Key News
Asian equities were mixed but mostly lower overnight as Hong Kong and Pakistan outperformed.
Alibaba announced that the company repurchased $5.8 billion worth of shares in the first quarter with $26.1 billion remaining in the current program, which extends through the first quarter of 2027. This monster program is a significant catalyst. The Hong Kong shares’ inclusion in Southbound Stock Connect could be another potential strong catalyst for the stock, as almost 10% of Tencent’s market cap is held by Mainland investors, who understand these companies better than anyone else, through the program.
Hong Kong followed the Mainland’s positive performance from yesterday to close slightly higher. Catalysts included the better-than expected Caixin (private survey) Manufacturing PMI, positive EV deliveries from June, and price increases for Baijiu, leading to gains in Kweichow Moutai and Wuliangye Yibin. However, growth and technology was off as value plays outperformed, including real estate on positive policy developments.
E-Commerce service provider Baozun rebounded somewhat overnight, gaining +4% in Hong Kong, after a dip earlier in the year. The company is not a consumer play, as it is completely a B2B service provider. It is seeing increasing competition from enhanced services offered to merchants by larger E-Commerce platforms. Alibaba, for example, has rolled out more, free-of-charge AI advertising tools for merchants to use on the platform.
Online and offline real estate brokerage platform KE Holdings, which operates the popular “Beike” app (the “Zillow” of China), reported its highest monthly transaction volume in three years.
There was chatter of another cut to the reserve requirement ratio (RRR) overnight as the PBOC considers moves in advance of the Third Plenum. The central bank has been keeping yields steady, likely waiting until a US Fed cut to allow them to fall lower. Lowering the reserve requirement is a good, short-term economic support measure that the central bank can
The Hang Seng and Hang Seng Tech indexes diverged to close +0.29% and -0.43%, respectively, on volume that increased +20% from Friday (Hong Kong was closed yesterday). Mainland investors purchased a net $760 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors were Energy, which gained +2.71%, Real Estate, which gained +1.99%, and Financials, which gained +1.72%. Meanwhile, the worst-performing sectors were Consumer Staples, which fell -1.97%, Communication Services, which fell -0.95%, and Information Technology, which fell -0.66%.
Shanghai, Shenzhen, and the STAR Board diverged to close +0.08%, -0.60%, and -1.48%, respectively, on volume that decreased -2% from yesterday. The top-performing sectors were Consumer Staples, which gained +1.55%, Financials, which gained +0.89%, and Utilities, which gained +0.42%. Meanwhile, the worst-performing sectors were Real Estate, which fell -1.89%, Consumer Discretionary, which fell -1.49%, and Information Technology, which fell -1.46%.
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Last Night’s Performance
Last Night’s Exchange Rates, Prices, & Yields
- CNY per USD 7.27 versus 7.27 yesterday
- CNY per EUR 7.80 versus 7.80 yesterday
- Yield on 1-Day Government Bond 1.25% versus 1.25% yesterday
- Yield on 10-Year Government Bond 2.24% versus 2.25% yesterday
- Yield on 10-Year China Development Bank Bond 2.34% versus 2.34% yesterday
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