Hong Kong Rallies As Shorts Press Their Bets

Key News

Asian equities markets had a strong day following yesterday’s US move with Hong Kong outperforming while China is still on its Golden Week holiday and India missed out on the fun due to the major Hindu festival Dussehra.

Hong Kong had 481 stocks rise while just 22 declined as the Hang Seng Index closed back above 18,000 after dipping below 17,000 intra-day Monday. Internet stocks were the most heavily traded by value with Alibaba HK 8.44%, Tencent +5.76%, Meituan +8.16%, insurance giant AIA +7.42%, and JD.com HK +10.13%. Clearly shorts felt some pain yesterday though they added to their positions as Hong Kong’s Main Board saw short turnover reach 103% of the 1-year average. Meituan had 35% of its volume short today, Alibaba HK 18%, JD.com HK 31%, and Tencent 12%. Remember, Mainland investors are not able to buy Hong Kong stocks as Southbound Stock Connect is closed which eliminates a potential buyer.

Tencent continues to buy back stock with another 1.2 million share purchase while Wuxi Biologics bought over 3 million shares overnight. The Asia currency index slipped slightly as as the dollar rebounded slightly this morning. China’s offshore currency CNH rallied from 7.18 on September 27^th to 7.04 yesterday and 7.06 today. We recently wrote about EV battery maker CATL as their rival China Aviation Lithium Battery Co prepares for a Hong Kong listing that appears to be undersubscribed. A highly respected global strategist raised emerging markets to overweight yesterday.

The Hang Seng and Hang Seng Tech gained +5.9% and +7.54% respectively on volume +66.52% from Monday which is 84% of the 1-year average. 481 stocks advanced while 22 closed down. Main Board short turnover increased 75% from Monday which is 103% of the 1-year average. Growth and value factors were mixed as large caps outperformed small caps. All sectors were positive with discretionary +8.69%, communication +6.33%, and tech 6.11%. Top sub-sectors were sporting goods, EV related, and retailers. Southbound Stock Connect is closed for the entire week.

Shanghai, Shenzhen and STAR Board are closed this week.

G’mar chatima tova!

Last Night’s Exchange Rates, Prices, & Yields

Mainland China’s fixed income and currency markets were closed overnight.