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Northern Asian equity markets were off following the US equity market’s tech-driven loss while Southern Asian equity markets held up. The Hang Seng Index was off -0.83% though Hong Kong internet stocks weighed on the Hang Seng Tech -1.75%. Volumes were light and down -36.89% from yesterday which is only 37% of the 1-year average.

Hong Kong internet names were off despite positive news such as JD.com increasing their buyback to $3B from $2B, Reuters reporting that Alibaba is looking to sell its stake in Weibo, and Meituan and Kuiashou announcing a partnership. Also in the news, according to Reuters, rather than listing new shares in Hong Kong, Didi will allow US shareholders to convert their US-listed shares to Hong Kong-listed shares. This is different than previous Hong Kong relistings that saw the companies sell new shares to investors. In theory, investors should cheer the decision not to dilute current shares though pre-market the stock is off. This technique allows companies like Didi to relist in Hong Kong while avoiding Hong Kong’s two-year listing requirement. I would assume we’ll see similar moves taken by other recent US IPOs such as Full Truck and KE Holdings.

All Hong Kong sectors were down today as decliners outpaced advancers 3 to 1. Southbound Stock Connect was closed today so there was no support from Mainland investors in Hong Kong stocks. Lithium battery-related stocks were one of the only bright spots in Hong Kong and China.

The Mainland market was also off with every sector down as profit-taking hit liquor stocks hard as Kweichow Moutai -4.54% and Wuliangye Yibin -5%. Shanghai -0.91%, Shenzhen -0.81%, and STAR Board -0.98% as volume was flat from yesterday which is 95% of the 1-year average. Northbound Stock Connect volumes were light as foreign investors bought $103mm of Mainland stocks. Chinese Treasury bonds rallied and CNY appreciated a touch versus the US $; copper was off.

There was an article about how China’s adoption of mobile payments is having an effect on bank branches and ATMs. In 2021, Chinese banks closed 2,398 branches while the number of ATMs in China declined by 69,400 to 959,700.

Last Night’s Exchange Rates, Prices, & Yields

  • CNY/USD 6.37 versus 6.37 yesterday
  • CNY/EUR 7.20 versus 7.22 yesterday
  • Yield on 10-Year Government Bond 2.79% versus 2.80% yesterday
  • Yield on 10-Year China Development Bank Bond 3.07% versus 3.08% yesterday
  • Copper Price -0.13% overnight
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