Asian equities exhibited a mixed performance in the past week, with Hong Kong and Korea slipping while Pakistan and Singapore saw gains. This divergence followed the conclusion of China’s Singles Day sales festival, which reported a notable 9.7% increase in parcel deliveries year-over-year (YoY), marking a strong consumer engagement during the shopping event. Concurrently, major tech companies such as Tencent, Alibaba, JD.com, Bilibili, and NetEase released their quarterly earnings, with Tencent meeting analyst expectations. Additionally, CATL’s founder expressed aspirations of opening a manufacturing facility in the United States, highlighting the ongoing implications of geopolitical dynamics on business strategies in the region.
In particular, Alibaba’s third-quarter results for the fiscal year 2024 revealed a slight revenue miss, while adjusted net income and earnings per share surpassed analysts’ forecasts. Core e-commerce platforms Taobao and Tmall reported a modest revenue growth of 1% YoY, amounting to RMB 98.99 billion. The Cloud Intelligence Group and international e-commerce segments demonstrated stronger growth, with increases of 7% and 29%, respectively. Furthermore, Alibaba’s aggressive share buyback strategy, which included the repurchase of 414 million shares for $4.1 billion, exemplifies the company’s commitment to enhancing shareholder value despite challenging market conditions.
The week also saw various economic indicators emerge from Mainland China, with media sources indicating a clear economic recovery, as reflected in better-than-expected data. Singles Day sales experienced a significant 26% growth YoY, reinforcing optimistic consumer sentiment. Although retail sales rose 4.8% YoY, exceeding expectations, industrial production slightly missed its targets. The housing market exhibited mixed signals, with new home prices experiencing slight declines, while first-tier cities noted some recovery in used home sales prices—suggesting potential stabilization amidst broader real estate challenges. This gradual recovery may lead to improvements in consumer confidence and spending patterns in the high-end property markets.
The investment climate surrounding Chinese equities remains cautious, as evidenced by the mixed performances of U.S.-listed shares of JD.com and Bilibili, which saw declines following poor quarterly reports. Pessimism surrounding U.S. listings is guiding investor preferences towards Hong Kong shares, where local sentiment remains more favorable. Prominent hedge fund managers, like David Tepper, Michael Burry, and Howard Marks, retained their positions in Chinese stocks and ETFs as of the latest filings, indicating a potential long-term bullish outlook on the sector. However, strategic investors are likely to remain on the sidelines, influenced by concerns regarding U.S.-China trade relations and macroeconomic uncertainties.
On the market front, fluctuations continued as the Hang Seng Index displayed a marginal decline, with the Hang Seng Tech Index slightly rebounding. The diverse sector performances revealed a positive trend in energy and materials, contrasting with the downturns in real estate and consumer discretionary sectors. Mainland investors showed increased activity through the Southbound Stock Connect, purchasing substantial volumes of Hong Kong-listed stocks, particularly in major enterprises like Tencent and Meituan. Nevertheless, persistent issues such as below-average volumes for favored ETFs reflect a cautious atmosphere among market participants.
The overall sentiment in the Asia-Pacific region indicates that confidence is building, albeit slowly, as macroeconomic conditions evolve. The Hang Seng Index’s diverging performances and increased stock purchases by investors suggest a potential shift in market sentiment towards a more positive outlook. As President Xi’s international engagements unfold and policy directives intended to stabilize and spur growth take effect, investors will closely monitor economic indicators, sector performances, and broader geopolitical developments in the upcoming weeks. The markets remain poised for a recovery, particularly in Tier 1 cities, as small improvements in housing and consumer engagement signal a budding optimism for economic resilience amidst the challenges that lie ahead.
