Asian equities experienced a mixed performance overnight, with South Korea showing strength, whereas Hong Kong and Mainland China initially opened higher before declining in afternoon trading, with the latter closing down for the day. A significant positive catalyst for market sentiment was the meeting between Presidents Biden and Xi at the G20 Summit. The bilateral dialogue seems to have set a positive tone for future communications, especially in light of potential developments surrounding President Trump’s prospective second term in office. Added to this positive momentum was the China Securities Regulatory Commission (CSRC) announcement, dubbed “Guidelines for Supervision of Listed Companies No. 19 – Market Value Management.” These guidelines encourage listed companies to focus on value enhancement, investor returns, and overall shareholder value through means like dividends, stock buybacks, and mergers and acquisitions.
Celebrating a decade since the launch of Stock Connect, Mainland investors demonstrated significant interest in Hong Kong stocks and ETFs, with purchases totaling $1.74 billion. However, this strong start waned, as concerns persisted regarding Trump’s tariff policies and hawkish members of his cabinet, despite the strengthening US dollar driven by expectations of sustained high interest rates. Investors appear to be overlooking the fact that Trump’s negotiating tactics could diverge from historical precedents like the Smoot-Hawley Tariff Act of the 1930s, hinting at skepticism about the likelihood of similar strategies being employed in 2024.
This week is marked by another wave of third-quarter financial results announcements from prominent Chinese companies. Notable reports include those from Trip.com, Weibo, and Tongcheng Travel coming on Tuesday, with additional results from major entities such as PDD, IQ, Baidu, and Meituan scheduled for Thursday. The Hong Kong market showed more resilience compared to its Mainland counterpart. Top traded stocks revealed a diverse performance, with Tencent rising by 0.8%, while Alibaba experienced a drop of 1.03%, exacerbated by a decrease in its US Depository Receipts post-financial reports. Meanwhile, the electric vehicle sector in Hong Kong saw positive movement amid reports of progress on EU-China EV tariffs.
The Hang Seng Index and Hang Seng Tech Index recorded gains of 0.77% and 0.32%, respectively, although trading volume decreased by 9.27% compared to Friday. Despite this decline, the trading volume still exceeded the one-year average. On this occasion, 288 stocks advanced against 189 decliners. Notably, there was a significant drop in Main Board short turnover, indicating a slight shift in investor sentiment. The top-performing sectors for the day were financials, technology, and industrials, while healthcare struggled, reflecting broad trends in stock performance across various sectors.
In contrast, the Mainland indices, including Shanghai, Shenzhen, and the STAR Board, closed lower, experiencing declines of 0.21%, 2.18%, and 1.84% respectively. This downturn came amid volume that was about 185% of the one-year average, indicating active trading despite the negative performance. A substantial number of stocks (3,971) declined compared to those that advanced (1,160). Notably, energy and utilities sectors managed modest gains, while technology and communication services experienced significant downturns, indicating sector-specific vulnerabilities in the Mainland markets.
Looking ahead, the newsletter advertises an upcoming webinar focused on private equity and public equity dynamics, set for November 12th. In the latest content from KraneShares, the focus also shifts to the KraneShares Bosera MSCI China A ETF and the potential for A-shares to continue their upward trajectory. In terms of economic indicators, the value of the Chinese Yuan has fluctuated slightly against the US dollar and Euro, while the yield on government and development bank bonds also saw minor increases. Meanwhile, the steel and copper markets displayed contrasting performance, signaling some shifts in raw material pricing trends that may influence broader economic sentiment.