Xi & Central Committee Confirm Domestic Consumption Focus
6 Min. Read Time
Key News
Asian equities were largely higher, though the Philippines was closed for the Feast of the Immaculate Conception.
There was an interesting divergence to start the week, as Hong Kong was off on light volumes due to the weak performance of banks and healthcare, though the Hang Seng Tech index was flat overnight. At the same time, Mainland China had healthy volumes, driving a strong up day.
President Xi and the Central Committee held a meeting to discuss the economy. The release lacked specific details but had all the right language, including:
- “implement more proactive and effective macro policies”
- “continue to expand domestic demand”
- “continue to implement a more proactive fiscal policy alongside a moderately loose monetary policy”.
Mainland investors agreed with my positive assessment that the highest echelon of China's government is focused on supporting the economy, particularly domestic consumption.
Besides foreign investors closing their books for 2025, a factor in Hong Kong's weakness might have been reports that the US Defense Department budget ($901 billion) includes a ban on Chinese healthcare companies from receiving US government funding. This issue has been around for a while, which may have caused a “foreign investor freakout” as Hong Kong-listed healthcare names fell. Mainland investors, on the other hand, shrugged their shoulders, as Mainland healthcare stocks were up! I don’t know if this issue hits President Trump’s radar, though Congress messing with his China deal might not go over well.
Treasury Secretary Bessent and US Trade Representative Greer both stated that China is buying US soybeans and were constructive about US-China relations on their Sunday morning political TV show circuit, which no one watches.
Hong Kong-listed healthcare weakness was despite the National Healthcare Security Administration adding 114 drugs from local and foreign pharmaceutical companies to the national medical insurance program. The inclusion increases demand for included drugs as the government does bulk buying at a discounted price. Hengrui Pharma fell -1.56% despite having nine more of its drugs added to this list, bringing its total to 20 within the scope of the scheme.
Insurance and brokerage stocks had a positive day in both markets as the National Financial Supervision Administration (NFRA) loosened insurance companies' solvency adequacy ratios, which will allow them to invest RMB 108 billion more into the stock market. The stocks also benefited from CSRC Chairman Wu Qing reiterating the 15th Five Year Plan’s pro-financial market language with an emphasis on supporting investment banks, brokerage firms, and asset managers. However, Hong Kong-listed banking stocks were lower.
Baidu gained +3.45% after the company confirmed last week’s rumor of a potential IPO of its Kunlun chip unit. Pop Mart fell -8.49%, after reports of a light US Black Friday. Chinese consumers' ADHD might have kicked in, as Disney’s Zootopia 2 appears to be a big hit in China.
Tencent fell -0.82%, though, after the close, it announced it bought 1 million shares today. Mainland investors bought a net $197 million worth of Hong Kong-listed stocks today, as Xiaomi fell -0.47%, a big net buy, though Tencent was sold. All told, Hong Kong was off despite some decent news.
Growth stocks outperformed in Mainland China, led by clean technology, software, technology hardware, and semiconductors, as the 15th Five-Year Plan draft’s emphasis on tech self-reliance garners investor attention.
China’s bureaucracy added another layer of paperwork for 7,000 local and foreign that submitted Q3 revenue and employee count following the State Council’s "Regulations on the Reporting of Tax Information by Internet Platform Enterprises". It doesn’t appear to have been a factor in today’s trading.
November's Foreign Reserves totaled $3.35 trillion versus October’s $3.34 trillion and economists' estimate of $3.36 trillion. The State Taxation Administration noted money received from VAT increased +8.3% year-over-year (YoY), led by taxes on products including computer communication equipment, which increased +12.3% YoY, mobile phones, which increased +20.3% YoY, household appliances, which increased +26.5% YoY, and new energy vehicles, which increased +19.1% YoY.
China’s November trade data was firmer, as Exports increased +5.9% YoY versus expectations of 4% and October’s -1.1% while Imports increased +1.9% YoY versus October’s 1% and expectations of 3%. The consumer price index (CPI) and producer price index (PPI) will be released tomorrow.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -1.2% |
| Hang Seng Tech | HSTECH Index | 0% |
| Hong Kong Turnover | HKTurn Index | -2% |
| Hong Kong Short Sale Turnover | HKSST Index | 2.4% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 14.9% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 196.71 |
| China (Shanghai) | SHCOMP Index | 0.5% |
| China (Shenzhen) | SZCOMP Index | 1.2% |
| China (STAR Board) | Star50 Index | 1.9% |
| Mainland Turnover | .chturn Index | 18.8% |
| Northbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | Not Available |
| Jing Daily China Global Luxury Index | CHINALUX Index | -0.1% |
| Japan | NKY Index | 0.2% |
| India | SENSEX Index | -0.7% |
| Indonesia | JCI Index | 0.9% |
| Malaysia | FBMKLCI Index | -0.2% |
| Pakistan | KSE100 Index | 1% |
| Philippines | PCOMP Index | Closed |
| South Korea | KOSPI Index | 1.3% |
| Taiwan | TWSE Index | 1.2% |
| Thailand | SET Index | -1% |
| Singapore | STI Index | -0.5% |
| Australia | AS51 Index | -0.1% |
| Vietnam | VNINDEX Index | 0.7% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume as % of 1-Year Average | 83 | 121 |
| Advancing Stocks | 142 | 3179 |
| Declining Stocks | 348 | 1790 |
| Outperforming Factors | Momentum, Liquidity, EPS Revision | |
| Underperforming Factors | Low Volatility, Value, Dividend Yield | Dividend Yield, Low Volatility, Multi-Factor Score |
| Top Sectors | Tech, Financials, Industrials | |
| Bottom Sectors | Energy, Healthcare, Financials | Energy, Staples, Utilities |
| Top Subsectors | Semis, Electrical Equipment, Financial Services | Communication Equipment, Forest, Computer Hardware |
| Bottom Subsectors | Consumer Durables, Coal, Personal/Household Products | Coal, Petrochemical, Motorcycle |
| Southbound Connect Buys | Xiaomi (Large), Pop Mart, SMIC (Moderate) | N/A |
| Southbound Connect Sells | Tencent (Moderate), Alibaba, Hua Hong Semi, Innovent Bio (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 151 | -0.92 |
| Communication Services | 9 | -0.49 |
| Consumer Discretionary | 28 | -0.86 |
| Consumer Staples | 13 | -1.21 |
| Energy | 7 | -1.86 |
| Financials | 23 | -1.52 |
| Health Care | 13 | -1.8 |
| Industrials | 20 | -0.57 |
| Information Technology | 10 | -0.09 |
| Materials | 10 | -1.28 |
| Real Estate | 6 | -0.69 |
| Utilities | 12 | -0.83 |
| Mainland China Listed | 404 | 0.87 |
| Communication Services | 6 | 0.44 |
| Consumer Discretionary | 31 | -0.04 |
| Consumer Staples | 24 | -0.8 |
| Energy | 13 | -0.98 |
| Financials | 64 | 0.85 |
| Health Care | 31 | 0.28 |
| Industrials | 64 | 0.47 |
| Information Technology | 91 | 3.05 |
| Materials | 58 | 0.32 |
| Real Estate | 6 | 0.4 |
| Utilities | 16 | -0.55 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -0.8 |
| Alibaba HK | 9988 HK Equity | -1 |
| JD.com HK | 9618 HK Equity | -0.7 |
| NetEase HK | 9999 HK Equity | -0.6 |
| Yum China HK | 9987 HK Equity | 0.4 |
| Baozun HK | 9991 HK Equity | 3.9 |
| Baidu HK | 9888 HK Equity | 3.5 |
| Autohome HK | 2518 HK Equity | -0.8 |
| Bilibili HK | 9626 HK Equity | -0.1 |
| Trip.com HK | 9961 HK Equity | -1.8 |
| EDU HK | 9901 HK Equity | 0.7 |
| Xpeng HK | 9868 HK Equity | 0.1 |
| Weibo HK | 9898 HK Equity | 0.6 |
| Li Auto HK | 2015 HK Equity | -0.4 |
| Nio Auto HK | 9866 HK Equity | -0.7 |
| Zhihu HK | 2390 HK Equity | 0.3 |
| KE HK | 2423 HK Equity | 0.7 |
| Tencent Music Entertainment HK | 1698 HK Equity | -0.4 |
| Meituan HK | 3690 HK Equity | 0.5 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -1 |
| XIAOMI CORP-CLASS B | -0.5 |
| TENCENT HOLDINGS LTD | -0.8 |
| POP MART INTERNATIONAL GROUP | -8.5 |
| PING AN INSURANCE GROUP CO-H | 2.2 |
| SEMICONDUCTOR MANUFACTURI-H | 2.9 |
| INNOVENT BIOLOGICS INC | -7 |
| MEITUAN-CLASS B | 0.5 |
| BAIDU INC-CLASS A | 3.5 |
| CHINA CONSTRUCTION BANK-H | -4 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 6.1 |
| EOPTOLINK TECHNOLOGY INC L-A | 7.2 |
| SUZHOU TFC OPTICAL COMMUNI-A | 19.2 |
| VICTORY GIANT TECHNOLOGY -A | 5.5 |
| FOXCONN INDUSTRIAL INTERNE-A | 3.7 |
| CAMBRICON TECHNOLOGIES-A | 4.6 |
| EAST MONEY INFORMATION CO-A | 1.4 |
| ADDSINO CO LTD -A | 7 |
| SUNGROW POWER SUPPLY CO LT-A | 1.3 |
| ZHEJIANG SANHUA INTELLIGEN-A | 3.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 7.07 versus 7.07 yesterday
- CNY per EUR 8.24 versus 8.23 yesterday
- Yield on 10-Year Government Bond 1.85% versus 1.85% yesterday
- Yield on 10-Year China Development Bank Bond 1.94% versus 1.94% yesterday
- Copper Price 0.96%
- Steel Price -1.14%
