Key News
Asian equities were mostly higher as Hong Kong outperformed, while Japan closed lower on the Yen’s strength.
Mainland China was closed for the Mid-Autumn Festival, Pakistan for Eid-Milad-un-Nabi, South Korea for Chuseok, and Taiwan for the Mid-Autumn Festival, too.
With Hong Kong closed tomorrow, investors bought interest rate cut beneficiaries in advance of the US Fed cut tomorrow. However, it was a very broad rally, with all sectors rising as value stocks barely outperformed growth stocks. Financial stocks were top performers, led by mega-cap banks and insurance companies, along with real estate, which was helped by developer Kaisa Group, which gained +17% from US $0.011 to US $0.013 as creditors approved a restructuring plan.
The largest Hong Kong Initial Public Offering (IPO) since Kuiashou three years ago also helped improve investor sentiment. The appliance maker Midea Group (300 HK) gained +7.85% after raising $4 billion with their new Hong Kong listing. Their Hong Kong shares are still at a 21.5% discount to their Mainland shares.
Electric vehicle (EV) and internet stocks had strong sessions, except for Trip.com, which fell -1%. Hong Kong’s most heavily traded stocks by value were Tencent, up +0.58%, Midea, up +7.85%, Alibaba, up +1.04% on a cloud computing deal with Indonesia’s GoTo, Meituan, up +1.66%, and AIA, up +0.46%.
A Mainland media source crowned Tencent the “repurchase king” as the company has bought 157.7 million of its own shares, worth a total of HKD 60 billion ($7.69 billion) since May 17th. Yesterday’s release from the Hong Kong Exchange noted that, year-to-date, 237 stocks bought back stock versus 92 in 2023 for a total buyback amount of HKD 201.2 billion ($25.797 billion), which is up 172% year over year. Other companies with large buybacks include Meituan, Kuaishou, HSBC, AIA, Yum China, and Wuxi Biologics. Tencent bought 2,640,000 shares today in Hong Kong, Meituan bought 1,263,600 shares today in Hong Kong, while Alibaba bought 716,599 US ADRs yesterday (17.5% of Alibaba’s ADR volume was their buyback yesterday!!!).
It is worth noting that iPhone supplier stocks were weak on chatter that iPhone 16 pre-orders are light, and iPhone Pro pre-orders are very light, while Huawei’s three-fold Mate XT
iShares Exponential Technologies ETF
The Hang Seng and Hang Seng Tech indexes gained +1.37% and +1.12%, respectively, on volume that was up +31% from yesterday, which is 61% of the 1-year average. 308 stock advanced while 157 declined. Main Board short turnover increased by +4.84% from yesterday, which is 53% of the 1-year average, as 14% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The value factor and small capitalization stocks outperformed the growth factor and large capitalization stocks. All sectors were positive as Financials gained +1.81%, Materials gained +1.65%, and Energy gained +1.48%. The top-performing subsectors were consumer durables, banks, and energy. Meanwhile, media and household products were the only negative sub-sectors. Southbound Stock Connect was closed.
Shanghai, Shenzhen, and the STAR Board were closed.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
Mainland China’s currency and bond markets were closed overnight.