Review of the week

• Asian stocks were mostly lower this week, with mainland China, South Korea and Pakistan outperforming as China cut 1- and 5-year loan prime rates (LPR), which help set prices. mortgage rates.
• TAL Education kicked off the third quarter internet earnings season on Thursday with a bang on both the bottom line and the top line.
• A series of upcoming Hong Kong IPOs were announced this week, including Horizon Robotics, Jiangsu Hengrui Pharmaceuticals (mainland-listed) and Chery electric vehicles.
• Alibaba began pre-sales for its Singles’ Day (11/11) sales festival on Monday evening, noting that among the best sellers were iPhones and home furnishings.

Key news

Asian stocks ended a slow week in mixed fashion, with mainland China and Hong Kong outperforming while India and Japan underperforming.

Mainland China was the only local market to end the week higher, while Hong Kong was down, but not as much as the region (-1% vs. -3%).

National People’s Congress to meet in Beijing from November 4^th at 8^thalthough the news had no effect on the markets, as it came just as the markets closed. The agenda did not mention support for economic policy, with the first item discussed being the “preschool education law”. Expectations relate to an articulation of fiscal policy support with the issuance of special purpose bonds, described in more detail. Some think that this late publication is necessary to build the recovery plan.

Also after the closing, Premier Li Qiang said he met with the State Council to discuss “the economic situation and the implementation of a set of progressive policies.” I like the sound in relation to the NPC agenda!

The October one-year medium-term loan facility (MLF) rate remained at 2%, as expected, although loan volume increased by RMB 300 billion in September to RMB 700 billion, compared with 600 billion RMB expected.

It was a fairly quiet night from a news perspective, although India and China appear to be improving relations after Modi and Xi’s meeting at the BRICS conference, which was followed by pressure from Indian businesses for more cooperation with China.

Growth and technology stocks outperformed in mainland China and Hong Kong, driven by internet, autos, healthcare and cleantech. The electric vehicle (EV) ecosystem was strong following Tesla’s results, as Geely gained 2.00%, Li Auto gained 5.10%, BYD gained +2.38% and Great Wall Motors gained +4.66%, although Xpeng fell -1.88%.

Consumer play Pop Mart fell -6.72% after a major shareholder sold its shares following strong financial results.

It was another good day in mainland China for purchases of Hong Kong-listed stocks and ETFs via Southbound Stock Connect, with $1.18 billion in net purchases today, bringing the total to week at $4.69 billion and the year’s total at $73 billion versus The total for 2023 is just $40 billion.

Mainland financial media pointed out that a mainland “star” fund manager made Alibaba its first position, while Kweichow Moutai fell to its third position, after being No. 1 for a long time.

Volumes fell from extreme levels as foreign skepticism of the rally, combined with the U.S. election, left many investors on the sidelines. A 60% tariff is only considered bad for China, although Amazon, Walmart, Home Depot and Costco would have a big problem. This explains why I don’t think it will happen!

The Hang Seng and Hang Seng Tech indices gained +0.49% and +1.21% respectively, on volume down -2.41% compared to yesterday, or 133% of the one-year average. 333 stocks rose while 151 fell. Main Board short turnover decreased by -11.44% from yesterday, which is 98% of the year-over-year average, as 12% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is determined by market makers’ ETF coverage). The growth factor and small caps outperformed the value factor and large caps. The best performing sectors were Technology, which gained +3.65%, Healthcare, which gained +1.78%, and Consumer Staples, which gained +1.36%. Meanwhile, industrials fell -0.94%, materials fell -0.84% ​​and energy fell -0.80%, making up the worst performing sectors. The best performing subsectors were semiconductors, automotive and pharmaceuticals. Meanwhile, food and beverage, telecommunications and energy were among the worst-performing subsectors. Southbound Stock Connect volumes were strong, almost 2x the average, as mainland investors purchased $1.18 billion worth of Hong Kong-listed stocks and ETFs, including the Hong Kong ETF Tracker, which represented a large net purchase, Alibaba, which represented a moderate net purchase. buy, GCL Tech and Tencent, which were small net purchases. Meanwhile, Meituan and Semiconductor Manufacturing International (SMIC) recorded small net sales.

Shanghai, Shenzhen and STAR Board increased by +0.59%, +1.85% and +1.39% respectively, on a volume that increased by +16.57% compared to yesterday, or 205% of the average over one year. 4,082 stocks rose while 942 fell. The growth factor and small caps outperformed the value factor and large caps. The best performing sectors were technology, which gained +1.71%, industrial products, which gained +1.4%, and communication services, which gained +1.31%, while Utilities fell -1.79%, and Financials and Energy fell -0.34%. The best performing subsectors included power generation equipment, complete industrial and household products. At the same time, the precious metals, insurance and energy subsectors were among the worst performing subsectors. Northbound Stock Connect volumes were high, at just over 2x the average. The CNY and Asia Dollar Index fell against the US dollar. Copper fell while steel rose.

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Last night’s performance

Last night’s exchange rates, prices and yields

• CNY per USD 7.12 compared to 7.12 yesterday
• CNY per EUR 7.71 against 7.68 yesterday
• Yield on 10-year government bonds 2.15% versus 2.17% yesterday
• Yield on 10-year Chinese Development Bank bonds 2.24% compared to 2.24% yesterday
• Copper price -0.08%
• Steel prices +1.51%