Last week in review
- China released its 2022 economic data this week. GDP grew by +3.0%, while retail sales fell by a less-than-expected -0.2%.
- Chewy founder Ryan Cohen has announced his stake in Alibaba and is advocating for more share buybacks based on the company’s low valuation.
- World economic leaders gathered at the WEF forum in Davos, Switzerland. Chinese Vice Premier Liu He addressed the participants of the event and emphasized that China is open for business again. Later, the leader met with US Treasury Secretary Janet Yellen in Zurich.
- Foreign investors have poured nearly $15 billion into mainland stocks so far this year, already surpassing the total inflows in 2022.
- In this week’s video, Xiabin provides an inside look at life in Shanghai after the end of Zero COVID restrictions and updates on the recovery of China’s travel industry.
Friday’s top news
China and Hong Kong stocks ended the Year of the Tiger like Katy Perry’s “Roar,” although in 2021 we were supposed to be Survivor singing “Eye of the Tiger.”
The Hang Seng and Hang Seng Tech indices gained +1.82% and +2.67% respectively as all sectors were positive for the third day in a row. Hong Kong-listed internet stocks outperformed their US-listed counterparts overnight, boosting the latter’s gains in the US market today. The Hang Seng Index closed above 22,000, a big, meaningless, round number, but psychologically important! Hong Kong’s top-selling stocks were Alibaba, +3.65%, Tencent, +2.35%, and Meituan, +4.93%, seeing Jack Man in Hong Kong.
Yesterday, we noted that Hong Kong Exchanges & Clearing (HKEX) announced that it had expanded Southbound Stock Connect to include “international companies initially listed in Hong Kong,” helping fuel the internet rally. Note that not all dual-listed companies consider Hong Kong as their primary listing. The move by HKEX could prompt more companies to convert their secondary offerings in Hong Kong into primary offerings. Why? Tencent has about 9.32% of the market capitalization held by investors in mainland China through Southbound Stock Connect. Meanwhile, about 30% of Hong Kong’s daily trading volume comes from Southbound Stock Connect. HKEX also announced the expansion of Northbound Stock Connect to include more stocks.
Foreign investors bought another $1.4 billion worth of mainland stocks, bringing net buying to $14.6 billion year-to-date, more than all of 2022.
Solar power company Sungrow had a strong day, with mega cap and large-cap growth stocks favored by domestic and foreign investors. The company gained +7.04% after forecasting +100% profit growth in 2023. Meanwhile, a popular domestic investment fund manager has announced its holdings for 2022. has shown a preference for clean technology and consumer discretionary resources.
After closing in Hong Kong, Sinopharm announced that their mRNA vaccine had been approved for clinical trials in China.
US Treasury Secretary Janet Yellen’s team will visit China next month before visiting China this year. Do not forget that in the first week of February, Secretary of State Blinken may also visit China. The “180” in US-China relations really makes you wonder what Xi might say to Biden at the G20.
China Last Night will take a break from Monday and resume on Thursday, January 26c. Stock and bond markets in the People’s Republic of China and Hong Kong will be closed during this period for the Lunar New Year holiday. “Gong Hei Fat Choy” in Cantonese (or gong xi fa cai, 恭喜发财 in Mandarin): May you have abundant prosperity in the New Year!
The Hang Seng and Hang Seng Tech indices gained +1.82% and +2.67%, respectively, on yesterday’s +2.74% increase in volume, which is 76% of the 1-year average. 415 shares increased in price, while 71 shares decreased. Main Board short sales volume is down -1.26% from yesterday, which is 72% of the 1-year average as 17% of the volume is short. Growth and value factors performed well as large caps outperformed small caps. All sectors were positive as consumer discretionary rose +3.2%, energy +3.14% and materials +2.97%. The top performing subsectors were energy, retail and materials. Meanwhile, food, consumer goods and household products were among the worst performers. Southbound Stock Connect closed today.
Shanghai, Shenzhen and STAR Board gained +0.76%, +0.65% and +0.54%, respectively, on volume that increased by +9.51% from yesterday, which is 81% of the 1-year average. 3614 shares rose in price, while 1056 shares declined. Growth and value factors performed well, with large caps outperforming small caps. The top-performing sectors were utilities, which gained +2.01%, communications, which gained +1.67%, and materials, which gained +1.63%. Meanwhile, healthcare fell by -0.41% and consumer goods by -0.38%. The top performing subsectors were telecommunications, precious metals and education. Meanwhile, motorcycles, securities and biotech were among the worst performers. Northbound Stock Connect volumes were moderate/light as foreign investors bought $1.4 billion worth of Mainland stocks. CNY gained +0.05% against the USD to close at CNY 6.78 per USD, Treasuries sold and Shanghai copper lost -0.27%.
Big China City Mobility Tracker
Mobility drops dramatically when China goes on vacation.
Last Night’s Show
Last Night’s Currency Rates, Prices and Returns
- CNY USD 6.78 vs. USD 6.79 yesterday
- CNY 7.35 against EUR 7.34 yesterday
- 10-year government bond yield 2.93% vs. 2.92% yesterday
- The 10-year China Development Bank Bond yielded 3.09% versus 3.08% yesterday
- Copper price -0.27%