BYD & Kuaishou Beat

Key News

Asian equities had a good day as Hong Kong outperformed while Mainland China was off slightly.

Alibaba led the way as it jumped +12.23% on high volume as analysts updated their sum of the parts analysis (SOTP). Tencent gained +1.75% on high volume and strong buying from Mainland investors, Meituan closed higher by +4.01% on high volume and moderate buying from Mainland investors, JD.com finished at +1.92%, and BYD gained +3.12% on strong financial results and its net income jumping +400% year-over-year in another masterful move from Warren Buffet and Charlie Munger. BYD’s results, which beat on revenue, adjusted net income, and adjusted EPS, lifted the EV space with Xpeng HK +3.64%, Li Auto HK +4.59%, and Nio Auto HK +1.83%.

Hong Kong short turnover jumped to 17% of total turnover though short turnover was highly concentrated in three Hong Kong listed ETFs while internet stocks had lower short turnover. Something to keep an eye on as hedge funds may go long on individual stocks while shorting the broader market. Online video company Kuaishou +1.53% reported after the Hong Kong close that it beat on revenue (RMB 28.292 billion +15.8% YoY versus expectations RMB 27.27 billion), adjusted net income (RMB -45.322 million versus expectations RMB -303.188 million) and adjusted EPS (RMB -0.1 versus expectations RMB -0.07).

While Taiwan’s President’s visit to the US has garnered attention, very little attention was given to Taiwan’s ex-President, founder of the political party that competes against the current President, visit to China in the first visit of a Taiwanese former leader ever. He stated “People on both sides of the Taiwan Strait are Chinese people…” according to Reuters. It was also disclosed but hardly discussed that National Security Advisor Jake Sullivan spoke with China’s Wang Yi in an unfortunately rare occurrence of the two sides speaking diplomatically. In Asia, there continues to be attention given to the high-profile involvement of senior government officials at the Bao Development Forum. In light of the Alibaba announcement and Jack Ma’s visit to China, many are pointing to a pro-business policy pivot.

Mainland China was led by growth plays as the more growth-oriented STAR Board gained +2.26%, the growth tilting Shenzhen finished -0.05%, and the value tilting Shanghai closed at -0.16%. China’s most heavily traded was growth/tech focused and not the usual widely held foreign stocks. For instance, Kweichow Moutai +0.46% was the 37^th most heavily traded versus usually being in the top five most heavily traded. Foreign investors bought a healthy $627 million of Mainland stocks via Northbound Stock Connect.

The Hang Seng and Hang Seng Tech indexes gained +2.06% and +2.47%, respectively, on volume +37.95% from yesterday which is 121% of the 1-year average. 302 stocks advanced while 192 declined. Main Board short turnover increased +50.82% from yesterday which is 124% of the 1-year average as 17% of turnover was short turnover. Growth factors outpaced value factors as large caps outpaced small caps. Top sectors were discretionary +6.6%, communication +1.52%, and real estate +1.27% while materials and energy were off -0.12% and -0.22%. Top sub-sectors were food/staples, retailing, and media while business services, capital goods, and pharma were the worst. Southbound Stock Connect volumes were light/moderate as Mainland investors bought $390 million of Hong Kong stocks today with Tencent a strong net buy, Meituan a moderate/large net buy, and Kuaishou a small net sell.

Shanghai, Shenzhen, and STAR Board diverged to close -0.16%, -0.05%, and +2.26%, respectively, on volume that decreased -2.99% from yesterday, which is 109% of the 1-year average. 1,676 stocks advanced while 2,984 stocks declined. Growth factors outpaced value factors as small caps outpaced large caps. Top sectors were tech +1.51%, utilities +0.73%, and staples +0.39% while communication -1.58%, energy -0.89%, and financials -0.47%. Top sub-sectors were semis, computer hardware, and chemical industry while construction, diversified financials, and energy equipment were the worst. Northbound Stock Connect volumes were moderate/high as foreign investors bought $627 million of Mainland stocks with Kweichow Moutai and Foxconn the most heavily traded with small net buys. CNY and the Asia dollar index were off small versus the US $. Treasury bonds rallied while Shanghai copper was off small and steel up.

Upcoming Webinars

Join us today, March 29th at 11:00 am EDT for:

From High-Emitting to High-Growth: Opportunities From Companies Transitioning to Renewable Technologies

Click here to register

Join us tomorrow, March 30th at 3:00 pm BST for the next installment of our UCITS webinar series:

Capturing Broad Exposure In China A-Shares

Click here to register

Join us Tuesday, April 4th at 10:00 am EDT for:

Two Sessions & “Revenge Spending”: China Q1 Market Review

Click here to register

Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

• CNY per USD 6.88 versus 6.87 yesterday
• CNY per EUR 7.47 versus 7.45 yesterday
• Asia Dollar Index -0.14% overnight
• Yield on 10-Year Government Bond 2.85% versus 2.85% yesterday
• Yield on 10-Year China Development Bank Bond 3.02% versus 3.02% yesterday
• Copper Price -0.06% overnight
• Steel Price +0.58% overnight