Asian equity markets finished higher overnight as China closed mixed, which followed a strong rally in US stocks yesterday.
President Xi’s Sunday speech emphasized modernization and high-quality development as the economy will take center stage/priority once this week’s Party Congress concludes. Investors noted that the speech mentioned China’s low birth rate sending healthcare stocks higher in both Hong Kong and China.
EV and hybrid vehicle maker BYD (1211 HK, 002594 CH) gained 6.22% in Hong Kong and 4.99% in China after announcing strong preliminary Q3 results with a net profit increase between +333% to +365%. Hat tip to Berkshire Hathaway
In another sign of opening up, two Chinese airlines announced the resumption of international flights as Hong Kong measures are relaxed further despite new Covid cases averaging 5,000 a day.
Anta Sports (2020 HK) was a rare Hong Kong underperformer after announcing weaker-than-expected preliminary financial results, which could weigh on competitor Nike. There is chatter on regulatory policy changes that would be favorable to investors though nothing tangible yet, however, stock buybacks could be an area of focus.
Southbound Stock Connect buying was strong (again) as Mainland investors buying Hong Kong listed stocks such as Tencent. Foreign investor flows into Mainland China were off overnight as onshore China underperformed offshore China. Hong Kong internet stocks had a strong day following the strong move in their US ADRs yesterday. 21% of Hong Kong’s Main Board volume was short today with Meituan having 35% of volume short, JD.com HK 33%, Alibaba HK 32%, and Tencent 8%. NetEase’s
The Hang Seng and Hang Seng Tech gained +1.82% and +4.25% respectively on volume +4.17% from yesterday which is 81% of the 1-year average. 408 stocks advanced while 88 declined. Main Board short sale trading volume increased 7.52% from yesterday which is 98% of the 1-year average as 21% of the Main Board volume was short. Growth factors outpaced value factors as small caps outpaced large caps. All sectors were positive with top sectors being tech up +5.33%, healthcare gaining +3.51%, and discretionary finishing 3.43% while real estate was +0.42%. Top sub-sectors were auto parts, pharma/biotech, and healthcare equipment while mining and property development were among the worst. Southbound Stock Connect volumes were moderate/light as Mainland investors bought $653 million of Hong Kong stocks today with Tencent another strong net buy, Wuxi Biologics and Meituan were both small net buys.
Shanghai, Shenzhen, and STAR Board closed mixed -0.13%, +0.36%, and -0.33% on volume -1.88% from yesterday which is 80.4% of the 1-year average. 1,910 stocks advanced while 1,586 declined. Growth factors outpaced value factors as large caps outperformed small caps. Top sectors were healthcare gaining +1.76%, discretionary up +0.84%, and industrials +0.84% while finishing lower were real estate -1.48%, tech -0.57%, and staples -0.43%. Top sub-sectors were pharma, auto industry, and power generation while airports, chemicals, and insurance were among the worst. Northbound Stock Connect volumes were moderate/light as foreign investors sold -$521 million of Mainland stocks. Treasury bonds were flat, CNY was off -0.06% versus the US $ to 7.201 and copper -0.59%.
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.20 versus 7.19 Yesterday
- CNY per EUR 7.08 versus 7.04 Yesterday
- Yield on 10-Year Government Bond 2.70% versus 2.70% Yesterday
- Yield on 10-Year China Development Bank Bond 2.86% versus 2.87% Yesterday
- Copper Price -0.59% overnight