Asian stocks combined overnight on low volumes and little significant news, as South Korea posted back-to-back days of 1% for the first time since early July, while the Philippines underperformed.
There was little market-moving news for Mainland China and Hong Kong as top policymakers met at the China Economic Work Conference (CEWC). A Reuters article that the Chinese government will deliberately weaken the Renminbi to offset Trump tariffs is making the rounds. I find the article somewhat non-sensical as we know China’s interest rates are being cut, which, based on how many US Fed cuts occur, could weigh on the renminbi as interest rate differentials are a big factor in currency moves. China’s bond market agreed with me as the 10-year government bond yield hit a 52-week and all-time low of 1.84%. It’s amazing that China is easing and still has no foreign buyers due to Trump tariff concerns.
The CEWC sets the big picture economic plan, though usually is light on specific details as the Dual Sessions in March will finalize and approve the actual game plan. A strong word release is feasible due to investors’ singular focus on the topic and the recent Politburo release, which included President Xi in the title. In addition to further support for housing and local governments, expanding the consumption subsidies applied to automobiles/electric vehicles/hybrid and home appliances to consumer electronics, textiles, and restaurant dining would be logical.
Car production employs many other people, and BYD employs more than 700,000 more people!Electronics companies, in addition to computer hardware, mobile phones, laptops, and desktops, employ many other people, in addition to small family homes and restaurant chains. We may also see structural issues addressed, such as the conversion of China’s minimum social safety net (healthcare, pensions, and social security) and the rights of migrant employees. Coincidentally, a continental media outlet reported that the Ministry of Human Resources and Social Security will expand the Individual Retirement System (think IRA in the United States), from the initial pilot program to 36 locations nationwide.
Mainland Chinese investors appeared to think this was positive for consumer spending, as consumption sub-sectors outperformed, including retail, leisure products, household products, textile (maybe another area, though I’ve had trouble finding total employment), and liquor. Are Mainland investors telling us something about their consumer-focused buying? We shall see, though, that Hong Kong’s consumer weakness actually supports the idea.
Hong Kong fell on the trading day as foreign investor sentiment remains gloomy and they await tangible political proof. Growth stocks fell, with the exception of electric vehicle (EV) stocks, following strong November auto sales of 3,316,000, an increase of 11. 7% year-on-year. -year-over-year (year-over-year) and 8. 6% month-over-month (MoM), up 1. 51% in electric and hybrid vehicle sales. The launch of the Cybertruck in China has also been announced. The National Cyberspace Administration has announced that it will review stock/financial recommendations on social media platforms, although it focuses more on Americans than platforms. There is no need to worry about this issue. Mainland investors bought into the Hong Kong dip today with a significant $937 million worth of Hong Kong stocks and ETFs. Light volumes in the national team’s favorite ETFs, despite 2,446 corporations on the mainland buying RMB 160 billion ($336 billion) via purchase in 2024.
The Hang Seng and Hang Seng Tech fell -0. 77% and -1. 31% respectively, with volume down -42. 79% from yesterday, or 109% of the one-year average. 292 stocks rose, while 192 fell. Main Board short turnover decreased -44% from yesterday, or 109% of the year-over-year average, as 15% of turnover was short turnover (short turnover in Hong Kong includes short volume of ETFs, which makes up our minds through ETF coverage from market makers Value stocks and large cap stocks “outperformed”/fell less than growth stocks and small cap stocks Sectors. leaders were the services Public, with an increase of +1. 84%, Materials, +0. 93%, and Basic Consumption, +0. 67%, while Technology fell -1. 15%, Real Estate fell -1. 10% and Discretionary Customers. falls -1. 08%. The most sensitive subsectors were steel, sanitary appliances and food, while commercial conglomerates, customer facilities, monetary facilities and insurance were the worst. Southbound Stock Connect prices were 1. 5 times pre-inflation levels as mainland investors bought more than $937. million Hong Kong stocks and ETFs, with HK Tracker ETF being a giant net buy, China Mobile and Alibaba being giant/moderate net buys, Tencent and Meituan are moderate. net sales, and Xiaomi and Sunac were small net sales.
Shanghai, Shenzhen, and the STAR Board were mixed +0.29%, +0.76%, and -0.37%, respectively, on volume down -19% from yesterday, which is 177% of the 1-year average. 3,810 stocks advanced, while 1,206 declined. Growth and small capitalization stocks outperformed value and large capitalization stocks. The top sectors were energy, up +1.33%, real estate, up +0.96%, and materials, up +0.53%, while financials fell -1.27%, communication services fell -0.94%, and industrials fell -0.61%. The top sub-sectors were soft drink, forest, and leisure products, while insurance, banking, and land transport were the worst. Northbound Stock Connect volumes were almost 1.5X average. CNY and the Asia dollar index fell versus the US dollar. Treasury bonds rallied. Copper rose while steel fell.
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