The robot carnage on Wall Street predictably spilled over into Asian markets on Wednesday. In addition to the multiple idiosyncratic stories (e.g. Facebook, Twitter, Nvidia, etc.) reports that the Trump administration is pondering a crackdown on Chinese investment in technology are not helping – at all.
Notably, the VXN/VIX ratio is now back to 1.3, rebounding from the dip lower in early February which was of course almost entirely attributable to the blow up of levered and inverse VIX products (i.e. the denominator spiking). So it looks like this is back on its way to the “new” average that we saw it 2017, when it reset higher following Goldman’s June 9 FAAMG call:
Hong Kong shares tumbled as the Hang Seng and H-shares were off 2.5% amid a rout in tech shares:
Wednesday was the worst day for both since February 9 (lot of “since February 8” and “since February 9” moments lately).
The usual suspects were under pressure as Tencent (Nomura cut their price target to HK$520 from HK$536), Sunny Optical and AAC all plunged:
Mainland shares weren’t hit nearly as hard and indeed the ChiNext managed to escape with just a 0.5% loss (not even worth showing the chart on that). The SHCOMP was lower by more than 1% and the CSI was under pressure, but again, the worst losses were in Hong Kong. Notably, BYD collapsed after tipping a horrendous decline in profits. Here are the Hong Kong listed shares:
On the bright side, Trump is super excited about Kim’s meeting with Xi and what the supposedly foretells for his own summit with the Hermit King.
But on Wednesday, “positive” geopolitical news wasn’t enough to mitigate the drag from the Nasdaq plunge.