Key News
Asian equities were mixed following President Donald Trump’s Mexico-Canada tariff talk, which strengthened the U.S. dollar overnight. Taiwan, Thailand, and Indonesia underperformed.
Hong Kong and China bounced around the room in a choppy session, though volumes were very high, which has become the new normal. Another strong day of Mainland investors buying Hong Kong via Southbound Stock Connect with $2.173 billion of net buying, with Alibaba and the Hong Kong Tracker ETF seeing very large inflows, with Tencent, SMIC, and Meituan also seeing large net buys. Xiaomi -5.68% despite announcing a new high-end sedan costing $112k in a very volatile day, opening +4.26% and hitting an intra-day low of -8.7%. Xiaomi traded 832mm shares Thursday versus the 1-year average of 145mm with the value of volume Hong Kong $45 billion, which is 8X what the most heavily traded stock would trade pre-September stimulus.
Alibaba -0.88% and Tencent -1.22% traded HK $24B and HK $19B. There was a bit of the revenge of the nerds in both Hong Kong and China as recent tech/growth stocks underperformed while old-school value plays outperformed. Auto was a bright spot in Hong Kong, with BYD +2.26%, Geely +6.03%, Great Wall +7.36%, and XPeng +6.18%. Baidu -1.24% despite announcing an autonomous driving partnership with CATL +0.51%. On Friday, the National Bureau of Statistics will release February “official” Manufacturing and Non-Manufacturing PMIs. In China, recent outperformers such as electronic devices, communication, and computers underperformed, while household appliances, banks, and energy outperformed. It’s pretty quiet from a news perspective, though there is a pre-Dual Session press conference on Friday.
The Hang Seng and Hang Seng Tech fell -0.29% and -1.22% on volume +9.82% from Wednesday, which is 268% of the 1-year average. 294 stocks advanced, while 192 declined. Main Board short turnover increased by +36.9% from Wednesday, which is 316% of the 1-year average, as 18% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Growth and small caps outperformed value and large caps. The top sectors were real estate +1.58%, staples +1.2%, and healthcare +0.47%, while tech -4.34%, communication -1.44%, and energy -0.59% were the worst. The top sub-sectors were household appliances, communication services, and construction materials, while media, technology hardware, and national defense were the worst. Southbound Stock Connect volumes were 10x pre-stimulus levels as Mainland investors bought $2.173B of Hong Kong stocks and ETFs led by Alibaba and Hong Kong Tracker ETF. Tencent, SMIC, and Meituan were large net buys, while Li Auto, Xpeng, and Xiaomi were very small net buys.
Shanghai, Shenzhen, and STAR Board were mixed +0.23%, -0.26%, and -0.05% on volume +3.42% from yesterday, which is 174% of the 1-year average. 1,966 stocks advanced, while 3,007 declined. Value and large caps outperformed growth and small caps. The top sectors were staples +1.37%, real estate +0.52%, and discretionary +0.43%, while communication -2.26%, tech -2.05%, and utilities -0.77%. The top sub-sectors were retail, chemicals, and leisure products, while communication equipment, computer hardware, and telecom were the worst. Northbound Stock Connect volumes were above average. CNY and the Asia dollar index fell versus the US dollar. Treasury bond prices fell. Copper and steel rose.
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2025 China Outlook: A Recipe For Re-Rating
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.28 versus 7.26 yesterday
- CNY per EUR 7.60 versus 7.61 yesterday
- Yield on 10-Year Government Bond 1.76% versus 1.73% yesterday
- Yield on 10-Year China Development Bank Bond 1.75% versus 1.69% yesterday
- Copper Price +0.27%
- Steel Price +0.12%
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