In a mixed week for Asian equities, major markets showed divergent trends, with South Korea and Pakistan outperforming, while Hong Kong and Mainland China lagged. A flurry of third-quarter earnings reports from Internet companies characterized the week; notable performances included Trip.com, Kuaishou, and Qifu Technology all beating expectations, whereas PDD fell short. Additionally, significant developments in China’s solar industry emerged as the Ministry of Industry and Information Technology (MIIT) urged solar panel manufacturers to manage excess supply, coinciding with the Ministry of Finance’s (MOF) reduction in export tax rebates for solar panels. This strategy seems aimed at reducing trade deficits with countries like the United States and Brazil, particularly as preparations are underway for potential negotiations with a new Trump administration.
Alibaba made headlines as the company announced a strategic merger of its domestic and international e-commerce sectors, marking a notable reversal of last year’s restructuring efforts. This decision appears to stem from the company’s recognition of the rapid growth in international markets and its investment in advanced AI technologies to enhance its global competitiveness. CEO Eddie Wu emphasized that the evolving e-commerce landscape now requires integrated capabilities across global supply chains to ensure success. This shift may also be motivated by a desire to spotlight significant growth opportunities within Alibaba’s international operations, thereby reassuring analysts and investors alike.
Financial sentiment in Hong Kong reflected optimism among mainland investors, who purchased $328 million worth of Hong Kong-listed equities via the Southbound Stock Connect program, marking the seventh consecutive day of net buying. Such continued investment indicates a belief among mainland investors that there may be favorable future developments, potentially linked to promising trade negotiations between the U.S. and China under a possible Trump administration. However, the broader Hong Kong market faced challenges, with the Hang Seng and Hang Seng Tech indexes both declining by about 2% amid heightened geopolitical concerns and a strong U.S. dollar.
In sharper terms, the mainland markets—Shanghai, Shenzhen, and the STAR Board—suffered significant losses, closing down 3.06%, 3.54%, and 4.16%, respectively. Trading volumes increased, reflecting heightened activity amid adverse market conditions. Sector-wise, the performance varied significantly, with Utilities being the least affected but still declining, while Health Care, Information Technology, and Financials were among the worst-hit sectors. Additionally, volume spikes suggest renewed participation from investors, even as negative trends permeated various sectors, indicating both volatility and possible opportunistic buying in a bearish environment.
Valuable insights emerged from the earnings season, specifically from KE Holdings, which reported a slight revenue miss but exceeded net profit expectations, with an impressive 18% year-over-year increase in new home transactions. This positive trend signals potential recovery momentum for China’s real estate sector, which had navigated tumultuous waters recently. KE Holdings’ focus on home decoration services during market downturns appears to be a strategic maneuver that aided in their profitability and underlines the importance of diversification in tough economic circumstances.
Lastly, currency and commodity metrics remained stable, with the Chinese yuan showing slight fluctuations against the U.S. dollar and the euro. The yield on government bonds remained unchanged, indicating a steady outlook among investors wary of risk. Activities in commodities like copper and steel showed mild variations as well, indicating ongoing market adjustments. Thus, while the week was filled with ups and downs, the overarching narratives point toward strategic adaptations in business models, geopolitical considerations, and investor sentiments that could shape the investment landscape in Asia moving forward.
