Key News
Asian equities were mixed overnight on light volumes and a weaker US dollar in advance of today’s US Fed interest rate decision. Hong Kong was closed for the Mid-Autumn Festival, and South Korea was closed for Chuseok—Thanksgiving Day.
Mainland mega-capitalization stocks were stronger, led by banks, energy, insurance, and electric vehicles. CATL gained +1.58%, while BYD finished higher by +1.35%. Home appliance companies Midea, Haier, and Gree gained +2.74%, +3.28%, and +3.26%, respectively, on consumer purchase subsidies. Mid and small-capitalization stocks were weaker as the National Team appeared active in their large and mega-cap equity ETFs based on above-average volumes.
Travel data for the Mainland’s four-day weekend for the Mid-Autumn Festival was strong, with 107 million domestic trips, an increase of +6.3% versus 2019 data. Consumer staple stocks were dragged lower by liquor stocks Kweichow Moutai, which fell -2.86%, and Wuliangye Yibin, which fell -1.38%, on concerns that orders for the upcoming October vacation are weak. Apple supplier Foxconn fell -2.6% and LXJM fell -3.36% on continued chatter that iPhone 16 sales in China are so far weaker than expected.
The PBOC reiterated their focus on the 7-day repo rate, which is 1.70%. The medium-term lending facility (MLF) rate decision is scheduled for September 25th. We are apt to see cuts to the MLF and bank reserve requirement ratio (the amount of cash banks must hold on reserve) following the US Fed’s cut. The Mainland market continues to lack animal spirits as consumer confidence remains low due to falling real estate prices’ effect on household savings. Policymakers are going to have to step on the gas to shake things up. That said, Hong Kong has held on very well, driven by buybacks and Southbound Stock Connect inflows. Yes, knocking on wood.
Prime Minister Li Qiang presided over a State Council meeting focused on private equity. Vice Premier He Lifeng spoke with the UK’s Chancellor of the Exchequer Reeves on the UK-China economic and financial dialogue. There was also chatter about investment legend David Tepper’s hedge fund Appaloosa’s big China internet and ETF positions. Interesting!
The Hang Seng and Hang Seng Tech were closed today.
Shanghai, Shenzhen, and the STAR Board diverged +0.49%, -0.17%, and -1.17%, respectively, on volume that decreased -8.61% from Friday, which is 61% of the 1-year average. 1,512 stocks advanced, while 3,388 declined. The value factor and large capitalization stocks outpaced the growth factor and small capitalization stocks. The top-performing sectors were Real Estate, which gained +2.93%, Energy, which gained +2.75%, and Consumer Discretionary, which gained +2.09%. Meanwhile, the worst-performing sectors were Consumer Staples, which fell -1.66%, Information Technology, which fell -1.11%, and Communication Services, which fell -0.25%. The top-performing subsectors were construction machinery, motorcycles, and coal. Meanwhile, agriculture, computer hardware, and liquor were among the worst-performing subsectors. Northbound Stock Connect was closed today. CNY and the Asia Dollar Index were stronger versus the US dollar. Treasury bonds rallied. Copper gained while steel fell.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.08 versus 7.09 yesterday
- CNY per EUR 7.87 versus 7.89 yesterday
- Yield on 10-Year China Government Bond 2.04% versus 2.07% yesterday
- Yield on 10-Year China Development Bank Bond 2.13% versus 2.17% yesterday
- Copper Price +0.46%
- Steel Price -0.81%