China Daily Briefing

BYD reported US$1.2 billion in Q2 2026 profit despite the brutal domestic EV price war, with international sales making up an increasingly meaningful share of revenue. The result shows BYD's cost structure and vertical integration (from lithium cells to final assembly) creating enough margin buffer to survive a race-to-the-bottom in China while building brand equity abroad. The Stock Connect flow implication: if A-share BYD outperforms H-share BYD in the coming sessions, Southbound buying pressure is likely — international investors chasing the profit beat through the H-share route. Watch the A/H premium on BYD — it narrows when foreign institutional money is active.

ChangXin Memory Technologies (CXMT), China's domestic DRAM manufacturer, reported 870% year-on-year revenue growth — a figure that would be dismissed as noise if it weren't for the context: CXMT is scaling into a global memory market where Samsung, SK Hynix, and Micron dominate. That SCMP called it 'aggressive expansion' is a tell — CXMT is gaining share by pricing below market, the same playbook CATL used in batteries. The strategic implication for HBM and DRAM pricing is deflationary: CXMT's capacity additions could weigh on margins for the Korean memory majors, which may explain part of Korea's -1.07% session today.

Hong Kong Exchanges announced the HKEX Tech 100 index will include Pony AI and WeRide, both autonomous vehicle companies that recently completed Hong Kong listings. Index inclusion triggers mandatory rebalancing by passive funds benchmarked to the HKEX Tech 100, creating mechanical buying pressure. More strategically, this signals HKEX's intent to position Hong Kong as the listing venue of choice for Chinese tech companies priced out of or excluded from US markets — a deliberate response to ADR delisting risks. Southbound flows into these names from mainland investors are likely to follow once the inclusion is effective.