Key news
Asian equities didn’t forget about Friday’s US CPI print nor the ECB’s rate hike language leading to a similar fall as we had in Europe and the US Friday. Bitcoin was also smoked over the weekend as a sign of risk-off contagion. South Korea was hit especially hard while Australia dodged the bullet due to the Queen’s birthday and market holiday.
Growth stocks were hit harder in the region and Hong Kong than they were in China. Volumes were high, though lower than Friday’s high volumes, driven by Hong Kong and Mainland China index rebalances.
Yes, there were rumors of more covid testing in Beijing and Shanghai though macro factors were overwhelmingly at play overnight. May industrial production and retail sales will be released on Wednesday. Foreign investors sold a healthy $2 billion worth of mainland stocks today though mainland investors bought the dip in Hong Kong, especially in Tencent, Kuaishou, Meituan, and Li Auto. Electric vehicles (EV) and lithium stocks were rare strong spots on May EV sales.
Wuxi Biologics (2269 HK) and WuXi AppTec (603259 CH) were off -5.8% and -9.56%, respectively, as a consortium of owners trimmed their stake in the companies.
The Hang Seng and Hang Seng Tech indexes dropped -3.39% and -4.72%, respectively, on volume that was -11.62% lower than Friday, which is 112% of the 1-year average. 157 stocks advanced while 316 fell. Hong Kong short sale turnover fell -9.95% from Friday, which is 123% of the 1-year average. Value and dividend factors outperformed growth factors while large caps “outperformed” small caps. Energy was the “best” performer, down -0.96%, while discretionary fell -5.89%, communication fell -5.05%, and healthcare fell -4.44%. Online education was the top sub-sector along with the EV ecosystem, while internet and biotech were down. Southbound Stock Connect volumes were elevated as Mainland investors bought Hong Kong-listed stocks, including net buys in Tencent, Meituan, Kuaishou, and Li Auto.
Shanghai, Shenzhen, and the STAR Board were off -0.89%, -0.01%, and -1.31%, respectively, on volume that was +4.25% higher than Friday, which is 101% of the 1-year average. 1,858 stocks advanced while 2,539 stocks declined. Growth factors outperformed value factors while small caps outperformed large caps. Materials was the only positive sector, gaining +0.5%, while real estate fell -3.94%, utilities fell -3.22%, and communication fell -2.7%. Lithium-related stocks and online education stocks outperformed while power and electrical plants underperformed. Northbound Stock Connect volumes were high as foreign investors sold a healthy $2 billion worth of Mainland stocks today. Treasury bonds sold off along with CNY versus the US dollar, which fell to 6.72 CNY/USD, and copper fell -0.8%.
Last Night’s Exchange Rates, Prices, & Yields
- CNY/USD 6.75 versus 6.71 on Friday
- CNY/EUR 7.05 versus 7.06 on Friday
- Yield on 1-Day Government Bond 1.15% versus 1.15% on Friday
- Yield on 10-Year Government Bond 2.77% versus 2.75% on Friday
- Yield on 10-Year China Development Bank Bond 2.98% versus 2.97% on Friday
- Copper Price -0.8%
—
Originally Posted on June 13, 2022 – Mainland Investors Buy The Dip In Hong Kong
Author Positions as of 6/13/22 are KBA, KALL, KCNY, KFYP, KCNY, KEMQ, BZUN, HSBC, KWEB, KHYB, LI US
Charts Source: KraneShares
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.
