Key News
Asian equities had a weak day, as Hong Kong and Taiwan underperformed by -2%, South Korea and the Philippines nearly -2%, and India and Mainland China -1% as the US dollar strengthened overnight.
It is hard to know precisely what the bigger driver of the region’s risk-off sentiment was: US interest rates higher for longer and/or President Trump’s early cabinet picks with the rumor of Senator Mark Rubio as Secretary of State. Regional weakness was not a China or Hong Kong issue, as potential investors recognize that the global economy is highly interconnected. As we mentioned yesterday, offshore China/Hong Kong – US ADRs are predominantly owned by foreign investors who tend to react more than onshore China/Shanghai – Shenzhen – STAR Board/mainly owned by Chinese investors in China. Hong Kong investors might be waiting for heavyweight earnings, with Tencent reporting tomorrow morning, JD.com Thursday, and Alibaba Friday.
As we show below, Singles Day sales data was strong. A non-factor in today’s Hong Kong risk-off day are reports that the Mainland’s property transaction tax will be cut from 3% to 1% while healthcare managed a gain in the Mainland on news policies supporting the prepaying medical insurance funds. The limited national medical insurance plan coverage drives an element of China’s high saving rate. Some regional positive real estate news Shenzhen, reporting transaction volume, has picked up five weeks in a row. China Association of Automobile Manufacturers reported that October auto production and sales increased month over month by +7.2% and +8.7%, respectively, to 2.996mm and 3.053mm. NEV auto (hybrid & EV) saw production and sales increase +48% YoY and 49.6% YoY to 1.463mm and 1.43mm. Mainland investors bought a healthy $1.258 billion of Hong Kong stocks and ETFs as Southbound Stock Connect accounted for 46% of Hong Kong turnover.
Syntun, a Mainland mobile payment and e-commerce data provider, distributed a press release that was picked up by Mainland media showing a strong increase in Singles Day sales from last year. Why don’t the companies provide the number themselves? Alibaba and JD.com reported earnings this week, though US regulators didn’t like the companies showing Gross Merchandise Value sold (GMV) as it isn’t revenue. China.com reported that the State Post Bureau handled 701mm parcels on Singles Day, which is a 151% increase from the usual daily average and +9.7% year over year (YoY) :
- Total Singles Day sales increased +26.6% YoY to RMB 1.44 trillion
- Total sales on e-commerce increased +20.1% YoY to RMB 1.11 trillion
- Live-streaming e-commerce sales increased +54.6% YoY to RMB 332.5B
Alibaba reported that e-commerce units Taobao and Tmall reported that its Singles Day sale event generated “robust growth in Gross Merchandise Volume (“GMV”) and a record number of active buyers.” Alibaba reported Lots of good data, though the below jumped out:
- With the help of the AI-powered marketing tool Quanzhantui, nearly 290,000 merchants benefitted from sales growth for over 1.6 million products.
- 88VIP is China’s largest paid e-commerce membership program, with over 42 million members by the end of June 2024
- Brands surpassed RMB100 million in GMV as of midnight. November 11.
- Apparel and 79 beauty brands surpassed RMB100 million in GMV as of midnight. November 11.
- 34 consumer electronics brands also surpassed RMB100 million in GMV.
- The new consumption force enabled four designer and collectible toy brands to surpass RMB100 million in GMV as of 4:00 p.m. November 11.
- 34 sports and outdoor brands surpassed RMB100 million in GMV as of midnight. November 11.
JD.com reported its Singles Day sales noting a “more than 20% year-over-year (YoY) increase in shoppers for its 2024”. Some highlights include:
- JD Logistics’ workforce of over 340,000 couriers ensured timely deliveries nationwide.
- Transaction volumes for 519 home and appliance categories increased by 200% YoY, with best-sellers including energy-efficient air conditioners, robotic vacuum cleaners, dryers, zero-water-pressure smart toilets, and recliner sofas. (smart toilets? Not going to ask….)
- Sales of AI-enabled electronics surged, with a tenfold increase in AI learning machines and 100% YoY growth in computers, cell phones, and AI-powered peripherals. AI smart glasses sales rose by 200%, while high-tech consumer electronics like gaming CPUs, headphones, and action cameras saw transaction volume double.
- JD Auto reported a 95% YoY increase in sales of EV charging stations, with installation service orders up by 110% YoY.
- Sales of Electronics and Home Appliances Among European Customers on ochama: On ochama, JD.com’s European retail platform, food and beverages, fresh produce, as well as electronics and home appliances gained significant popularity. Sales of Chinese small home appliances increased by 200% YoY.
The Hang Seng and Hang Seng Tech fell -2.84% and -4.19% on volume +14.62% from yesterday, which is 186% of the 1-year average. 73 stocks advanced, while 435 declined. Main Board short turnover increased by +20.82% from yesterday, which is 187% of the 1-year average, as 16% of turnover was short turnover (Hong Kong 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. All sectors were negative, led lower by materials -5.07%, discretionary -3.33%, and staples -3.75%. Healthcare equipment was the only positive sub-sector, while capital goods, semis, and food/retailing were the worst. Southbound Stock Connect volumes were 2X the average as Mainland investors bought $1.258B of Hong Kong stocks and ETFs, with the Hong Kong Tracker ETF a massive net buy, Xiaomi moderate net buy, Alibaba, Tencent, and Ping An were small net buys, SMIC and CNOOC a small net sell, Meituan and China Mobile were moderate net sells.
Shanghai, Shenzhen, and STAR Board fell -1.39%, -0.81%, and -2.17% on volume +1.73% from yesterday, which is 274% of the 1-year average. 1,383 stocks advanced, while 3,525 declined. Value and small caps fell less than growth and large caps. Healthcare was the only positive sector, +0.55%, while communication -3.1%, tech -2.28%, and financials -2.11%. The top sub-sectors were retail, healthcare, and household products, while aerospace/military, education, and insurance were the worst. Northbound Stock Connect volumes were high, just over 2X the average. CNY and the Asia dollar index fell versus the US dollar. Treasury bonds rallied. Copper and steel fell.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.23 versus 7.19 yesterday
- CNY per EUR 7.67 versus 7.67 yesterday
- Yield on 10-Year Government Bond 2.07% versus 2.09% yesterday
- Yield on 10-Year China Development Bank Bond 2.15% versus 2.16% yesterday
- Copper Price -0.99%
- Steel Price -0.42%