Internet and reopening games continue

Internet and reopening games continue

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Asian stocks were mostly higher, with Hong Kong and mainland China outperforming while Thailand was on holiday for the late King Bhumibol Adulyadej’s birthday. The continued rollback of COVID rules in several cities, particularly Shanghai, led to another strong day in Hong Kong, China, and in particular Hong Kong-listed internet stocks.

Mainland media highlighted an expert from the Beijing Institute of Respiratory Diseases, who said that “the pathogen and toxicity of Omicron mutuals…were greatly weakened compared to the original strain and Delta “. With the less deadly omicron variant compared to the original covid and delta, it makes sense to recall the restrictions in addition to the people’s frustration for nearly three years of strict policies. This is despite the 4,247 new covid cases as well as 25,477 asymptomatic cases reported today.

Over the weekend, Chinese internet stocks were dubbed “China’s best reopening play” due to companies’ exposure to e-commerce and online travel booking as well as “distressed” valuations. “, underlined by an analyst who covers the space. As my colleague, Jonathan Shelon, has eloquently put it, “Chinese internet stocks are the drivers of domestic consumption as it happens online.” At our investor conference last week, Alibaba’s Head of Investor Relations Robert Lin spoke about the company’s pivotal role in retail sales.

Shorts covering their positions led to several strong performers today, including Bilibili, which gained +28%, and Xpeng, which gained +26%. Hong Kong’s most traded stocks by value were Tencent, which gained +6.08%, Alibaba HK, which gained +9.26%, and Meituan, which gained +3.75%.

The Politburo meets tomorrow, which could give us clues about economic policies coming out of the upcoming Central Economic Work Conference (CEWC) in ten days.

A bank’s global strategist moved China to an overweight for the first time after keeping it at equal weight for two years. Underweight investors in China may therefore have to chase names.

Mainland China had a good day, except for semiconductor stocks. The mainland’s most traded stocks by value were Shijiazhuang Yiling Pharmaceutical, which gained +8.29%, broker East Money, which gained +4.97%, and Ping An Insurance, which gained +5.96% , and Sungrow Power, which fell -9.58% on weak European demand. Financials had a good day on the continent, gaining +4.95% as financial regulators’ policies allowed banks to prop up struggling property developers. Foreign investors bought $848 million worth of mainland stocks today. The CNY had a strong day, gaining +1.48% against the US Dollar to close at CNY 6.96 per dollar, while the Asian Dollar Index gained +0.47%.

The Hang Seng and Hang Seng Tech indices gained +4.51% and +9.27%, respectively, on volume that was up +56.18% from Friday, or 181% of the 1-year average . 470 stocks rose, while 41 stocks fell. Main card short sales revenue was up +46.31% from Friday, or 148% of the 1-year average, with 14% of revenue being short-sell revenue. discovered. Growth and value factors were mixed, with small caps outperforming large caps. All sectors were positive, with Consumer Discretionary gaining +7.9%, Technology +6.96% and Communication Services +6.93%. The best-performing subsectors in Hong Kong were healthcare equipment, retail and hardware equipment, while semiconductors lagged. Southbound Stock Connect volumes were strong as mainland investors sold -$182 million net worth of Hong Kong stocks. Tencent was a strong net sell in the trading schedule, while Meituan was a slight net long, Kuaishou was a moderate net long, and Xpeng was a moderate net sell.

Shanghai, Shenzhen and the STAR Board diverged to close +1.76%, +0.88% and -0.45%, respectively, on volume that fell -22.35% from yesterday to 111 % of 1-year average. 3,286 stocks rose, while 1,366 stocks fell. Value factors outperformed growth factors, with large caps outperforming small caps. All sectors were positive, with Communication Services gaining +6.34%, Financials +4.9% and Energy +3.13%. The best performing sub-sectors on the continent were telecommunications, diversified financial services and construction. Meanwhile, power generation equipment, motorcycles and chemicals were among the worst. Northbound Stock Connect volumes were moderate/high as overseas investors bought $848 million net worth of continental stocks. The CNY gained more than +1% from Friday against the US Dollar to close at 6.96 from 7.05 on Friday, Treasuries sold off slightly and copper gained +0.59%.

Last night’s exchange rates, prices and yields

  • CNY for 7.96 USD against 7.05 on Friday
  • CNY for 7.34 EUR against 7.37 on Friday
  • Overnight government bond yield 1.10% vs. 1.20% on Friday
  • 10-year government bond yield 2.89% vs. 2.87% on Friday
  • China Development Bank 10-year bond yield 3.02% vs. 3.00% on Friday
  • Copper price +0.59% overnight

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