Robots And Real Estate Rebound Pre-Alibaba Earnings Results

Asian Markets Show Mixed Performance AmidTrump Tariff Threats and Tech Optimism

Asian equities and currencies experienced a mixed performance overnight, with South Korea and Mainland China outperforming while Indonesia underperformed. The markets were weighed down by President Donald Trump’s tariff threats, which continue to cast a shadow over investor sentiment. However, the strong outperformance of certain sectors, particularly in Hong Kong and Mainland China, suggests that other factors, such as the launch of xAI’s Grok3 model and anticipation of earnings reports from major tech companies like Alibaba, NetEase, and Bilibili, also played a role in shaping market dynamics. The timing of these developments is particularly noteworthy, as they coincide with a growing focus on artificial intelligence (AI) in the region.

China’s Tech and Manufacturing Sectors Shine, Driven by State Support and AI Momentum

Mainland China and Hong Kong saw significant gains in hard technology stocks, particularly in the semiconductor and high-end manufacturing sectors, with a focus on auto/electric vehicle, hardware, and electric equipment. This strong performance aligns with the emphasis on manufacturing firms during President Xi’s recent meeting with private sector entrepreneurs, where the speaker list was exclusively composed of representatives from the manufacturing industry. Additionally, Mainland investors purchasing Hong Kong stocks via the Southbound Stock Connect injected $1.327 billion into the market, with a focus on internet stocks and select semiconductor companies like Hua Hong Semis. However, not all sectors performed equally, with SMIC experiencing net selling and Meituan being a notable exception with a large net sell.

The surge in interest around humanoid robots in Mainland China also highlights the growing excitement around AI and robotics. Many companies in the space saw significant gains, fueled by speculation that mass production of humanoid robots could begin as early as 2025. This trend was further underscored by the popularity of dancing robots during the Chinese New Year TV gala, which now seems like a foreshadowing of the industry’s growth.

Economic Policies Aim to Boost Domestic Consumption

While much of the attention has been on the tech and manufacturing sectors, a quieter but significant announcement came from the State Administration for Market Regulation. The agency unveiled a three-year plan to promote consumption across key sectors, including automobiles, home appliances, electronics, textiles, and food. This policy initiative is likely part of the broader strategy to support domestic consumption ahead of the Dual Sessions in March. The plan reflects China’s ongoing efforts to stabilize and grow its economy by leveraging domestic demand, a strategy that has become increasingly important in the face of global economic uncertainties.

Real Estate Sector Shows Mixed Trends, but Elite Cities Lead Recovery

The real estate sector in China also saw mixed performance, with only a handful of Mainland and Hong Kong-listed real estate stocks remaining in the MSCI indices. While new home prices in January fell slightly more than in December (-0.07% vs. -0.08%), used home prices saw a similar trend (-0.34% vs. -0.31%). However, a closer look reveals that 1st Tier cities like Beijing, Shanghai, Shenzhen, and Guangzhou experienced their second consecutive month of price increases, while 2nd Tier cities like Wuhan, Xi’an, and Chengdu also saw gains after being flat in December. This recovery underscores the importance of location in real estate, with wealthier cities leading the charge.

Additionally, the State Council’s “Action Plan for Stabilizing Foreign Investment in 2025” aims to remove barriers in telecommunications, medical care, and education, further signaling China’s commitment to attracting foreign investment and diversifying its economy. The recent surge in humanoid robot stocks, coupled with the upcoming earnings reports from Alibaba, NetEase, and Bilibili, suggests that the tech sector will remain a key driver of growth in the near term.

Upcoming Financial Results and Events to Watch

Investors are eagerly anticipating the earnings reports from major Chinese tech companies, with Alibaba, NetEase, and Bilibili set to release their results on February 21, 2025. These reports are expected to provide further insight into the health of the tech sector and its growth prospects, particularly in light of the AI-driven trends that have been shaping the market. Additionally, VIPS, TCOM, and Tencent will follow with their own financial updates in late February and March.

Separately, a live webinar titled “A DeepSeek Driven China Internet Rerating?” is scheduled for Thursday, February 20th at 11 am EST. This event promises to delve into the potential re-rating of China’s internet sector, a topic of growing interest for investors and analysts alike.

Market Performance and Economic Indicators: A Closer Look

The Hang Seng and Hang