Oil & Yields Weigh on Asian Markets
5 Min. Read Time
Key News
Asian equities were hit hard by rising US Treasury yields and oil prices as Middle East tensions flared up overnight. Singapore and Korea underperformed.
Hong Kong and Mainland China were similarly hit, though AI supply-chain stocks, i.e., picks-and-shovels stocks (semiconductors, semiconductor equipment, technology hardware, electrical equipment, and communications equipment), were off significantly on a sell-side report that the FCC could ban China-made optical networking components. Investors took a shoot-first, ask-questions-later approach, leading to significant losses despite no verification of the report. Hong Kong volumes were up 118% from yesterday as Mainland China reopened post-holiday, but volumes in both markets were below their 1-year averages. I assume liquidity will not fully return until Monday.
Positives worth highlighting before delving into the carnage included National Holiday spending and travel data, which looked strong. The State Taxation Administration reported service consumption was “robust,” with household appliances and electronics outperforming. Hong Kong-listed appliance maker Midea rose 2.05%. According to the Ministry of Transport, 306 million people traveled daily during the holiday, up 0.7% year-over-year (YoY), with rail trips increasing 13.1% YoY versus car trips, which declined 0.2%. Alibaba fell 1.04%. Its travel unit, Fliggy, announced that hotel booking revenues increased 70% YoY. More importantly, Alibaba held its pre-earnings blackout call, with cloud expected to grow 50% YoY and e-commerce 5%. I suspect more analysts will publish their views today.
Real estate outperformed as holiday-driven housing transactions picked up, though data is not available yet. Energy also outperformed on higher oil prices. Tencent fell 2.19% on chatter that it will issue $5 billion in bonds to fund AI capex. It was Hong Kong’s most heavily traded stock by value, with twice the traded value of second-ranked Alibaba. Tencent saw significant net buying from Mainland investors via Southbound Stock Connect. Hong Kong-listed Biren fell 11% after selling 130 million shares in a private placement, raising HK$4.04 billion. Hong Kong- and Mainland-listed AI stocks were hit hard and indiscriminately, with the Science & Technology (STAR) Board down 4.82%. Samsung Electronics’ earnings were strong but fell short of investor expectations, as concerns rose about the sustainability of chip demand.
Trading volumes in the ETFs favored by China’s “National Team,” i.e., investment firms associated with sovereign wealth, were below average, with mixed flows. One has to wonder when the cavalry mounts up.
After the close, Tencent announced it had bought back 241,000 shares, and KE Holdings announced it had bought back 622,533 shares.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.4% |
| Hang Seng Tech | HSTECH Index | -2.9% |
| Hong Kong Turnover | HKTurn Index | 118.9% |
| Hong Kong Short Sale Turnover | HKSST Index | 75.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2706 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 825 |
| China (Shanghai) | SHCOMP Index | -0.8% |
| China (Shenzhen) | SZCOMP Index | -1.6% |
| China (STAR Board) | Star50 Index | -4.8% |
| Mainland Turnover | .chturn Index | 16.3% |
| Japan | NKY Index | -1.4% |
| India | SENSEX Index | -1.4% |
| Indonesia | JCI Index | -1.9% |
| Malaysia | FBMKLCI Index | -0.7% |
| Pakistan | KSE100 Index | -0.7% |
| Philippines | PCOMP Index | -2.2% |
| South Korea | KOSPI Index | -2.6% |
| Taiwan | TWSE Index | -1% |
| Thailand | SET Index | -0.9% |
| Singapore | STI Index | -3.5% |
| Australia | AS51 Index | -0.8% |
| Vietnam | VNINDEX Index | -0.8% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 79 | 71 |
| Advancing Stocks | 201 | 1528 |
| Declining Stocks | 367 | 3513 |
| Outperforming Factors | Low Volatility, Dividend Yield, Buyback | Low Volatility, Dividend Yield, Value |
| Underperforming Factors | Liquidity, Growth, EPS Revision | Growth, Liquidity, EPS Revision |
| Top Sectors | Energy, Real Estate, Staples | Energy, Utilities, Real Estate |
| Bottom Sectors | Tech, Healthcare, Communication | Tech, Healthcare, Communication |
| Top Subsectors | Coal, Petroleum/Petrochemical, Consumer Durables/Apparel | Marine, Oil/Gas, Gas |
| Bottom Subsectors | Semis, Tech Hardware, Media/Entertainment | Semis, Communication Equipment, Biotech |
| Southbound Connect Buys | Tencent (Very Large), Minimax (Small) | |
| Southbound Connect Sells | SMIC, YOFC (Moderate), Alibaba, KB Laminates (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -1.25 |
| Communication Services | 7 | -2.1 |
| Consumer Discretionary | 27 | -0.86 |
| Consumer Staples | 12 | 1.12 |
| Energy | 7 | 2.77 |
| Financials | 24 | 0.23 |
| Health Care | 15 | -3.89 |
| Industrials | 16 | -1.96 |
| Information Technology | 14 | -4.85 |
| Materials | 14 | -2.06 |
| Real Estate | 6 | 2.28 |
| Utilities | 10 | 0.58 |
| Mainland China Listed | 419 | -1.47 |
| Communication Services | 9 | -1.68 |
| Consumer Discretionary | 21 | -1.35 |
| Consumer Staples | 16 | -0.26 |
| Energy | 11 | 3 |
| Financials | 60 | 0.05 |
| Health Care | 26 | -2.55 |
| Industrials | 62 | -0.58 |
| Information Technology | 126 | -4.14 |
| Materials | 69 | -0.38 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -2.2 |
| Alibaba HK | 9988 HK Equity | -1 |
| JD.com HK | 9618 HK Equity | 0.3 |
| NetEase HK | 9999 HK Equity | -1.1 |
| Yum China HK | 9987 HK Equity | 0.4 |
| Baozun HK | 9991 HK Equity | 4.5 |
| Baidu HK | 9888 HK Equity | -3.1 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -1.4 |
| Trip.com HK | 9961 HK Equity | -2.2 |
| EDU HK | 9901 HK Equity | 0.2 |
| Xpeng HK | 9868 HK Equity | -1.3 |
| Weibo HK | 9898 HK Equity | -0.8 |
| Li Auto HK | 2015 HK Equity | -1.1 |
| Nio Auto HK | 9866 HK Equity | -0.6 |
| Zhihu HK | 2390 HK Equity | 0.6 |
| KE HK | 2423 HK Equity | 1.5 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.7 |
| Meituan HK | 3690 HK Equity | -1.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -2.2 |
| ALIBABA GROUP HOLDING LTD | -1 |
| HSBC HOLDINGS PLC | -4.9 |
| SEMICONDUCTOR MANUFACTURI-H | -6.7 |
| KINGBOARD LAMINATES HLDG LTD | -6.4 |
| AIA GROUP LTD | 0.7 |
| YANGTZE OPTICAL FIBRE AND-H | -6.7 |
| MINIMAX GROUP INC | -13.7 |
| GENSCRIPT BIOTECH CORP | -5.1 |
| LENOVO GROUP LTD | -8.1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -3.1 |
| CXMT CORP-A | -7.8 |
| EOPTOLINK TECHNOLOGY INC L-A | -2.7 |
| CONTEMPORARY AMPEREX TECHN-A | -1.5 |
| GIGADEVICE SEMICONDUCTO-CL A | -5.5 |
| SUZHOU TFC OPTICAL COMMUNI-A | -9.9 |
| SHENGYI TECHNOLOGY CO LTD -A | 1.5 |
| CAMBRICON TECHNOLOGIES-A | -2.8 |
| SUZHOU DONGSHAN PRECISION-A | -10 |
| WUXI APPTEC CO LTD-A | -3.2 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.70 versus 6.70 yesterday
- CNY per EUR 7.49 versus 7.49 yesterday
- Yield on 10-Year Government Bond 1.69% versus 1.68% yesterday
- Yield on 10-Year China Development Bank Bond 1.76% versus 1.76% yesterday
- Copper Price 1.07%
- Steel Price -1.16%
