The Greatest Contrarian Indicator Rings The Bell!
4 Min. Read Time
Key News
Asian equities were a sea of red as Middle East tensions elevated oil prices. Multiple markets were off by -1% or more, including Korea, Singapore, and Malaysia, though the Philippines bucked the trend. Meanwhile, Mainland China remains closed for the National Holiday.
Hong Kong was hit by profit-taking on absurdly light volume following the recent pop, as the best-performers from yesterday flipped to the worst-performers overnight, including pharmaceuticals, biotech, and internet stocks. Semiconductor stocks were off again, which is interesting.
Alibaba fell by -2.59% and was Hong Kong’s most heavily-traded stock by value. Alibaba has its pre-earnings call with sell-side analysts tomorrow in advance of the November earnings release. Revenue is expected to grow 10% year-over-year (YoY), and Adjusted EPS is expected to grow +138% YoY, though we will see if management guides analysts’ expectations higher.
There was chatter in Mainland China that strong real estate sales are the ultimate contrarian trade. Mainland media noted strong retail sales in both Hubei and Huai'an due to government subsidies. It is worth noting that JD.com, which gained +1.25%, and Trip.com, which gained +0.60%, bucked the downdraft trend along with the consumer services sector. The telecommunications and machinery sectors also stood out.
There was a lot of Western media coverage of the EU getting tough on China’s imports, though Mainland media noted that Wopke Hoekstra, European Commission Executive Vice President for Trade and Economic Security, will attend the upcoming China-EU Trade and Investment Consultation Mechanism.
Hang Seng Indexes noted that the Hang Seng Tech Index will increase from 30 to 50 holdings at the December 7th rebalance. The objective is add more hardware technology names to the index by including revenue growth as an inclusion criterion. One catalyst was to reduce the exposure of internet stocks, as a Mainland media source called the current index “the food delivery index”. Do index providers make changes at the top or the bottom? Exactly! In fact, the Hang Seng Tech index was launched in July 2020, which missed the market’s peak by seven months. Arguably, this is the strongest catalyst for consumption-oriented internet stocks, such as Alibaba, JD.com, and Meituan!
Hong Kong buybacks that took place today but were announced after the close included Tencent buying back 238,000 shares and KE Holding (US Ticker: BEKE) buying back 627,348 shares.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.6% |
| Hang Seng Tech | HSTECH Index | -0.7% |
| Hong Kong Turnover | HKTurn Index | -3.6% |
| Hong Kong Short Sale Turnover | HKSST Index | 5.8% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 0.2706 |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Closed |
| China (Shanghai) | SHCOMP Index | Closed |
| China (Shenzhen) | SZCOMP Index | Closed |
| China (STAR Board) | Star50 Index | Closed |
| Mainland Turnover | .chturn Index | Closeed |
| Japan | NKY Index | -0.9% |
| India | SENSEX Index | -0.6% |
| Indonesia | JCI Index | -0.7% |
| Malaysia | FBMKLCI Index | -1.3% |
| Pakistan | KSE100 Index | 0.1% |
| Philippines | PCOMP Index | 1% |
| South Korea | KOSPI Index | -2% |
| Taiwan | TWSE Index | 0% |
| Thailand | SET Index | 0.2% |
| Singapore | STI Index | -1.6% |
| Australia | AS51 Index | -0.1% |
| Vietnam | VNINDEX Index | -0.3% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 36 | Closed |
| Advancing Stocks | 46 (Hang Seng) | Closed |
| Declining Stocks | 46 (Hang Seng) | Closed |
| Outperforming Factors | Value | Closed |
| Underperforming Factors | Growth | Closed |
| Top Sectors | Real Estate, Industrials, Consumer Staples | Closed |
| Bottom Sectors | Health Care, Communication Services, Consumer Discretionary | Closed |
| Top Subsectors | Household & Personal Products, Construction, Machinery | Closed |
| Bottom Subsectors | Semiconductors, Pharmaceuticals, Software | Closed |
| Southbound Connect Buys | Closed | N/A |
| Southbound Connect Sells | Closed | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -0.87 |
| Communication Services | 7 | -1.35 |
| Consumer Discretionary | 27 | -1.15 |
| Consumer Staples | 12 | 0.49 |
| Energy | 7 | -0.19 |
| Financials | 24 | -0.18 |
| Health Care | 15 | -2.48 |
| Industrials | 16 | 0.68 |
| Information Technology | 14 | -1.14 |
| Materials | 14 | -0.6 |
| Real Estate | 6 | 0.69 |
| Utilities | 10 | 0.38 |
| Mainland China Listed | 419 | 0.16 |
| Communication Services | 9 | 0.16 |
| Consumer Discretionary | 21 | 0.66 |
| Consumer Staples | 16 | 1.69 |
| Energy | 11 | 1.14 |
| Financials | 60 | 1.12 |
| Health Care | 26 | 3.03 |
| Industrials | 62 | 0.9 |
| Information Technology | 126 | -1.72 |
| Materials | 69 | 0.46 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.8 |
| Alibaba HK | 9988 HK Equity | -2.6 |
| JD.com HK | 9618 HK Equity | 1.3 |
| NetEase HK | 9999 HK Equity | 1.6 |
| Yum China HK | 9987 HK Equity | 0.6 |
| Baozun HK | 9991 HK Equity | 3.7 |
| Baidu HK | 9888 HK Equity | -1.6 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | 1.3 |
| Trip.com HK | 9961 HK Equity | 0.6 |
| EDU HK | 9901 HK Equity | 0.9 |
| Xpeng HK | 9868 HK Equity | 2.2 |
| Weibo HK | 9898 HK Equity | 0.1 |
| Li Auto HK | 2015 HK Equity | 2.1 |
| Nio Auto HK | 9866 HK Equity | 1.9 |
| Zhihu HK | 2390 HK Equity | 0 |
| KE HK | 2423 HK Equity | 1.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | 0.5 |
| Meituan HK | 3690 HK Equity | -0.9 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -2.6 |
| TENCENT HOLDINGS LTD | -1.8 |
| AIA GROUP LTD | 0 |
| LENOVO GROUP LTD | -0.7 |
| KINGBOARD LAMINATES HLDG LTD | -2.7 |
| GENSCRIPT BIOTECH CORP | -12.7 |
| XIAOMI CORP-CLASS B | -1.3 |
| PING AN INSURANCE GROUP CO-H | -0.1 |
| HSBC HOLDINGS PLC | -1.9 |
| CONTEMPORARY AMPEREX TECHN-H | -0.5 |
Last Night's Exchange Rates, Prices, & Yields
Mainland China's bond, currency, and commodity markets remained closed overnight and will reopen tomorrow.
