Asian equities had a strong day despite a stronger US dollar as Japan, Hong Kong, and South Korea outperformed. Meanwhile, Mainland China and the Philippines underperformed, and Thailand was off for a market holiday celebrating His Majesty King Maha Vajiralongkorn Phra Vajiraklaochaoyuhua’s birthday. Despite the quiet summer night on light volumes globally, Alibaba gained +4.72% to become Hong Kong’s most heavily traded stock by value after announcing a 0.6% service fee for merchants on their Taobao E-Commerce website. The move is expected to have a positive impact on Q3 revenue, net income, and earnings per share (EPS).
Following Alibaba higher were Tencent, China Construction Bank, energy giant CNOOC, and Meituan in terms of gaining percentages. However, internet names outperformed compared to hardware names, which were weak after Apple experienced a fall in China sales ranking. Real estate underperformed in both Hong Kong and Mainland China, with distressed developer Country Garden falling as its liquidation was postponed until January. Weak results from Hong Kong mall operator Wharf Holdings also led to a decline in its stock. Foreign favorites Kweichow Moutai and CATL weighed on Mainland markets following foreign selling via Northbound Stock Connect.
China’s 10-Year Treasury Bond’s yield hit a new 52-week low of 2.15%, with June Industrial Profits increasing +3.6% year over year. Fuyao Glass fell -6.99% after US government agents searched some of the company’s facilities following an investigation targeting a third-party labor service provider. Despite these fluctuations, the Hang Seng and Hang Seng Tech indexes gained, with value factor and large caps outperforming growth and small caps. Southbound Stock Connect volumes were light as Mainland investors bought a net $95 million worth of Hong Kong-listed stocks and ETFs, while Northbound Stock Connect volumes were light as foreign investors were net sellers of Mainland stocks.
Shanghai, Shenzhen, and the STAR Board diverged in their closing performance, with the value factor and large caps outperforming growth and small caps. The top-performing sectors were Financials, Utilities, and Communication Services while Real Estate, Health Care, and Consumer Staples fell. Northbound Stock Connect volumes were light as foreign investors were net sellers of Mainland stocks. The 10-Year Treasury Bond rallied, CNY and the Asia Dollar Index fell versus the US dollar, and Copper gained while steel fell. An upcoming webinar on Hedgeye’s Proprietary Risk Range™ Signals & A New ETF To Help Manage Risk In US Equities is scheduled for August 8th at 1 pm EDT.
In addition to the market performance, a recreational ping pong/table tennis player shared their amazement at watching Olympic players with incredible hand-eye coordination. Chinese fans encourage their players by yelling “jia you”, meaning “add oil” or “pedal to the metal”. Policymakers are urged to remember this term at the upcoming Politburo meeting. The recent subsidies for home appliances and autos represented the first fiscal stimulus post-Zero Covid. Overall, the Asian equities market showed a mix of gains and declines across various sectors, influenced by both domestic and global economic factors.
