China Markets Rebound, Alibaba’s First Spinoff Approaches

Week in Review

• Only a few markets managed gains for the week: Indonesia, the Philippines, Hong Kong, and Mainland China. Meanwhile, Japan, Taiwan, South Korea, India, and Singapore were all lower on hawkish Central Bank speech and a jump in the US dollar.
• There were multiple diplomatic overtures between the US and China this week including US National Security Advisor Jake Sullivan’s meeting with China’s Foreign Minister in Malta and US Secretary of State Blinken’s meeting with China’s Vice President Han Zheng during the UN General Assembly, which was held in New York this week.
• Consumers in China spent more than expected this week on Huawei’s new Mate 60 phones, which were reported to be selling faster than stores can restock them, and baijiu-infused coffee, which helped liquor giant Kweichow Moutai become the largest constituent in the MSCI
  MSCI
  China A Index.
• Mainland investors bought an impressive net $14 billion worth of Hong Kong stocks this week on weakness.

Friday’s Key News

Asian equities were mixed as Mainland China and Hong Kong bucked the trend by outperforming while Japan, South Korea, and India underperformed.

All sectors in both Hong Kong and Mainland China were up today, led by growth stocks and sectors, as breadth was decent as advancers outpaced decliners handily, which was a complete reversal of yesterday’s moves. As I noted yesterday, the Shanghai, Shenzhen and Hang Seng Index have all breached big, round numbers and are hovering around 3,100, 1,900, and 18,000, respectively. This puts the market’s declines on policymakers’ radars. Investors, on the other hand, may also note the undervaluation of China equities, especially in light of higher US interest rates, which still have the potential to weigh on US stocks.