Vice Premier Promotes Internet Companies
6 Min. Read Time
Key News
Asian equities rebounded except for Mainland China and India as President Trump appeared to soften his tariff talk, though folks might be getting tariff PTSD or started to ignore it.
Here is some big news that you likely will only read here: Vice Premier Zhang Quoqing visited unnamed “platform enterprises,” i.e., internet companies in “food delivery, online retail, live streaming E-Commerce, and transportation services.” It doesn’t take Sherlock Holmes to guess the companies he met with (Meituan, Alibaba/JD/PDD, Bytedance, and Didi). The Vice Premier “has urged intensified efforts to promote the healthy development of the platform economy”.
Following President Xi’s tech entrepreneur meeting, we have another very unsubtle sign of the government’s change in attitude and need for the companies as domestic consumption becomes a top policy priority.
China Merchants Bank (CMB) fell by -5.48% in Hong Kong and -5.39% in Mainland China after reporting tepid financial results and a decline in the dividend growth rate. Today’s drop unfortunately hits ex-state-owned enterprises (SOEs) and active China managers who use CMB, the largest non-SOE bank, as their financial sector proxy. We have long argued the issue is not that the companies are SOEs but are in slow-growth sectors like financials and energy. How can a Chinese bank make money with the 1-year Treasury at 1.57% and the 10-year Treasury at 1.77%? CMB weighed on bank and financial-heavy indices, including the Shanghai Composite Index.
Internet stocks were higher following yesterday’s downdraft in US-listed China stocks, led by Xiaomi, which gained +1.03%, Tencent, which gained +0.90%, and Alibaba, which gained +1.41% after announcing their AI will be incorporated in BMW’s China vehicles.
Although Hong Kong volumes were light, 41% of Hong Kong volume was from Southbound Stock Connect, as Mainland investors bought a healthy $1.1 billion worth of Hong Kong-listed stocks and ETFs today.
Financial results drove price action. You can easily tell which companies beat estimates and which did not, based on their stock price moves overnight:
- Kuaishou Technology (1024 HK) fell by -1.67% following yesterday’s post-close financial results. (I though the results were just fine.)
- Textile maker Shenzhou International (2313 HK) gained +12.66%.
- Hot pot restaurant chain Haidilao International (6862 HK) gained +6.14%.
- Toy maker/retailer Pop Mart International (9992 HK) gained +10.87%.
- Bottled water giant Nongfu Spring (9633 HK) fell by -8.3%.
Mainland China had a choppy session as bank stocks weighed on Shanghai. However, Shenzhen managed a small gain.
Today’s Boao Forum For Asia 2025 Annual Conference highlight was the keynote speech by Peng Shen of the China Economic System Reform Research Association on how to “boost consumption. She said that “the national income level must be raised, and the proportion of primary distribution must be changed.”
Morgan Stanley raised its Hong Kong and Mainland China index price targets again. Both markets were resilient despite the addition of several Chinese companies to the US export ban list.
The Hang Seng and Hang Seng Tech indexes gained +0.60% and +1.01%, respectively, on volume that was down by -30% from yesterday, which is 120% of the 1-year average. 285 stocks advanced, while 180 stocks declined. Main Board short turnover decreased by -6.16% from yesterday, which is 155% of the 1-year average, as 20% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Growth and small capitalization stocks outperformed value and large capitalization stocks. The top-performing sectors were Real Estate, which gained +1.98%, Consumer Discretionary, which gained +1.61%, and Information Technology, which gained +0.93%. Meanwhile, the worst-performing sectors were Consumer Staples, which fell -1.18%; Financials, which fell -0.73%; and Utilities, which fell -0.53%. The top-performing subsectors were consumer durables, apparel, consumer services, and household/personal products. Meanwhile, food, real estate investment trusts (REITs), and banks were among the worst-performing subsectors. Southbound Stock Connect volumes were moderate, at 2x pre-stimulus levels, as Mainland investors bought a net $1.08 billion worth of Hong Kong-listed stocks and ETFs, including Tencent, Semiconductor Manufacturing International (SMIC), Pop Mart, Meituan, and Kuaishou. Meanwhile, Mainland investors were net sellers of Xiaomi, CNOOC Finance, and Alibaba.
Shanghai, Shenzhen, and the STAR Board diverged to close -0.04%, +0.39%, and -0.26%, respectively, on volume that decreased -8.35% from yesterday, which is 96% of the 1-year average. 3,641 stocks advanced, while 1,039 stocks declined. Growth and large capitalization stocks outperformed value and small capitalization stocks. Consumer Discretionary and Consumer Staples were the only positive sectors, up +0.66% and +0.20%, respectively. Meanwhile, the worst-performing sectors were Financials, which fell -0.94%; Materials, which fell -0.66%; and Utilities, which fell -0.64%. The top-performing subsectors were office supplies, chemical fibers, and auto. Meanwhile, banks, energy equipment, and construction machinery were among the worst-performing subsectors. Northbound Stock Connect volumes were above average. CNY and the Asia Dollar Index both fell versus the US dollar. Treasury bond prices gained. Copper and steel rose.
Last Night's Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.6% |
| Hang Seng Tech | HSTECH Index | 1% |
| Hong Kong Turnover | HKTurn Index | -30% |
| HK Short Sale Turnover | HKSST Index | -6.2% |
| Short Turnover as a % of HK Turnovr | N/A | 19.6% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 421.4 |
| China (Shanghai) | SHCOMP Index | 0% |
| China (Shenzhen) | SZCOMP Index | 0.4% |
| China (STAR Board) | Star50 Index | -0.3% |
| Mainland Turnover | .chturn Index | -8.4% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.3% |
| Japan | NKY Index | 0.7% |
| India | SENSEX Index | -0.9% |
| Indonesia | JCI Index | 3.8% |
| Malaysia | FBMKLCI Index | 0.3% |
| Pakistan | KSE100 Index | 0.9% |
| Philippines | PCOMP Index | 0.1% |
| South Korea | KOSPI Index | 1.1% |
| Taiwan | TWSE Index | -0.1% |
| Thailand | SET Index | 0.5% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | 0.7% |
| Vietnam | VNINDEX Index | -0.4% |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | 0.68 |
| Communication Services | 9 | 0.83 |
| Consumer Discretionary | 28 | 1.62 |
| Consumer Staples | 13 | -1.18 |
| Energy | 7 | -0.17 |
| Financials | 23 | -0.73 |
| Health Care | 13 | 0.31 |
| Industrials | 20 | 0.07 |
| Information Technology | 10 | 0.93 |
| Materials | 10 | 0.32 |
| Real Estate | 6 | 1.98 |
| Utilities | 12 | -0.53 |
| Mainland China Listed | 404 | -0.32 |
| Communication Services | 6 | -0.38 |
| Consumer Discretionary | 31 | 0.66 |
| Consumer Staples | 24 | 0.2 |
| Energy | 13 | -0.04 |
| Financials | 64 | -0.94 |
| Health Care | 31 | -0.12 |
| Industrials | 64 | -0.43 |
| Information Technology | 91 | -0.03 |
| Materials | 58 | -0.66 |
| Real Estate | 6 | -0.08 |
| Utilities | 16 | -0.64 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -2.1 |
| Alibaba HK | 9988 HK Equity | -3.8 |
| JD.com HK | 9618 HK Equity | -3.2 |
| NetEase HK | 9999 HK Equity | -1.7 |
| Yum China HK | 9987 HK Equity | -3.1 |
| Baozun HK | 9991 HK Equity | -7.7 |
| Baidu HK | 9888 HK Equity | -1.5 |
| Autohome HK | 2518 HK Equity | 0 |
| Bilibili HK | 9626 HK Equity | -4.6 |
| Trip.com HK | 9961 HK Equity | -3.5 |
| EDU HK | 9901 HK Equity | -2.2 |
| Xpeng HK | 9868 HK Equity | -7.5 |
| Weibo HK | 9898 HK Equity | -2.2 |
| Li Auto HK | 2015 HK Equity | -4.9 |
| Nio Auto HK | 9866 HK Equity | -2.6 |
| Zhihu HK | 2390 HK Equity | -4 |
| KE HK | 2423 HK Equity | -5.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.7 |
| Meituan HK | 3690 HK Equity | -4.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| XIAOMI CORP-CLASS B | -6.3 |
| TENCENT HOLDINGS LTD | -2.1 |
| ALIBABA GROUP HOLDING LTD | -3.8 |
| KUAISHOU TECHNOLOGY | -1.7 |
| POP MART INTERNATIONAL GROUP | 10.9 |
| BYD CO LTD-H | -3.5 |
| MEITUAN-CLASS B | -4.3 |
| CHINA MERCHANTS BANK-H | -5.5 |
| SEMICONDUCTOR MANUFACTURING | -1.7 |
| SHENZHOU INTERNATIONAL GROUP | 12.7 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| WOLONG ELECTRIC GROUP CO L-A | -4 |
| CHINA MERCHANTS BANK-A | -5.4 |
| ZIJIN MINING GROUP CO LTD-A | 1.9 |
| SUNGROW POWER SUPPLY CO LT-A | 7.7 |
| BYD CO LTD -A | -1.5 |
| DALIAN HUARUI HEAVY INDUS -A | 10 |
| NORTH COPPER CO LTD-A | 4.2 |
| EAST MONEY INFORMATION CO-A | -1.5 |
| ANHUI JIANGHUAI AUTO GROUP-A | 6.2 |
| MUYUAN FOODS CO LTD-A | 3.5 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.26 versus 7.26 yesterday
- CNY per EUR 7.83 versus 7.84 yesterday
- Yield on 10-Year Government Bond 1.79% versus 1.82% yesterday
- Yield on 10-Year China Development Bank Bond 1.82% versus 1.85% yesterday
- Copper Price +0.84%
- Steel Price +0.22%
