Important news

Asian equity markets were mixed on weak news ahead of the US Federal Reserve’s Jackson Hole meetings, with the US dollar weakening against Asian currencies and Hong Kong, Thailand and Malaysia outperforming while Japan and South Korea underperformed.

Hong Kong gained but closed well below daily highs as all sectors except healthcare rose on decent volume and breadth, led by momentum in growth stocks following the release of second-quarter financial results last week.

Also helpful were Premier Li’s statement to the State Council on Friday, in which he focused on increasing domestic consumption, and CCTV’s reaffirmation of subsidies for the purchase of electric vehicles and cars.

The US-China Financial Working Group, which was established after Janet Yellen’s visit to Beijing last September, met for the fifth time in Shanghai last week. A spokesman for the People’s Bank of China, China’s central bank, said the two sides had held “professional, pragmatic, open and constructive communication” on a range of trade and economic issues.

The most heavily traded stocks in Hong Kong were Tencent, which closed flat despite releasing a new game, Alibaba, up +1.69%, Xiaomi, up +1.73%, Meituan, up +0.93% and JD.com, up +3.88%. More internet second-quarter earnings are coming this week, with Kuaishou up tomorrow after gaining +0.80%. Baidu, up +2.39% overnight, reports its numbers on Thursday. NetEase gained +1.96% and Trip.com fell -0.66%. Short-video platform Bilibili gained +2.17% ahead of its earnings release tomorrow. JD subsidiaries JD Logistics and JD Health gained +5.06% and +7.93% respectively after the parent company reported positive results last week.

EV stocks were higher, including Li Auto up +5.29%, BYD up +0.45% and Xpeng up +3.76%.

The real estate market rose on news that minimum prices would be abolished in certain markets.

Investors in mainland China sold a net $793 million of Hong Kong-listed stocks and ETFs, and their disjointed buying and selling makes me jealous of their brokers’ commissions. In mainland China, the trading day was far less enthusiastic, although Shanghai did post a gain thanks to the strength of major banks and insurance companies.

After the market closed, home appliance maker Midea Group announced that its second-quarter operating revenue rose 10.3% year-on-year and its net profit rose 14.11%. Meanwhile, Will Semiconductor reported a 36.5% increase in operating revenue and a whopping 792% increase in net profit (not a typo!).

President Xi met with Vietnam’s President Lam, while coast guards from China and the Philippines enjoyed a sea-based version of bumper cars.

Northbound Stock Connect data transparency has decreased today as stock and aggregated buy and sell data is no longer made available. The data will likely be revised and published on a monthly or quarterly basis. We will let you know when we have access to the data again.

The Hang Seng and Hang Seng Tech indices gained +0.80% and +1.68% respectively on volume that declined -6.89% since Friday, representing 93% of the 1-year average. 302 stocks rose while 173 stocks fell. Short turnover on the Main Board exchange fell -17.94% since Friday, representing 93% of the 1-year average, as 17% of turnover was short turnover (Hong Kong short turnover includes ETF short volume driven by market makers’ ETF hedging). The growth factor and large caps outperformed the value factor and small caps. The best performing sectors were industrials, up +1.9%, materials, up +1.87%, and consumer discretionary, up +1.56%. Meanwhile, healthcare was the only sector with negative readings, falling -0.53%. The best performing subsectors were retail, capital goods and banks. Media, food and beverages and medical equipment, meanwhile, were among the worst performing subsectors. Turnover on Southbound Stock Connect was moderate as mainland investors sold -$793 million worth of healthy Hong Kong-listed stocks and ETFs, including the Hong Kong Tracker ETF, which represented a very large net sell, and the Hang Seng Tech ETF and China Enterprise ETF, which represented large net sells.

Shanghai, Shenzhen and the STAR Board diverged, closing at +0.49%, -0.10% and -0.27% respectively on volume that declined -3.45% since yesterday, 71% of the 1-year average. 1,959 stocks rose while 2,865 fell. The value factor and large caps outperformed the growth factor and small caps. The best performing sectors were financials, up +1.68%, materials, up +1.18% and industrials, up +0.98%. Meanwhile, healthcare fell -0.50% and consumer staples fell -0.32%. The best performing subsectors were precious metals, construction machinery and motorcycles. Meanwhile, power generation equipment, biotechnology and pharmaceuticals were among the worst performing subsectors. CNY and the Asia Dollar Index gained against the US dollar. Treasuries recovered. Cooper posted a small gain, while Steel was flat.

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Performance from last night

Last night’s exchange rates, prices and returns

• CNY per USD 7.15 vs. 7.16 on Friday
• CNY per EUR 7.89 compared to 7.88 on Friday
• Yield on 10-year government bonds 2.18% compared to Friday
• Yield on 10-year China Development Bank bonds 2.24%, up from 2.26% yesterday
• Copper price: 0.03%
• Steel price: 0.00%