Revenge Of The Value Nerds
6 Min. Read Time
Key News
Asian equities had a positive day, led by South Korea, while Vietnam, Hong Kong growth stocks, and Mainland China underperformed.
The US dollar was firmer versus local currencies as markets priced in higher for longer rates under Warsh, a factor contributing to global technology stock weakness, except for semiconductors. While historically a hawk, Trump put him in the Fed job to cut rates, in my opinion. I have never seen such a distinction between value and growth stocks in both the Hong Kong and Mainland China markets as today.
Breadth was positive in both markets, though the Hang Seng Index managed a small gain, the Hang Seng Tech Index fell by -1.84%, the value-oriented Shanghai Composite Index gained +0.85%. Meanwhile, the growth-geared STAR Board fell by -1.20%. Coal stocks were the best-performing subsector in both markets! Coal! Software stocks followed their US counterparts lower on AI’s threat, but the downdraft was very specific to growth stocks.
Battery giant CATL gained +4.34% in Hong Kong and +4.92% in Mainland China after increasing its stake in a lithium battery supplier. Solar stocks managed to buck the growth downdraft on chatter that Elon Musk’s people visited several China-based solar companies. Pharmaceuticals in both markets also avoided the growth sniper shot.
Yesterday’s rumor of a value-added-tax (VAT) increase on E-Commerce might be a factor, though technology hardware and semiconductor stocks were off in both markets. Southbound Stock Connect investors bought the Hong Kong growth dip on healthy $1.71 billion worth of net buying, as Tencent was down -3.96% but still a large net buy, Alibaba was down -0.93%, and the Hang Seng Tech ETF was a large buy, as well. Tencent stopped a marketing campaign on WeChat that seems to have put investors on edge for no reason, in my opinion. All three saw put buying, though Baidu, which fell -2.97%, had strong call activity as its Kunlun chip unit moves toward an IPO.
Yesterday, we wrote about Waymo’s valuation, which is 2X Baidu’s market cap. It would be a fun exercise to apply US equivalent company valuations to Baidu’s business units (Search – Google, Taxi – Waymo, LLM – OpenAI).
Mainland media noted strong inflows into Mainland-listed ETFs with exposure to Hong Kong growth stocks. The 149 Mainland ETFs with Hong Kong exposure had a net inflow of $365 million, as two Mainland-listed ETFs focused on Hong Kong-listed technology and internet exposure, each recording a net inflow of $100 million.
The Mainland-listed China ETFs favored by the "National Team", i.e. investment firms associated with China's sovereign wealth, have all returned to below-average trading volumes.
President Xi had a call with President Putin, which optically isn’t great.
Yum China (YUMC US, 9987 HK) reported Q4 financial results after the Hong Kong close. Its revenue increased +9% year-over-year (YoY), and adjusted net income and adjusted earnings per share (EPS) that beat analyst expectations. The company bought back 7% of shares outstanding in 2025, which amounts to 24.7 million shares. The company plans to buuy back $460 million worth of shares in the first half of 2026, while increasing the next dividend by +21% to $0.29. While 2025 revenues of $11.8 billion are higher than 2020’s annual revenue of $8.26 billion, the US ADR is 26.82% below its all-time high in June 2021. The company opened 1,706 stores in China in 2025, with a goal of 20,000 by year-end 2026 and 30,000 by 2030. While it is never a good thing to be a pig in China, it might not a good thing to be a chicken, either!
A non-factor in today’s trading was the December RatingDog Services PMI, considered the “private” survey, conducted by S&P on non-SOE companies, which was 52.3 versus December’s 52.0 and economists' expectations of 52.
Mainland media reported that Elon Musk’s team met with Jinko Solar. Remember our thesis: President Trump and President Xi plan to announce corporate partnerships during their April trip.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0% |
| Hang Seng Tech | HSTECH Index | -1.8% |
| Hong Kong Turnover | HKTurn Index | -14.8% |
| Hong Kong Short Sale Turnover | HKSST Index | -19.2% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 1707.89 |
| China (Shanghai) | SHCOMP Index | 0.8% |
| China (Shenzhen) | SZCOMP Index | 0.3% |
| China (STAR Board) | Star50 Index | -1.2% |
| Mainland Turnover | .chturn Index | -2.4% |
| Japan | NKY Index | -0.8% |
| India | SENSEX Index | 0.1% |
| Indonesia | JCI Index | 0.3% |
| Malaysia | FBMKLCI Index | -0.3% |
| Pakistan | KSE100 Index | 0.5% |
| Philippines | PCOMP Index | -0.5% |
| South Korea | KOSPI Index | 1.6% |
| Taiwan | TWSE Index | 0.3% |
| Thailand | SET Index | 0.8% |
| Singapore | STI Index | 0.4% |
| Australia | AS51 Index | 0.8% |
| Vietnam | VNINDEX Index | -1.2% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 109% | 133% |
| Advancing Stocks | 298 | 3127 |
| Declining Stocks | 181 | 1940 |
| Outperforming Factors | Value, Dividend Yield, Low Volatility | Value, Dividend Yield, Low Volatility |
| Underperforming Factors | Liquidity | Liquidity, Momentum |
| Top Sectors | Energy, Real Estate, Industrials | Energy, Real Estate, Staples |
| Bottom Sectors | Communication, Tech, Discretionary | Tech, Communication |
| Top Subsectors | Coal, Electrical Equipment | Coal, Aviation, Soft Drink |
| Bottom Subsectors | Software, Semis, Tech Hardware | Internet, Cultural Media, Communication Equipment |
| Southbound Connect Buys | Tencent (Very Large), Alibaba, HS Tech ETF, Xiaomi(Large), Drinda, YOFC (Small) | |
| Southbound Connect Sells | SMIC (Moderate) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -0.75 |
| Communication Services | 11 | -3.68 |
| Consumer Discretionary | 28 | -0.77 |
| Consumer Staples | 13 | 1.06 |
| Energy | 6 | 3.91 |
| Financials | 25 | 1.11 |
| Health Care | 16 | 0.77 |
| Industrials | 22 | 1.54 |
| Information Technology | 12 | -2.33 |
| Materials | 14 | 1.34 |
| Real Estate | 7 | 3.68 |
| Utilities | 11 | 1.11 |
| Mainland China Listed | 386 | 0.85 |
| Communication Services | 8 | -0.8 |
| Consumer Discretionary | 26 | 1.35 |
| Consumer Staples | 19 | 2.68 |
| Energy | 12 | 5.07 |
| Financials | 64 | 1.22 |
| Health Care | 31 | 1.05 |
| Industrials | 58 | 2.33 |
| Information Technology | 95 | -1.79 |
| Materials | 52 | 0.59 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -4 |
| Alibaba HK | 9988 HK Equity | -0.9 |
| JD.com HK | 9618 HK Equity | -1.6 |
| NetEase HK | 9999 HK Equity | -3.3 |
| Yum China HK | 9987 HK Equity | -0.6 |
| Baozun HK | 9991 HK Equity | -2.9 |
| Baidu HK | 9888 HK Equity | -3 |
| Autohome HK | 2518 HK Equity | -4.6 |
| Bilibili HK | 9626 HK Equity | -3.7 |
| Trip.com HK | 9961 HK Equity | -6.1 |
| EDU HK | 9901 HK Equity | 1.6 |
| Xpeng HK | 9868 HK Equity | -0.2 |
| Weibo HK | 9898 HK Equity | -2.1 |
| Li Auto HK | 2015 HK Equity | 3.4 |
| Nio Auto HK | 9866 HK Equity | -2 |
| Zhihu HK | 2390 HK Equity | -4.7 |
| KE HK | 2423 HK Equity | 2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.1 |
| Meituan HK | 3690 HK Equity | -1.1 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -4 |
| ALIBABA GROUP HOLDING LTD | -0.9 |
| XIAOMI CORP-CLASS B | -1.8 |
| SEMICONDUCTOR MANUFACTURI-H | -2.4 |
| MEITUAN-CLASS B | -1.1 |
| TRIP.COM GROUP LTD | -6.1 |
| POP MART INTERNATIONAL GROUP | 2.4 |
| ZIJIN MINING GROUP CO LTD-H | 0.7 |
| YANGTZE OPTICAL FIBRE AND-H | -2.5 |
| NETEASE INC | -3.3 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | -3.5 |
| SHANTUI CONSTRUCTION MACHI-A | 1.8 |
| ZHONGJI INNOLIGHT CO LTD-A | -5 |
| EOPTOLINK TECHNOLOGY INC L-A | -7 |
| CONTEMPORARY AMPEREX TECHN-A | 4.9 |
| ADDSINO CO LTD -A | 0.4 |
| KWEICHOW MOUTAI CO LTD-A | 3.4 |
| SHENZHEN SUNWAY COMMUNICAT-A | -11.9 |
| BLUEFOCUS INTELLIGENT COMM-A | -8 |
| LEO GROUP CO LTD-A | -9 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.94 versus 6.93 yesterday
- CNY per EUR 8.20 versus 8.18 yesterday
- Yield on 10-Year Government Bond 1.82% versus 1.82% yesterday
- Yield on 10-Year China Development Bank Bond 1.97% versus 1.97% yesterday
- Copper Price +3.24%
- Steel Price +0.13%
