Asian equities had a strong day except for India and the Philippines as Mainland China and Hong Kong both outperformed.
Asian equities had a strong day except for India and the Philippines as Mainland China and Hong Kong both outperformed. Both Mainland China and Hong Kong were down in the morning session but ripped in the early afternoon following a release from the CPC Central Committee, which was presided over by President Xi. Specific to internet stocks, the release stated that “It is necessary to promote the healthy development of the platform economy, complete the special rectification of the platform economy, implement normalized supervision, and introduce specific measures to support the standardized and healthy development of the platform economy.” The interpretation is that this marks the end or, at least, a significant easing of internet regulation. Hong Kong’s most heavily traded stocks were Tencent, which gained +11.07%, Meituan, which gained +15.51%, Alibaba HK, which gained +15.69%, JD.com HK, which gained +15.68, and Kuaishou, which gained +8.98%. Hong Kong volumes increased +56% from yesterday, showing strong investor participation in the rally. Was there short covering? 100%. Hong Kong short turnover increased +50% from yesterday, which is 161% of the 1-year average. Southbound Stock Connect was closed so today’s move was without the participation of Mainland investors. After the Hong Kong close, Bloomberg News reported that “according to people familiar with the matter,” China is close to allowing the Public Company Accounting Oversight Board (PCAOB) to perform onsite audit reviews in China, which would eliminate the potential for ADR delisting presented by Holding Foreign Companies Accountable Act (HFCAA).
