China Market Update: It's The End Of The World, Hong Kong & Chinese Stocks Feel Fine
CLN
Asian equities declined following the US attack on Iranian nuclear facilities, the threat of a potential counterattack, and concerns over Middle East oil transportation out of the Persian Gulf (hence the REM song reference in today's title).
Despite the strength of the US dollar, Hong Kong, Mainland China, and Malaysia outperformed.
A key factor in the resilience of Hong Kong and Mainland China was the start of the 12th two-and-a-half-day meeting of the 14th Standing Committee of the National Committee of the Chinese People's Political Consultative Conference (CPPCC). Try saying that five times fast! The meeting, attended by the upper echelons of China's government, will discuss 'further deepening economic system reform and promoting China-style modernization,' with topics including 'deepening economic system reform and promoting China's modernization,' 'promoting fertility support,' and 'promoting artificial intelligence.' Policy expectations are light, though I suspect last year's meeting set in motion the September announcements by the People's Bank of China (PBOC) and Politburo regarding real estate policy.
It was hard not to notice that consumer-focused Hong Kong stocks and sub-sectors, such as automobiles, electric vehicles (EVs), hybrids, travel, hotels, and restaurants, performed well. Alibaba declined 0.81% despite integrating its online travel platform, Fliggy, and restaurant delivery service, Ele.me, into its core E-Commerce business, driven by strong orders. Alibaba's weakness may also have been influenced by Meituan's 2.18% gain after the company announced an expansion of its 'instant retail business,' leveraging its massive restaurant delivery network and further overseas expansion in Saudi Arabia.
Another factor was the Hong Kong relisting initial public offering (IPO) of Mainland-listed Zhejiang Sanhua Intelligent Controls. While more supply in the market requires capital from somewhere, it was interesting that the IPO was down despite being heavily oversubscribed: 747 times by retail investors and 23 times by institutional investors.
Premier Li signed a State Council order requiring internet platforms to submit tax-related information, but this does not appear problematic, as it focuses on tax reporting by the companies themselves.
The Wall Street Journal published a nonsensical article on Wall Street's lost love affair with US listings of Chinese companies. Meanwhile, Southbound Stock Connect saw strong inflows, with Mainland investors net buying $1.005 billion.
Hong Kong- and Mainland-listed semiconductor stocks had a strong day following Friday's Wall Street Journal article reporting that the US will pressure ASML and Taiwan Semiconductor Manufacturing Company (TSMC) to stop producing in China. Mega-cap banks also performed well, as the exchange-traded funds (ETFs) favored by the National Team saw strong volumes. Beverages and food stocks were down, with Kweichow Moutai off 0.61%.
I thoroughly enjoyed listening to the Dwarkesh Podcast interview with Arthur Kroeber of Gavekal Dragonomics. You'll learn more about China from listening to that two-and-a-half-hour episode than from a lifetime of reading about China in the Western media. I don't agree with everything, but on the big picture, I found it very insightful and aligned with my own thinking.
I also enjoyed the BG2 Podcast, hosted by Altimeter's founder and CEO Brad Gerstner and Benchmark's former general partner Bill Gurley, interviewing Coatue's Laffont brothers on artificial intelligence (AI), public and venture capital markets, macroeconomics, US debt, crypto, IPOs, and more. Coatue hosted its 2024 East Meets West Conference last week, focusing on AI. The investment firm generously provides its deck for free on its website, which I recommend checking out.
Yes, I had a long weekend watching my kids' sports.
New Content
Read our latest article:
Navigating Global Crosswinds: Carbon Markets Respond to Tariff Tactics and Executive Orders
Please click here to read
Chart1
Chart2
Chart3
Chart4
Chart5
Chart6
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
CNBC
an hour ago
- CNBC
China's suppressed crypto demand is spilling over into these stocks
China essentially banned cryptocurrencies years ago. Now that pent-up demand is finding an outlet in Hong Kong markets as local regulators eye the potential of stablecoins. Hong Kong-traded shares of Guotai Junan International nearly tripled in price Wednesday after becoming the first mainland Chinese-backed securities brokerage to obtain a license for virtual currency trading in Hong Kong . So many mainland-based investors bought the Hong Kong-listed stock that Guotai's total trading value ranked first on the exchange on Wednesday and Thursday, exceeding that of Alibaba, according to Wind Information. Guotai held onto second place on Friday, ceding the top trading spot to Xiaomi after its electric car launch Thursday night, the data showed. As a special administrative region of China, Hong Kong operates under different financial regulations and allows bitcoin trading. In late May, the region passed a stablecoin bill to formalize the process for financial companies to issue and manage virtual assets, primarily those that reference government-issued, or fiat, currencies. "We believe China's newfound interest in stablecoins is driven by concerns that legislation of U.S. stablecoins could extend dollar dominance," Morgan Stanley's Chief China Economist Robin Xing and a team said in a June 19 report. The People's Bank of China "is exploring HK as a sandbox for future payment alternatives," the firm said. While the analysts pointed out that Beijing has banned crypto transactions in mainland China since 2021 , PBOC Governor Pan Gongsheng's high-profile speech in mid-June "signals a pivot." Pan highlighted stablecoins and also noted how digital technologies have exposed weaknesses in traditional payment systems, the Morgan Stanley analysts pointed out. A growing trend among companies Other Chinese companies are jumping onto the trend. Hong Kong-listed financial services firm China Renaissance announced Thursday it plans to spend $100 million over the next two years to invest in cryptocurrency assets and to develop its business in the related Web3.0 realm. On the same day, the company also announced that Frank Fu, a former CEO of crypto exchange Huobi Americas, would join China Renaissance as an independent non-executive director . China Renaissance, also known as CR Holdings, saw its shares gain 20% last week. In the mainland, where stock trading is subject to more price restrictions, Shanghai-listed TF Securities saw gains of nearly 29% last week after it confirmed to investors Friday its wholly-owned subsidiary, TF International, also obtained a license in Hong Kong for virtual assets trading. TF Securities and popular financial information and brokerage company Eastmoney saw the largest turnover by share volume and price last week on the mainland exchanges, according to Wind data, although Eastmoney did not share any virtual assets-related business updates. Its stock climbed by about 11% in the last week. Watch for the drivers behind shares' recent surge The leap in Guotai shares over the past week reflects the market's positive expectations for stablecoin business, Li Dongfang, a Beijing-based finance blogger, said in Chinese, translated by CNBC. But the stock price surge is due more to investors pursuing emerging themes and following first-mover advantage, rather than a reflection of new business growth, Li said. He expects more brokerages to also get similar approvals for virtual asset business, and not see such large fluctuations in stock prices. Part of Beijing's impetus for banning crypto trading was an effort to control financial risks. Speculation takes on a different form with a population of 1.4 billion people. However, the macro trend is clear, if not accelerating. The New York-founded cryptocurrency conference Consensus expanded to Hong Kong this year with its first event in the region in February. Another Consensus event is planned for Hong Kong next year. Recent Chinese business news reports have also scrutinized the potential for stablecoins in Chinese sales of goods overseas via online platforms. They have also highlighted how a unit of Chinese e-commerce company along with Standard Chartered, are among those officially participating in Hong Kong's stablecoin project. "For China, ignoring this trend risks being left behind in the digital infrastructure race – especially as stablecoins increasingly function as bypass mechanisms to traditional banking networks," the Morgan Stanley analysts said.
Yahoo
an hour ago
- Yahoo
Cantor Fitzgerald Raised The PT on Lam Research (LRCX), Maintains a Buy Rating
Lam Research Corporation (NASDAQ:LRCX) is one of the . On June 24, Cantor Fitzgerald raised the firm's price target on Lam Research Corporation (NASDAQ:LRCX) from $90 to $115, while keeping an Overweight rating on the stock. The increased price target is based on the firm's research which suggests a modestly improved wafer fab equipment market in 2025. The firm noted that Cantor Fitzgerald's industry checks suggest a modest improvement in the WFE sector for calendar year 2025, primarily driven by demand from domestic China. This suggests that 2026 will be another year of growth for the sector, thereby presenting growth opportunities for Lam Research Corporation (NASDAQ:LRCX) as well. Cantor Fitzgerald believes the sector is largely immune to tariff-related issues and expects the consensus estimates for the semiconductor equipment group to move significantly higher. A technician operating an automated semiconductor processing machine with laser accuracy. In Q3 2024, the company posted revenue of $4.72 billion, reflecting a 24.43% year-over-year increase. The revenue topped estimates by $79.9 million with EPS of $1.40 exceeding expectations by $0.04. China remained a major contributor to Lam Research Corporation (NASDAQ:LRCX)'s revenue, with China's revenue forming 31% of its total revenue. Lam Research Corporation (NASDAQ:LRCX) is a leading global supplier of wafer fabrication equipment and services used in the semiconductor industry to manufacture integrated circuits. While we acknowledge the potential of LRCX as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock. READ NEXT: The Best and Worst Dow Stocks for the Next 12 Months and 10 Unstoppable Stocks That Could Double Your Money. Disclosure: None. 擷取數據時發生錯誤 登入存取你的投資組合 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤 擷取數據時發生錯誤
Yahoo
an hour ago
- Yahoo
‘President who cried tariffs': Markets react to Trump's claim he's ending trade talks with Canada
CNBC Economics Editor Jeff Cox discusses the market's reaction to President Trump's announcement of a potential trade deal with China and the end of trade talks with Canada.
