week in review
- CSRC, China’s SEC, issued a statement on Monday reaffirming its support for convertible interest entities (VIEs) and foreign listings.
- In a Tuesday address, PBOC Governor Yi Gang indicated support for the economy, financial aid to help meet carbon targets and comment on the real estate market.
- Hong Kong internet names were closed on Wednesday despite positive news such as JD.com increasing its buyback from $2B to $3B, Reuters reported that Alibaba is looking to sell its stake in Weibo, and Meituan and Kuiashou. Partnership announced.
- Asian shares were mixed on Thursday, a day of slow news ahead of the new year.
Asian equities ended 2021 broadly higher with Hong Kong internet stocks outperforming in the half-day session, while the Philippines underperformed in its half-day session. South Korea, Taiwan, Indonesia and Thailand remained closed today as traders began their New Year celebrations.
I would like to pause and reflect on 2021, which was a year I had not anticipated. There is a stark contrast between what foreign investors think of China, represented by Hong Kong and US-listed ADRs in 2021, and what Chinese investors, represented by Shanghai and Shenzhen-listed shares of the Mainland market, think of China. saw the deviation. The MSCI China All Shares Index consists of Hong Kong-listed Chinese stocks (weighting 41.92%), Shanghai/Shenzhen-listed stocks (weighting 51.51%) and US-listed Chinese stocks (weighting 6.58%). In 2021, Hong Kong-listed stocks were down -19.7%, US-listed stocks were down -37.94%, and Shanghai and Shenzhen-listed stocks were up +3.77%.
Foreign investors gave more weight to Mainland shares, as evidenced by net inflows of $67.14 billion into Mainland shares via Northbound Stock Connect, 2X the amount of inflows in 2020. This divergence is also reflected in the Chinese currency, which appreciated +2.6% versus the US. dollars this year. CNY closed at 6.52 on 2020 and 6.36 on 2021. Chinese Treasury bonds also had a strong year, with the Businesshala Treasury 7-10 Year Index gaining +5.7%. China’s economy may continue to roar in 2022, but it may look a little different than in years past.
As for the spread index, readings above 50 represent month-to-month growth, and readings below 50 indicate contraction. New orders and export orders have dropped below 50, so getting off the hood and looking at the details is mixed. Business expectations for both PMIs were strong with readings of 54.3 and 57.3. PMI was not considered a market driven phenomenon by local brokers.
Hang Seng closed a disappointing year led by Internet stocks, down +1.24%, as the Hang Seng Tech Index rose +3.57%, while several individual names posted very strong returns after a very strong day in the US yesterday. Posted. Volume was down -16.72% as compared to yesterday’s full day session. Hong Kong’s most-traded shares by value were Tencent, which rose +3.02%, Alibaba HK, which rose +8.19%, Meituan, which rose +3.21%, JD.com HK, which rose +5.47%, and Wednesday’s IPO. Sensetime, which rose +33.17 per cent. Short sellers were forced to cover up their shorts, although year-end window dressing was also a factor. In thin markets, moves tend to be exaggerated. I am hopeful that we can maintain the momentum in the new year with the tax-loss sell-off. fingers crossed! Southbound Stock Connect closed today. Besides internet stocks, healthcare had a strong day on supportive policy measures for Chinese traditional medicine as the sector rose +3.32% in Hong Kong.
Mainland had a full day session and Shanghai gained +0.57%, Shenzhen gained +0.52%, and Star Board gained +1.65% on volume, which was +3.85% higher than yesterday, Which is just above the 1-year average. Real estate was the best performing sector as the city of Ningbo implemented apartment loans for families with more than two children, according to Mainland media source Yikai. The article said that this policy is expected to be implemented at the national level as the policies to increase the birth rate are apt to be one of the big stories in 2022. The clean technology sector had a strong day led by solar, lithium and wind plays. Release of the Ministry of Commerce supporting this sector in the 14th Five Year Plan. The Finance Ministry announced that electric vehicle (EV) subsidies would be cut by 30% in 2022, although EV plays were unaffected. Foreign investors purchased $719 million worth of shares listed on Mainland today through Northbound Stock Connect. Bonds were closed, CNY had a strong day, and copper rose +0.14%.
The Regional Comprehensive Economic Partnership (RCEP) will be effective from tomorrow. 15 Asian countries will enjoy preferential trade arrangements with each other.
Private company Huawei reported poor results due to US technology export ban. It is interesting that the media does not highlight the fact that the US government is trying to kill the company.
RIP to Yale professor and Chinese historian Jonathan Spence.
A shout out and hat tip to my colleagues Henry, Megan and Joe, who help bring china last night for life on a daily basis. we appreciate your reading china last night And welcome any comments and recommendations on the material and data. We hope you and your loved ones enjoy New Year’s Eve, which is also my birthday, and wish you success personally and professionally in 2022.
Last Night’s Exchange Rates, Prices and Yields
- CNY/USD 6.36 vs. 6.37 Yesterday
- CNY/EUR 7.22 vs 7.22 Yesterday
- Yield on 1-Day Government Bonds 1.78% versus yesterday’s 1.78%
- Yield on 10-year government bonds 2.78% versus yesterday’s 2.77%
- Yield on 10-year China Development Bank bonds 3.08% versus 3.07% yesterday
- Copper price +0.14%