- Asian stocks registered another tumultuous trading week, a reflection of the US and developed markets. Markets were in the deepest red on Monday as investors feared a possible lockdown in Beijing.
- Multiple positive statements from the People’s Bank of China (PBOC), the Central Bank of China and the State Council on the platform economy and real estate led to some minor stock rallies throughout the week.
- Several large-cap A-share names reported positive Q1 gains on Wednesday as the earnings season kicked off in mainland China.
- On Thursday, Baidu received official approval to offer fully self-driving taxi rides in Beijing through the Apollo Go program. Previously, the company’s autonomous vehicles required safety drivers.
Friday’s most important news
Asian stocks had a strong day, except for India and the Philippines, as mainland China and Hong Kong both outperformed.
Both mainland China and Hong Kong were down in the morning session but ruptured in the early afternoon following a release from the CPC Central Committee chaired by President Xi. Specifically for internet stocks, the release stated: “It is necessary to promote the healthy development of the platform economy, complete the special rectification of the platform economy, implement normalized supervision and introduce specific measures to ensure the standardized and healthy development of the platform.” economy to support.” The interpretation is that this means the end or at least a significant relaxation of internet regulation.
Hong Kong’s most traded stocks were Tencent, which gained +11.07%, Meituan, which gained +15.51%, Alibaba HK, which gained +15.69%, JD.com HK, which gained +15.68 , and Kuaishou, who won +8.98%. † Hong Kong volumes were up +56% from yesterday, demonstrating strong investor participation in the rally. Was there short coverage? 100%. Hong Kong short sales were up +50% from yesterday, which is 161% from the 1-year average. Southbound Stock Connect was closed, so today’s move was without the participation of mainland investors.
Following Hong Kong’s shutdown, Bloomberg News reported that “according to people familiar with the matter,” China is nearly allowing the Public Company Accounting Oversight Board (PCAOB) to conduct onsite audit reviews in China, which could potentially increase ADR takedown. presented by Holding Foreign Companies Accountable Act (HFCAA). Let’s hope!
The South China Morning Post said regulators will meet with internet companies next week in an effort to prioritize domestic consumption. We have repeatedly pointed out that domestic consumption needs to pick up. In addition, a third of all retail sales are made through Internet companies. It makes sense to ease the regulatory burden, as domestic geared motors are needed to jump-start the economy.
It was a very strong and broad move in both China and Hong Kong. The CPC meeting was held to “analyze and study the current economic situation and economic work”. It acknowledged that the effects of both covid and the crisis in Ukraine have “led to heightened risks and challenges”, while reiterating “people first, life first”. It seemed to indicate a balance “to efficiently coordinate the prevention and control of epidemics and economic and social development”. To stabilize the economy, it was recommended to “implement policies such as tax cuts, tax cuts and rate cuts and make good use of various monetary policy instruments.” This must be done ‘quickly’ while at the same time emphasizing ‘the leading role of consumption in the economic cycle’. It reiterated that “houses are for living in, not for speculation”, but also the need to “support places in improving real estate policies according to local conditions and promoting the stable and healthy development of the real estate market.” .” We often see China as a unique entity, although it is a diverse country not only geographically, but also economically. Not all Chinese cities have high real estate prices. It makes sense to allow flexibility in policy at the local level.
The Hang Seng Index and Hang Seng Tech Index closed +4.01% and +9.96% respectively on a volume that was +56% higher than yesterday, which is 114% of the 1-year average. There were 393 advancing stocks and only 98 falling stocks. Short sales volume in Hong Kong was up +50%, which is 161% from the 1-year average. The leading sectors were discretionary, which gained +12.47%, communications, which gained +10.39%, and technology, which gained +6.26%, while energy was the only off sector, down -0, 43%. Growth drivers outperformed while value sectors underperformed today. Southbound Stock Connect was closed for Monday’s holiday.
Shanghai, Shenzhen and the STAR board gained +2.41%, +3.89% and 4.88% by volume which was +14.93%, which is 89% of the 1-year average. There were 4,238 advancing stocks and only 218 falling stocks. Leading sectors were communications, up +7.26%, tech, up +4.99%, discretionary, up +4.61%, industrials, up +4.29%, and materials, up +4.29%. 4.17% gained as all sectors were positive. Growth factors outperformed value and dividend factors. Foreign investors today bought $644 million worth of mainland stock through Northbound Stock Connect. Treasuries gained, CNY gained +0.63% against the US dollar and copper gained +0.16%.
Last night’s exchange rates, prices and returns
- CNY/USD 6.60 vs 6.63 yesterday
- CNY/EUR 6.96 vs 6.97 yesterday
- One Day Government Bond Yield 1.59% vs. 1.32% Yesterday
- 10-Year Treasury Yield 2.84% vs. 2.85% Yesterday
- Yield on 10-Year China Development Bank Bond 3.07% vs. 3.07% Yesterday
- Copper price +0.16% overnight