio Auto HK | 9866 HK Equity | -3.3 |
| Zhihu HK | 2390 HK Equity | -3.3 |
| KE HK | 2423 HK Equity | 1 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.1 |
| Meituan HK | 3690 HK Equity | 2.7 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -0.7 |
| ALIBABA GROUP HOLDING LTD | -0.5 |
| YANGTZE OPTICAL FIBRE AND-H | 3.2 |
| MEITUAN-CLASS B | 2.7 |
| MINIMAX GROUP INC | 1.7 |
| Z AI CO LTD | -5.3 |
| XIAOMI CORP-CLASS B | 1.8 |
| KINGBOARD LAMINATES HLDG LTD | 3.3 |
| AIA GROUP LTD | 0.1 |
| SEMICONDUCTOR MANUFACTURI-H | -0.9 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | -3.5 |
| SHANTUI CONSTRUCTION MACHI-A | -2.7 |
| ZHONGJI INNOLIGHT CO LTD-A | -4.3 |
| EOPTOLINK TECHNOLOGY INC L-A | -4 |
| CXMT CORP-A | -3.9 |
| CHINA JUSHI CO LTD -A | 2.6 |
| SUZHOU TFC OPTICAL COMMUNI-A | -0.7 |
| HENGTONG OPTIC-ELECTRIC CO-A | -0.7 |
| CONTEMPORARY AMPEREX TECHN-A | -2.7 |
| SHENGYI TECHNOLOGY CO LTD -A | 0.4 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.72 versus 6.72 yesterday
- CNY per EUR 7.77 versus 7.79 yesterday
- Yield on 10-Year Government Bond 1.69% versus 1.69% yesterday
- Yield on 10-Year China Development Bank Bond 1.76% versus 1.77% yesterday
- Copper Price -1.29%
- Steel Price -0.54%
