Didi IPO Wednesday, Foreign Investors Buy China in Size, Weekly Review


Weekly review

  • The results of the 618 shopping festival were released on Monday. JD.com and Alibaba together sold 136.5 billion goods during the promotional period, which lasted from June 1.st to June 18e.
  • Full Truck Alliance (YMM US) went public in the United States on Tuesday. Full Truck’s business can be boiled down to Uber in China for truckers, as it connects shippers with truckers. Shares of the company rose + 13% on Tuesday, but recovered the initial gains.
  • Online delivery company Missfresh updated its IPO prospectus on Wednesday, adding more details. The company plans to raise up to $ 366 million, valuing the company up to $ 3.9 billion, when it goes public on Friday.
  • It was announced Thursday that the Chinese government will embark on a campaign to install solar panels on rooftops. Although details are limited. Solar stocks listed in mainland China gained on the news.

New Keys

Didi will be listed on the New York Stock Exchange (NYSE) next Wednesday after the company’s shares are listed on Tuesday. The company will sell 288 million shares (331.2 million if the “greenshoe” is filled – additional shares available if the demand exists, named after Stride Rite who first used this option when it went out. called Green Shoe Manufacturing Company) at a price of between $ 13 and $ 14, which puts the size of the offer, that is, the amount the company will raise, between $ 3.7 billion and $ 4 billion. dollars ($ 4.3 to $ 4.6 if the greenshoe is awarded). That would value the company at around $ 73 billion, according to Bloomberg, which is lower than many expected. There was a lot of fanfare around this deal.

Asian stocks ended the week on a positive note as investors applauded the US infrastructure deal. The materials sector was the best performer, driven by metals and mining stocks in China and Hong Kong. The results of stress tests conducted on US banks also helped financials.

Hong Kong and mainland China were the best performing markets regionally, with investors also applauding the PBOC’s cash injection yesterday, helping to allay tightening fears. It should be noted that the PBOC has been telling investors not to tighten for months.

Hong Kong saw growth stocks outperform, with Internet stocks being the market leaders.

Foreign investors were extremely active overnight. Northbound Stock Connect, the Hong Kong-based trading platform for foreign investors to access shares listed in Shanghai and Shenzhen, recorded $ 2.19 billion in net purchases, bringing the total entries weekly to $ 3.25 billion. That is to say nearly 10% of cumulative admissions since the start of the year and 10% of 2020 admissions in one week.

The CNY appreciated against the US dollar, which helped foreign investors in mainland stocks. Several brokers have noted the technical configuration of Shanghai, Shenzhen and Hang Seng, which could reach their all-time highs.

S&P Global Ratings reaffirmed China’s sovereign credit rating at A + with a stable outlook, driven by S&P GDP outlook of 8.3% in 2021

Kuaisou Tech (1024 HK) soared + 7.99% after reaching 1 billion monthly active users and winning sponsorship for the upcoming Summer and Winter Olympics.

MSCI announced its review of global market accessibility last night. Neither China A nor South Korea have announced a consultation. For China A and South Korea, as well as Brazil, India and Turkey, the absence of MSCI futures was cited. Know China An inclusion is stopped due to lack of MSCI futures is frustrating. That being said, there are still other issues such as the 30% foreign ownership limit and China’s settlement at trade date (as opposed to trade date plus 2 here). We may have to mourn for Argentina as it will be downgraded outside of the MSCI Emerging Markets Index.

H-Share update

The Hang Seng Index and Hang Seng TECH Index rose + 1.4% and + 2.44%, respectively, as volume increased + 17% from yesterday, while remaining just below 95% of the one-year average. The 209 Chinese companies listed in Hong Kong and in the MSCI China All Shares index gained + 1.65%, driven by materials + 3.29%, communication + 2.49%, discretionary 2.49 %, commodities + 1.6%, energy + 1.47%, financials + 1.24%, and technology + 099%. Meanwhile, real estate -0.18%. The most traded stocks in Hong Kong by value were Tencent, which gained + 2.66%, Meituan, which gained + 4.76%, Alibaba HK, which gained + 2.57%, Hong Kong Exchanges, which gained + 3.05%, Kuaishou Tech, which gained + 7.99%, Xiaomi which gained + 1.28%, Geely Auto which fell by -0.19%, China Mobile which gained + 2.48% , 3SBio which fell -16.61% and JD.com which gained + 3.07%. Southbound Stock Connect volumes were moderate / high, with mainland investors buying $ 460 million in Hong Kong shares, with Southbound Connect trading accounting for 13.4% of Hong Kong revenue.

A-Share Update

Shanghai, Shenzhen and the STAR Board gained + 1.15%, + 1.11% and + 2% on a volume that was + 5% higher than yesterday, which is 111% of the average in 1 year. The mainland 532 stocks of the MSCI China All Shares index gained + 1.87%, driven by materials + 3.24%, healthcare + 2.56%, commodities + 2, 31%, financials + 2.11%, energy + 2.11%, industry + 1.82% and technology + 1.12%. Meanwhile, utilities -0.19%. The mainland’s most traded stocks by value were broker East Money, which gained + 7.21%, China Three Gorges, which fell -5.87%, Jiangsu Hoperun Software, which fell -5 , 53%, COSCO Shipping, which gained + 8.47%, Longi Green Energy which gained + 2.39%, Luxshare Precision which gained + 2.55%, Kweichow Moutai which gained + 2.11%, BYD which gained + 0.04%, Wuliangye Yibin who gained + 2.47% and Luzhou Laojiao who gained + 1.7%.

Last night’s exchange rates, prices and yields

  • CNY / USD 6.45 vs. 6.47 yesterday
  • CNY / EUR 7.71 vs. 7.72 yesterday
  • 1-day government bond yield 1.50% vs. 1.53% yesterday
  • 10-year government bond yield 3.08% vs. 3.08% yesterday
  • 10-year Development Bank of China bond yield 3.50% vs. 3.50% yesterday
  • Copper price -0.65% overnight

About KraneShares

Krane Funds Advisors, LLC is the investment manager of the KraneShares ETFs. Our range of China-focused ETFs provide investors with solutions to understand the importance of China as an essential part of a well-designed investment portfolio. We strive to offer innovative, first to market strategies, which have been developed on the basis of our strong partnerships and our in-depth knowledge of investing. We help investors stay on top of global market trends and aim to provide meaningful diversification. Krane Funds Advisors, LLC is majority owned by China International Capital Corporation (CICC).