Trump-Xi Summit Is A Go

Key News

Asian equities started the week on a high note as volumes fell following Friday’s FTSE index rebalance, led by Hong Kong, Mainland China, Taiwan, and Korea, while Japan was closed for Respect for the Aged Day. Strength in China's currency the renminbi (CNY) garnered no attention overnight, though the exchange rate is still below 6.70, at 6.69 CNY per USD.

Hong Kong and Mainland China had strong days, as advancers outpaced decliners significantly, though volumes were a touch light. Healthcare was a top performer on optimism around AI’s effect on biotech and chatter that the US government could allow allow US companies to license drugs from Chinese pharmaceuticals.

Internet and AI "picks and shovels" drove the Hang Seng back above the 24,000 level. However, Lenovo fell -4.9% on profit taking. Tencent gained +2.63% and was Hong Kong’s most heavily traded stock by value on an analyst upgrade after their cloud efforts, as their daily buyback rolls on. Alibaba gained +3.02% on moderate net buying from Mainland China via Southbound Stock Connect and an upgrade from an analyst on cloud growth.

Alibaba named Liu Dayiheng the head of Qwen. He will be reporting to directly to CEO Eddie Wu. This was announced ahead of the three-day Cloud (“Yunqi”) Conference that is taking place in Hangzhou. I wonder whether Alibaba will use the conference to announce the spin-off of its T-Head chip design unit. It would be good timing with the Trump-Xi summit limiting any geopolitical blowback on the suddenly sensitive issue of semiconductors.

Reuters reported that the State Administration of Market Regulation (SAMR) is looking at the online travel units of Alibaba and Meituan following Trip.com’s fine, though these units are non-factors, as seen in its stock performance today.

Oil & gas and real estate gained, while non-ferrous metals were weak in both Hong Kong and Mainland China. The AI supply chain was mixed by category as Mainland China's Science & Technology (STAR) Board gained +0.29%. Mainland-listed CXMT rose 2.41%, after announcing its fifth-generation DRAM memory chip, indicating rising sophistication. Battery giant CATL fell -0.59% in Hong Kong and -1.61% in Mainland China after the company announced it had repurchased 3.69 million shares today as the company battles chatter of market share loss.

The state-owned Assets Supervision and Administration Commission (SASAC) released efforts to strengthen SOEs.

China’s restaurant delivery war wiped out the bottom lines of JD.com, Meituan, and, to a lesser extent, Alibaba. SAMR's intervention on behalf of restaurant owners has seen the elimination of delivery subsidies, which should allow for net income and earnings per share (EPS) to rebound. Yesterday, SAMR spokesperson Shu Wei stated that "During the '15th Five-Year Plan' period, we will better regulate competition… Price wars won't win us a future; only high quality can win us the market.” This is a situation where rules such as “Regulations on Curbing Predatory Pricing” are actually a good thing. Remember this news was digested during market hours.

President Xi’s US trip was officially confirmed. China's president will arrive on Wednesday and depart on Friday. This will be Xi’s first US visit in three years, apart from APEC in San Francisco, and the first official visit in eleven years. The last one was with President Obama in Seattle.

Vice Premier and chief trade negotiator He Lifeng met with Treasury Secretary Bessent and US Trade Representative Greer in NYC yesterday to discuss trade and economic issues. Bessent said the meeting was “very successful”. The Ministry of Commerce called the talks “candid, in-depth, and constructive exchanges on economic and trade issues”.

I mentioned this statistic from Congress’ U.S.-China Trade Relations release on August 17, 2026: “In 2023, sales in China by majority U.S.-owned affiliate firms were $475.2 billion”

Hong Kong-listed companies' buybacks that took place today and were announced after the close included Tencent, with 235,000 shares, Baidu, with 566,00 shares, and Kuiashou, with 486,000 shares.

Last Night's Performance

Country / Index	Ticker	1-Day Change
China (Hong Kong)	HSI Index	1.2%
Hang Seng Tech	HSTECH Index	0.4%
Hong Kong Turnover	HKTurn Index	-23.9%
Hong Kong Short Sale Turnover	HKSST Index	-20.2%
Short Turnover as a % of Hong Kong Turnover	N/A	18%
Southbound Stock Connect Net Buy/Sell (US $ Millions)	N/A	520.29
China (Shanghai)	SHCOMP Index	1%
China (Shenzhen)	SZCOMP Index	1%
China (STAR Board)	Star50 Index	0.3%
Mainland Turnover	.chturn Index	-2%
Japan	NKY Index	1.4%
India	SENSEX Index	0.8%
Indonesia	JCI Index	-0.9%
Malaysia	FBMKLCI Index	0.1%
Pakistan	KSE100 Index	0.2%
Philippines	PCOMP Index	-0.2%
South Korea	KOSPI Index	1.6%
Taiwan	TWSE Index	1.1%
Thailand	SET Index	0.9%
Singapore	STI Index	0.3%
Australia	AS51 Index	0%
Vietnam	VNINDEX Index	-0.9%

Indicator	Hong Kong	Mainland China
Today's Volume % of 1-Year Average	76	82
Advancing Stocks	379	4027
Declining Stocks	191	1027
Outperforming Factors	Liquidity, EPS Revision, ESG Score	ESG Score, Large Caps, Quality
Underperforming Factors	None	None
Top Sectors	Healthcare, Communication, Energy	Real Estate, Healthcare, Energy
Bottom Sectors	Materials, Utilities	Utilities
Top Subsectors	Pharmaceuticals/Biotech, Commercial/Professional Services, National Defense	Biotech, Real Estate, Pharmaceutical
Bottom Subsectors	Building, Household Appliances, Non Ferrous Metal	Household Appliances, Precious Metals, HIghway
Southbound Connect Buys	Alibaba, YOFC (Moderate), Z.AI (Small	N/A
Southbound Connect Sells	Tencent (Large), Xiaomi (Moderate), SMIC (Small)	N/A

MSCI China All Shares Index	# of Stocks	Average 1-Day Change (%)
Hong Kong Listed	165	1.6
Communication Services	11	2.29
Consumer Discretionary	28	1.36
Consumer Staples	13	0.53
Energy	6	1.52
Financials	25	1.23
Health Care	16	5.38
Industrials	22	0.67
Information Technology	12	1.06
Materials	14	-1.13
Real Estate	7	1.4
Utilities	11	-0.25
Mainland China Listed	386	0.74
Communication Services	8	0.31
Consumer Discretionary	26	0.06
Consumer Staples	19	0.19
Energy	12	1.77
Financials	64	0.75
Health Care	31	3.52
Industrials	58	0.09
Information Technology	95	0.98
Materials	52	0.32

US & Hong Kong Dually Listed	Ticker	1-Day Change (%)
Tencent HK	700 HK Equity	2.6
Alibaba HK	9988 HK Equity	3
JD.com HK	9618 HK Equity	0.4
NetEase HK	9999 HK Equity	0.9
Yum China HK	9987 HK Equity	0.6
Baozun HK	9991 HK Equity	4.2
Baidu HK	9888 HK Equity	2.1
Autohome HK	2518 HK Equity	0
Bilibili HK	9626 HK Equity	1
Trip.com HK	9961 HK Equity	1.1
EDU HK	9901 HK Equity	0.7
Xpeng HK	9868 HK Equity	-3.7
Weibo HK	9898 HK Equity	-0.3
Li Auto HK	2015 HK Equity	-4.4
Nio Auto HK	9866 HK Equity	-2.7
Zhihu HK	2390 HK Equity	-0.5
KE HK	2423 HK Equity	0.6
Tencent Music Entertainment HK	1698 HK Equity	-1.7
Meituan HK	3690 HK Equity	1.1

Hong Kong's Most Heavily Traded by Value	1-Day Change (%)
TENCENT HOLDINGS LTD	2.6
Z AI CO LTD	1.8
ALIBABA GROUP HOLDING LTD	3
MINIMAX GROUP INC	-1.7
XIAOMI CORP-CLASS B	4.5
YANGTZE OPTICAL FIBRE AND-H	1.3
LENOVO GROUP LTD	-4.9
KINGBOARD LAMINATES HLDG LTD	3.5
SEMICONDUCTOR MANUFACTURI-H	0.7
HUA HONG GRACE SEMICONDUCTOR	0

Shanghai and Shenzhen's Most Heavily Traded by Value	1-Day Change (%)
ZHONGJI INNOLIGHT CO LTD-A	1.6
EOPTOLINK TECHNOLOGY INC L-A	2.6
VICTORY GIANT TECHNOLOGY -A	9.2
CONTEMPORARY AMPEREX TECHN-A	-1.6
CXMT CORP-A	2.4
HENGTONG OPTIC-ELECTRIC CO-A	3.3
GIGADEVICE SEMICONDUCTO-CL A	0.9
CHINA JUSHI CO LTD -A	1.9
BOE TECHNOLOGY GROUP CO LT-A	2.5
TIANSHUI HUATIAN TECHNOLOG-A	2.9

Last Night's Exchange Rates, Prices, & Yields

• CNY per USD 6.70 versus 6.70 Friday
• CNY per EUR 7.69 versus 7.68 Friday
• Yield on 10-Year Government Bond 1.68% versus 1.68% Friday
• Yield on 10-Year China Development Bank Bond 1.76% versus 1.76% Friday
• Copper Price 0.39%
• Steel Price 0.13%