Solar stocks shine as new video game approval lifts Hong Kong internet stocks

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Asian stocks were mixed as Taiwan had a strong day, the Philippines underperformed and Thailand had a holiday for Asarnha Bucha Day, which Google says is a Theravada Buddhist festival. June trade was released towards the close of markets, with exports beating expectations while imports were a little light. Overall, a strong release is a great sign for the global economy.

Hong Kong internet stocks were higher overall following the approval of 67 new video games pushing up related stocks like NetEase HK +1.83% and Bilibili HK +3.52%. Neither Tencent -0.71% nor NetEase had new games approved. Tencent, which feels Prosus is reducing its stake in the company, bought an additional 890,000 shares overnight, extending its buyout streak to the eleventh day. Trip.com HK jumped +3.46% on talk of relaxing its rules for visiting Hong Kong. Hong Kong miner and processor Tianqi Lithium’s IPO, the company’s mainland stock class ticker 002466 CH, raised $1.7 billion as the stock was flat. Noah, a US ADR-listed wealth manager, is listed in Hong Kong under the ticker symbol 6686 HK. Real estate was the worst sector in Hong Kong -3.5% although one of the best performers in China at +0.61%. Gossip that unfinished apartment buildings are causing landlords to default on their mortgages also weighed on banks in Hong Kong -1.67% and on the mainland -1.46%.

US dollar bonds of real estate companies are in freefall as investors have left the space altogether. The cleantech ecosystem, with a focus on solar power, had a strong day on the mainland after talks on government support for solar installation to help China reach the peak target of carbon of 2025. Note that Hong Kong missed the memo. Overseas investors sold $1 billion worth of Mainland stocks through Northbound Stock Connect, with China Merchants Bank and ICBC seeing strong sales.

A mainland media source noted that the Shanghai University of Finance and Economics’ quarterly Shanghai Consumer Confidence Index was 108, with +100 signifying optimism and less than 100 signaling pessimism. Publication was halted from the first quarter due to concerns over Shanghai returning to a lockdown. Yes, there continue to be new covid cases in China and Hong Kong. However, we are seeing targeted quarantines at the district, neighborhood or building level instead of city-wide lockdowns. Hong Kong has an average of nearly 3,000 new cases, but is the city shut down? No.

The Hang Seng and Hang Seng Tech diverged -0.22% and +0.51% in volume -6.14% from yesterday, or 77% of the 1-year average. 195 stocks rose while 276 fell. Hong Kong short sales revenue increased by +1.31%, 91% of the 1-year average, as 19% of Hong Kong volume was short. Growth factors were mixed, with value underperforming and large caps outperforming small caps. The main sectors were Commodities +1.59%, Industrials +0.64% and Discretionary +0.37%, while Real Estate -3.53%, Financials -1.67% and utilities -0.76%. The main sub-sectors were electrical equipment stocks, Tik Tok-related companies, alcohol, wind energy, rare earth and nuclear energy companies. The lower sub-sectors were property managers, banks and real estate companies. Southbound Stock Connect volumes were light as mainland investors were net buyers of Hong Kong stocks, with small net purchases of Tencent and Meituan.

Shanghai, Shenzhen and STAR Board gained +0.09%, +0.93% and +0.34% on volume -3.48% from yesterday, or 79% of the 1-year average. 3,225 stocks rose while 1,190 stocks fell. Growth factors outperformed value factors, with small caps outperforming large caps. The main sectors were industrials +2.36%, utilities +1.06% and real estate +0.7%, while energy and financials were down -0.58% and – 1.38%. The main sub-sectors were electric companies, electric vehicles and solar energy, while semi-finished products and banks were among the worst. Northbound Stock Connect volumes were subdued as overseas investors sold -$1.022 billion. Treasuries rallied, the CNY fell slightly against the US dollar and copper hit -3.12%.

Last night’s exchange rates, prices and yields

  • CNY/USD 6.73 vs. 6.72 yesterday
  • CNY/EUR 6.76 vs. 6.76 yesterday
  • 10-year government bond yield 2.81% vs. 2.81% yesterday
  • China Development Bank 10-year bond yield 3.06% vs. 3.06% yesterday
  • Copper price -3.12% overnight
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