Risk Off Day As JD Ramps Up Data Center Investment
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Key News
Asian equities were mostly lower overnight, as Korea and Thailand outperformed, while Hong Kong and Vietnam underperformed.
Hong Kong stocks traded lower during the overnight session, as the Hang Seng Index fell 1.00% to 24,667 and the Hang Seng Tech also declined -0.62% to 4,291. It was a similar story on the Mainland, though Mainland China's Science & Technology (STAR) Board bucked the trend, gaining 1.55%. Sector performance saw relative strength in Information Technology and Materials on the Mainland, and Communication Services and Energy in Hong Kong. Conversely, Consumer Discretionary and Industrials lagged on the Mainland, while Materials and Information Technology underperformed in Hong Kong. This meant a slight growth tilt, leading semiconductor and other technology exposures to outperform.
Optical communications maker Zhongji Innolight fell -1.03% overnight and was the Mainland's third most heavily-traded stock by value, despite some analysts identifying the stock as a major beneficiary of US hyperscaler capex. Optical communications are likely going to be required for new AI-enabled data centers as well as connections worldwide for higher bandwidth data. Zhongji and China in general are leaders in the development and manufacturing of this technology.
Health care was lower in both Hong Kong and Mainland China, despite strong signals emerging about China's health care innovation ecosystem. The Wall Street Journal recently published an article about a New Zealander who, after struggling to fight his non-Hodgkin lymphoma through traditional methods, flew to China to receive CAR-T therapy, a new way to treat cancer that was not yet available in his home country, and achieved complete remission. Foreign patients traveling to China for advanced cancer treatments are providing a powerful are forming a powerful external validation for the country's health care innovation ecosystem. Their willingness to cross borders, pay out of pocket, and manage the complexity of treatment abroad suggests that China increasingly competes not only on cost, but also on differentiated therapies, clinical capacity, and speed of access. Shanghai Sino United Hospital reportedly treated roughly three dozen CAR-T patients from 12 countries after opening the treatment pathway to international patients.
JD.com, which gained 0.30% overnight, is building a 100,000 GPU data center cluster as part of a broader push to upgrade its data infrastructure. Meanwhile, Alibaba led an RMB 2 billion investment into an AI model and training startup.
The People's Bank of China (PBOC) injected liquidity into the markets overnight, though that did not help stem broad-based declines due to global risk-off sentiment. Meanwhile, the Ministry of Natural Resources, the Ministry of Culture & Tourism, and the National Forestry and Grassland Administration issued a joint statement on optimizing natural resources for tourism development. Trip.com gained 0.19% in Hong Kong.
China released more data points on the economy overnight for the August and year-to-date (YTD) periods. Industrial production was the bright spot, while consumption and fixed asset investment were lackluster to declining. These data points continue to point towards a new stimulus package for the economy and especially for consumption. We are, in particular, looking to see whether there is a significant policy annoucnement following the Trump-Xi meeting this month.
August Economic Data Release Overview
% changes are year-over-year (YoY)
- Industrial Profits (Value-Added) +5.2%
- Retail Sales of Consumer Goods +0.4%
- Fixed Asset Investment YTD -7.2%
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1% |
| Hang Seng Tech | HSTECH Index | -0.6% |
| Hong Kong Turnover | HKTurn Index | -2.8% |
| Hong Kong Short Sale Turnover | HKSST Index | -12.8% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 112.5 |
| China (Shanghai) | SHCOMP Index | -0.5% |
| China (Shenzhen) | SZCOMP Index | -0.8% |
| China (STAR Board) | Star50 Index | 1.6% |
| Mainland Turnover | .chturn Index | -1.1% |
| Japan | NKY Index | 0% |
| India | SENSEX Index | -1% |
| Indonesia | JCI Index | -1.1% |
| Malaysia | FBMKLCI Index | -1.1% |
| Pakistan | KSE100 Index | 0.8% |
| Philippines | PCOMP Index | -1.1% |
| South Korea | KOSPI Index | -0.9% |
| Taiwan | TWSE Index | -0.8% |
| Thailand | SET Index | -0.8% |
| Singapore | STI Index | -1.4% |
| Australia | AS51 Index | -0.9% |
| Vietnam | VNINDEX Index | 1.3% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 92 | 86 |
| Advancing Stocks | 14 (Hang Seng) | 83 (CSI 300) |
| Declining Stocks | 78 (Hang Seng) | 213 (CSI 300) |
| Outperforming Factors | Growth | Growth |
| Underperforming Factors | Value | Value |
| Top Sectors | Communication Services, Consumer Discretionary, Energy | Information Technology, Energy, Materials |
| Bottom Sectors | Materials, Real Estate, Industrials | Industrials, Real Estate, Financials |
| Top Subsectors | Software & Services, Semiconductors, Paper & Packaging | Semiconductors, Power Generation, Motorcycles |
| Bottom Subsectors | Electrical Equipment, Non-Ferrous Metals, Industry Conglomerates | Caterins & Tourism, Retail, Agriculture |
| Southbound Connect Buys | Z.ai, YOFC, CNOOC | N/A |
| Southbound Connect Sells | Tencent, Hua Hong Grace Semiconductor, Alibaba | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -0.6 |
| Communication Services | 11 | 1.67 |
| Consumer Discretionary | 28 | 0.1 |
| Consumer Staples | 13 | -1.17 |
| Energy | 6 | -0.08 |
| Financials | 25 | -2.09 |
| Health Care | 16 | -1.13 |
| Industrials | 22 | -2.3 |
| Information Technology | 12 | -1.87 |
| Materials | 14 | -3.39 |
| Real Estate | 7 | -2.54 |
| Utilities | 11 | -0.13 |
| Mainland China Listed | 386 | -0.49 |
| Communication Services | 8 | -0.57 |
| Consumer Discretionary | 26 | -1 |
| Consumer Staples | 19 | -0.46 |
| Energy | 12 | 0.18 |
| Financials | 64 | -1.05 |
| Health Care | 31 | -0.8 |
| Industrials | 58 | -2.03 |
| Information Technology | 95 | 0.35 |
| Materials | 52 | -0.02 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 1.9 |
| Alibaba HK | 9988 HK Equity | 1.2 |
| JD.com HK | 9618 HK Equity | 0.3 |
| NetEase HK | 9999 HK Equity | 2.7 |
| Yum China HK | 9987 HK Equity | -0.5 |
| Baozun HK | 9991 HK Equity | -1.9 |
| Baidu HK | 9888 HK Equity | -0.4 |
| Autohome HK | 2518 HK Equity | 2.4 |
| Bilibili HK | 9626 HK Equity | -0.3 |
| Trip.com HK | 9961 HK Equity | 0.2 |
| EDU HK | 9901 HK Equity | -1.2 |
| Xpeng HK | 9868 HK Equity | -3.9 |
| Weibo HK | 9898 HK Equity | 0.3 |
| Li Auto HK | 2015 HK Equity | -2.9 |
| Nio Auto HK | 9866 HK Equity | -2.2 |
| Zhihu HK | 2390 HK Equity | 3 |
| KE HK | 2423 HK Equity | -3.7 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.3 |
| Meituan HK | 3690 HK Equity | -0.4 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | 1.9 |
| Z AI CO LTD | -5.7 |
| ALIBABA GROUP HOLDING LTD | 1.2 |
| MINIMAX GROUP INC | -7.1 |
| CONTEMPORARY AMPEREX TECHN-H | -6 |
| YANGTZE OPTICAL FIBRE AND-H | -0.9 |
| KINGBOARD LAMINATES HLDG LTD | 3.1 |
| HSBC HOLDINGS PLC | -3.2 |
| SEMICONDUCTOR MANUFACTURI-H | -0.9 |
| KANZHUN LTD | -4.6 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | -0.8 |
| SHANTUI CONSTRUCTION MACHI-A | -2.3 |
| ZHONGJI INNOLIGHT CO LTD-A | -1 |
| CONTEMPORARY AMPEREX TECHN-A | -6.2 |
| CHINA JUSHI CO LTD -A | 4 |
| SHENGYI TECHNOLOGY CO LTD -A | 2.9 |
| CAMBRICON TECHNOLOGIES-A | 3.4 |
| GIGADEVICE SEMICONDUCTO-CL A | 1.7 |
| CXMT CORP-A | -0.5 |
| EOPTOLINK TECHNOLOGY INC L-A | -1.2 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.71 versus 6.71 yesterday
- CNY per EUR 7.75 versus 7.75 yesterday
- Yield on 10-Year Government Bond 1.69% versus 1.69% yesterday
- Yield on 10-Year China Development Bank Bond 1.77% versus 1.77% yesterday
- Copper Price 0.51%
- Steel Price 0.64%
