The Asian markets mirrored the downward trajectory of US stocks, influenced by a weaker US dollar, as sentiments turned cautious with disappointing tech earnings dominating news cycles. China-centric reports focused largely on the financial performance of Tesla alongside lowered iPhone 16 order expectations from Apple, which further fueled a bearish outlook for growth stocks in Hong Kong. Educational services firm New Oriental Education and Topsports saw significant declines—6.49% and 2.81%, respectively—affecting overall market confidence. Despite the IPO of Horizon Robotics raising a substantial $696 million with a modest gain of 2.76%, investor sentiment across popular growth sectors was distinctly negative. Notably, Southbound Stock Connect recorded only a minor net sell of $60 million, showcasing a clear retreat after three consecutive days of heavy buying that reached $3.57 billion, marking a year-to-date investment total of $72.64 billion.
Before the opening bell on US markets, TAL Education surprised analysts with earnings surpassing expectations across the board—revenue, adjusted net income, and adjusted EPS—including a notable 1.57% uptick in pre-market trading. Meanwhile, mainland markets showed losses but fared better compared to Hong Kong. Investors in China remained on standby for the National People’s Congress (NPC) schedule and expected announcements regarding potential fiscal stimulus measures to bolster the economy and address market concerns. Additionally, robust passenger car sales in September were reported, revealing a 4.5% year-over-year increase alongside a remarkable 53.3% penetration for new energy vehicles (NEVs) amidst an ongoing conversation concerning government tariffs impacting expansion in Europe for Chinese electric vehicle manufacturers.
In the real estate sector, Chinese authorities revealed an extensive support initiative nearing RMB 1.77 trillion, with the initial 404 projects securing RMB 135 billion, likely driven by recent fiscal policy shifts. This strategic support signals awareness of historical economic pitfalls, similar to Japan’s real estate bubble collapse. The market’s dynamics reflected a noted absence of the “National Team,” as trading volumes of favored ETFs remained unimpressive. Meanwhile, Zijin Mining emerged as the predominant foreign investor under the Qualified Foreign Institutional Investors (QFII) program, indicating a calm before potential market shifts, as underscored by the broader trading sentiment.
In discussions with Nasdaq Dorsey Wright, insights were shared regarding the Shanghai Index’s extended bear market phase lasting 875 days until early February 2024, indicating several days of negative performance that impacted investor confidence. Nevertheless, technical indicators have shown signs of improvement recently, raising questions around the sustainability of the present market pullback. Flow into Hong Kong’s growth and China’s mega-cap stocks had culminated in a notable state of overbought conditions in late September, with data indicating that Hong Kong growth stocks reached 194% overbought marks. Contrarily, mega-cap stocks moved from oversold to significantly overbought territory at 257%. This stark contrast portends possible buying opportunities, as complete fiscal policy support had not yet materialized.
The Hang Seng and Hang Seng Tech indices registered losses of 1.30% and 2.64%, respectively, with volume dipping 14.22% from the previous day but still maintaining a robust 137% of the one-year average. The day’s trading disclosed 425 declining stocks compared to just 77 advances, with short turnover seeing an increase, suggesting traders were hedging against market volatility. Overall sector performance remained bleak, primarily impacted by real estate, healthcare, and discretionary sectors, all declining significantly. Although food and staples, as well as energy sectors displayed resilience, segments such as retailing and pharmaceuticals faced considerable downturns, reflecting a broader industry-wide malaise.
Stock market performance continued to decline in Shanghai, Shenzhen, and the STAR Board, with respective losses of 0.68%, 0.91%, and 0.16%. Despite lower volume trading—21.17% down, yet still representing 177% of the seasonal average—decliners outnumbered advancers. Across sectors, the industrial and consumer discretionary sectors recorded notable reductions, whereas smaller non-cyclical sectors like daily chemicals showcased performance strength. Northbound stock connect trading volumes surged, reaching twice the average amid heightened activity. On the commodities front, the Chinese Yuan and Asia Dollar Index appreciated against the US dollar, a trend in contrast to declines witnessed in both copper and steel prices, coupled with rising treasury yields reflecting shifting market sentiments in the wake of economic data releases.
For those looking to leverage current market conditions and gain insights into the driving forces behind public equity buyouts, an upcoming webinar scheduled for November 12 will explore critical dynamics within private equity sectors. Interested parties are encouraged to register to deepen their understanding of emerging investment opportunities and overarching market trends. Furthermore, the KraneShares Bosera MSCI China A ETF highlights ongoing discussions about the potential for A-shares to continue their upward momentum following recent rallies. These developments serve as focal points for investors navigating the complex landscape of Asian equities amid macroeconomic fluctuations and shifting consumer behaviors in China.