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Asian Markets Rally on Easing US-China Tensions
Asian equities experienced a robust trading session ahead of TSMC’s financial results release, buoyed by easing US-China tensions following Treasury Secretary Bessent’s truce comments. The US dollar resumed its decline, creating favorable conditions for regional markets. This geopolitical thaw comes as the US demonstrates increased diplomatic engagement, having recently facilitated the Israel-Gaza peace agreement. Market analysts suggest the reduced pressure on China may be strategically timed to support broader international conflict resolution efforts.
Hong Kong and Mainland markets saw relatively quiet trading with light volumes as investors await further clarity on the evolving US-China relationship. According to market monitoring reports, Hong Kong growth, technology, and internet stocks have worked through their overbought conditions, with declining Relative Strength Index (RSI) readings and 50-day moving averages providing technical support.
Alibaba’s Singles Day Shows Early Strength
Alibaba recorded a modest decline of 0.25% as its highly anticipated Singles Day shopping festival pre-sales commenced. The initial sales figures demonstrated remarkable consumer engagement, with 35 brands achieving RMB 100 million in sales within the first hour alone. The platform processed 1,802 orders and saw active user numbers surpass last year’s comparable period. Singles Day shopping analytics indicate cosmetics and sports apparel categories are particularly strong, with Estee Lauder, Nike, and Anta reportedly experiencing robust demand from the outset.
The contrasting performance within the cosmetics sector highlighted market selectivity, with Giant Biogene (2367 HK) plunging 15.21% on concerns about its Singles Day product performance. However, the company’s controlling shareholder demonstrated confidence by purchasing 760,000 shares during the downturn.
Nio Faces Headwinds from GIC Lawsuit
Nio shares tumbled 8.99% following revelations that Singapore’s sovereign wealth fund GIC had filed a lawsuit in New York City court during August, alleging the electric vehicle manufacturer inflated revenues. The lawsuit claims Nio improperly recognized revenues from sales to its battery swap affiliate before the batteries were sold to end customers. This development weighed heavily on the broader EV and battery sector, with Xiaomi declining 3.6%, CATL falling 1.2%, and Xpeng dropping 3.5% despite CEO He Xiaopeng’s announcement that flying car production would commence in 2026.
The negative sentiment spread across related sectors, though critical mineral supply chain developments continue to draw investor attention to long-term EV production fundamentals.
Clean Energy and AI Infrastructure Developments
At the 2025 Sustainable Global Leaders Conference in Shanghai, Xpeng’s CEO also revealed enhancements to last month’s humanoid robot launch through a new AI visual and language system. Concurrently, the National Development and Reform Commission (NDRC) announced a comprehensive three-year plan to expand China’s EV charging station network.
This policy direction fueled outperformance in clean technology companies, with Sungrow surging 7.66% and Longi gaining 2.61%. The Hong Kong and Mainland electricity and coal sub-sectors also demonstrated strength. China’s significant advantage in power generation infrastructure – comprising 12% solar, 13% wind, 5% nuclear, and 16% hydroelectic of total electrical output – positions the country favorably for AI infrastructure expansion, though this strategic advantage appears underappreciated by investors.
In parallel energy developments, renewable energy project advancements globally are creating new infrastructure opportunities, while enterprise security updates highlight the increasing integration between physical infrastructure and digital systems.
Nuclear Innovation and Market Flows
Mainland media sources reported that “the world’s first onshore commercial modular small reactor” has successfully passed the International Atomic Energy Agency’s safety review, representing a significant milestone in nuclear energy technology. Meanwhile, Mainland investors demonstrated strong appetite for Hong Kong stocks, purchasing $2.035 billion worth of shares through Southbound Stock Connect, accounting for 25% of Hong Kong trading volumes.
Zijin Gold International gained 3.8% after being added to the Southbound Stock Connect program. Interestingly, Mainland precious metals and mining stocks experienced another down day despite the sector having doubled since January 2024, potentially signaling a cooling period for the red-hot global gold and mining space.
Sector Performance and Market Sentiment
Mainland China markets displayed a pronounced value bias, with banks, insurance, and utilities outperforming while growth sectors such as semiconductors and STAR Board constituents underperformed. The National Team’s favored ETFs recorded average to slightly above-average trading volumes, prompting speculation about potential strategic buying during market dips.
The China Federation of Logistics & Purchasing reported that the E-commerce Logistics Index increased month-over-month to reach a new high, indicating robust underlying consumption trends. Meanwhile, advanced AI model developments are creating new opportunities across industrial and commercial applications, though market participants continue to monitor geopolitical developments and currency fluctuations closely.
Market participants remain focused on several key themes: managing exuberance in certain sectors, navigating tariff uncertainty, and adjusting portfolios in response to US dollar de-risking trends. The evolving landscape suggests continued selectivity will be essential for navigating China’s complex market environment in the coming sessions.
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