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Forbes
05-06-2025
- Business
- Forbes
China Market Update: Regulatory Support For AI & Tech Raises Growth Stocks, Trump & Xi Speak
CLN KraneShares Asian equities were positive overnight, led by Hong Kong and South Korea, while Japan underperformed, as Trump and Xi are said to have held a phone call. Helping sentiment was May's Caixin Services PMI, which increased month over month to 51.1 from 50.7, beating expectations of 51.0. Hong Kong and Mainland China were led higher by growth and technology stocks following a speech from a senior official of the CSRC, China's SEC, affirming strong support for the science and technology sector in the capital markets. This follows a similar message from the Ministry of Industry and Information Technology (MIIT) supporting AI development. Alibaba gained +3.23% despite a Financial Times article, widely publicized by Bloomberg News, that Apple and Alibaba's AI iPhone partnership was being held back by the China's government, according to 'two people familiar with the matter'. This was a great sign of resiliency! Alibaba likely benefited from a rise in AI plays, including Kuaishou, which gained +5.01%, along with semi conductors, including Semiconductor Manufacturing International (SMIC), which gained +4.19%. Healthcare and biotech were hit with profit taking along with precious metals and home appliances. According to a Mainland media article, a great indicator of Hong Kong's market rebound is that $77.6 billion of capital has been raised by listings, which is 7 times the amount raised versus last year and 90% of 2024's total. Today, Tencent was Hong Kong's most heavily traded stock by value in Hong Kong, with HKD 9.3 billion in total volume, which is almost 2X the average HKD 5 billion for the highest value last year. The US appears to be going the other direction on reports that the SEC will tighten scrutiny of foreign listings. Autos, including electric vehicles (EVs) and hybrids, had a good day in both markets following strong May results, along with insurance and capital markets. Mainland China opened lower but managed to grind higher, led by technology hardware, software, and semiconductors. The Renminbi closed at 7.17 per US dollar, having rallied from 7.34 on April 9th, which was also a 52-week low. It feels like stocks are starting to play catch-up to the currency. Fingers crossed! Live Webinar Join us Friday, May 30, at 11 am EDT for: Innovation In Hedged Equity - With Hedgeye's CEO Keith McCullough Please click here to register New Content Read our latest article: Navigating Global Crosswinds: Carbon Markets Respond to Tariff Tactics and Executive Orders Please click here to read Chart1 KraneShares Chart2 KraneShares Chart3 KraneShares Chart4 KraneShares Chart5 KraneShares Chart6 KraneShares
Forbes
29-04-2025
- Business
- Forbes
China Market Update: Robotics Ecosystem Outperforms, IPOs Are On The Rise In Hong Kong
CLN KraneShares Asian equities were mixed but mostly higher overnight as Thailand and Taiwan outperformed while Malaysia and Singapore underperformed. Markets opened lower in Hong Kong, only to swing sharply higher following positive comments from the National Development and Reform Commission (NDRC) on high-quality development and supporting consumption and employment. Unfortunately, the Hang Seng ended the session close to flat. Mainland China-based restaurant chain Green Tea Group will go public on the Hong Kong Stock Exchange after its fifth attempt in four years. The company has no business outside of China, so it does not expect any impact from trade tensions. We have seen some IPOs of China-based companies in Hong Kong and New York, after and despite 'Liberation Day' tariffs. This shows how consumer-oriented China's economy has become, enabling these firms to weather the tariff storm. Meanwhile, the Hong Kong Stock Exchange is amending its rules to make it easier for firms to list there, especially US listed firms that are seeking a secondary listing on the exchange. Internet earnings reports for Q1 are due to start in mid-May. However, TAL Education already reported, as it tends to be early in the cycle, and missed estimates on revenue, net income, and earnings per share. The private tutoring and educational technology company has idiosyncratic risks, so we do not think its results are indicative of the internet sector overall. Health care was a top-performing sector in both Mainland China and Hong Kong overnight. The industry continues to rally, with significant improvements in regulatory posture and government support. Humanoid robot plays outperformed in Hong Kong. Jiangsu Guomao Reducer Inc., which makes small motors used for robots, gained +3.37% in Mainland China. The humanoid robotics theme has become a hot topic in China's markets after robots were displayed dancing during the CCTV Gala, a massive TV event celebrating Lunar New Year, and ran in the Beijing Half Marathon. Mainland investors were net sellers of Hong Kong-listed stocks and ETFs via Southbound Stock Connect, which may have led to the market's decline in the second half of the session. New Content Read our latest article: New Drivers For China Healthcare: AI Med-Tech Innovation, Cancer Treatment, & Favorable Balance of Trade Please click here to read Chart1 KraneShares Chart2 KraneShares Chart3 KraneShares Chart4 KraneShares Chart5 KraneShares Chart6 KraneShares
Forbes
25-04-2025
- Business
- Forbes
China Market Update: Baidu Releases New AI Model, Week In Review
CLN KraneShares Asian equities mostly followed Wall Street higher overnight as Japan and Taiwan outperformed, while India and Singapore underperformed. The Politburo issued a press release reiterating that it is willing to step in and support the market through its various mechanisms. These include the 'National Team', which refers to investment firms associated with sovereign wealth. It also mentioned supporting consumption, cutting rates at opportune times, and lowering some regulatory barriers. We are likely to see a cut to the reserve requirement ratio (RRR), though we may have to wait for more clarity on tariffs or for the People's Bank of China (PBOC), China's central bank, to gain the confidence necessary to make the cut. Baidu unveiled a new AI model, ERNIE 4.5 Turbo, overnight. The new large language model (LLM) is being offered at an even lower price point than previous versions. Combined with upgrades, it could offer Baidu a new edge in the ongoing price war between China's LLM and cloud providers, chiefly Tencent, Alibaba, and Baidu. Baidu shares were up in Hong Kong overnight and are trading slightly higher in the US this morning. Electric vehicle names struggled overnight after Tesla's disappointing earnings, though the China-based players are in a very different situation. Xpeng led declines and is down -3% this morning in US trading. Mainland media reported that certain semiconductor and technology imports from the US were to be exempted from retaliatory tariffs. Bloomberg reported that China is also mulling exemptions for medical equipment and chemicals, including methane. This makes sense and mirrors the US' move to exempt electronics, as no one wants to pay $2,000 or more for an iPhone. This is more evidence that tariffs will not be sustainable and are likely still opening gambits for negotiations, albeit very strong ones. Alternatively, tariffs could be in place long-term, but with so many exemptions as to make their overall impact. Any long-term tariffs are likely to target specific industries. After Xi's recent visit to Kenya, China will finance the country's construction of roads and railways. China's Belt & Road Initiative has expanded China's trade with African nations. Trade tensions could give China a new zeal to make deals and increase trade with Africa, which could benefit the infrastructure industry. New Content Read our latest article: New Drivers For China Healthcare: AI Med-Tech Innovation, Cancer Treatment, & Favorable Balance of Trade Please click here to read Chart1 KraneShares Chart2 KraneShares Chart3 KraneShares Chart4 KraneShares Chart5 KraneShares Chart6 KraneShares
Forbes
21-04-2025
- Business
- Forbes
China Market Update: Robot Runs In Beijing Marathon, CATL Announces 5-Minute Charging
CLN KraneShares Asian equities were mixed overnight despite the US dollar's weakness, led higher by Mainland China, India and Singapore, while Japan, Taiwan, and Thailand closed lower and Australia and Hong Kong remained closed for Easter. Over the weekend, the People's Bank of China (PBOC) left the 1- and 5-year Loan Prime Rates (LPRs) unchanged at 3.10% and 3.60%, respectively. The latter is the reference rate for mortgages. Going into the morning's trading, Friday's State Council announcement on stabilizing the stock market and real estate industry was front-page news, as it is rare for the highest echelon of China's government to comment on the market. The State Council released a piece titled 'Opinions on Promoting the Development of Individual Pensions,' noting the growth over the last three years, though further promotion and adoption of the retirement savings plans is needed. The China Daily had a front-page article titled 'Policy Focus on Consumption to Drive Growth,' which reviewed the potential policies to boost consumption and highlighted their. An area of emphasis includes 'raising people's income and reducing financial burdens'. Technology, growth, and small-cap stocks led the market higher, though on light volumes. Meanwhile, large-cap banks, liquor names, energy, and insurance were mostly lower. However, the strong breadth overall was a positive sign. Technology and growth stocks gained after a robot marathon in Beijing. Tian Gong Ultra's humanoid robot runner won with a time of two hours and forty minutes. CATL gained +2.62% after the company announced five-minute recharging capabilities for its latest batteries. This follows a similar announcement from BYD a few weeks ago. There was chatter about and Meituan's restaurant delivery price competition escalating, though Hong Kong was closed overnight so the impact on share prices is not yet known. There were no updated filings with the Hong Kong Stock Exchange as of this morning, though we anticipate US-listed firms with no Hong Kong listing to relist in the market. This makes sense since the companies' founders' wealth is in the US listing or American Depositary Receipt (ADR), along with their employees' stock option plans. We are monitoring for new filings daily. Hong Kong's Financial Secretary stated last Sunday: 'I have instructed the Securities and Futures Commission and the Hong Kong Exchanges and Clearing Limited (HKEX) to be fully prepared for the potential return of Chinese Concept Stocks listed abroad.' This matters right now because there has been some speculation that China stocks could be delisted from US exchanges as part of the current trade spat. Expanding the goods trade war into the financial sphere would be a significant escalation by the US, and remains highly unlikely. No one in the US wants the goods trade war to expand into a services trade war, considering the fact that the US is the largest services exporter globally. Moreover, the $800 billion of market value in China-based firms' ADRs is almost all held by US investors, not Chinese investors. It would be highly embarrassing to punish US investors, in my opinion. Capital controls would also negatively impact the prestige of the US' capital markets. For more on this topic, check out our recent article. Live Webinar Join us on Wednesday, April 23, at 10 am EDT for: Trump's China Playbook: Amb. Terry Branstad on How the President Thinks Please click here to register New Content Read our latest article: New Drivers For China Healthcare: AI Med-Tech Innovation, Cancer Treatment, & Favorable Balance of Trade Please click here to read Chart1 KraneShares Chart2 KraneShares Chart3 KraneShares Chart4 KraneShares
Forbes
15-04-2025
- Business
- Forbes
China Market Update: Domestic Consumption Stays Resilient
CLN KraneShares Asian equities had a good day as fewer tariffs meant markets were up. India had a strong day following yesterday's market holiday, Vietnam was off, and Thailand remained closed for the Songkran Festival. Hong Kong and Mainland China bounced around the room, posting small gains, though expected US tariffs on semiconductors and pharmaceuticals weighed heavily on those subsectors along with technology hardware. Bloomberg News reported that China has stopped importing Boeing airplanes, according to 'people familiar with the matter.' I've not seen this confirmed, but with China's reciprocal tariffs, taking delivery and paying 2X makes no sense. I would recommend waiving the tariff to allow Boeing parts for the sake of Chinese airlines and their passengers! After the close, Premier Li was in the headlines, stating that the government would '…expand domestic demand in all directions, calmly deal with the difficulties and challenges brought about by external shocks, and promote consumption, expand domestic demand….'. I suspect markets want to see a more aggressive implementation of the RMB 2 trillion stimulus announced by the National People's Congress (NPC). Sell-side economists like UBS and Société Générale have started to lower their 2025 GDP targets due to the impact of US tariffs. Domestic consumption plays have done decently, though more forceful action is needed. Hong Kong-listed internet stocks reflect an element of this domestic consumption focus, as the stocks were largely higher, led by Alibaba, up +1.85%, Tencent, up +0.44%, Meituan, up +0.62%, Kuaishou, up +1.69%, which pulled an inverse James Bond to fall -0.07%, up +0.77%, and Baidu, up +0.06%. Mainland investors bought $928 million worth of Hong Kong-listed stocks via Southbound Stock Connect, which accounted for 44% of Hong Kong's turnover. Mainland China lacked strong catalysts, though, at day's end, China ETFs favored by the National Team experienced high volumes going into the lunch break and very high volumes into the market close. After the close, CATL gained +1.85% after the company reported Q1 results, with net income beating expectations and revenue a slight miss. President Xi left Vietnam for Malaysia. Yesterday, I referenced a Hong Kong government official speaking about expediting Hong Kong listings from US-listed Chinese companies. It took some digging, but it was Hong Kong Financial Secretary Paul Chan on his blog where he stated, 'Hong Kong has established a regulatory framework to facilitate companies listed overseas to conduct dual listing or second listing in Hong Kong. In response to the latest global changes, I have instructed the China Securities Regulatory Commission and the Hong Kong Stock Exchange to be prepared.' With the help of the Hong Kong Exchanges, we are monitoring the section of their website where relisting US listed companies will publicly file. Nothing overnight from Pinduoduo nor Full Truck Alliance. The Hang Seng and Hang Seng Tech indexes diverged to close +0.23% and -0.67%, respectively, on volume that was down -26.96% from yesterday, which is 105% of the 1-year average. 194 stocks advanced, while 268 declined. Main Board short turnover decreased by -30.34% from yesterday, which is 107% of the 1-year average, as 16% of turnover was short turnover (Hong Kong short turnover includes ETF short volume, which is driven by market makers' ETF hedging). Value and large capitalization stocks outperformed growth and small capitalization stocks. The top-performing sectors were Utilities, up +0.88%; Energy, up +0.73%; and Consumer Discretionary, up +0.72%. Meanwhile, the worst-performing sectors were Healthcare, which fell -1.04%; Real Estate, which fell -0.95%; and Information Technology, which fell -0.67%. The top-performing subsectors were consumer durables, apparel, consumer services, and household appliances. Meanwhile, semiconductors, national defense, and steel were among the worst-performing subsectors. Southbound Stock Connect volumes were 2X pre-stimulus September levels as Mainland investors bought a net $928 million worth of Hong Kong-listed stocks and ETFs, including China Mobile, Meituan, and Tencent, which were moderate net buys, Kuaishou, which was a small net buy, and Alibaba, SMIC, and Xiaomi, which were moderate net sells. Shanghai, Shenzhen, and the STAR Board diverged to close +0.15%, -0.19%, and -0.78%, respectively, on volume that was down -15.91% from yesterday, which is 88% of the 1-year average. 1,884 stocks advanced, while 3,067 declined. Value and large capitalization stocks outperformed growth and small capitalization stocks. The top sectors were Financials, up +0.65%; Utilities, up +0.27%; and Communication Services, up +0.26%. Meanwhile, the worst-performing sectors were Information Technology, which fell -1.31%; Materials, which fell -0.99%; and Real Estate, which fell -0.81%. The top-performing subsectors were chemicals, soft drinks, and leisure products. Meanwhile, ports, aerospace, and chemical fibers were among the worst-performing subsectors. Northbound Stock Connect volumes were near the one-year average. CNY and the Asia Dollar Index both fell versus the US dollar. Treasury bonds were flat. Copper rose, and steel fell. New Content Read our latest article: New Drivers For China Healthcare: AI Med-Tech Innovation, Cancer Treatment, & Favorable Balance of Trade Please click here to read Chart1 KraneShares Chart2 KraneShares Chart3 KraneShares Chart4 KraneShares Chart5 KraneShares
