Key News
Asian equities were largely higher as Hong Kong outperformed while Pakistan was closed for Eid-al-Azha. There were several positive catalysts that led Hong Kong higher, though interestingly failed to boost mainland China.
CSRC Chairman Wu Qing gave the Lujiazui Forum’s opening ceremony speech, in which he noted the recent “Nine National Measures” to reform and improve the capital markets, corporate governance, and shareholder returns. He stated that the CSRC will “…guide listed companies to establish a sense of active return to investors, strengthen communication with investors, improve information transparency and governance norms, and better use cash dividends, repurchase cancellations, and other methods to give back to investors.” He also spoke to improving companies’ ability to list in Hong Kong and Eight Articles geared toward improving and enhancing the technology-focused STAR Board.
China Reform Holdings, part of China’s “National Team,” announced that it had started purchasing three Hong Kong-listed ETFs focused on dividends and SOEs. This is the National Team’s first publicly announced buying in Hong Kong.
JD.com announced results from its 618 e-commerce sales event, including 83 brands that exceeded RMB 1 billion ($138 million) with over 500 million users placing orders! JD.com provided a wealth of data but the previous shows how well the event was.
Alibaba also announced results from its 618 e-commerce sales. 365 brands sold more than RMB 100 million ($13.78 million) of goods, while 36,000 brands doubled their sales year-over-year. Apple, Nike, L’Oreal, Lancome, Adidas, and Estee Lauder sold more than RMB 1 billion of goods ($138 million). The 88VIP program saw a 65% increase in members from last year.
A global bank raised its price target on Bilibili, which gained +18.96% due to the strong results of the new “Three Kingdoms” online video game. How do analysts know it is doing well? The game is bought on Apple’s App Store, which sells the data. The “can’t trust the China data” argument is very dated due to the information from our mobile phones being sold. It’s worth noting we’ve been managing the game’s success with no effect on the stock, but it’s good to see an analyst upgrade, getting the company the attention it deserves.
Hong Kong’s most heavily traded stocks by value were Tencent, which gained +3.18%, Meituan, which gained +5.57%, China Construction Bank, which gained +3.57%, Xiaomi, which gained +6.33% on strong 618 sales, and CNOOC, which gained +5.83%. The Hang Seng Index closed above the 18,000 level, which has been a key support level as of late. The 1 and 5-Year Loan Prime, the latter’s rate used for mortgages, will be released in a few hours, though no changes are expected from the current rates of 3.45% and 3.95%. Lots of gripping from traders on Hong Kong eliminating typhoon market holidays. Maybe we should start a GoFundMe page to supply umbrellas for our trader friends?
The Hang Seng and Hang Seng Tech gained +2.87% and +3.65%, respectively, on volume +22.11% from yesterday, which is 110% of the 1-year average. 416 stocks advanced, while 64 declined. Main Board short turnover increased +11.73% from yesterday, which is 94% of the 1-year average, as 15% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). Large caps and value stocks outperformed growth and small caps. All sectors were positive, led by technology, up +4.71%, financials, up +3.38%, and communication services, up +3.2%. All sub-sectors were positive, led by food/staples, technical hardware, and energy. Southbound Stock Connect volumes were light/moderate as Mainland investors bought $303 million of Hong Kong stocks and ETFs.
Shanghai, Shenzhen, and the STAR Board fell -0.4%, -0.87%, and -0.69%, respectively, on volume -4.54% from yesterday, which is 84% of the 1-year average. 1,729 stocks advanced, while 3,122 declined. Large caps and value “outperformed”/fell less than small caps and growth. The top sectors were financials, up +0.29%, energy, up +0.14%, and utilities, up +0.08%, while consumer discretionary fell -1.33%, healthcare fell -1%, and industrials fell -0.95%. The top sub-sectors were precious metals, computer hardware, and oil/gas, while power generation equipment, motorcycles, and catering/tourism were the worst. Northbound Stock Connect volumes were light. CNY had a small loss versus the US dollar. Treasury bonds rallied. Copper and steel were lower.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.25 versus 7.26 yesterday
- CNY per EUR 7.79 versus 7.79 yesterday
- Yield on 10-Year Government Bond 2.24% versus 2.25% yesterday
- Yield on 10-Year China Development Bank Bond 2.35% versus 2.36% yesterday
- Copper Price -0.10%
- Steel Price -0.17%
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