Alcohol stocks weigh on Shanghai while internet stocks lift Hong Kong

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Asian stocks were broadly higher, although Japan, South Korea and Taiwan were down. China was mixed overnight and Hong Kong and India closed higher.

Over the weekend, PBOC chief Yi Gang said Evergrande’s problems were “manageable.” Meanwhile, a negative Wall Street Journal article on Alibaba documented increased competition, which caused the company’s e-commerce market share to fall from 78% in 2015 to 51% today. Alibaba’s stock class in Hong Kong didn’t seem to care as it rose 0.68% overnight as internet names had a good day overnight. However, Tencent saw another small net sale by mainland investors through Southbound Stock Connect.

As China moves away from its Q1 2020 quarantine, year-over-year comparisons become more difficult as the low bar comparison rises. However, retail sales were a bright spot in September, far exceeding estimates. The statement opens the debate on whether the PBOC will ease monetarily by reducing the bank reserve requirement ratio (RRR) or the prime lending rate (LPR). It is possible that regulations and carbon commitments, which have been tightened in recent times, may be temporarily relaxed to help the economy.

News over the weekend of a consumption tax hit alcohol stocks hard, with Kweichow Moutai and Wuliangye Yibin falling -6.1% and -8.11%, respectively. Both stocks were sold almost 2 to 1 in Northbound Stock Connect, leading to a healthy $ 1.25 billion exodus of mainland stocks by foreign investors who decided to pull first and lay. questions later. Clean tech games had a good day in Hong Kong and the mainland market as the ecosystem of electric vehicles (EVs), solar, wind and metals outperformed.

The Hong Kong stock exchanges today launched the MSCI China A50 Index futures contracts. This is the first futures contract approved by the China Securities Regulatory Authority (CSRC), the Chinese version of the SEC, as the Singapore-listed FTSE A 50 was never cleared to trade. 1,395 contracts were negotiated, representing a value of nearly $ 100 million. The launch eliminates one of MSCI’s three concerns about expanding the inclusion of Shanghai and Shenzhen stocks in their indexes. The other issues are that Chinese stocks are settling on the trade date against the rest of the world at Q + 2 (trade date plus two days) and the misalignment of the Hong Kong and mainland holidays. We also heard an announcement that foreign investors who use QFII, a quota program that provides access to mainland stocks and bonds, will be allowed to trade in financial derivatives, including commodities.

Today it was announced that Goldman Sachs would be allowed to take full ownership of its mainland securities business. The move follows JP Morgan’s approval two months ago to do the same.

H-Share update

The Hang Seng opened higher and slid in the red for most of the trading day before staging a rally late in the day, lifting the index higher to close at + 0.31% as the volume plunged -29%, which is only 74% of the 1-year average. The 210 Chinese companies listed in Hong Kong and in the MSCI China All Shares index gained + 0.52%, driven by energy + 3.12%, materials + 3.07%, health +2 , 64% and industry + 0.82%. Meanwhile, utilities -1.08% and financials -0.85%. The most traded stocks in Hong Kong by value were Tencent, which gained + 0.28%, Meituan, which fell -0.14%, Alibaba HK, which gained + 0.68%, BYD, which won + 1.39%, Anta Sports, which won + 4.45%. , AIA which fell by -0.4%, Wuxi Biologics which gained + 5.03%, Geely Auto which gained + 1.64%, Kuaishou Technology which decreased -3.01% and Li Ning which gained + 2.82% . Southbound Stock Connect volumes were low as mainland investors sold $ 13 million in Hong Kong shares today, with Southbound Connect trading accounting for 11.4% of Hong Kong’s revenue.

A-Share Update

Shanghai, Shenzhen and the STAR Board diverged to close at -0.12%, + 0.06% and -0.78%, respectively, on volumes up +1.44% from Friday, or 102 % of the one-year average. The mainland 542 stocks of the MSCI China All Shares index were down -0.65% with energy + 4.86%, utilities + 2.33%, materials + 1, 98% and industry + 1.75%. Meanwhile, commodities -4.79%, real estate -2.18%, healthcare -1.87% and communication -1.66%. The mainland’s most traded stocks by value were Kweichow Moutai, which fell -6.1%, Wuliangye Yibin, which fell -8.11%, CATL, which gained + 4.57%, Tianqi Lithium, which gained + 4.63%, BYD, which gained + 0.91%, Zijin Mining which gained + 0.87%, Longi Green Energy which gained + 1.21%, Ganfeng Lithium which gained +5 , 63%, Luzhou Laojiao which fell -4.16% and the broker East Money which fell -0.77%. Northbound Stock Connect volumes were moderate / light, with foreign investors selling $ 1.25 billion in mainland stocks, with northbound trading accounting for 5.9% of mainland revenue.

Last night’s exchange rate, prices and yields

  • CNY / USD 6.43 vs. 6.44 Friday
  • CNY / EUR 7.47 vs. 7.47 on Friday
  • Yield on 1-day government bonds 1.71% vs. 1.71% Friday
  • 10-year government bond yield 3.04% vs. 2.97% Friday
  • 10-year Development Bank of China bond yield 3.36% vs. 3.30% Friday
  • Copper price


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