Week in Review
- Asian equities were mostly higher this week as Japan outperformed the region, Hong Kong saw modest gains, and Mainland China was lower.
- China released mixed purchasing managers’ index (PMI) readings this week as Manufacturing outpaced Non-Manufacturing (Services), though the private and official surveys for both showed expansion month-over-month.
- Real estate stocks were higher this week as online real estate brokerage platform Beike, operated by KE Holdings, reported its highest monthly transaction volume in three years in June.
- Alibaba announced Tuesday 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.
Friday’s Key News
Asian equities were mixed overnight as investors awaited the U.S. jobs report for June. It indicated that the U.S. economy added more jobs than expected, though unemployment increased — making for a complex but still strong case for interest rate cuts toward the end of the year.
The EU announced provisional new tariff rates for China-made electric vehicles that were slightly lower than expected. BYD, one of the largest exporters, will see its rate remain unchanged at 17%. Th average duty paid will be near 20%. The electric vehicle ecosystem was mostly lower overnight.
Internet stocks were mostly lower. NetEase delayed a title release, which weighed on its shares. Meanwhile, buyback champions Alibaba and JD.com were lower though Alibaba is up for the week.
Tourism stocks were higher on positive policy developments. The central government released a pledge to improve tourism infrastructure. Domestic tourism is roaring back in China. Our team visited tourism hotspot Xian last month, where we were told that visitors to the famous terra-cotta warriors were 10 million in 2023, up from only 2 million in 2019.
International tourism is coming back too, albeit slowly. According to the South China Morning Post, foreigners entering the country more than doubled from last year in the first six months of this year. This is mainly due to increased visitors from countries that have been granted visa-free access to China, which include multiple EU countries such as France and Germany.
Financials were underperformers overnight. The PBOC announced multiple long-term government borrowing mechanisms with key partners, which could help fund support for the consumer going into the Third Plenum meetings in ten days. The theme among analysts regarding the meeting has been preparing for a “post-property” China. What does this mean? An economy that is more concentrated in domestic consumption and innovation, rather than real estate speculation.
The Hang Seng and Hang Seng Tech indexes both closed lower by -1.27% and -1.45%, respectively, overnight on volume that was basically flat from yesterday. Mainland investors bought a net $45 million worth of Hong Kong-listed stocks and ETFs overnight via Southbound Stock Connect. The top-performing sectors overnight were Health Care, which gained +2.67%, Materials, which gained +1.80%, and Utilities, which fell -0.19%. Meanwhile, the worst-performing sectors were Financials, which fell -2.46%, Information Technology, which fell -1.61%, and Real Estate, which fell -1.50%.
Shanghai, Shenzhen, and the STAR Board diverged to close -0.26%, 0.52%, and 1.23%, respectively, on volume that decreased -2% from yesterday. The top-performing sectors overnight were Health Care, which gained +2.57%, Materials, which gained +1.42%, and Communication Services, which gained +0.51%. Meanwhile, the worst-performing sectors were Financials, which fell -1.47%, Consumer Staples, which fell -1.25%, and Energy, which fell -0.60%.
New Content
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How to Buy the Same Stocks as China’s Sovereign Wealth Funds
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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 7.87 versus 7.86 yesterday
- Yield on 1-Day Government Bond 1.24% versus 1.24% yesterday
- Yield on 10-Year Government Bond 2.28% versus 2.25% yesterday
- Yield on 10-Year China Development Bank Bond 2.36% versus 2.34% yesterday
- Copper Price +0.39%
- Steel Price -0.89%
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