China Market Update: E-Commerce Rebounds On Price War Pledge, Week In Review

Week in Review

Asian equities were mixed but mostly lower for the week as Pakistan and Thailand outperformed, while Hong Kong and Singapore underperformed.
Health care stocks had a solid week, continuing their gains on Hengrui Pharmaceuticals’ new tie-up with multinational GSK, while biotechnology contract research organization WuXi Apptec announced that its net profit for the first half of 2025 doubled.
Battery giant CATL reported a net income increase of +34% for the second quarter of 2025, despite overcapacity and falling battery prices.
Trade talks progressed, as the US announced a deal with the EU and extended the deadline for negotiations with China by three months.

Key News

Asian equities were mostly lower overnight on increased trade rhetoric and the hiking of tariffs on Canada and a litany of other countries, though Malaysia and Pakistan outperformed while Korea and Thailand underperformed.

China was left out of yesterday’s tariff blitz, which focused on smaller trading partners. Markets in China were relatively resilient as a result. However, they were somewhat weighed by another indication from the S&P purchasing managers’ index (PMI), that manufacturing activity contracted last month from the month prior.

The National Reform & Development Commission (NDRC) held a press conference last night to provide an update on the status of efforts to curb excess capacity and “involution” or Phyrric victories, i.e. self-defeating competition, and a general economic policy update. Spokespeople for the commission said that they will be enabling more jobs to be created by private enterprises in the domestic economy, as well as calling out specific examples of extreme competition, especially in E-Commerce.

Internet names were mostly higher after E-Commerce majors JD, Meituan, and Alibaba all made renewed promises to end “disorderly competition” in response to the NDRC press conference. Analysts are pointing to a return to more sustainable growth for these platforms, once again. JD, which was higher overnight nonetheless, has the most to lose if it cannot continue its high subsidies for instant commerce. The company’s margins were already relatively low going into this contest, and growth had been slowing. Alibaba and Meituan, on the other hand, will likely benefit from “anti-involution”.

Solar stocks were top-performers as a fund worth RMB 50 billion will be set up to buy out and shut down polysilicon excess capacity.

Electric vehicle maker Xpeng outperformed after it reported vehicle deliveries for July that increased +229% year-over-year (YoY) to over 36,000 units.

Bank research recently highlighted NetEase and the gaming industry showing positive growth momentum and resilience. We have already seen NetEase benefit from recently resuming its licensing deal with Microsoft/Blizzard, though on better terms than previously.

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