{"id":199676,"date":"2024-11-11T10:00:00","date_gmt":"2024-11-11T15:00:00","guid":{"rendered":"https:\/\/ibkrcampus.eu\/campus\/uncategorized\/the-tale-of-two-chinas-their-investors-returns\/"},"modified":"2024-11-11T10:00:00","modified_gmt":"2024-11-11T15:00:00","slug":"the-tale-of-two-chinas-their-investors-returns","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/the-tale-of-two-chinas-their-investors-returns\/","title":{"rendered":"The Tale of Two China\u2019s & Their Investors Returns!"},"content":{"rendered":"\n

Key News<\/h2>\n\n\n\n

Asian equities were overall lower on a stronger US dollar overnight, as Mainland China outperformed while Hong Kong and South Korea underperformed.<\/p>\n\n\n\n

The last few days demonstrate why we say there are two Chinese equity markets and why you should hold both: onshore China\/Shanghai- Shenzhen \u2013 STAR Board stocks\/95% owned by domestic investors versus the offshore China\/Hong Kong stocks \u2013 US ADRs\/majority owned by foreign investors. While foreign investors and Western media pan Friday\u2019s NPC release for the lack of domestic consumption stimulus, Mainland investors cheered the news with a foreign bank\u2019s Shanghai fixed income trading desk calling the announcement \u201c significant fiscal policy adjustments.\u201d The Mainland market rose today following Friday\u2019s after the close press conference. This doesn\u2019t appear to be the National Team, as their favorite ETFs all had below-average volumes. Domestic investors recognize that local governments tend to employ more people in less affluent provinces; thus, cleaning up their balance sheets affects the real economy.<\/p>\n\n\n\n

Mainland investors focused on statements in the press conference\u2019s Q&A, including \u201cWe are actively planning for the next fiscal policy and increasing countercyclical adjustments\u201d and \u201cWe will increase efforts to support large-scale equipment updates and expand the variety and scale of consumer goods for trade-in.\u201d We don\u2019t have the dates for the December China Economic Work Conference, which is an opportunity to articulate fiscal policy support. <\/p>\n\n\n\n

Signs that the economy is slowly improving, such as the recent PMIs, but today\u2019s aggregating financing and new loans have both increased month over month. Yes, they missed economist expectations but improved as the Citi China Economic Surprise index continues to rise.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

After such a powerful move post-stimulus, we are coming off overbought levels with offshore China \/growth stocks only 5% overbought versus their October 4th high of 194% and onshore China 8% overbought versus their October 4th high of 257% (the level is based on the 10-year weekly distribution history). <\/p>\n\n\n\n

Hong Kong didn\u2019t fall nearly as badly, with Alibaba +0.11% versus its ADR on Friday -5.94% on Singles Day today. With Singles Day running until midnight tonight, we don\u2019t have a final number. However, the company has reported that within the following categories, each company sold more than RMB 100 Gross Merchandise Value (GMV):<\/p>\n\n\n\n