Asian Markets Search For Direction, US Asset Managers Bet On Vast China Market

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Asian equities were mostly flat overnight as markets looked for direction following the reinstatement of Powell as US Fed chair and preparations for the Thanksgiving holiday in the US. Mainland China remained mostly unchanged as Shanghai, Shenzhen and Star Board closed +0.10%, +0.00% and -0.27% respectively. Meanwhile, Hang Seng managed to post a minor gain of +0.14% and the Hang Seng Tec Index again lagged with a fall of -0.50%.

Value beats growth once again in a trend that is likely to continue till the end of the year. Internet platforms mixed overnight, as sales continued to mount due to a confluence of factors, including Alibaba, including widespread rotation out of tech, excessive concerns over small new fines, and concerns of a consumer slowdown. Mainland investors were bullish on the coal name as investment in the sector increased after China’s decline triggered energy shortages. Oil and gas names rose in Hong Kong, brushing off the release of strategic reserves by the US.

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Chinese electric vehicle maker Xpeng grew +10.09% in Q3 after delivering 14% more SUVs and sedans than expected.

Fintech platform Ant Group will be re-branding some consumer lending products to indicate that the loans are being provided by third parties rather than the company itself. The move follows guidance from regulators on how to mitigate risks and ensure that consumers are safe and well informed.

Shares of Meituan rose ahead of expectations for a positive third-quarter earnings release on Friday. I’ll be providing commentary and analysis on Monday’s release, so stay tuned.

A top economic official said the aim of curbing real estate lending and speculation is to stabilize housing prices. Vice Premier Liu He echoed the official’s statements in an editorial for the People’s Daily. Real estate was up again in both the mainland (+0.94%) and Hong Kong (+1.24%).

US asset management firms are making deposits in China by force. JPMorgan CEO Jamie Dimon apologizes after quips that his bank could last longer than the Chinese Communist Party, both celebrate their 100th anniversary this year. The off-hand comment came as JPMorgan agreed to buy out its remaining China asset management subsidiary. Meanwhile, Ray Dalio’s Bridgewater is setting up a wholly owned asset management unit in China that will invest in RMB-denominated securities on behalf of Mainland Chinese citizens. Bridgewater and JP Morgan join Goldman Sachs and some other US investment managers betting on growth in China’s asset management industry and taking advantage of their newfound ability to operate in the country without a local partner. This bodes well for China’s mainland stock market, which is set to see a significant increase in domestic participation and flow after restrictions on how much real estate a home can own as an investment asset. Chinese households have twice as much real estate as American households. Therefore, disinvestment of these assets and exploring alternatives is a significant event for China A-Shares.

China Last Night will take a holiday tomorrow and Friday to commemorate the Thanksgiving holiday in the US. Happy Turkey Day!

Last Night’s Exchange Rates, Prices and Yields

  • CNY/USD 6.39 vs. 6.39 Yesterday
  • CNY/EUR 7.16 vs. 7.19 Yesterday
  • Yield on 1-Day Government Bond 1.65% vs. 1.70% yesterday
  • Yield on 10-Year Government Bonds 2.86% vs 2.89% yesterday
  • Yield on 10-year China Development Bank bonds 3.15% versus 3.17% yesterday
  • Copper price today +1.08%

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