Winning Streak Snapped By Profit Taking
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Key News
Asian equities closed mixed, as Japan and India outperformed and the US dollar weakened overnight.
Hong Kong’s four-day winning streak and Mainland China’s three-day winning streak both came to an end with profit taking overnight. Both markets bounced around the room on volumes that were well above their 1-year averages.
It was very interesting that Southbound Stock Connect volumes accounted for 64% of turnover in Hong Kong today. I can’t recall a percentage that high, as Mainland investors poured $673 million into Hong Kong-listed stocks and ETFs, net of selling. Does the high Connect percentage indicate a lack of foreign investor participation? I suspect so, which makes me bullish, as the charts of the Shanghai, Shenzhen, Hang Seng, and Hang Seng Tech all continue to grind higher. So far this year, Southbound buying of Hong Kong stocks is up to $92.86 billion versus 2024’s total of $103 billion, 2023’s total of only $40.70 billion, and 2022’s total of $49.20 billion.
Recent outperformers, including pharmaceutical, brokerage, and insurance stocks, were hit with profit taking on no negative news, while mining and energy outperformed.
In fact, we had positive news from the National Development & Reform Commission (NDRC) that the third round of funds for the consumption subsidies will be allocated in July. The third round will be financed by the issuance of RMB 200 billion worth of ultra-long-dated Treasury bonds.
Hong Kong’s most heavily traded stock was brokerage firm Guotai Junan International, which fell -4.32%, after rising +198% yesterday on its cryptocurrency trading approval. Alibaba fell -2.86% though I am not seeing any news. Alibaba will release its annual report after the close, which will give me something to read on my flight home tonight.
China Travel gained +85% on reports that Hong Kong tourist numbers were strong during May’s Golden Week holiday. Other tourist stocks were up around +1%, though I suspect short sellers got rolled on China Travel’s surge.
JD.com gained +0.23% as founder Richard Liu attends the “Summer Davos” in Tianjin. Shockingly, there has been little Western media coverage of the event, which makes me suspect something good is occurring. Harvard’s Graham Allison stated at the event, “I would be surprised if in the next week or so we do not see a memorandum of understanding (MOU) coming out of the discussions that have been going on between Bessent and He…,” according to the South China Morning Post. I’ve not seen that elsewhere, but it would be a significant catalyst.
Privately-held robotics company Unitree stated that the firm, founded in 2016 with one employee, now has 1,000 employees and RMB 1 billion in annual revenue. If you didn’t catch our Nasdaq bell ringing yesterday, take a look. A Unitree humanoid robot rang the bell!
All in all, a quiet night!
Last Night's Performance
| Country/Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.6% |
| Hang Seng Tech | HSTECH Index | -0.3% |
| Hong Kong Turnover | HKTurn Index | -2.3% |
| Hong Kong Short Sale Turnover | HKSST Index | -22.3% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 10.3% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 0 |
| China (Shanghai) | SHCOMP Index | -0.2% |
| China (Shenzhen) | SZCOMP Index | -0.3% |
| China (STAR Board) | Star50 Index | -0.6% |
| Mainland Turnover | .chturn Index | -1.3% |
| Nouthbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | 0% |
| Japan | NKY Index | 1.6% |
| India | SENSEX Index | 1.2% |
| Indonesia | JCI Index | 1% |
| Malaysia | FBMKLCI Index | 0.6% |
| Pakistan | KSE100 Index | -0.4% |
| Philippines | PCOMP Index | 0.1% |
| South Korea | KOSPI Index | -0.9% |
| Taiwan | TWSE Index | 0.3% |
| Thailand | SET Index | -0.1% |
| Singapore | STI Index | 0.3% |
| Australia | AS51 Index | -0.1% |
| Vietnam | VNINDEX Index | -0.1% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 134 | 123 |
| Advancing Stocks | 183 | 1480 |
| Declining Stocks | 279 | 3466 |
| Outperforming Factors | Value, Buybacks, Low Volatility | Value, Low Volatility, Buyback |
| Underperforming Factors | Quality, Momentum, EPS Revisions | Momentum, Growth, Liquidity |
| Top Sectors | Materials, Staples, Tech | Staples, Utilities, Materials |
| Bottom Sectors | Healthcare, Discretionary, Real Estate | Discretionary, Healthcare, Industrials |
| Top Subsectors | Non-Ferrous Metals, Construction Materials, Consumer Durables/Apparel | Catering/Tourism, Banking, Energy Equipment |
| Bottom Subsectors | Coal, Pharmaceuticals, Auto | Office Supplies, Auto, Securities/Brokerage |
| Southbound Connect Buys | SMIC (Large), Alibaba, China Travel (Moderate), China EB, Guoai Junan, Shandong Molong, Xiaomi (Small) | N/A |
| Southbound Connect Sells | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 152 | -0.58 |
| Communication Services | 9 | 0.2 |
| Consumer Discretionary | 30 | -1.77 |
| Consumer Staples | 13 | 0.66 |
| Energy | 7 | -0.5 |
| Financials | 23 | -0.41 |
| Health Care | 13 | -2.04 |
| Industrials | 19 | -0.64 |
| Information Technology | 10 | 0.41 |
| Materials | 10 | 3.01 |
| Real Estate | 6 | -0.88 |
| Utilities | 12 | -0.69 |
| Mainland China Listed | 432 | -0.23 |
| Communication Services | 9 | -0.39 |
| Consumer Discretionary | 31 | -1.26 |
| Consumer Staples | 27 | 0.25 |
| Energy | 16 | -0.11 |
| Financials | 63 | -0.02 |
| Health Care | 40 | -0.83 |
| Industrials | 69 | -0.66 |
| Information Technology | 85 | -0.18 |
| Materials | 68 | 0.2 |
| Real Estate | 7 | -0.21 |
| Utilities | 17 | 0.23 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.1 |
| Alibaba HK | 9988 HK Equity | -2.9 |
| JD.com HK | 9618 HK Equity | 0.2 |
| NetEase HK | 9999 HK Equity | -0.2 |
| Yum China HK | 9987 HK Equity | -0.9 |
| Baozun HK | 9991 HK Equity | -1.4 |
| Baidu HK | 9888 HK Equity | 0.4 |
| Autohome HK | 2518 HK Equity | -1.1 |
| Bilibili HK | 9626 HK Equity | 2 |
| Trip.com HK | 9961 HK Equity | 1.1 |
| EDU HK | 9901 HK Equity | -3.3 |
| Xpeng HK | 9868 HK Equity | -3 |
| Weibo HK | 9898 HK Equity | -0.3 |
| Li Auto HK | 2015 HK Equity | 0.8 |
| Nio Auto HK | 9866 HK Equity | -1.5 |
| Zhihu HK | 2390 HK Equity | 0.8 |
| KE HK | 2423 HK Equity | -2.4 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.5 |
| Meituan HK | 3690 HK Equity | -1.4 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| GUOTAI JUNAN INTERNATIONAL | -4.3 |
| ALIBABA GROUP HOLDING LTD | -2.9 |
| TENCENT HOLDINGS LTD | 0.1 |
| CHINA TRAVEL INTL INV HK | 86 |
| XIAOMI CORP-CLASS B | 0.4 |
| CHINA EVERBRIGHT LTD | 6.2 |
| SEMICONDUCTOR MANUFACTURING | 1 |
| MEITUAN-CLASS B | -1.4 |
| BYD CO LTD-H | -3.2 |
| PING AN INSURANCE GROUP CO-H | -0.8 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| EAST MONEY INFORMATION CO-A | -3.6 |
| BEIJING COMPASS TECHNOLOGY-A | 4.2 |
| TIANFENG SECURITIES CO LTD-A | 4.2 |
| GOTION HIGH-TECH CO LTD-A | -1.9 |
| HUNDSUN TECHNOLOGIES INC-A | 4.1 |
| ZHONGJI INNOLIGHT CO LTD-A | 3.2 |
| BYD CO LTD -A | -3.4 |
| LAKALA PAYMENT CO LTD-A | 4.3 |
| DAWNING INFORMATION INDUST-A | 3.7 |
| SHENZHEN FORMS SYNTRON INF-A | -0.2 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.17 versus 7.17 yesterday
- CNY per EUR 8.41 versus 8.32 yesterday
- Yield on 10-Year Government Bond 1.65% versus 1.65% yesterday
- Yield on 10-Year China Development Bank Bond 1.69% versus 1.70% yesterday
- Copper Price 0.38%
- Steel Price -0.13%
