April Auto Sales & Li Auto in Focus

Articles From: KraneShares
Website: KraneShares

By:

Chief Investment Officer

KraneShares

Key News

Asian equities were lower overnight on light volumes and US debt ceiling concerns in advance of today’s US CPI release.

Foreign investors bought a healthy $804 million of Mainland stocks today via Northbound Stock Connect. China and Hong Kong were mixed as Mainland traders booked profits in SOEs with the Mainland and Hong Kong financial sectors down -2.9% and -2.23% along with Mainland and Hong Kong energy sectors down -2.31% and -0.8%. SOE reform buzz has led local Chinese asset managers to list SOE-focused ETFs.  Auto stocks were a top performer in both China and Hong Kong as April auto sales increased 54.5% year over year to 1.65 million and +2.1% month over month.

Within the Mainland, the third and fourth most heavily traded stocks by value were CATL (300750 CH) gaining+2.96% and BYD (002594 CH) closing higher by +3.87%. Prior to the US market opening, Li Auto (LI US) beat analyst estimates on revenue +96.55% year over year, adjusted net income, and adjusted EPS as the electric vehicle company delivered 52,584 vehicles in the first quarter. JD.com reports tomorrow after the Hong Kong close/prior to the US opening.  

The PCAOB released its 2022 inspection reports for the auditors the Board inspected in China. While some issues were discovered, they gained complete access and, in the words of Chair Williams: “It is not unexpected to find such high rates of deficiencies in jurisdictions that are being inspected for the first time. And the deficiencies identified by PCAOB staff at the firms in mainland China and Hong Kong are consistent with the types and number of findings the PCAOB has encountered in other first-time inspections around the world.” This should be viewed as a positive.

Hong Kong was mixed overnight on light volume with the most heavily traded by value Tencent +0.37%, Alibaba HK +0.94%, China Construction Bank -2.15%, Meituan -1%, BYD +2.44%, and JD.com HK -0.66%.  Real estate was off -2.37% in Hong Kong and -0.98% after a small distressed Shanghai-listed developer will be delisted after failing exchange listing requirements. Hong Kong shorts were quiet while Mainland investors were a small net seller of Hong Kong stocks via Southbound Stock Connect. Some chatter that Italy might leave the Belt & Road initiative, though who knows! CNY and Asia dollar index were off versus the US dollar though rallying post the CPI print.

The Hang Seng and Hang Seng Tech diverged -0.53% and +0.34% on volume off -19% from yesterday which is 82% of the 1-year average. 236 stocks advanced while 248 declined. Main Board short turnover declined -13.16% which is 66% of the 1-year average as 13% of turnover was short turnover. The growth factor outperformed the value facto while small caps “outperformed” large caps. Top sectors were utilities +0.84%, tech +0.65%, and healthcare +0.44% while real estate -2.4%, financials -2.26%, and energy -0.82%. The top sub-sectors were autos, household products, and semis while banks, diversified financials, and insurance were the worst. Southbound Stock Connect volumes were light as Mainland investors sold $29 million of Hong Kong stocks while SMIC was a small net sell, and Tencent and Meituan were small net buys.

Shanghai, Shenzhen, and STAR Board were mixed -1.15%, +0.31%, and -0.82% on volume -17% from yesterday which is 110% of the 1-year average. 2,667 stocks advanced while 1,958 declined. The growth factor outperformed the value factor while small caps “outperformed” large caps. The top sectors were discretionary +2.22%, materials +0.51%, and healthcare +0.24% while financials -3.02%, energy -2.43%, and communication -1.55%. The top sub-sectors were the auto industry, auto parts, and education while computer hardware, oil/gas, and banking were the worst. Northbound Stock Connect volumes were moderate/high as foreign investors bought a healthy $804 million of Mainland stocks with Citic a small net sell, and Ping An and Kweichow Moutai small net buys. CNY and Asia’s dollar slipped versus the US dollar. Shanghai copper and steel were both off.

Last Night’s Performance

MSCI China All Shares Index Average 1-Day Change %
Asian Countries Average 1-Day Change %
US & Hong Kong Dually Listed 1-Day Change %
Hong Kong's Most Heavily Traded By Value 1-Day Change (%)
Shanghai and Shenzhen's most heavily traded by value

Last Night’s Exchange Rates, Prices, & Yields

  • CNY per USD 6.92 versus 6.92 yesterday
  • CNY per EUR 7.58 versus 7.58 yesterday
  • Asia Dollar Index -0.02% overnight
  • Yield on 10-Year Government Bond 2.72% versus 2.74% yesterday
  • Yield on 10-Year China Development Bank Bond 2.89% versus 2.91% yesterday
  • Copper Price -0.24% overnight
  • Steel Price -0.59% overnight

Originally Posted May 10, 2023

Author Positions as of 5/9/23 are KBA, KALL, KCNY, KFYP, KCNY, KEMQ, BZUN, HSBC, KWEB, KHYB, LI US 

Charts Source: KraneShares 

Join the Discussion

Thank you for engaging with IBKR Campus. If you have a general question, it may already be covered in our FAQs. If you have an account-specific question or concern, please reach out to Client Services.

Your email address will not be published. Required fields are marked *

Disclosure: KraneShares

Content on China Last Night is for informational purposes only and should not be construed as investment advice. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results; material is as of the dates noted and is subject to change without notice. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.

This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities. Investing involves risk, including possible loss of principal.

This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.

Forward-looking statements (including Krane’s opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results) contained in this presentation are based on a variety of estimates and assumptions by Krane. These statements generally are identified by words such as “believes,” “expects,” “predicts,” “intends,” “projects,” “plans,” “estimates,” “aims,” “foresees,” “anticipates,” “targets,” “should,” “likely,” and similar expressions. These also include statements about the future, including what “will” happen, which reflect Krane’s current beliefs. These estimates and assumptions are inherently uncertain and are subject to numerous business, industry, market, regulatory, geo-political, competitive, and financial risks that are outside of Krane’s control. The inclusion of forward-looking statements herein should not be regarded as an indication that Krane considers forward-looking statements to be a reliable prediction of future events and forward-looking statements should not be relied upon as such. Neither Krane nor any of its representatives has made or makes any representation to any person regarding forward-looking statements and neither of them intends to update or otherwise revise such forward-looking statements to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such forward-looking statements are later shown to be in error. Any investment strategies discussed herein are as of the date of the writing of this presentation and may be changed, modified, or exited at any time without notice.

Disclosure: Interactive Brokers

Information posted on IBKR Campus that is provided by third-parties does NOT constitute a recommendation that you should contract for the services of that third party. Third-party participants who contribute to IBKR Campus are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from KraneShares and is being posted with its permission. The views expressed in this material are solely those of the author and/or KraneShares and Interactive Brokers is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to buy or sell any security. It should not be construed as research or investment advice or a recommendation to buy, sell or hold any security or commodity. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Forex

There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.