Asian equities slumped into the weekend on rising cases in the US, Japan and, to a lesser degree, Hong Kong. Both the Mainland and Hong had a pullback today after posting gains for the week.
Western media is focused on China’s pension plan reducing its position in insurance company People’s Insurance Company of China (PICC). One broker believes that up to ten stocks could see selling from the pension plan, which is being heralded as a sign that the regulators believe the market has gone too far too fast. Pension plans tend to rebalance at month end or around high-volume events such as futures rolling in order to limit their impact. We’ve seen massive volume in the Mainland of late, which makes trimming a position make perfect sense. One Mainland broker simply called today a correction driven by profit taking.
DND, drinks and drugs, were up on the day as Kweichow Moutai and Wuliangye Yibin rose +0.46% and+1.61%, respectively, while healthcare was broadly higher. Northbound Stock had outflow of $627mm though for the week +$4.023B of net buying by foreign investors.
The SEC held their Emerging Markets Roundtable yesterday. According to the notes from our SEC law firm, the first panel comprised solely of short sellers was negative on China! Shocking. I find it a little ironic that without frauds there would be no short sellers. It is amazing only one mutual fund family of significance participated in the day long panel. One! I find it absolutely shocking that the largest mutual fund families have done nothing to defend their shareholders on this issue. The mutual fund lobby Investment Company Institute (ICI) did not participate either.
The World Artificial Intelligence Conference (WAIC) has been this week. I will gather notes from CEO speeches etc. for Monday delivery!
Southbound Stock volumes have come off a bit but remain at 2X the 1-year average. Volume leader Semiconductor Manufacturing was sold slightly, Tencent was bought heavily, and Xiaomi saw net buying as well.
Shanghai and Shenzhen bounced around the room but fell toward the close to end the day -1.95% and -0.31% at 3,383 and 2,251, respectively. Volumes were off -6.4% from yesterday but remained 2.5X the 1-year average while 1,358 stocks advanced and 2,398 stocks declined. Large cap stocks fell more than mid and small caps. The Mainland stocks within the MSCI China All Shares Index fell -1.36% with health care +0.94%, communication +0.69%, discretionary +0.41%, staples +0.26%, tech -1.18%, utilities -1.31%, industrials -1.59%, real estate -1.95%, materials -2.76%, financials -3.61%, and energy -3.7%.
Northbound Stock Connect volumes were elevated again as foreign investors became net sellers overnight. Shanghai Connect volume leaders Kweichow Moutai and Ping An were both bought by small margins. Shenzhen connect volume leader Gree Electric Appliances was bought 2 to 1, liquor stock Wuliangye Yibin was sold 7 to 5, and East Money Information was sold by a small margin. Foreign investors sold -$627mm worth of Mainland stocks today. For the week, foreign investors bought $4.023B worth of Mainland stocks.
Krane Funds Advisors, LLC is the investment manager for KraneShares ETFs. Our suite of China focused ETFs provide investors with solutions to capture China’s importance as an essential element of a well-designed investment portfolio. We strive to provide innovative, first to market strategies that have been developed based on our strong partnerships and our deep knowledge of investing. We help investors stay up to date on global market trends and aim to provide meaningful diversification. Krane Funds Advisors, LLC is majority owned by China International Capital Corporation (CICC).
I am the Chief Investment Officer of KraneShares, a China-focused provider of exchange-traded funds (ETFs). As a pioneer within the ETF industry I experienced the surge
I am the Chief Investment Officer of KraneShares, a China-focused provider of exchange-traded funds (ETFs). As a pioneer within the ETF industry I experienced the surge in popularity of ETFs firsthand, helping an industry-leading global ETF provider grow AUM from a few million to over $1.5 trillion. Leveraging my experience working in capital markets, voracious appetite for global financial news and a touch of humor, I aim to provide readers with an informative daily roundup of key headlines and data from China’s financial markets. In addition to contributing to Forbes, I am often interviewed on and quoted in Bloomberg, CNBC and The Wall Street Journal on matters surrounding Chinese markets.