Markets rise on epic influx of foreigners as internet stocks climb wall of worry, week in review

Review of the week

• China’s December CPI was released at +1.8% vs. +1.6% in November, meeting expectations of 1.8%.
• The World Bank on Wednesday halved its global GDP growth forecast for 2023, although it expects Chinese GDP growth to lead the pack.
• The China Passenger Car Association released December and 2022 sales data showing that 4 million electric vehicles were sold in China in 2022, 5 times more than in the United States.
• Jack Ma has given up most of his stake in financial technology giant Ant Group, paving the way for final regulatory approval as well as a possible IPO.

Friday’s key news

Asian equities ended the week in the green, with the exception of Japan and Thailand, while Hong Kong, China and the Philippines outperformed.

Global equities have had a strong year-to-date performance (knock on wood). Lots of news overnight! What did our Chinese news risk barometer do? Remember that we use the Chinese currency as a barometer of risk to understand if the “news” has an impact/something that should concern us. The CNY appreciated by +0.17% against the US dollar to close at 6.72! All the negative Western media headlines? The stock market didn’t care as the Hang Seng gained +1.04%, Hang Seng Tech closed up +1.51%, Shanghai finished +1.01%, Shenzhen gained +0.9% and the STAR Board increased by +0.01%.

Just before the opening in Hong Kong, the Financial Times published an article titled “China set to take ‘preferred shares’ in units of Alibaba and Tencent”. It is only several paragraphs into the article that the source of the article is revealed. Are “distinct persons knowledgeable about the matter” a credible source? I have no idea, but the key is that the market didn’t care at all despite the publication by Western media of the FT article. I don’t see any mention of it in mainland media as FYI. If this is true, there is an argument and an indication that the companies are in favor of the government because their success would also benefit them. I think we might see local provinces supporting businesses, but we will find out.

Hong Kong was flat, if a bit wobbly at the open, but recovered later in the session as Reuters reported that “Didi Global’s carpooling and other apps are back on store shelves.” ‘national applications from next week’. Reuters source? “Five sources told Reuters, in another signal that their two-year regulatory crackdown on the tech sector is ending.”

December trade data was released, showing exports and imports fell year-on-year, but not as deeply as expected. Remember we should hang on China’s exports will slow as global demand for the global factory slows. Export data also indicates that the global economy is unfortunately slowing. Import data was weak, although falling commodity prices were a factor as, for example, crude oil imports increased, but the value of oil imports declined due to lower prices petrol.

The most traded by value in Hong Kong was Alibaba HK, which gained +1.71% on news that it would work on smart car technology with Geely Automobile (175 HK), which fell -0.98% , Tencent +2.03% on net purchases from mainland investors, and Meituan -1.04%, as dual-listed U.S. internet and electric vehicle (EV) companies as well as growth players saw a surge. solid day. Hong Kong reopening games like Macau casinos and airlines had a good day. All sectors in Hong Kong were positive, minus utilities, while rising equities beat the declines nearly 4 to 1. Hong Kong’s healthcare sector gained +4.6%, led by Wuxi Biologics Cayman (2269 HK), as two analysts raised their ratings/target price. Main Board’s short volume grew to 17% of revenue, with Alibaba’s short revenue accounting for 23% of total revenue, NetEase 32% and Tencent 17%. All sectors in China advanced today as value factors outperformed.

In China, talk that the PBOC will inject liquidity into the financial system ahead of the Chinese New Year helped sentiment. The mainland’s most traded were CATL +1.38%, Kweichow Moutai +2.89%, Wuliangye Yibin +2.68%, Ping An Insurance +2.83%, East Money +3.08%, LONGi Green Energy + 0.02% and BYD +0.46%. These are growth stocks favored by domestic and foreign investors, although I would argue that you don’t need an active manager to buy them! Overseas investors bought $1.984 billion of mainland stocks through Northbound Stock Connect with a weekly total of $6.519 billion. The semis were a downside outlier for the day as US meetings with Japan and the Netherlands to curb tech exports to China weighed on the space. Strong day and week!

Two Chinese airlines have said they will withdraw from the NYSE. Sounds bad, right? Fake! Both companies are public companies that contain sensitive information that could be revealed during an audit review by the PCAOB. The PCAOB is part of the SEC, i.e. the US government, in a move we’ve seen from other public companies. It shows that private companies are allowed to join the HFCAA. It’s good news!!!

The Hang Seng and Hang Seng Tech indices gained +1.04% and +1.51%, respectively, on volume that was down -16.65% from yesterday, or 106% of the 1-year average . 388 stocks rose, while 104 stocks fell. Primary Card short-term revenue was down -11.56% from yesterday, which is 103% of the 1-year average, as 17% of revenue was revenue. short term business. Growth factors outperformed value factors, while small caps outperformed large caps. The best performing sectors were Healthcare +4.6%, Basics +2.26% and Communications +2.12%, while Utilities was the only negative sector -0.32%. The best performing subsectors were Pharmaceuticals/Biotech, Healthcare Equipment and Media, while Semi-Finished, Food/Commodities and Utilities. Southbound Stock Connect volumes were light as mainland investors bought $261 million worth of Hong Kong stocks, with Tencent moderate buying, BYD small net buying and Meituan and Li Auto small net selling. .

Shanghai, Shenzhen and STAR Board gained +1.01%, +0.9% and +0.01%, respectively, on volume that was up +3.27% from yesterday, or 77% of the average over 1 year. 2,796 shares rose, while 1,808 shares fell. Value factors outperformed growth factors, with large caps barely outperforming small caps. All sectors were positive, with Consumer Staples +3.33%, Healthcare +3.01% and Financials +2.17% with Technology +0.36%. The main subsectors were soft drinks, household products and diversified financial services, while power generation equipment, gas industry and communication equipment. Northbound Stock Connect volumes were light/moderate as overseas investors bought $1.984 billion worth of mainland stocks. The CNY moved strongly against the US dollar, +0.17%, closing at 6.72, Treasuries sold off and Shanghai copper gained +0.26%.

Tracking the mobility of major Chinese cities

The trend continues to improve. Although traffic in Shanghai and Chengdu has picked up, metro usage remains steady in both cities. Spring Festival and Chinese New Year travel is starting to pick up again, although the market is open as a mainland media source noted that 37.88 million people traveled on the fifth day alone. COVID cases continue to rise rapidly in several provinces.

Performance last night

Last night’s exchange rates, prices and yields

• CNY for 6.72 USD against 6.75 yesterday
• CNY for 7.26 EUR against 7.27 yesterday
• 10-year government bond yield 2.90% vs. 2.88% yesterday
• China Development Bank 10-year bond yield 3.03% vs. 3.00% yesterday
• Copper price +0.26% overnight