Summer Trading Lull Ahead Of Tencent Earnings Tomorrow
5 Min. Read Time
Key News
Asian equities were mixed overnight as South Korea and Taiwan outperformed, while Mainland China and Hong Kong underperformed.
Japan was closed overnight for National Mountain Day, which encourages people to connect with nature, appreciate the blessings of mountains, and honor the country's rugged terrain, which covers roughly 70% to 80% of the country.
Hong Kong was lower overnight as the Hang Seng Index closed lower by -1.1% and the Hang Seng Tech Index closed lower by -1.9%. Declining stocks outpaced advancing stocks on lower-than-usual volume. Top sectors included Healthcare (+0.32%) and Energy (+0.28%), while Information Technology (-2.32%), Communication Services (-2.18%), and Consumer Staples (-1.60%) underperformed. Top subsectors included petroleum, electrical equipment, and pharmaceuticals, while bottom subsectors included non-ferrous metals, steel, and automobiles.
Hong Kong internet stocks were lower overnight ahead of Tencent's earnings report tomorrow and JD.com's earnings report on Thursday, both before the U.S. market opens. Tencent was down -2.2% and was Hong Kong's second most heavily traded stock by value. Alibaba was down slightly by -0.2% and was Hong Kong's most heavily traded stock by value. JD.com was down -3.0%, NetEase fell by -1.4%, and Meituan was down -0.9%.
According to Bloomberg, Tencent's WorkBuddy has sparked an "AI Turnaround" story. WorkBuddy has become China's most popular AI workplace assistant just months after launch. It will be interesting to see whether this shows up in tomorrow's earnings report, as investors are eager to see the company's spending plans and the impact of its AI efforts on profits.
Tencent Music Entertainment (TME) reported earnings before the U.S. open this morning. TME posted strong revenue of RMB8.93 billion ($1.32 billion), up 5.8% year-over-year, but its stock dropped by about -4% as expenses continue to weigh on margins.
Mainland investors were slight sellers of Hong Kong-listed stocks and ETFs, with a net sell of -$175.8 million through the Southbound Stock Connect. Top Southbound Stock Connect net buys included Xiaomi (-3.5%) and MiniMax (+1.7%), while top net sells included Z.AI (-4.8%).
There was chatter overnight that Z.AI has upgraded its ZCode coding harness with new features, including idle-time task capabilities. All GLM Coding Plan user (people who subscribe to Z.AI’s paid usage plan for its GLM coding models) quotas were fully reset at 1 pm local time as part of a milestone celebration for reaching 1 million users.
Mainland China was lower, with Shanghai down -0.8%, Shenzhen down -0.5%, and China's Science and Technology (STAR) Board closing lower by -1.6%. Mainland China's Utilities (+0.48%) sector outperformed, while Materials (-3.73%) and Communication Services (-1.21%) underperformed. Top subsectors included soft drinks, heavy machinery, and catering tourism, while bottom subsectors included communication equipment, internet, and semiconductors.
Electric Vehicle (EV) stocks were lower, including NIO (-3%), XPeng (-2.5%), Li Auto (-2%), and BYD (-3%) after China's Car Association said EV sales fell by -4% in July.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.1% |
| Hang Seng Tech | HSTECH Index | -1.9% |
| Hong Kong Turnover | HKTurn Index | -12.2% |
| Hong Kong Short Sale Turnover | HKSST Index | -21% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -175.76 |
| China (Shanghai) | SHCOMP Index | -0.8% |
| China (Shenzhen) | SZCOMP Index | -0.5% |
| China (STAR Board) | Star50 Index | -1.6% |
| Mainland Turnover | .chturn Index | -7.7% |
| Japan | NKY Index | 2.1% |
| India | SENSEX Index | -0.5% |
| Indonesia | JCI Index | -1.5% |
| Malaysia | FBMKLCI Index | -0.2% |
| Pakistan | KSE100 Index | -0.8% |
| Philippines | PCOMP Index | 0.6% |
| South Korea | KOSPI Index | 0.7% |
| Taiwan | TWSE Index | 0.4% |
| Thailand | SET Index | -0.7% |
| Singapore | STI Index | 1% |
| Australia | AS51 Index | 0.2% |
| Vietnam | VNINDEX Index | -0.0005 |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 77% | 93% |
| Advancing Stocks | 13 | 69 |
| Declining Stocks | 79 | 227 |
| Outperforming Factors | Value | Value |
| Underperforming Factors | Growth | Growth |
| Top Sectors | Healthcare, Energy | Utilities |
| Bottom Sectors | Information Technology, Commuincation Services, Consumer Staples | Materials, Communication Services |
| Top Subsectors | Petroleum, Electrical Equipment, Pharmaceuticals | Oil & Gas, Communication Equipment, Land Transport |
| Bottom Subsectors | Non Ferrous Metals, Steel, Automobiles | Precious Metals, Marine, Base Metals |
| Southbound Connect Buys | Citic Securities, Xiaomi, MiniMax | N/A |
| Southbound Connect Sells | Z.AI, YOFC | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -1.4 |
| Communication Services | 11 | -2.18 |
| Consumer Discretionary | 28 | -1.08 |
| Consumer Staples | 13 | -1.6 |
| Energy | 6 | 0.28 |
| Financials | 25 | -0.94 |
| Health Care | 16 | 0.32 |
| Industrials | 22 | -0.65 |
| Information Technology | 12 | -2.32 |
| Materials | 14 | -4.5 |
| Real Estate | 7 | -0.98 |
| Utilities | 11 | -0.13 |
| Mainland China Listed | 386 | -0.97 |
| Communication Services | 8 | -1.21 |
| Consumer Discretionary | 26 | -0.33 |
| Consumer Staples | 19 | -0.68 |
| Energy | 12 | -0.98 |
| Financials | 64 | -0.35 |
| Health Care | 31 | -0.08 |
| Industrials | 58 | -0.75 |
| Information Technology | 95 | -0.77 |
| Materials | 52 | -3.73 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -2.2 |
| Alibaba HK | 9988 HK Equity | -0.2 |
| JD.com HK | 9618 HK Equity | -3 |
| NetEase HK | 9999 HK Equity | -1.4 |
| Yum China HK | 9987 HK Equity | -0.4 |
| Baozun HK | 9991 HK Equity | -5.7 |
| Baidu HK | 9888 HK Equity | -2.5 |
| Autohome HK | 2518 HK Equity | 3.2 |
| Bilibili HK | 9626 HK Equity | -3 |
| Trip.com HK | 9961 HK Equity | -0.5 |
| EDU HK | 9901 HK Equity | -1.2 |
| Xpeng HK | 9868 HK Equity | -2.9 |
| Weibo HK | 9898 HK Equity | -0.2 |
| Li Auto HK | 2015 HK Equity | -2.1 |
| Nio Auto HK | 9866 HK Equity | -4.4 |
| Zhihu HK | 2390 HK Equity | 1.3 |
| KE HK | 2423 HK Equity | -1.5 |
| Tencent Music Entertainment HK | 1698 HK Equity | 2.6 |
| Meituan HK | 3690 HK Equity | -0.9 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -0.2 |
| TENCENT HOLDINGS LTD | -2.2 |
| Z AI CO LTD | -4.8 |
| KINGBOARD LAMINATES HLDG LTD | -2.1 |
| MINIMAX GROUP INC | 1.7 |
| XIAOMI CORP-CLASS B | -3.5 |
| ZIJIN MINING GROUP CO LTD-H | -5.8 |
| MEITUAN-CLASS B | -0.9 |
| LENOVO GROUP LTD | -1.6 |
| HUA HONG GRACE SEMICONDUCTOR | -3.1 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 2.6 |
| EOPTOLINK TECHNOLOGY INC L-A | 3.9 |
| GIGADEVICE SEMICONDUCTO-CL A | -0.2 |
| SUZHOU DONGSHAN PRECISION-A | 4.3 |
| GUANGDONG FENGHUA ADVANCED-A | 6.7 |
| SHANDONG SINOCERA FUNCTION-A | -4.2 |
| ZIJIN MINING GROUP CO LTD-A | -6.4 |
| WUXI APPTEC CO LTD-A | -0.7 |
| CAMBRICON TECHNOLOGIES-A | -3 |
| CXMT CORP-A | -1.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.75 versus 6.74 yesterday
- CNY per EUR 7.78 versus 7.79 yesterday
- Copper Price +0.60%
- Steel Price +0.17%
