Mainland Markets Reopen From Golden Week Holiday

Key News

Asian equities were mixed after the terrible events in Israel over the weekend, which sent oil higher, as Mainland China’s markets reopened from the Golden Week holiday last week.

There were multiple market holidays in Asia overnight including Japan, which was closed for National Sports Day, South Korea, which was was closed for Hangul Day or the celebration of the invention of the Korean alphabet, and Taiwan, which was closed for Double Ten Day or the celebration of the Wuchang Uprising.

China’s Golden Week consumption data, reported on Friday, appear strong with 826 million domestic trips taken, representing an increase of +71% year-over-year (YoY). Tourism revenue for the week came in at RMB 753 billion, representing an increase of +129% YoY. However, Golden Week real estate sales were weak, as expected, which some attributed to the weak Mainland market, though it is hard to buy real estate while traveling.

Foreign investors sold a net $1.02 billion worth of Mainland stocks overnight.

Meanwhile, US Senate Majority Leader Chuck Schumer and five Senators (Crapo from Idaho, Cassidy from Louisiana, Hassan from New Hampshire, Kennedy from Louisiana, and Ossoff from Georgia) are in China and have already met with both President Xi and Foreign Minister Wang. Schumer reiterated the White House’s stabilization language, a departure from “decoupling”. Schumer’s meeting with Xi is a strong signal, in my opinion. Mainland media noted Xi’s comment that the “Thucydides trap is not inevitable”.

Hong Kong was only open for two hours due to a typhoon, posting small gains on obviously light volumes. Hong Kong couldn’t match the strong gains we saw Friday, which is why we are seeing a pullback in US-listed China stocks today. The mainland reopened for the first time since Thursday, September 28^th, posting small losses on light volumes. Energy was a top-performing sector on the mainland, where it gained +0.73%, and Hong Kong, where it gained +2.42%. Mainland inventors were net buyers of Hong Kong-listed stocks, though it was a short session. CNY gained versus the US dollar.

It was deeply saddening to see the events that occurred over the weekend in Israel. I have visited Israel multiple times for work and brought my family there for holiday several years ago. Our thoughts and prayers are with our friends there.

The Hang Seng and Hang Seng Tech indexes gained +0.18% and +0.24%, respectively, on volume that declined -2.32% from Friday, which is 41% of the 1-year average. 248 stocks advanced while 240 declined. Main Board short turnover increased +3% from Friday, which is 42% of the 1-year average as 17% of turnover was short turnover (remember Hong Kong short turnover includes ETF short volume, which is driven by market makers hedging). Growth and value factors were both off as large caps outpaced small caps. The top-performing sectors were energy, which gained +2.41%, materials, which gained +1.6%, and healthcare, which gained +1.58%. Meanwhile, real estate fell -1.51%, consumer staples fell -0.64%, and consumer discretionary fell -0.25%. The top-performing subsectors were energy, materials, and technical hardware. Meanwhile, real estate, media, and retail were among the worst-performing. Southbound Stock Connect volumes were light as Mainland investors bought a net $260 million worth of Hong Kong -listed stocks and ETFs as Meituan was a moderate net buy, while Tencent and Xpeng were small net sells.

Shanghai, Shenzhen, and the STAR Board fell -0.44%, -0.09%, and -0.07%, respectively, on volume that increased +8% from the last trading day, which is 88% of the 1-year average. 1,463 stocks advanced while 3,383 stocks declined. The growth factor outperformed the value factor while small caps edged out large caps. The top-performing sectors were utilities, which gained +0.88%, healthcare, which gained +0.76%, and energy, which gained +0.66%. Meanwhile, real estate fell -1.69%, communication services fell -1.02% and consumer staples fell -0.77%. The top-performing subsectors were auto parts, autos, and biotech. Meanwhile, catering/restaurants, cultural media, and airports were among the worst-performing. Northbound Stock Connect volumes were light as foreign investors sold a net -$1.02 billion worth of Mainland stocks as Kweichow Moutai was a moderate net buy while LONGi, CATL, and Ping An Insurance were moderate net sells. CNY appreciated versus the US dollar as the Asia Dollar Index was flat. Treasury bonds rallied while copper gained and steel fell.