Market Highlight

WTI steadied just below $70 after tumbling to a five-month low overnight on signs that global supplies are eclipsing demand. Asia stocks were lower while S&P 500 futures fluctuated. Benchmark Treasuries dropped.

The Hang Seng Index opened 1.1% lower at 16,279.40 in Hong Kong. Meituan contributed the most to the index decline, decreasing 2.9%. Wuxi Biologics Cayman Inc. had the largest drop, falling 4.4%. In early trading, 70 of 82 shares fell, while 9 rose; 3 of 4 sectors were lower, led by commerce and industry stocks.

China's CSI 300 Index fell 0.7%, while the Shanghai Composite declined 0.5%. CSI 300 Materials Index stocks led the benchmark lower, with nine of 10 sectors declining. On the CSI 300, 147 of 291 stocks fell, while 144 rose. YongXing Special Materials Technology Co. led the declines, falling 3.3%, while Founder Securities Co. gained, rising 2.9%.


Option Summary

• AIA and BOC Hong Kong were among stocks from the Hang Seng Index that had low and high put-call ratios respectively
• Meituan call open interest was 1.9 standard deviations above the 20-day average
• China Construction Bank call volume was nearly twice the 20-day mean
• Industrial and Commercial Bank of China calls traded were ~5 times that of the average activity in the last 20 days
• Wuxi Biologics saw nearly four times the average number of puts traded over 20 days

Bloomberg Most Active Option Summary

Important News

• Shares of Asian energy producers like Woodside and Inpex decline after oil fell to its lowest since June on worries over excess global supplies.
   
• Chinese banks and tech companies including Alibaba and Tencent fall in Hong Kong after Moody’s changed their outlooks to negative from stable.
   
• Meitu falls as much as 6.9% in Hong Kong after Kingkey Enterprise sold 150m shares at a 10% discount to Wednesday’s close.
   
• Asian carriers such as Japan Airlines follow overseas peers higher on bullish projections from the industry body IATA, Delta Air’s comment on holiday travel, and a decline in oil prices. Industry profit is forecast to reach $23.3 billion this year, the IATA said Wednesday, more than double what the trade body expected in June.
   
• There is room for a cut to reserve requirement ratio for Chinese banks as monetary policy continues to prioritize stabilizing economic growth, according to a report in the China Securities Journal which cites analysts. The issuance of government debt may impact liquidity and December loan growth may be higher than previous years, meaning there is a possibility for a RRR cut, according to Zhang Wei, analyst at Founder Securities.
   
• Elon Musk’s SpaceX started talks about selling insider shares at a price that values the company at $175 billion or more, people familiar said, well above the $150 billion valuation this summer. The planned tender offer may range from $500 million to $750 million and value the shares at about $95 apiece.
   
• Alphabet on Wednesday introduced its most advanced artificial intelligence model, a technology capable of crunching different forms of information such as video, audio and text. Called Gemini, the Google owner's highly anticipated AI model is capable of more sophisticated reasoning and understanding information with a greater degree of nuance than Google's prior technology. It is also a version that runs directly on smartphones — and will be enabled immediately on its own Pixel 8 Pro.
  
  What is Gemini?
  
  Gemini is a large language model, trained on billions of images and sentences from the internet. It's the technology that powers chatbots, in Google's case, Bard. In a briefing with reporters, company executives said Gemini is able to understand math problems, break them down, and provide advice on how to solve them. It is also better at coding and reasoning tasks than existing AI programs. Gemini can also take instructions that come as videos, images or voice commands in addition to text inputs, something that few other AI models can do.
   
• Vladimir Putin arrived in Saudi Arabia and held talks with Crown Prince Mohammed Bin Salman as part of a rare foreign trip to strengthen partnerships in the Gulf. The two men discussed OPEC+ and the Israel-Hamas war.
   
• AbbVie will buy Cerevel Therapeutics in a deal valued at $8.7 billion, its second major acquisition in the past week. It’s paying $45 a share in cash. Cerevel’s stock surged 42% since the end of last week amid speculation a deal was in the works.
   
• Citi’s fixed-income and equities trading revenue may slump as much as 20% in the fourth quarter but “FX has held up pretty nicely,” CFO Mark Mason said. Shares rose after the firm said full-year revenue is on track with guidance, though it may be at the lower end of the $78 billion to $79 billion target.
   
• Apple is preparing several new iPad models for early next year, and is updating the iPad Air, iPad Pro and MacBook Air.
   
• McKinsey named its new class of partners of around 250 people, roughly a third smaller than usual, the WSJ reported.
   
• JD has openly accused Noah Holdings (NYSE:NOAH) and its subsidiary Gopher Asset Management of engaging in "malicious lawsuits." The accusation comes as JD Century Trade Holdings, a subsidiary of JD.com, is embroiled in a legal battle overseen by the Shanghai Financial Court. The dispute centers around allegations tied to a supply chain financing scam by Camsing International, which falsely implicated JD in transactions worth 3.4 billion yuan.
   
• Asia hedge funds are set to post improved performances in 2023 by dodging China and placing bets on Japan’s rebound and the AI-fueled tech rally.
   
• The Apple senior executive who invented the iPhone screen and TouchID, is retiring, people familiar said. Steve Hotelling was most recently a VP.
   
• SpaceX’s Starlink satellite service completed nine months of US military tests in the Arctic, potentially clearing the way for Elon Musk to deepen his ties with the Pentagon.
   
• GameStop sales fell 9% from the same period a year ago, short of estimates. C3.ai’s revenue missed and the firm’s outlook for an operating loss. Chewy cut its net sales guidance for the full year.
   
• AMD CEO Lisa Su introduced a new line of AI accelerator chips and predicted the market may explode to more than $400 billion in the next four years. The company’s MI300 series takes aim at an industry dominated by Nvidia.
   
• U.S. President Joe Biden said on Wednesday his administration had approved $4.8 billion in student debt cancellation for 80,300 people.
   
• Chart of the Day: Demand for the Fed’s Standing Repo Facility rose to the highest level since 2020 this week, potentially signaling that one or more banks are making preparations for future liquidity strains. Counterparties tapped the facility for $203 million on Dec. 5, the most since July 2020, before demand fell back to $6 million Wednesday. “The chatter is a specific bank just got set up for the SRF and tested it,” said Steven Zeng at Deutsche Bank.
  
  
   

FX and Commodity Highlight for the Day

The U.S. dollar was at a two-week high on Wednesday, while the euro was weak across the board as markets ramped up bets that the European Central Bank (ECB) will cut interest rates as early as March.

Oil prices rose in Asian trade on Thursday after tumbling to over five-month lows, as a meeting between Russian and Saudi leaders saw the two discussing more “cooperation” on oil prices.

Top Traded Underlying at Goldhorse
From weeks of Nov 20 – Dec 1

US/Global Stocks/Other Asset Classes/Indexes

1. Tesla (TSLA US)
2. Apple (AAPL US)
3. Nvidia (NVDA US)
4. Microsoft (MSFT US)
5. Futu (FUTU US)
6. Google (GOOGL US)
7. AMD (AMD US)
8. Amazon (AMZN US)
9. TSM (TSM US) → newly added this week
10. Alibaba (BABA US)

HK Stocks

1. HSBC (5 HK)
2. Tencent (700 HK)
3. Alibaba (9988 HK)
4. BYD (1211 HK) → newly added this week
5. Xiaomi (1810 HK)
6. The Tracker Fund of Hong Kong (2800 HK)
7. Baidu (9888 HK) → newly added this week
8. CK Hutchison Holdings (1 HK)
9. CLP Holdings Limited (2 HK) → newly added this week
10. Sunny Optical Technology (2382 HK)