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Real Estate Stocks Soar, Biden & Xi Meet In Bali

Key News

Asian shares were mixed overnight as Hong Kong outperformed on property strength and a continuation of Friday’s growth share rally on lower-than-expected US CPI pressure.

Biden and Xi met on the sidelines of the G20 summit in Bali. According to initial reports, the two leaders had a constructive discussion on preventing the use and proliferation of nuclear weapons in Ukraine, improving communication between the US and China and working together on climate.

Property fared better in both Hong Kong and mainland China after the government outlined a 16-point plan for industry support, which includes allowing developers access to pre-sale funds and banks engaging in swap-based lending. While government support for the sector has been in the works for the past few months, the release of pre-sale funds appears to be the most compelling catalyst yet for property stocks, as Country Garden Holdings gained +45% overnight in Hong Kong.

While most growth stocks were higher overnight, reopening plays like Trip.com saw profitability and continued declines due to uncertainty over the path of China’s Zero COVID policy. On Saturday, the National Health Commission (NHC) hosted a press conference, where leaders reiterated new guidelines to reduce the economic cost of virus containment measures.

As we can see below in our Major City Mobility Tracker, congestion and metro traffic picked up again from Friday after slowing down in the 4th to 10th of November. Beijing’s change is particularly notable here, as the city has seen a sharp increase in COVID cases, threatening a full-scale shutdown, which clearly hasn’t happened.

Major City Mobility Tracker, powered by wind

Mainland investors took profits overnight in Southbound Connect trading, while foreign investors poured more than $2 billion into mainland stocks via Northbound Stock Connect.

The Hang Seng and Hang Seng Tech indices closed +1.70% and +1.80% respectively on volume which increased +12% from Friday. Property was the top performing sector in Hong Kong overnight as investors responded positively to new policy support for the sector. Meanwhile, Short Sale turnover increased +13% after falling last week as growth stocks saw a strong recovery.

Shanghai, Shenzhen and the STAR board closed down -0.13%, -0.26% and -0.03% respectively overnight on volume down -12% from Friday. Property was also a top performing sector on the continent.

Last night’s exchange rates, prices and returns

  • CNY per USD 7.07 versus 7.10 on Friday
  • CNY per EUR 7.29 versus 7.32 on Friday
  • Yield on 1-day government bond 1.20% versus 1.20% on Friday
  • Yield on 10-year government bond 2.84% versus 2.74% on Friday
  • Yield on 10-year China Development Bank Bond 2.97% versus 2.87% Friday
  • Copper price -0.84% ​​overnight

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