Meituan Reports Strong Golden Week As Sunac Restructures Its Debt

Key News

Asian equities, except for South Korea and the Philippines, rebounded after yesterday’s downdraft.

Hong Kong managed a small gain, though volumes were exceedingly light at only 41% of the 1-year average as volume turnover marked a 52-week low and the lightest volume day in three years.

The Financial Times has an article stating Belgium’s State Security Service is monitoring Alibaba and its logistics company Cainiao for spying, which is absurd. The article’s source is the always reliable “people familiar with the matter.” Alibaba must be doing great in Europe, making its rivals angry.

Macau visitor numbers are high year-over-year, though off slightly versus 2019. Mainland media noted domestic travel and tickets sold are also high year-over-year, though also off slightly versus 2019. Chinese travelers have far more choices to travel internationally, as I experienced in Milan last week.

Meituan reported on Golden Week activity, saying that “the daily average consumption scale of service retail in China has increased 153% compared to the same period in 2019”. It also reported “the national consumption of dining and dining in restaurants increased by +254% compared to the same period in 2019.”

Sunac became the first real estate company to receive court approval to restructure its debt after negotiations with 2,000 offshore bondholders. The number of offshore investors highlights the complexity of doing a deal, though we should assume Evergrande, Country Garden, and others will do the same. According to Bloomberg, debt owners will recover 34% to 43% of their principal, which is better than zero considering that the company is bankrupt. The deal allows Sunac to finish its projects under construction and muddle through. I doubt we’ll see any headlines on China’s Lehman moment averted.

US Senators might meet with President Xi next week while visiting China. Regardless of whether the meeting happens or not, a hat tip to the Senators for being the first members of Congress to visit China in five years.

The Hang Seng and Hang Seng Tech indexes gained +0.10% and +0.14%, respectively, on volume that decreased -18% from yesterday, which is 41% of the 1-year average. 258 stocks advanced, while 214 declined. Main Board short turnover declined -26% from yesterday, 43% of the 1-year average, as 17% of turnover was short turnover (remember Hong Kong short turnover includes ETF short volume, which is driven by market makers’ ETF hedging). The value factor outperformed the growth factor as small caps outpaced large caps. The top sectors were communication services, which gained +0.65%, consumer staples, which gained +0.47%, and real estate, which gained +0.13%. Meanwhile, technology fell -0.62%, utilities fell -0.2%, and materials fell -0.14%. The top-performing subsectors were food, media, and autos. Meanwhile, technical hardware, business services, and consumer durables were among the worst-performing. Southbound Stock Connect was closed today.

Shanghai, Shenzhen, and STAR Board were closed today.

Last Night’s Performance

Last Night’s Exchange Rates, Prices, & Yields

Mainland bond and currency markets were closed overnight.

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