Hong Kong Internet Shares Rising as the Renminbi Rocks

Breaking news

Stock markets in North Asia had a strong day, while India was free and South Asia mixed. The Chinese currency, the renminbi, rose +0.66% against the US dollar overnight from 6.42 to 6.38, which is twice the decline of the US dollar against the US dollar overnight. other major currencies. The exchange rate is confusing because the renminbi is quoted US dollars divided by the renminbi, which reduces the profit of the renminbi. It’s hard to say whether the move is an indication of risky sentiment, skepticism about the Fed tapering or concerns about US government finances.

Hong Kong was driven by internet stocks as the Hang Seng Tech Index rose +3.07% from the Hang Seng Index’s rise of +1.49%. The Hang Seng Index closed above the 50-day moving average for the second time in a row since June 30e. However, we need to temper our enthusiasm a bit as volumes were light today.

Alibaba HK gained +1.17% after announcing a new high-end semiconductor chip for its cloud business. The move proves that Alibaba is more than an e-commerce company. It is a true technology supplier, aligning the company with the government’s desire to see China’s technology industry become more self-reliant.

President Xi delivered a speech on China’s digital economy yesterday, emphasizing AI, big data, cloud computing and blockchain as critical industries for China’s economy and technological growth. Jack Ma went on vacation to Spain, which seems to be getting some attention. We also had news yesterday that Baidu’s search engine is getting access to Tencent’s WeChat for the first time.

Kuaishou Technology rose +9.49% after announcing a partnership with the NBA. Xiaomi jumped +5.39% on the news that its electric vehicle (EV) unit will start producing cars in 2024. Hong Kong also helped launch Wealth Connect, which allows Chinese investors in the Greater Bay Area to invest in Hong Kong financial products. We also saw Apple’s supply chain jump after the MacBook’s announcement yesterday.

An Evergrande affiliate has made an onshore bond coupon payment. Tencent saw its third day of small net sales by mainland investors via Southbound Stock Connect, although Meituan was a net purchase. Tencent has not bought back its shares since the Golden Week holiday.

Clean tech had a strong day in Hong Kong, led by the EV ecosystem, while the same names were on the mainland and led by EV battery maker CATL (300750 CH) -0.74%. Mainland equities today posted gains ahead of tomorrow’s October loan yield, although it has been flat since April 2020.

Liqueur stocks Kweichow Moutai and Wuliangye Yibin rebounded from yesterday’s decline following fresh consumer tax rumors, rising +0.68% and +1.7% respectively. Pork producer Muyuan Foods (002714 CH) posted a loss in the third quarter but announced it will raise RMB 6 billion, pushing its stock up +6.41%. Foreign investors today bought $611 million worth of mainland stocks through Northbound Stock Connect.

The media are starting to be picked up by the media. President Xi emphasizes a third term, although there may be lapses due to the implicit mandatory retirement age in China. We argued that this politically sensitive process could explain the internet regulation introduced this year. Ensuring that online news coverage is aligned with what’s happening could explain the intensification of internet regulation. We can’t prove this theory, but it makes sense. It could also mean that we are at the end of internet regulation as it has been very quiet lately. Fingers crossed!

H-shares update

The Hang Seng opened higher and jumped higher in the mid-morning before closing +1.49%, while volume fell -4.98%, which is 70% off the 1-year average. The 210 Chinese companies listed in Hong Kong in the MSCI China All Shares gained +1.48%, led by technology +3.81%, staples +3.06%, healthcare +2.34%, utilities +1, 92%, industrials +1.71%, financials +1.66% and discretionary +1.61% while real estate and energy both lost -0.74%. Hong Kong’s most traded by value were Tencent +0.4%, Meituan +1.85%, Alibaba HK +1.17%, Xiaomi +5.39%, Anta Sports +3.23%, Kuaishou Technology +9.49%, BYD +1.52%, Ping An + 2.11%, HK Exchanges +2.59% and AIA +2.29%. Southbound Stock Connect volumes were low as mainland investors sold $75mm worth of Hong Kong shares as Southbound trading accounted for 10.8% of Hong Kong sales.

Update A Shares

Shanghai, Shenzhen and STAR Board gained +0.7%, +0.86% and +1.05% by volume at -2.8% from yesterday, which is 99% of the 1-year average. The 542 mainland stocks within the MSCI China All Shares gained +1.6%, led by Commodities +2.58%, Healthcare +2.24%, Financials +1.68%, Materials +1.5%, technology +1.31%, industrials +1.29% and discretionary +11.16% while real estate -0.23%. The most heavily traded mainland stocks were CATL -0.74%, Kweichow Moutai +0.68%, Muyuan Foods +6.41%, Wuliangye Yibin +1..7%, BYD -0.4%, China Northern Rare Earth -2.98%, Cosco Shipping +6.88%, Zijin Mining +2.08%, Jiangsu Akcome Science +9.96% and Tianqi Lithium +0.63%. Northbound Stock Connect volumes were subdued as foreign investors bought $611mm worth of mainland equities, as Northbound trading accounted for 5.3% of mainland revenue.

Last night’s exchange rates, prices and returns

  • CNY/USD 6.39 vs 6.43 yesterday
  • CNY/EUR 7.45 vs. 7.46 yesterday
  • 10-Year Treasury Yield 3.01% vs. 3.04% Yesterday
  • 10-Year China Development Bank Bond Yield 3.33% vs. 3.36% Yesterday
  • Copper price -0.45% overnight

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