Asian equities were off overnight as Hong Kong outperformed and China was mixed.
Asian equities were off overnight as Hong Kong outperformed and China was mixed. Hong Kong’s rally was quite broad with 3 advancers to every 1 decliner as every sector was in the green and led by a strong rebound in internet stocks. Tencent was Hong Kong’s most heavily traded by value gaining +1.12% followed by Alibaba HK +6.43% as Tencent’s WeChat Pay is officially usable on Alibaba’s e-commerce websites. I noticed that on Alibaba’s international website there is a WeChat button though I candidly don’t know if that is a new addition. The walled garden or moats the companies have built to hurt their rivals are coming down as the companies adhere to regulations. Tencent saw net buying from Mainland investors overnight for the 11 th out of the last 12 trading days while the company bought 220k shares today. Real estate stocks rebounded strongly with developer Sunac (1918 HK) gaining +14.81% after the company denied having asked for government assistance and buying back bonds. The Mainland market was mixed overnight as yesterday’s high-flying liquor stocks were hit with profit-taking while energy, real estate, and utilities had strong days. The PBOC spoke to protecting housing from a financial crisis. Evergrande’s situation isn’t going away as restructuring bond and loan repayments with creditors will be arduous however recognition of the firm’s size is on policy maker’s radar. Evergrande is being called Lehman’s moment, but it is more like their Bear Stearns moment as there is no Lehman without Bear going down. Stopping the first domino from dropping is job #1 in China. All things energy and utility-related in the Mainland market such as coal, oil, wind, solar, hydro, and electric generation outperformed China’s high energy prices.
