Why SOE ADR Delisting Is Good, Real Estate Policy Lifts Sector, MSCI Quarterly Index Review, Weekly Review

Review of the week

• Asian stocks rose sharply this week as China released better-than-expected trade data.
• China’s National Passenger Vehicle Information Exchange Association announced that China’s vehicle sales in July increased by 41% year-on-year.
• On Wednesday, China released inflation data for July, showing that the consumer price index (CPI) rose only +2.9% year-on-year.
• Softbank cut its position in Alibaba from 24% to 15% on Thursday. After a difficult year for tech investors, China has profited from his e-commerce investments.

main news

This morning, five US-listed Chinese companies announced they would be delisted from the New York Stock Exchange (NYSE) after the close of trading in Hong Kong. All five are state-owned enterprises (SOEs). We have long argued that delisting SOEs is a potential solution to the Holding Foreign Companies Accountable Act (HFCAA), as audit reviews may actually contain sensitive information. rice field. SOE audits may include the amount of government grants to companies. Private companies have long said they have nothing to hide from audit reviews conducted by the Public Company Accounting Oversight Board (PCAOB). China’s SEC, the China Securities Regulatory Commission (CSRC), issued a statement this morning that it is clear that the five U.S. listings are low in volume and account for a very small percentage of the company’s market capitalization. pointed out. The CSRC also said it would “maintain communication with relevant overseas regulators to jointly protect the legitimate rights and interests of companies and investors.” The market dynamic is that US-listed Chinese companies have been slow to start trading, even though I strongly believe this could be a very good development for the HFCAA solution. is shown.

Asian stocks surged as Japan caught up after yesterday’s market holiday while Thailand was on vacation for the circuit queen’s birthday. It was a quiet session due to the low volume in Hong Kong.

The biggest-traded stocks in Hong Kong were Tencent +0.2%, Meituan +1.53%, China Mobile +1.45%, Alibaba HK +1.25% and Li Ning +0.2%. +4.78% on strong first half results. Energy was the top sector in both Hong Kong and mainland China, +1.8% each in both markets due to strong pricing and the release of data showing electricity consumption increased +6% year-on-year in the first half of the year and an increase of +2.29%. Strong, strong second half estimates.

Mainland stocks tumbled ahead of the weekend as profit-taking hit the week’s outperformers such as semiconductors. His Hygon Information (688041 CH), a computer component maker, surged +66% in his IPO today, making it the most traded mainland Chinese stock overnight by trading value. Property had a decent day on the mainland, with the sector gaining +1.22%. Yesterday, we told you that several cities are reducing home purchase limits to help collapse sales.

After the close, July lending and lending totals were well below expectations at RMB75.6bn, down from RMB1.35tn/67.9tn to RMB5.17tn in June and RMB1.125tn to RMB1.125tn in June. It fell short of an estimate of RMB 2.81 trillion. The release will get a lot of attention from policy makers as rumors of a RMB 1 trillion bailout plan are rumored.

After the close of US trading yesterday, MSCI released its quarterly index review.This will be implemented by the asset manager at the close of trading on August 30.^thChina’s weight in emerging markets is projected to increase from 33.5% to 33.8% as the number of shares increases from 716 to 721. Newly added brands include Tianqi Lithium, which is very popular at home and abroad. China’s 721 stocks account for 52% of the MSCI EM’s 1,386 stocks. At some point the numeric count catches up with the percentage weight. Some might argue that China is becoming an asset class and that both China and China-excluded emerging market strategies are needed.

The Hang Seng and Hang Seng Tech Indexes rose +0.46% and +0.54% respectively, with volume down -9.33% from yesterday. That’s 56% of his yearly average. 302 stocks rose and 160 stocks fell. Hong Kong short sales increased +0.67%. This is 56% of the annual average, as short sales account for 16% of total sales. Large-cap stocks outperformed small-cap stocks, and the value factor outperformed the growth factor. Overnight’s top sectors were energy up +1.82%, materials up +1.31% and consumer goods +1.25%, while healthcare fell -1.04% and consumer goods fell -0.08%. The best-performing subsectors were materials, metals-related sectors such as iron, cobalt, and steel, while online education and circuit boards were among the losers. Southbound Stock Connect saw lower turnover as Mainland Chinese investors bought his $126 million worth of Hong Kong shares in Tencent and Li Auto on net sales, while Meituan was a net seller. .

Shanghai, Shenzhen and STAR Board fell -0.15%, -0.45% and -2.3% respectively, with trading volume down -7.25% from yesterday. That’s 93% of his yearly average. 2,110 shares rose and 2,326 shares fell. Today the value factor outperformed the growth factor and large caps outperformed small caps. The top sectors were Energy +2.28%, Utilities +1.27% and Real Estate +1.2%. On the other hand, high tech fell -1.79%, discretionary -0.91% and industrial -0.71%. Top-performing subsectors included coal, precious metals, and energy equipment, while solar, semiconductors, and batteries were among the losers. Volume on Northbound Stock Connect was light to moderate as foreign investors bought $575 million worth of mainland stocks today. Chinese government bonds were flat, CNY fell -0.04% against the US dollar to 6.74, and copper gained +1%.

Last night’s exchange rates, prices and yields

• CNY/USD 6.74 vs. yesterday’s 6.74
• CNY/EUR 6.91 vs Yesterday’s 6.97
• 1-Day Treasury Yields 1.00% vs Yesterday’s 1.03%
• 10-Year Treasury Yield 2.73% vs Yesterday’s 2.73%
• China Development Bank 10-Year Bond Yields 2.91% vs. 2.91% Yesterday
• Copper price +1.00%