Key News North Asia equity markets had a strong day while India was off and South Asia was mixed. China’s currency, the renminbi, jumped +0.66% versus the US dollar overnight from 6.42 to 6.38, which is two times the US dollar’s decline versus other major currencies. The currency rate is confusing as the renminbi is quoted US dollars divided by renminbi, making a renminbi gain a decline. It is difficult to tell whether the move is an indication of risk-on sentiment, skepticism of Fed bond tapering, or concerns of the US government’s finances. Hong Kong was powered higher by internet stocks as the Hang Seng Tech Index jumped +3.07% versus the Hang Seng Index’s gain of +1.49%. The Hang Seng Index closed above its 50-day moving average for the second day in a row for the first time since June 30th. However, we need to temper our enthusiasm a touch as volumes were light today. Alibaba HK gained +1.17% after announcing a new high-end semiconductor chip for its cloud business. The move proves that Alibaba is more than an e-commerce company. It is a real technology provider, aligning the company with the government’s desire to see China’s tech industry become more self-reliant. President Xi gave a speech yesterday on China’s digital economy, stressing AI, big data, cloud computing, and blockchain as critical industries for China’s economy and technological growth. Jack Ma headed to Spain on vacation, which seems to be gaining some attention. We also had news yesterday that Baidu’s search function will be allowed to access Tencent’s WeChat for the first time. Kuaishou Technology jumped +9.49% after announcing a partnership with the NBA. Xiaomi jumped +5.39% on news its electric vehicle (EV) unit will start producing cars in 2024. Also helping Hong Kong was the start of Wealth Connect, which will allow Chinese investors in the Greater Bay Area to invest in Hong Kong financial products. We also saw Apple’s supply chain jump after its MacBook announcement yesterday. An Evergrande affiliate made an onshore bond coupon payment. Tencent saw its third day of small net selling by Mainland investors through Southbound Stock Connect, though Meituan was a net buy. Tencent has not bought back its stock since the Golden Week holiday. Clean technology had a strong day in Hong Kong led by the EV ecosystem while the same names were off in the Mainland and were led by EV battery maker CATL (300750 CH) -0.74%. Mainland stocks posted gains today in advance of tomorrow’s loan prime rate for October though it has been holding steady since April 2020. Liquor stocks Kweichow Moutai and Wuliangye Yibin rebounded from yesterday’s drop on a new consumption tax rumors, gaining +0.68% and +1.7%, respectively. Pork producer Muyuan Foods (002714 CH) posted a loss in Q3, though announced it will be raising RMB 6 billion, which led the stock to jump +6.41%. Foreign investors bought $611 million worth of Mainland stocks today via Northbound Stock Connect. Word of next month’s China senior political meeting, which begins the process of determining China’s political leadership, is starting to be picked up by the media. An emphasis is being placed on a third term by President Xi though there may be turnover due to China’s implicit mandatory retirement age. We have argued that this politically sensitive process could explain the internet regulation implemented this year. Ensuring online news coverage is aligned with what is taking place could explain the step-up in internet regulation. We can’t prove this theory, but it does make sense. It could also mean that we are at the end of internet regulation as it has been very quiet of late. Fingers crossed! H-Shares Update The Hang Seng opened higher and jumped higher mid-morning before closing +1.49% as volume declined -4.98% which is 70% of the 1-year average. The 210 Chinese companies listed in Hong Kong within the MSCI China All Shares gained +1.48% led by tech +3.81%, staples +3.06%, healthcare +2.34%, utilities +1.92%, industrials +1.71%, financials +1.66% and discretionary +1.61% while real estate and energy both lost -0.74%. Hong Kong’s most heavily traded by value were Tencent +0.4%, Meituan +1.85%, Alibaba HK +1.17%, Xiaomi +5.39%, Anta Sports +3.23%, Kuaishou Technology +9.49%, BYD +1.52%, Ping An +2.11%, HK Exchanges +2.59% and AIA +2.29%. Southbound Stock Connect volumes were light as Mainland investors sold $75mm of Hong Kong stocks as Southbound trading accounted for 10.8% of Hong Kong turnover. A-Shares Update Shanghai, Shenzhen, and STAR Board gained +0.7%, +0.86%, and +1.05% on volume off -2.8% from yesterday which is 99% of the 1-year average. The 542 Mainland stocks within the MSCI China All Shares gained +1.6% led by staples +2.58%, healthcare +2.24%, financials +1.68%, materials +1.5%, tech +1.31%, industrials +1.29% and discretionary +11.16% while real estate -0.23%. The Mainland’s most heavily traded by value were CATL -0.74%, Kweichow Moutai +0.68%, Muyuan Foods +6.41%, Wuliangye Yibin +1..7%, BYD -0.4%, China Northern Rare Earth -2.98%, Cosco Shipping +6.88%, Zijin Mining +2.08%, Jiangsu Akcome Science +9.96%, and Tianqi Lithium +0.63%. Northbound Stock Connect volumes were moderate as foreign investors bought $611mm of Mainland stocks as Northbound trading accounted for 5.3% of Mainland turnover. Last Night’s Exchange Rates, Prices, & Yields – CNY/USD 6.39 versus 6.43 yesterday – CNY/EUR 7.45 versus 7.46 Yesterday – Yield on 10-Year Government Bond 3.01% versus 3.04% Yesterday – Yield on 10-Year China Development Bank Bond 3.33% versus 3.36% Yesterday – Copper Price -0.45% overnight Most Related Links : [newsbinding](/) [Governmental News](/government/) [Finance News](/finance/)