Internet shares rebound in Hong Kong as Alibaba Singles Day kicks off

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Asian stocks were mixed overnight with the Asian Dollar Index hitting a 52-week low.

Please see our assessment of yesterday’s market volatility using the link below: KraneShares Commentary on Market Volatility – KraneShares.

Hong Kong performed better than a quick look would reveal as the Hang Seng fell -0.1% while the Hang Seng Tech rose 2.96% led by internet stocks. The most traded volumes by value in Hong Kong were Tencent + 0.1%, Meituan + 2.4%, Alibaba HK + 3.16% with HK + 5.01% and Kuiashou + 4.58% making it into the top ten. Early pre-sale commitments for Alibaba’s Singles Day event look promising as you can even buy a Tesla with a 24-month interest loan during the event. Financial data impacted Hong Kong with the AIA -2.68%, Hong Kong stock exchanges -1.84%, and HSBC down -5.11% after it reported disappointing results after the lunch break. Ping An Insurance gained +0.92% and bucked the trend after good financial results.

A respected strategist from a major investment bank described the decline in Chinese internet stocks as “detached from fundamentals”. The intensity of yesterday’s movement was a big scratch to me. Short trades in Hong Kong were relatively quiet today with only 15% of the total trading volume in the main board being short as the market appears to have seen a recovery. Mainland investors bought $832 million of mainland shares today with Tencent seeing another strong net buy. The mainland market was slightly lower although the STAR Board managed to post a gain of +0.19%. Mainland investors, as opposed to foreign investors/outside investors, may have noticed that Li Qiang, likely the new prime minister although we won’t know until March, was responsible for launching the STAR Board, Tesla’s Shanghai factory, and was going strong. Supportive of the technology sector. I’ll send a link to a good Twitter overview (@ahern_brendan).

Restaurants had a good day after the State Council supported small businesses. Six government agencies have issued a statement on attracting foreign capital into manufacturing as the leaders of Germany and France will visit China next month. The People’s Bank of China (PBOC) made several technical adjustments that support inflows into the renminbi (CNY) as the Chinese yuan fell -0.63% against the US dollar to 7.31. Healthcare was the worst performer in China despite reports that an inhaled vaccine would be approved as 205 new cases of COVID-19 were reported in 31 provinces. Foreign investors bought $389 million in mainland shares today after yesterday’s heavy selling.

Hang Seng and Hang Seng tech diverged -0.10% and +2.96% on volume – 11.32% from yesterday, which is 116% of the first year average. 253 shares rose while 234 declined. Short trading volume on the main board decreased -23.55% which is 102% from the one year average as 15% of trading volume was short. Growth factors outweighed value factors as large companies outperformed small businesses. All sectors were positive except for real estate which fell -1.51%, with technology up 3.49%, discretionary increase of +2.76%, and industries closing up 2.35%. The top sub-sectors were tech hardware, retailers, and half of them, while real estate developers, food, and insurance were among the worst. Southbound Stock Connect volumes soared as mainland investors bought $832 million of HK shares, and Tencent saw other strong net purchases, BYD, Wuxi Biologics, Li Auto, Meituan and Kuaishou.

The cities of Shanghai, Shenzhen and Starboard were mixed with -0.04%, -0.46% and +0.19% on turnover -8.82% from yesterday which is 82% of the first year average. 1,978 shares rose while 2,553 declined. Growth and value factors were mixed as large companies outperformed small companies. The only positive sectors were Industry +0.36% and discretionary +0.23%, while Healthcare fell -2.51%, Telecoms fell -2.49%, and Real Estate closed down -1.57%. The top subsector included airports, auto parts and restaurants, while education, biotechnology and petrochemicals were among the worst. Northbound Stock Connect volumes were moderate/high as foreign investors bought $389 million of mainland stock today. Chinese Treasuries stabilized, the Chinese yuan fell -0.63% to 7.30, and copper rose +0.35%.

Currency exchange rates, rates, and returns

  • CNY per US dollar 7.31 vs 7.26 yesterday
  • Chinese yuan per 7.21 euros compared to 7.14 yesterday
  • The 10-year government bond yield is 2.72% vs. 2.72% yesterday
  • The 10-year CDB yield is 2.87% vs. 2.86% yesterday
  • Copper price +0.35% overnight

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