a week in review
- China released 2022 economic data this week. GDP grew +3.0% while retail sales fell -0.2%, less than expected.
- Chewy founder Ryan Cohen announces a stake in Alibaba and is calling for more share buybacks based on the company’s low valuation.
- Global economic leaders gather at the World Economic Forum forum in Davos, Switzerland. Chinese Vice Premier Liu He addressed the audience, emphasizing that China is open for business again. Later, the leader met with US Treasury Secretary Janet Yellen in Zurich.
- Foreign investors have invested nearly $15 billion in mainland stocks so far this year, already surpassing total inflows in 2022.
- In this week VideoXiabing provides an inside look at life in Shanghai after the end of Zero COVID restrictions and provides updates on the recovery of China’s travel industry.
Friday Home News
Mainland China and Hong Kong stocks ended the Year of the Tiger like Katy Perry’s “Roar,” though in 2021, we had to be a survivor, singing “Eye of the Tiger.”
Hang Seng and Hang Seng Tech rose 1.82% and +2.67% respectively, with all sectors positive for the third day in a row. Hong Kong-listed Internet stocks outperformed their US-listed peers overnight, which contributes to the latter’s gains in today’s US market movement. The Hang Seng Index closed above 22,000, which is a large, meaningless, but psychologically important round number! The most heavily traded stocks in Hong Kong by value were Alibaba, which rose +3.65% after watching Jack Ma in Hong Kong, Tencent, which rose +2.35%, and Meituan, which jumped +4.93%.
Yesterday, we reported that the Hong Kong Exchange and Clearing (HKEX) announced the expansion of Southbound Stock Connect to include “international companies listed on the Hong Kong Stock Exchange,” helping fuel the internet rebound. Remember that not all dual listed companies are Hong Kong master listed. HKEX’s move may prompt more companies to convert their secondary offerings in Hong Kong into a primary offering. why? Tencent has approximately 9.32% of its market capitalization held by investors in mainland China via Southbound Stock Connect. Meanwhile, nearly 30% of Hong Kong’s daily trading volume originates from Southbound Stock Connect. HKEX also announced the expansion of Northbound Stock Connect to include more stocks.
Foreign investors bought another $1.4 billion worth of shares on the mainland, making the year-to-date net purchase of $14.6 billion, which is more than in all of 2022.
High-cap and high-growth stocks favored by domestic and foreign investors had a strong day led by Sungrow Solar, which rose +7.04% after forecasting 100% earnings growth in 2023. Meanwhile, a well-known local mutual fund manager revealed announced his holdings in 2022, which showed a preference for clean technology and consumer discretionary stocks.
After the lockdown in Hong Kong, Sinopharm reported that its mRNA vaccine had been approved for clinical trials in China.
US Treasury Secretary Janet Yellen’s team will travel to China next month before her visit to China this year. Remember, we may have Secretary of State Blinken to visit China in the first week of February. The “180” in US-China relations really makes you wonder what Xi could have said to Biden at the G20.
China last night will take a break, starting on Monday and resuming on Thursday, January 26y. Stock and bond markets in mainland China and Hong Kong will be closed for the Lunar New Year holidays during that period. “Gong Hei Fat Choy” in Cantonese (or gong xi fa cai, 恭喜发财 in Mandarin): May you prosper in the new year!
The Hang Seng and Hang Seng Tech indices gained +1.82% and +2.67% respectively, in terms of volume which increased +2.74% from yesterday, which is 76% from the first-year average. 415 stocks rose, while 71 stocks declined. Mainboard short turnover is down -1.26% from yesterday, which is 72% from the first year average where 17% of volume was short. Growth and value factors performed well, with large companies outperforming smaller companies. All sectors were positive with Consumer Estimates +3.2%, Energy +3.14%, and Materials +2.97%. The best performing sub-sectors were energy, retail and materials. Meanwhile, food, consumer goods and household products were among the worst. Southbound Stock Connect is closed today.
Shanghai, Shenzhen, and STAR Board gained +0.76%, +0.65%, and +0.54% respectively, in volume that increased +9.51% from yesterday, which is 81% from the first-year average. 3614 shares rose, while 1056 shares declined. Growth and value factors performed well while large companies outperformed smaller companies. The best performing sectors were utilities which rose +2.01%, telecom services which rose +1.67%, and materials which rose +1.63%. Meanwhile, the healthcare sector fell -0.41% and consumer goods fell -0.38%. The best performing sub-sectors were telecoms, precious metals and education. Meanwhile, motorcycles, stock and biotech were among the worst. Northbound Stock Connect volumes were moderate/light as foreign investors bought $1.4 billion worth of mainland stocks. The Chinese Yuan rose +0.05% against the US Dollar, closing at CNY6.78 per US Dollar, Treasuries sold off, and Shanghai Copper fell -0.27%.
Major Chinese City Mobility Tracker
Commuting drops as China goes on vacation.
last night’s performance
Currency exchange rates, rates, and returns
- Chinese Yuan per US dollar 6.78 vs. 6.79 yesterday
- CNY 7.35 each against 7.34 yesterday
- The yield on 10-year government bonds is 2.93% versus 2.92% yesterday
- The yield on the CDB’s 10-year bond is 3.09%, up from 3.08% yesterday
- Copper Price -0.27%