Hong Kong Internet Stocks Ride Policy Tailwind As COVID Weighs On Mainland Sentiment | Jobs Recent


Important News

Asian stocks had a tough Monday, not least India and Singapore as Lionel Messi turned the world of soccer fans (at least temporarily!) on with Argentina’s thrilling win over France.

Volumes were light regionally as Friday was the last institutional trading/spending event. Hong Kong and China both opened higher but slipped during the trading day despite a strong Central Economic Work Conference/pro-domestic internet spending release emphasizing internet companies, EVs, and real estate. In addition to CEWC’s pro-use exemption, which emphasized the importance of Internet companies, a high-ranking regional government official visited Alibaba’s headquarters.

Hong Kong’s internet stocks performed very well today as evidenced by Hong Kong’s top exchanges by value were Tencent +1.14%, Alibaba HK +0.69%, Meituan, and Kuaishou +1.15%. After the closure of Hong Kong, it was announced that the eligibility of Northbound and Southbound Stock Connect will be extended by three months which should allow stocks to be dual listed and listed on the main Hong Kong list. The problem that hit Hong Kong and to a large extent Shanghai and Shenzhen is the spread of COVID in China. Remember that investing in stocks can be very economical. So, if you are careful, you may be shorting the stock.

Our Major Chinese Mobility Tracker shows that traffic and subway usage has dropped significantly over the past few weeks. Although the government is relaxing the rules, people are worried about getting sick. While this trend may worsen in the long run, there is light at the end of the tunnel as today’s WSJ noted a sharp rise in domestic air travel. The risk of sensitivities is evident in health care, which has undoubtedly benefited from COVID, which has been the worst sector in Hong Kong and China. Trading is expected to lighten up in the next two weeks although professional investors will have to keep an eye on the PCAOB’s news regarding the Holding Foreign Companies Accountable Act and the reality of China’s reopening in 2023. Position yourself accordingly!

Hang Seng and Hang Seng Tech lost -0.5% and -0.58% respectively on volume -26% from Friday which is 81% of the 1 year average. 110 stocks advanced while 395 declined. Big Board’s short interest is down -30.11% since Friday which is 64% of the 1-year average as 14% of the gain was short interest. Value factors outperformed growth factors as large caps outperformed small caps. Top sectors were telecommunications +0.78%, basic +0.26%, and discretionary +0.11% while healthcare fell -3.92%, utilities -3.54%, and industrials -2.67%. The top subsectors were software, retail, and food/beverages while pharma, healthcare, and food staples were among the worst. Southbound Stock Connect volumes were light as Mainland investors sold $54 million worth of Hong Kong stocks with Tencent, Meituan, and Kuaishou all short buys.

Shanghai, Shenzhen, and STAR Board fell -1.92%, -1.78%, and -2.27% on volume -0.22% from Friday which is 81% of the one-year average. 518 stocks advanced while 4,216 stocks declined. Growth factors “outperformed” value factors while large caps outperformed small caps. All sectors fell with industrials -1.07% and health -3.28%. The only positive subsector was education while pharma, telecom, and biotech were among the worst performers. Northbound Stock Connect volumes were light as foreign investors sold $213 million of Mainland stocks. The CNY fell slightly against the US dollar at 6.97, the Treasury market strengthened, while copper was off -0.23%.

Major Chinese Mobility Tracker

A slow consumption trend is in place.

Last Night’s Performance

Last Night’s Exchange Rates, Prices, and Products

  • CNY to USD 6.97 compared to 6.97 on Friday
  • CNY to EUR 7.39 compared to 7.40 on Friday
  • Earnings on the 10-year government bond at 2.86% compared with 2.88% on Friday
  • China Development Bank 10-Year Yield 3.02% vs. 3.04% Friday
  • Copper price -0.23%



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