Here's what happened in China's markets today (12/7)

1. China’s foreign exchange and gold reserves climbed higher in November.

The People’s Bank of China (PBoC) reported the country’s foreign exchange reserves increased $70.6 billion in November to reach $3.17 trillion. The figure was slightly higher than the $3.14 trillion expected by the market, which points to resilience in the nation’s ability to generate a positive balance of payments despite the economic headwinds and slowing exports. However, slowing imports are also warning of weak domestic consumption, which needs to be addressed with stimulus. Meanwhile, China continues to accumulate gold, with central bank purchases up another 380k ounces in November. The country’s official gold reserves amounted to 71.58 million ounces last month, another record high. $SPDR Gold Shares(GLD)$ $Chow Tai Fook Jewellery Group Limited(CJEWY)$ $Luk Fook Holdings International Ltd(LKFLF)$

2. China’s November trade figures signal mixed economic performance as trade surplus widens.

China’s exports for November grew 0.5% year-on-year, besting expectations of flat growth. It was a significant improvement from the 6.4% decline suffered in October. However, imports fell 0.6% annually, much worse than the 3.6% growth the market was expecting. As a result of the stronger exports and weaker imports, China’s trade surplus widened to $68.4 billion in November versus the $54.9 billion expected by the market. It was also much higher than the $56.5 billion surplus recorded in October. #trade #China

3. Automobile exports from China are surging, while smartphone exports are recovering.

In the first 11 months of 2023, exports of automobiles from China jumped 79.6% to RMB 653 billion ($90 billion) compared to a year ago. The country is set to overtake Japan as the world’s largest exporter of automobiles this year as sales could reach 5.4 million units. The leading brands out of China include SAIC, Chery, Tesla China, Changan, and Great Wall Motors. Meanwhile, exports of smartphones, once one of the fastest-growing export products, grew by just 3.3% in the same period to RMB 885 billion ($122 billion). China’s smartphone exports have been on a steady decline since reaching a peak in 2015, as lower end smartphone manufacturing and assembly shifted to lower-cost regions like India. $NIO Inc.(NIO)$ $NIO Inc.(NIO.SI)$ $NIO-SW(09866)$ $XPeng Inc.(XPEV)$ $XPENG-W(09868)$ $Li Auto(LI)$ $LI AUTO-W(02015)$ $BYD Co., Ltd.(BYDDF)$ $BYD COMPANY(01211)$ $Tesla Motors(TSLA)$ $GEELY AUTO(00175)$ $Geely Automobile Holdings Ltd.(GELYY)$

4. China’s leading EV battery manufacturer plans to spend $1 billion in Hong Kong.

Contemporary Amperex Technology (CATL), a leading battery supplier to Tesla, Volkswagen, and many domestic EV brands, is spending $1 billion to build its international headquarters in Hong Kong, including a research and development center, employing up to 500 people. The company is looking to improve its access to international firms after US lawmakers have been seeking to derail deals CATL has made with US firms like Ford and Duke Energy. CATL is leading the world in battery storage technology and recently developed a “skateboard” platform that integrates a battery back with a 600-mile range to a generic chassis that can be used by any EV manufacturer. It’s also believed to be 5-6 years ahead of Toyota in building a solid state battery with a range of 745 miles. $Toyota(TM)$ $Volkswagen AG(VWAGY)$

5. Temu is eating away at US discount stores’ market share as consumers look for deals.

Pinduoduo’s Temu shopping app has already taken the US by storm and is now firmly gaining market share from traditional discount stores like Dollar General and Dollar Tree. In November, Temu accounted for 17% of discount store category sales, putting it at third place behind the two established discount store retailers. While Temu is a pure online retailer, the fact that they are offering things like apparel, shoes, dresses, and home decors for $10 or less, pits them squarely against ultra-low priced retailers that operate physical stores and carry significant overhead. The company’s success in the US has already caught the attention of certain lawmakers who raise concerns about forced labor by the company’s suppliers. But it is just a marketplace much like Amazon, eBay, or Alibaba. $Pinduoduo Inc.(PDD)$ $Alibaba(BABA)$ $Alibaba(09988)$ $Amazon.com(AMZN)$

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