PCAOB Officials Arrive in Beijing, Week In Review

Week in Review

  • The arrest of a man named Ma in Hangzhou sent Alibaba lower on Tuesday, though the man arrested was not Jack Ma. This is an unfortunate example of investors’ willingness to “shoot first and ask questions later.”
  • Bilibili announced that it would be migrating its Hong Kong listing from a secondary listing to a dual primary listing while KE Holdings filed for a Hong Kong listing.
  • An editorial published by the Economic Daily, a Mainland media source, noted new draft policies set to support innovation and sustainable development among internet platforms and the end of the previous regulatory cycle, which focused on addressing issues in the industry. The article followed government meetings with industry leaders over the long weekend.

Friday’s Key News

Asian equities followed US equities lower except for Japan overnight as the delayed reaction to the US Fed’s 0.50% interest rate hike on Wednesday bled into Asian markets. Internet stocks were particularly hard hit, though there were few places to hide in last night’s price action outside of a handful of value sectors.

Reuters reported that officials from the US Public Company Accounting Oversight Board (PCAOB) have arrived in Beijing to attempt to settle the issue of audit reviews for US-listed Chinese companies and avoid delisting. While this is not the first time that officials from the US regulatory body have visited China, this is the first time they have travelled since the CSRC stated its readiness to make key concessions to allow audit reviews by foreign regulators and asked US-listed firms to prepare for more audit disclosures. Good news!

Shares in China-based internet companies are directly mirroring their US peers, which sold off heavily yesterday. The lack of a specific catalyst overnight and regulatory uncertainty related to delisting and the precise policies that China’s officials will undertake to support their development meant that these stocks traded in line with their US peers’ disappointing performance. However, for both the US and China internet space, Bank of America’s key bull/bear indicator is now close to “extreme bear,” which usually precedes a turnaround. However, timing is uncertain.

The electric vehicle ecosystem was off heavily overnight as Nio and XPeng were added to the SEC’s list of companies that could potentially face delisting.

Real estate names were off in China and Hong Kong. In particular, Country Garden Holdings fell by nearly -10% in Hong Kong.

Evergrande announced it reached an agreement with yuan bondholders to extend a payment by six months. The holders of onshore bonds totaling $3 billion made the decision to provide the embattled property developer with some relief with 99% voting in favor. Although the company is still not out of the woods yet, tides appear to be turning in China’s real estate sector and creditors appear to be willing to cut the company some slack. The Labor Day weekend, which was last weekend in China, is typically a boom time for property sales, though not so much this year. Nonetheless, Evergrande is offering 2,000 homes for sale as of April 30th.

The Hang Index and Hang Seng TECH Index both closed sharply lower at -3.81% and -5.23%, respectively, overnight on volume that was +17% higher than yesterday. Nearly all sectors in Hong Kong were lower except for consumer staples, energy, and utilities. Value factors slightly outpaced growth factors.

Shanghai, Shenzhen, and the STAR Board closed -2.16%, -1.71%, and -1.45%, respectively, on volume that was -16% lower than yesterday. The yield on the 10-year China treasury was flat while CNY depreciated slightly versus the US dollar and copper prices fell.

msci china all shares index 1 day percentage change
US Hong Kong dually listed ticket day percentage change
hong kong most heavily traded by value, 1 day percentage change
shanghai and shenzhen most heavily traded by value

Last Night’s Exchange Rates, Prices, & Yields

  • CNY/USD 6.67 versus 6.66 yesterday
  • CNY/EUR 7.04 versus 6.99 yesterday
  • Yield on 1-Day Government Bond 1.44% versus 1.44% yesterday
  • Yield on 10-Year Government Bond 2.83% versus 2.83% yesterday
  • Yield on 10-Year China Development Bank Bond 3.06% versus 3.05% yesterday
  • Copper Price -1.37% overnight

Originally Posted on May 6, 2022 – PCAOB Officials Arrive in Beijing, Week In Review

Author Positions as of 5/6/22 are KBA, KALL, KCNY, KFYP, KCNY, KEMQ, BZUN, HSBC, KWEB, KHYB, LI US

Charts Source: KraneShares

Disclosure: KraneShares

Content on China Last Night is for informational purposes only and should not be construed as investment advice. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results; material is as of the dates noted and is subject to change without notice. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.

This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities. Investing involves risk, including possible loss of principal.

This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.

Forward-looking statements (including Krane’s opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results) contained in this presentation are based on a variety of estimates and assumptions by Krane. These statements generally are identified by words such as “believes,” “expects,” “predicts,” “intends,” “projects,” “plans,” “estimates,” “aims,” “foresees,” “anticipates,” “targets,” “should,” “likely,” and similar expressions. These also include statements about the future, including what “will” happen, which reflect Krane’s current beliefs. These estimates and assumptions are inherently uncertain and are subject to numerous business, industry, market, regulatory, geo-political, competitive, and financial risks that are outside of Krane’s control. The inclusion of forward-looking statements herein should not be regarded as an indication that Krane considers forward-looking statements to be a reliable prediction of future events and forward-looking statements should not be relied upon as such. Neither Krane nor any of its representatives has made or makes any representation to any person regarding forward-looking statements and neither of them intends to update or otherwise revise such forward-looking statements to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such forward-looking statements are later shown to be in error. Any investment strategies discussed herein are as of the date of the writing of this presentation and may be changed, modified, or exited at any time without notice.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from KraneShares and is being posted with permission from KraneShares. The views expressed in this material are solely those of the author and/or KraneShares and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

In accordance with EU regulation: The statements in this document shall not be considered as an objective or independent explanation of the matters. Please note that this document (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and (b) is not subject to any prohibition on dealing ahead of the dissemination or publication of investment research.

Any trading symbols displayed are for illustrative purposes only and are not intended to portray recommendations.

Disclosure: Forex

There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at ibkr.com.

Source link

Leave a Reply

Your email address will not be published. Required fields are marked *

Previous Article

In balance: Quantum computing needs the right combination of order and disorder: Disorder in quantum computer chips needs to be designed to perfection

Next Article

States, NGOs, UAW all sue USPS over plans to buy gas delivery trucks - Charged EVs

Related Posts