To The Moon

Since last week, the performance of Chinese concept stocks has been more impressive than that of $S&P 500(.SPX)$ . Some Chinese stock assets continued to rise. $FTSE China Bull 3X Shares(YINN)$ $CSI China Internet ETF(KWEB)$

Monthly Chart

Below are top 10 Chinese ADRs list by July performances(20 Trading days):

Inside which:

• $NIO Inc.(NIO)$ , $XPeng Inc.(XPEV)$ , $Futu Holdings Limited(FUTU)$ rise over 50%。

• $EHang Holdings Ltd(EH)$ , $Gaotu Techedu Inc.(GOTU)$ , $New Oriental Education & Technology(EDU)$ , $TAL Education Group(TAL)$ rose over 30%。

• $Pinduoduo Inc.(PDD)$ , $FinVolution Group(FINV)$ , $Bilibili Inc.(BILI)$ rise over 20%.

I see there are many Tigers got good return from $NIO Inc.(NIO)$ $XPeng Inc.(XPEV)$ $Pinduoduo Inc.(PDD)$ .[ Winning Trades ]

Personally, I’m holding $JD.com(JD)$ and currently have a 5% in return, I planned to sell $JD.com(JD)$ at $42 on Monday, but the trade failed. Then i may continue to out the game on Tuesday in short term as its price is under pressure of MA 4. But I will continue buy $JD.com(JD)$ back.

Weekly chat

Some data of $JD.com(JD)$ ‘s fundamental

• JD.com $JD.com(JD)$ is currently negotiating acquisition matters with $Yonghui Superstores Co.,Ltd.(601933)$ . The two parties have conducted at least one round of preliminary communication, but have not yet reached an agreement. In response to this, $JD.com(JD)$ has no such intention at present.

• On May 11, $JD.com(JD)$ announced that its revenue in the first quarter was 243 billion yuan(YoY +1.4%). The operating profit was 6.4 billion yuan(YoY+166%) , and the net profit attributable to the company's ordinary shareholders was 6.3 billion yuan, compared with a net loss of 3 billion yuan in the same period last year.

• However, it is worth noting that $JD.com(JD)$ cash flow from operating activities was negative 21.607 billion yuan, compared with negative 3.485 billion yuan in the same period last year, and the cash outflow increased significantly.

• In 2023's 618 (which coincides with JD.com's 20th anniversary) promotional activities, the growth rate of $JD.com(JD)$ 's 618 exceeded expectations, setting a new record. The trade-in turnover of 3C digital, home appliances and household products increased by more than 150% year-on-year. The number of products participating in the 10 billion subsidy "has reached more than 10 times that of March", and the "one-click price guarantee" has been clicked more than 660 million times.

Goldman Sachs released a research report stating that the performance of JD.com’s 618 Shopping Festival was benefited from the platform’s emphasis on price competitiveness, the increased participation of small and medium-sized merchants, and the increase in content participation. The bank gave $JD.com(JD)$ Group a buy rating, believing that it has a leading retailer scale, a unique online direct sales and market model supplemented by internal warehousing and supply chain capabilities.

As for the reasons for the recent rise of Chinese ADRs, I would like to highlight two aspects:

• Firstly, the Chinese government is carrying positive policies to support private companies, the expectations on Chinese economics are getting stronger and stronger, and Foreign fund capital also become more bullish on Chinese Equities assets.

• On the other side, accompanied by FED’s slowing down rate hiking forecasts, the $USD Index(USDindex.FOREX)$ gradually bid farewell to the strong trend, and the interference factors affecting the trend of Chinese assets gradually faded.

The "real money" from overseas is increasingly flowing into Chinese assets: A-shares, HK market shares, and Chinese ADRs. Below are some data and comments from $Morgan Stanley(MS)$ & $Goldman Sachs(GS)$

Morgan Stanley: Market bullish on prospect of policy support after China's Politburo signals second half of 2023

Morgan Stanley Fund's active equity investment team noted that the Federal Reserve is expected to end the rate hike cycle, liquidity is expected to become looser, policy is more active and friendly, and A-shares have a basis for valuation expansion. In the fourth quarter, global monetary policy is expected to enter the resonance phase, and northbound funds are also expected to see net inflows.

According to an analysis by Morgan Stanley, the sharp rise in Chinese concept stocks last week was mainly due to strong short covering, and traders also quickly added new positions on Tuesday and Wednesday, mainly due to political support after the Politburo signal that the second half of the year was on the horizon.

Goldman Sachs said that the window of opportunity has opened for "investment in the Chinese market."

Goldman Sachs indicated in a July 26 report that the Politburo meeting set the tone of the Chinese government's economic policy in the second half of the year, that the political trough has been reached, and that the window of opportunity for a near-term recovery in the Chinese stock market is now open. The policy at the Politburo meeting can be seen as a positive surprise compared to the expectations of the market downturn.

Goldman Sachs' latest research report also said that "the window of opportunity to go long in China is open" . Goldman Sachs' hedge fund clients made massive net purchases of Chinese equities on Tuesday, the fastest growth rate in nine months, focusing on mainland-listed A-shares and Hong Kong-listed companies with Chinese capital.

Of the 11 sectors Goldman Sachs tracks for Chinese equities, its hedge fund clients bought a net 9 sectors other than health care and utilities, with consumer staples, consumer staples, financials, basic materials, and industrial dominating.