Hong Kong gapped lower at the open -2.29% but managed to claw back most of the initial losses to close -0.73%.
Asian equities posted modest losses as Australia and South Korea took an outsized hit. Broker chatter was fairly muted about the US crash yesterday. The fall was dismissed as an overdue correction following a robust rebound from March lows. Hong Kong gapped lower at the open -2.29% but managed to claw back most of the initial losses to close -0.73%. Volume leaders were Tencent -0.32%, Alibaba
BABA HK -0.47%, Meituan Dianping +0.36%, and NetEase HK -1.1%.
It is worth pointing out that NetEase US shares were off -3.1% and Alibaba US shares were off -3.7% Thursday as Hong Kong investors rightfully ask why these stocks would be down on US-centric news. One broker noted there were rumors of a Meituan Dianping and Didi merger though I’ve not seen anyone else mention it. Wouldn’t that be something! Meituan had a broker upgrade today, which likely drove the positive price action.
It is worth looking at the weekly returns of Asian equity indices below. Mainland China sticks out doesn’t it? The Mainland market is still a small part of globalized fund flows, which means a very low correlation to other equity indices. Low equity correlation is exceedingly hard to find. It is also worth pointing out that Hong Kong stocks, which have historically been foreign investors’ definition of China, fared much worse than the Mainland. Apparently, investors in China have a different view of the economy than foreign investors. Reuters covered a press conference from Zhu Guangya, “a cabinet advisor and former vice finance minister,” who called on US-China trade communication while Liu Huan, “another cabinet advisor, said he expected China’s economy to rebound sharply in the third quarter.” The current budget deficit is at 3.
