China ETF News: Risk Off Despite Strong Earnings In Consumer Sectors, Week in Review
Week in Review
- Asian equities were mixed but mostly lower for the week as Korea and Singapore outperformed, while Indonesia and Mainland China underperformed.
- Tencent reported earnings on Wednesday that were mostly in line with analyst estimates, noting a strong free cash flow increase and expanding investments in its AI cloud services segment.
- Alibaba reported earnings on Thursday, missing top line estimates, though growth was higher when you exclude divested businesses from the year-over-year comparison. Meanwhile, management revealed its chipmaking unit is projected to generate more annual revenue than fabless chip darling Cambricon.
- According to data released on Monday, China's retail sales increased 2.8% year-over-year in the first two months of the year, versus the 2.5% expected by economists.
Friday's Key News
Asian equities were mostly lower overnight as Indonesia and Thailand outperformed, while Japan and Vietnam underperformed.
Hong Kong outperformed Mainland China overnight though both markets were lower. There was a slight value and defensive bias, once again, as utilities outperformed, in a continuing risk-off global environment. Alibaba cratered in Hong Kong, though it was not down quite as much as its US-listed shares were yesterday. Mainland investors reversed their strong net buy yesterday, selling $2.7 billion worth of Hong Kong-listed stocks and ETFs.
Sportswear brand Li Ning beat estimates in its Q4 earnings, reported overnight. Shares increased nearly 8% on the Mainland. This could reflect gradually improving consumer confidence in China.
Communication equipment maker Delton Technology gained 33% in its Hong Kong IPO overnight.
Six countries have issued a statement that they are ready to take measures to ensure the security of the Strait of Hormuz, including France, the UK, Germany, Italy, Netherlands and Japan, though China has not yet responded to the US-led plea. Meanwhile, President Trump suggested his China visit would take place in mid-May.
Alibaba's decline led other E-Commerce names lower, including JD.com, which fell -1.9%, and Meituan, which fell -1.9%. We believe the market is not properly valuing Alibaba's underlying businesses, especially chipmaking unit T-Head and its AI cloud services division. Alibaba said they project cloud revenue to more than double every year for the next five years.
HTHT Hotels delivered strong earnings. The hotel chain's results reflect the health and resilience of China's travel demand versus other consumption segments. Per CCTV, tours and experiences have become paramount for China's domestic tourists.
Next week, we have earnings from Meituan, which reports on Monday, PDD, which reports on Wednesday, and Kuaishou, also reporting Wednesday.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -0.9% |
| Hang Seng Tech | HSTECH Index | -2.5% |
| Hong Kong Turnover | HKTurn Index | 11.9% |
| Hong Kong Short Sale Turnover | HKSST Index | -19.1% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 17.5% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | -2,682.64 |
| China (Shanghai) | SHCOMP Index | -1.2% |
| China (Shenzhen) | SZCOMP Index | -1.2% |
| China (STAR Board) | Star50 Index | -1.5% |
| Mainland Turnover | .chturn Index | 8.3% |
| Japan | NKY Index | -3.4% |
| India | SENSEX Index | 0.4% |
| Indonesia | JCI Index | 1.2% |
| Malaysia | FBMKLCI Index | -0.5% |
| Pakistan | KSE100 Index | -1% |
| Philippines | PCOMP Index | -0.6% |
| South Korea | KOSPI Index | 0.3% |
| Taiwan | TWSE Index | -0.4% |
| Thailand | SET Index | 1.1% |
| Singapore | STI Index | -0.4% |
| Australia | AS51 Index | -0.8% |
| Vietnam | VNINDEX Index | -3% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 133 | 110 |
| Advancing Stocks | 29 (Hang Seng) | 67 (CSI 300) |
| Declining Stocks | 60 (Hang Seng) | 231 (CSI 300) |
| Outperforming Factors | Value | Value |
| Underperforming Factors | Growth | Growth |
| Top Sectors | Energy, Utilities, Industrials | Industrials, Utilities, Information Technology |
| Bottom Sectors | Information Technology, Consumer Discretionary, Health Care | Communication Services, Real Estate, Materials |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | -1.62 |
| Communication Services | 11 | -1.15 |
| Consumer Discretionary | 28 | -3.2 |
| Consumer Staples | 12 | -0.88 |
| Energy | 6 | 0.76 |
| Financials | 25 | -0.06 |
| Health Care | 16 | -1.26 |
| Industrials | 19 | 0.45 |
| Information Technology | 15 | -5.02 |
| Materials | 14 | -0.68 |
| Real Estate | 1 | -1.13 |
| Utilities | 6 | 0.54 |
| Mainland China Listed | 11 | -0.47 |
| Communication Services | 11 | -3.15 |
| Consumer Discretionary | 26 | -0.65 |
| Consumer Staples | 18 | -0.32 |
| Energy | 11 | -0.77 |
| Financials | 64 | -0.83 |
| Health Care | 29 | -1.05 |
| Industrials | 60 | 0.61 |
| Information Technology | 113 | -0.19 |
| Materials | 58 | -1.32 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1 |
| Alibaba HK | 9988 HK Equity | -6.3 |
| JD.com HK | 9618 HK Equity | -1.9 |
| NetEase HK | 9999 HK Equity | -0.5 |
| Yum China HK | 9987 HK Equity | -0.2 |
| Baozun HK | 9991 HK Equity | -5.5 |
| Baidu HK | 9888 HK Equity | -1.9 |
| Autohome HK | 2518 HK Equity | 0.1 |
| Bilibili HK | 9626 HK Equity | -1.1 |
| Trip.com HK | 9961 HK Equity | 0.5 |
| EDU HK | 9901 HK Equity | -1.6 |
| Xpeng HK | 9868 HK Equity | -5.1 |
| Weibo HK | 9898 HK Equity | 2.1 |
| Li Auto HK | 2015 HK Equity | 1.2 |
| Nio Auto HK | 9866 HK Equity | -1.3 |
| Zhihu HK | 2390 HK Equity | -6.4 |
| KE HK | 2423 HK Equity | -1.9 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.5 |
| Meituan HK | 3690 HK Equity | -1.9 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ALIBABA GROUP HOLDING LTD | -6.3 |
| XIAOMI CORP-CLASS B | -8.6 |
| TENCENT HOLDINGS LTD | -1 |
| CNOOC LTD-H | 2.7 |
| MEITUAN-CLASS B | -1.9 |
| SEMICONDUCTOR MANUFACTURI-H | -4.8 |
| YANGTZE OPTICAL FIBRE AND-H | 5.5 |
| CONTEMPORARY AMPEREX TECHN-H | 8.4 |
| GEELY AUTOMOBILE HOLDINGS LT | 6.4 |
| BYD CO LTD-H | 0.6 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 6.4 |
| EOPTOLINK TECHNOLOGY INC L-A | 8.3 |
| CONTEMPORARY AMPEREX TECHN-A | 3.1 |
| SUNGROW POWER SUPPLY CO LT-A | 5.1 |
| HGTECH CO LTD-A | -3.3 |
| SUZHOU TFC OPTICAL COMMUNI-A | 1.3 |
| ZIJIN MINING GROUP CO LTD-A | -2.1 |
| SUZHOU DONGSHAN PRECISION-A | 3.9 |
| CAMBRICON TECHNOLOGIES-A | -1.2 |
| EAST MONEY INFORMATION CO-A | -5.3 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.89 versus 6.89 yesterday
- CNY per EUR 7.97 versus 7.98 yesterday
- Yield on 10-Year Government Bond 1.83% versus 1.83% yesterday
- Yield on 10-Year China Development Bank Bond 1.97% versus 1.97% yesterday
- Copper Price -1.10%
- Steel Price -0.26%
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