Hong Kong Internet Rally goes free solo on the Wall of Worry

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Asian stocks were mixed/mostly down as Hong Kong outperformed significantly, India managed a small gain and the Philippines closed for the Immaculate Conception. Asian investors applauded the ten measures reminiscent of COVID restrictions and the strong statement from the mainland media following the Politburo meeting, which bears repeating: “… the recovery of consumer demand is particularly essential to the economic growth, and consumption is directly related to epidemic prevention strategies.”

Although a pullback in US-listed Chinese stocks occurred, Hong Kong internet stocks had a strong day, with Hong Kong’s most traded stocks by value Tencent up 5.73%, Meituan + 6.45% and Alibaba HK +5.11%. Several companies had very good days, such as Kuaishou +11.08%, Alibaba Health +16.06%, JD Health +12.19% and Bilibili HK +22.01%, indicating that shorts are still outdated.

I mentioned yesterday that the CNY, the Chinese currency, was stable, indicating a favorable environment for Chinese stocks. Watching financial TV earlier this week, when asked, the show’s four professional money managers all said China was “uninvestable.” Good! Stay away as the pain trade is higher with CEWC and the potential for an ADR radiation solution providing potential catalysts! Note that the acceleration of ADR reimbursement was not included in the defense budget (NDAA), according to a DC source. Mainland China remained stable overnight, with real estate outperforming as CSRC Vice Chairman Li Chao and Shanghai Stock Exchange Managing Director Cai Jianchun discussed the acceleration of REIT rollout during a conference. Issuing REITs would provide another financing tool for struggling real estate developers. From a news perspective, President Xi visited Saudi Arabia and Hello Group (ticker MOMO) beat analyst estimates on revenue and adjusted net income, although adjusted EPS was missing. There were 4,031 new COVID cases and 17,134 asymptomatic cases, although our Major City Mobility Tracker shows a recovery in subway traffic (see below).

Sun Yu of the Chinese team at Bridgewater, the world’s largest hedge fund, caught the attention of mainland media for an interview in which she noted a fairly pessimistic outlook for the United States, Europe and the Kingdom. UK due to tight credit liquidity and risk of stagflation. China is completely different. China is (in) a phase of improved liquidity and economic support. Going forward, policies will be more supportive of the economy and future growth will come from domestic consumption and technological development…it’s more attractive for equities.

The Hang Seng and Hang Seng Tech gained +3.38% and +6.64% in volume -22.53% from yesterday, or 130% of the 1-year average. 454 stocks rose, while 46 stocks fell. Primary Card short-term revenue was down -21.81% from yesterday, or 111% of the 1-year average, as 15% of revenue was short-term revenue. short term. Growth factors outperformed value factors, albeit mixed, with small caps outperforming large caps. The main sectors were Healthcare +6.2%, Communication +6.12% and Discretionary +5.6%, while Energy was the only sector down -0.73%. The main sub-sectors were healthcare equipment, consumer services and software, while telecommunications and energy lagged. Southbound Stock Connect volumes were high/nearly 2x the 1-year average as mainland investors sold -$54m worth of Hong Kong stocks with Tencent, Meituan, Kuaishou and XPeng all small buys net.

Shanghai, Shenzhen and STAR Board were down -0.07%, -0.32% and -0.32% on volume of -8.46% from yesterday, or 91% of the 1-year average . 1,602 shares rose, while 3,005 shares fell. Value factors outperformed growth factors, while large caps outperformed small caps. The main sectors were real estate +2.68%, communication +1.09% and finance +0.51%, while technology -0.71%, utilities -0.49% and energy -0.44%. The top subsectors were real estate, education and household products, while diversified financial services, agriculture and computer hardware were among the worst. Northbound Stock Connect volumes were moderate/high as overseas investors bought $16 million worth of mainland stocks, with a preference for Shenzhen/growth stocks over Shanghai/value stocks. The CNY was slightly lower against the US dollar -0.05% to 6.97, the Treasury yield curve steepened and copper gained +0.24%.

Tracking the mobility of major Chinese cities

Traffic trends have remained stable although metro traffic continues to increase. The latter indicates a higher tolerance to mixing in crowded subway cars.

Performance last night

Last night’s exchange rates, prices and yields

• CNY for 6.97 USD against 6.98 yesterday
• CNY for 7.32 EUR against 7.33 yesterday
• 10-year government bond yield 2.89% vs. 2.87% yesterday
• China Development Bank 10-year bond yield 3.03% vs. 3.02% yesterday
• Copper price +0.24% overnight