• January 27, 2023

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Key News

Asian equities were largely lower though China, Taiwan, Malaysia, and Thailand managed gains. Mainland China benefitted from continued verbal support from policymakers as tech had a strong day led by semiconductors along with the clean technology ecosystem, which was led by solar and wind names.

The China Securities Regulatory Commission’s (CSRC) Vice Chairman Wang Jianjun said that the “long-term positive trend of China’s capital market remains unchanged.” Meanwhile, the PBOC injected liquidity into the financial system overnight on a quiet night from a news perspective.

Mainland mutual fund families are asking investors for cash to buy stocks due to attractive valuations. Mainland fund flows have been dominated by money market funds and bond funds as active and passive equity inflows have stalled.

Hong Kong reopened following yesterday’s market holiday and was led lower by internet stocks though the names were not down nearly as much as the US ADRs, which is leading to a bounce-back in the latter today.

Mainland investors were net buyers of Hong Kong stocks via Southbound Stock Connect as both Tencent and Meituan saw strong buying overnight. Tencent had its strongest Southbound buy day since March 15th while Meituan clocked its 19th straight net buying day. I assume that Mainland investors have noted the significant policy pivot regarding China’s internet regulation. Hong Kong liquor stocks were a top performer overnight as I’m sure investors felt like a stiff cocktail following Monday’s meltdown.

The Hang Seng Index and Hang Seng Tech Index fell -1.84% and -3.22%, respectively, on volume that was +21.94% higher than Friday, which is 103% of the 1-year average. Decliners beat advancers by 3 to 1 as short sale volume jumped +13.72% from Friday, which is 130% of the 1-year average. Value and dividend factors outperformed as consumer staples was the only positive sector, gaining +1.33%. On the downside, consumer discretionary fell -4.47% followed by energy and materials, which fell -3.27% and -3.01%, respectively, as mining and metal stocks were hit hard. Hong Kong-listed internet stocks led the most heavily traded by value as Tencent fell -2.29%, Meituan fell -3.31%, JD.com HK fell -8.21%, Alibaba HK fell -4.81%, and BYD fell -5.95%. Southbound Stock Connect reopened as Mainland investors bought Tencent and Meituan in size.

Shanghai, Shenzhen, and the STAR Board gained +1.06%, +1.53%, and +2.68%, respectively, on volume that was +26.57% higher than yesterday, which is 78% of the 1-year average. There were 3,317 advancing stocks and 993 declining stocks. Growth factors outperformed value and dividend factors along with small caps outperforming. The tech sector gained +2.4% led by semiconductors, utilities gained +2.35% led by solar and wind names, and industrials gained +2.14%. Meanwhile, energy was the only down sector, falling -3.3% led lower by coal names. Northbound Stock Connect reopened as foreign investors sold -$1.3 billion worth of Mainland stocks today. Treasury bonds rallied, CNY was off -0.09% versus the US dollar, and copper was off -0.43%.

Tencent Southbound Stock Connect

Meituan Southbound Stock Connect

Last Night’s Exchange Rates, Prices, & Yields

  • CNY/USD 6.72 versus 6.73 yesterday
  • CNY/EUR 7.10 versus 7.09 yesterday
  • Yield on 1-Day Government Bond 1.33% versus 1.33% yesterday
  • Yield on 10-Year Government Bond 2.81% versus 2.82% yesterday
  • Yield on 10-Year China Development Bank Bond 3.00% versus 3.02% yesterday
  • Copper Price -0.43% overnight

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