Tencent’s Bond Issuance Demonstrates Financial Health
4 Min. Read Time
Key News
Asian equities were mostly higher overnight as Mainland China's STAR (Science & Technology) Market and Korea outperformed, while the Philippines and Hong Kong underperformed.
Mainland China, especially the STAR (Science & Technology) market, outperformed Hong Kong overnight once again. Semiconductors represented the top-performing subsector in both Mainland China and Hong Kong. Alibaba was basically flat overnight despite being the second-most heavily traded stock in Hong Kong by value. Mainland investors sold a net $400 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect.
Tencent completed its first dual-currency bond offering, raising $4.7 billion. The company noted "strong investor support" for the issuance" and said that the "proceeds will be used to fund general corporate purposes, including refinancing" of existing debts. The bond issuance included multiple maturity dates, and the 20-year tranche is said to have achieved the tightest spread ever in the global technology, media, and telecommunications (TMT) sector. The tightest spread ever! Clearly, the company is not struggling. The strong reception of the bonds indicates that fixed income investors value this company very differently from equity investors. If you look at the stock price performance, you would think that the company is in deep financial trouble!
The State Administration of Market Regulation (SAMR) told online platforms to keep competition "fair" during the annual “618” shopping festival, which is now underway across multiple platforms. Shenzhen's market regulator summoned food delivery companies to address false addresses, multiple listings at one site, mismatched licenses, and poor hygiene with an order to immediately rectify all violations.
Chipmakers were higher nearly across the board, as Semiconductor Manufacturing (SMIC) gained +2.4%, Biren gained +4.4%, and Hua Hong gained +8.5%. Large language model (LLM) provider Knowledge Atlas was one of the top buys from Mainland investors via Southbound Stock Connect and gained 12% overnight.
SAMR issued a long-awaited approval for actively-managed ETF launches in China.
The Lujiazui Forum kicked off in Shanghai.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.7% |
| Hang Seng Tech | HSTECH Index | 0.2% |
| Hong Kong Turnover | HKTurn Index | 8.2% |
| Hong Kong Short Sale Turnover | HKSST Index | -6.6% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 15.9% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -411.45 |
| China (Shanghai) | SHCOMP Index | 0.4% |
| China (Shenzhen) | SZCOMP Index | 0.7% |
| China (STAR Board) | Star50 Index | 4.7% |
| Mainland Turnover | .chturn Index | 0.8% |
| Japan | NKY Index | 0.7% |
| India | SENSEX Index | 0.5% |
| Indonesia | JCI Index | -0.5% |
| Malaysia | FBMKLCI Index | 1.1% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | -2.1% |
| South Korea | KOSPI Index | 1.6% |
| Taiwan | TWSE Index | 0.1% |
| Thailand | SET Index | -0.1% |
| Singapore | STI Index | 1.2% |
| Australia | AS51 Index | 0.5% |
| Vietnam | VNINDEX Index | -0.1% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 101 | 136 |
| Advancing Stocks | 13 (Hang Seng) | 136 (CSI 300) |
| Declining Stocks | 79 (Hang Seng) | 85 (CSI 300) |
| Outperforming Factors | Value | Value |
| Underperforming Factors | Growth | Growth |
| Top Sectors | Materials, Information Technology, Communication Services | Information Technology, Materials, Industrials |
| Bottom Sectors | Consumer Staples, Real Estate, Financials | Consumer Discretionary, Consumer Staples, Communication Services |
| Top Subsectors | Semiconductors, Construction Materials, Aerospace | Semiconductors, Computer Hardware, Building Materials |
| Bottom Subsectors | Steel, Food & Beverage, Autos | Catering/Tourism, Forest Industry, Paper |
| Southbound Connect Buys | KE Laminates, Kingboard Holdings, Knowledge Atlas | N/A |
| Southbound Connect Sells | CNOOC, Tencent, Hua Hong | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | -0.84 |
| Communication Services | 11 | -0.08 |
| Consumer Discretionary | 28 | -0.9 |
| Consumer Staples | 13 | -2.78 |
| Energy | 6 | -0.39 |
| Financials | 25 | -1.88 |
| Health Care | 16 | -1.46 |
| Industrials | 22 | -0.43 |
| Information Technology | 12 | 0.24 |
| Materials | 14 | 0.29 |
| Real Estate | 7 | -2.18 |
| Utilities | 11 | -1.41 |
| Mainland China Listed | 386 | 1.02 |
| Communication Services | 8 | -1.13 |
| Consumer Discretionary | 26 | -1.77 |
| Consumer Staples | 19 | -1.14 |
| Energy | 12 | -0.41 |
| Financials | 64 | -0.7 |
| Health Care | 31 | -0.76 |
| Industrials | 58 | 0.38 |
| Information Technology | 95 | 3.72 |
| Materials | 52 | 0.49 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.4 |
| Alibaba HK | 9988 HK Equity | -0.1 |
| JD.com HK | 9618 HK Equity | -0.4 |
| NetEase HK | 9999 HK Equity | -0.1 |
| Yum China HK | 9987 HK Equity | -2.4 |
| Baozun HK | 9991 HK Equity | 0 |
| Baidu HK | 9888 HK Equity | 1.4 |
| Autohome HK | 2518 HK Equity | -0.1 |
| Bilibili HK | 9626 HK Equity | 1 |
| Trip.com HK | 9961 HK Equity | 0.5 |
| EDU HK | 9901 HK Equity | 1 |
| Xpeng HK | 9868 HK Equity | -3.1 |
| Weibo HK | 9898 HK Equity | -0.8 |
| Li Auto HK | 2015 HK Equity | -3.8 |
| Nio Auto HK | 9866 HK Equity | -2.8 |
| Zhihu HK | 2390 HK Equity | -0.6 |
| KE HK | 2423 HK Equity | -2.6 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.4 |
| Meituan HK | 3690 HK Equity | -1.2 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| KINGBOARD LAMINATES HLDG LTD | 3.1 |
| ALIBABA GROUP HOLDING LTD | -0.1 |
| TENCENT HOLDINGS LTD | -0.4 |
| SEMICONDUCTOR MANUFACTURI-H | 2.4 |
| KINGBOARD HOLDINGS LTD | 17.7 |
| KNOWLEDGE ATLAS TECHNOLOGY-H | 12.6 |
| HUA HONG GRACE SEMICONDUCTOR | 8.5 |
| YANGTZE OPTICAL FIBRE AND-H | -4.5 |
| CNOOC LTD-H | -3.1 |
| KUAISHOU TECHNOLOGY | 7.3 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| VISUAL CHINA GROUP CO LTD-A | -4 |
| SHANTUI CONSTRUCTION MACHI-A | -0.4 |
| GIGADEVICE SEMICONDUCTO-CL A | 10 |
| ZHONGJI INNOLIGHT CO LTD-A | 2.2 |
| SUZHOU DONGSHAN PRECISION-A | 3.2 |
| HENGTONG OPTIC-ELECTRIC CO-A | 3.3 |
| EOPTOLINK TECHNOLOGY INC L-A | 1.6 |
| SHENGYI TECHNOLOGY CO LTD -A | 0.4 |
| MONTAGE TECHNOLOGY CO LTD-A | 7.5 |
| JCET GROUP CO LTD-A | 6.3 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.76 versus 6.76 yesterday
- CNY per EUR 7.84 versus 7.85 yesterday
- Yield on 10-Year Government Bond 1.73% versus 1.73% yesterday
- Yield on 10-Year China Development Bank Bond 1.82% versus 1.83% yesterday
- Copper Price 0.41%
- Steel Price -0.50%
