Key News
Asian equities were mixed but mostly higher overnight as Pakistan and Malaysia outperformed and Hong Kong underperformed.
Xinhua had an editorial on China’s expanding domestic demand, stating that it is an important factor in overall economic growth. The editorial also noted that sales of household appliances surged by +30.2% year-over-year in October, driven by the trade-in subsidies. The editorial did not say that this would lead to an uptick in GDP growth, which the bears highlighted along with a Bloomberg article citing the piece.
Investors are awaiting the Central Economic Work Conference (CEWC) next week for more clarity on stimulus policies. The conference is expected to lay out the economic policy priorities for 2025, but it is a closed-door conference so we will not hear the conclusions until the press conference at its conclusion.
Mainland investors reversed course from the rare net selling from yesterday, to become net buyers of Hong Kong-listed stocks and ETFs once again. Mainland investors poured $477 million into Hong Kong overnight.
Vice Premier He Lifeng spoke to a US financial institution overnight. He is said to have highlighted that China still seeks to deepen cooperation on financial markets between the US and China.
Blue Focus Group, an advertising agency, surged +17% in Shanghai and was one of the Mainland’s top ten most traded stocks by value. Advertising revenues have been surging since last year, which is a great sign for the consumer. The stock’s rise dovetails nicely with the Xinhua editorial from last night.
Korea continued to trade lower on the political situation as opposition leaders and the public called for Yoon’s resignation.
The Hang Seng and Hang Seng Tech indexes fell -0.92% and -0.77%, respectively, on volume that decreased -16.65% from yesterday which is 85% of the 1-year average. 159 stocks advanced while 322 declined. Main Board short turnover increased +0.84% from yesterday which is 75% of the 1-year average as 14% of turnover was short turnover (HK short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Value and large caps fell less than growth and small caps. Tech and communication were the only positive sectors +0.76% and +0.46% while discretionary -2.2%, staples -1.85%, and real estate -1.53%. Top sub-sectors were technology hardware, construction materials and software while consumer services, household products and consumer staples were the worst. Southbound Stock Connect volumes were light as mainland investors bought $477mm of HK stocks and ETFs with Alibaba, China Mobile, CNOOC, Kingsoft Cloud and Robosense were very small net buys, Meituan a small/moderate net sell and Tencent a moderate net sell.
Shanghai, Shenzhen, and the STAR Board gained +0.13%, +0.74% and +0.25% on volume -9.93% from yesterday which is 151% of the 1-year average. 3,671 stocks advanced while 1,298 declined. Growth and small caps fell less than large caps and value. Top sectors were communication +1.68%, tech +0.54% and financials +0.23% while energy -0.91%, materials -0.69% and healthcare -0.53%. Top sub-sectors were education, cultural media and internet while office supplies, precious metals and oil/gas were the worst. Northbound Stock Connect volumes were just above average. CNY and the Asia dollar index gained versus the US dollar. Treasury bonds were rallied. Copper gained while steel fell.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
CNY per USD 7.26 versus 7.26 yesterday
CNY per EUR 7.65 versus 7.63 yesterday
Yield on 10-Year Government Bond 1.95% versus 1.96% yesterday
Yield on 10-Year China Development Bank Bond 2.03% versus 2.04% yesterday
Copper Price -0.36%
Steel Price -0.97%