China Market Update: Continent is still upbeat

Ahead of the US Federal Reserve's interest rate decision today, Asian equities were mixed overnight on light volumes and a declining US dollar. For the Mid-Autumn Festival in Hong Kong and Chuseok, or Thanksgiving Day, in South Korea, there were closures.

Banks, energy, insurance, and electric car companies led the stronger mainland mega capitalization equities. While BYD finished higher by +1.35%, CATL gained +1.58%. The consumer purchase subsidies gained by home appliance companies Midea, Haier, and Gree were +2.74%, +3.28%, and +3.26%, respectively. Based on above-average volumes, the National Team appeared active in their large and mega-cap equity ETFs, which contributed to the weakness of mid-and small-cap stocks.

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There were 107 million domestic travels during the four-day Mid-Autumn Festival weekend on the Mainland, up 6.3% from 2019 figures. Liquor stocks Kweichow Moutai (down -2.86%) and Wuliangye Yibin (down -1.38%) pulled down consumer staple stocks due to worries about weak orders for the October vacation. Due to ongoing speculation that iPhone 16 sales in China are far lower than anticipated, Apple suppliers Foxconn and LXJM saw declines of -2.6% and -3.36%, respectively. The PBOC reaffirmed its emphasis on the 1.70% 7-day repo rate. On September 25th, the medium-term lending facility (MLF) rate will be decided.

The mainland market is still devoid of animal spirits since consumer confidence is still low as a result of the impact of declining real estate prices on household savings. To make a change, policymakers will need to apply more pressure. Despite this, Hong Kong has managed to hold on quite well thanks to buybacks and inflows from Southbound Stock Connect. Indeed, tapping on wood. A private equity-focused State Council meeting was chaired by Prime Minister Li Qiang. Vice Premier He Lifeng discussed the UK-China economic and financial dialogue with the Chancellor of the Exchequer Reeves. The talk also revolved around Appaloosa, the hedge fund run by legendary investor David Tepper, and its substantial holdings in ETFs and China's internet.

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The Hang Seng and Hang Seng Tech closed, while Shanghai, Shenzhen, and the STAR Board experienced a decrease in volume. 1,512 stocks advanced, with real estate, energy, and consumer discretionary sectors leading. The worst-performing sectors were consumer staples, information technology, and communication services. Northbound Stock Connect closed, and the CNY and Asia Dollar Index were stronger.

FAQs

What caused the overnight closure of some Asian markets?
For the Mid-Autumn Festival, Hong Kong was closed, and on Chuseok, the Korean Thanksgiving Day, South Korea was closed.

Which sectors in Mainland China performed the best and the worst?
Consumer Staples, Information Technology, and Communication Services were the least successful sectors, while Real Estate, Energy, and Consumer Discretionary were the best.