Apple Suppliers Off As Tencent Denies Divestment Article

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There was a mild amount of risk in Asia before today’s Fed rate hike and more saber-rattling from Putin, leading China to call for a ceasefire.

Hong Kong-listed internet stocks were closed despite Tencent denying the -2.52% WSJ disinvestment article. Short sellers raised their bets because Tencent had 18% of today’s sales in volume 18% compared to today, Meituan had -2.95% in 30% less volume than yesterday, compared to 36% of yesterday, Alibaba HK ended up 20% lower volume versus -3.65% at 20%. Yesterday, and HK -2.93% on 37% lower volume versus 34% yesterday. Of all the shares traded on Hong Kong’s main board, 21% were sold short. This is becoming a bit absurd in my opinion with the potential to be embarrassing for the Hong Kong exchange. This also sets up for a massive short covering as we saw back in mid-March as the Hang Seng Index touches a low that is -6% from the Covid 2020 low.

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Mainland investors via Southbound Stock Connect were major buyers of Hong Kong listed shares today, with a very healthy net buyout of +$563 million. Someone is buying less! Tencent Music Entertainment (TME US, 1698 HK) re-listed in Hong Kong today. There’s chatter another little US China ADR is going to go private. Several Apple suppliers were down today, though Sunny Optical -10.51% (they have exposure to auto makers, so the Ford announcement could be a factor), AAC Technologies -3.07%, and BYD Electronic -3.05% for no reason. was not looking. The Asia Currency Index hit another 52-week low for the third day in a row as the CNY fell -0.38% to US$7.04. Mainland markets were closed, but not as much as Hong Kong in onshore versus offshore disparity. Widely held foreign stocks were closed from a news perspective on a calm day today. Foreign investors were net sellers of Mainland’s shares through the sale of Northbound Stock Connect — $434 million. Chinese Treasury bonds had a strong day with the government ten-year Treasury yielding 2.64%.

Hang Seng and Hang Seng Tech yesterday’s volumes fell -1.79% and -3.03%, respectively, at +11.36%, which is 64% of the 1-year average. 56 stocks gained while 440 stocks declined. Main board short selling turnover increased by +35% from yesterday which is 80% of 1 year average as short trading accounted for 21% of main board turnover. Growth and price factors were mixed as large caps “outperformed” / fell less than small caps. The only sector in green was energy +0.66% while technology was -4.16%, discretionary -3.22%, and real estate -2.68%. Top sub-sectors included petrochemicals, oil, shale, coal and air pollution-related ports and energy, while Apple-related stocks, retail, auto, solar and cement were the worst. Southbound Stock Connect volume was light as Mainland investors today bought healthy stock of $563 million with Tencent with medium/light net buys, Meituan light net buys and Sunny Optical short net sales.

Shanghai, Shenzhen and Star Board fell -0.17%, -0.37%, and -1.5% volumes -2.37% from yesterday, which is 63% of the 1-year average. 2,782 shares rose while 1,744 shares declined. Value factors outperformed growth, while small caps outperformed large caps by a small amount. The top sectors were energy +1.19%, utilities +0.57%, and real estate +0.22% negative, while healthcare -2.99%, staples -2.05%, and discretionary -1.92%. The top sub-sectors were shipping/marine industries, rare earths, thermal, natural gas and iron ore while semi, CRO, medical services and medical equipment were the worst. Northbound Stock Connect volumes were moderate/light as foreign investors sold –$434 million of Mainland stock. Treasury bonds were up, CNY -0.38% versus US$7.04, and copper was up +0.11%.

Last Night’s Exchange Rates, Prices and Yields

  • CNY/USD 7.05 vs 7.01 yesterday
  • CNY/EUR 6.99 vs 7.02 Yesterday
  • Yield on 10-Year Government Bond 2.65% vs. 2.66% yesterday
  • Yield on 10-Year China Development Bank Bond 2.79% versus 2.81% yesterday
  • Copper price +0.11% overnight

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