Key News
Asian stocks wished they were still on vacation, as US tariffs proved not to be a beautiful thing for stocks as the US dollar surged, Asian equities plunged, except for the Philippines, while Mainland China remains on holiday.
The Hang Seng and Hang Seng Tech indexes opened sharply lower by -2.28% and -3.20%, but managed to close at -0.04% and +0.29%, led by semiconductors and AI winners. Alibaba gained +6.46%, Tencent gained +0.75%, Semiconductor Manufacturing International (SMIC) gained +10.26%, and Kingsoft Cloud surged +31.43%. It is surprising that Baidu fell -3.82%, considering its significant efforts in the AI space.
With China hit with tariffs of only 10% compared to 25% for Canada and Mexico, one might speculate that US-China trade talks are occurring though the market reaction seems to be an example of shooting first and asking questions later. The removal of the de minimis exemption was a surprise, which explains the weakness of this morning’s pre-US market open in e-commerce.
Hong Kong’s losses were mitigated by a Wall Street Journal report that China’s government will refrain from devaluing the renminbi and take steps to limit the export of fentanyl precursor chemicals.
January electric vehicle (EV) sales were released overnight. BYD gained +0.59% on 300,538 NEVs (hybrid + EV), which is up +49% year-over-year (YoY), though -42% month-over-month (MoM). Geely gained +3.36% on sales of 266,000 versus 213,000 YoY. NIO fell – 2.35% on sales of 13,863 units, which is down -55% MoM and up +38% YoY. Li Auto fell -5.71% on sales of 29,927 units, which is down -48% from December and -3.97% YoY. XPeng fell -0.93% on sales of 30,350 units, which is down -17% MoM and +267% YoY. Xiaomi fell -0.91% on sales of more than 20,000 vehicles while targeting 300,00 in 2025.
It was quiet otherwise with Mainland China still on holiday, though January real estate transaction volume increased +26% YoY, led by first-tier cities.
Movie theaters sold more than RMB 1 billion worth of tickets each of the first five holiday days, led by Nezha: Demon Child in The Sea, which had sales exceeding RMB 3.358B for the holiday. China’s movie ticket sales are expected to exceed the US in 2025
The Hang Seng and Hang Seng Tech indexes diverged to close -0.04% and +0.29%, respectively, on volume that increased +141% from last Tuesday, which is 91% of the 1-year average. 176 stocks advanced while 318 stocks declined. Main Board short turnover increased +164% from last Tuesday, which is 37% of the 1-year average, as 100% 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 large caps outperformed the growth factor and small caps. The top-performing sectors were Consumer Discretionary, which gained +1.03%, Materials, which gained +0.75%, and Communication Services, which gained +0.27%. Meanwhile, the worst-performing sectors were Real Estate, which fell -2.68%, Industrials, which fell -2.17%, and Consumer Staples, which fell -1.22%. The top-performing subsectors were semiconductors, consumer discretionary distribution, and nonferrous metals. Meanwhile, consumer staples distribution, consumer services, and paper & packaging were among the worst-performing subsectors. Southbound Stock Connect was closed.
Shanghai, Shenzhen and STAR Board were closed.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
Mainland China’s currency, fixed income, and commodity markets were closed overnight.
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