China’s Market Shuffle & Yum’s Finger-Licking Quarter

According to Forbes, Yum China posted Q3 revenue of $3.2 billion, marking a 4% year-over-year increase while expanding to 17,514 stores—that’s 10% more locations than last year and nearly double since 2019. Asian markets mostly declined as US dollar strength and fears of no further interest rate cuts in 2025 weighed on growth stocks, creating a “revenge of the nerds” moment where value stocks outperformed. Tencent gained 0.12% and Baidu jumped 2.87% ahead of anticipated AI announcements, while Alibaba fell 2.57% after rebranding its Ele.me delivery service to Taobao Flash Purchase. Mainland investors bought $1.26 billion worth of Hong Kong stocks via Southbound Connect, and Tesla’s October China sales dropped 9.9% year-over-year to 61,497 vehicles.

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The Great Market Divide

Here’s what’s really interesting about today’s action—it wasn’t a broad-based selloff. We saw a clear split between value and growth stocks that tells you everything about current investor sentiment. Banks, telecom, and energy held steady while semiconductors, clean tech, and hardware got hammered. Foxconn down 1.87%, Luxshare down 3.87%, Sungrow down over 6%. Ouch.

And this “revenge of the nerds” pattern? It’s basically markets working off overbought conditions after that strong run since late September. The RSI sitting above 70 for that long was bound to cause some indigestion. But honestly, lower expectations heading into Q3 earnings might not be the worst thing. Sometimes setting the bar low is the smartest play.

That Suspicious AI Power Story

So the Financial Times drops this piece about Chinese provinces offering cheap electricity to data centers to compensate for less efficient domestic AI chips. The narrative is that this offsets the government’s supposed ban on Nvidia’s H20 chips. But wait—didn’t China recently say they hadn’t actually banned those chips? And that buyers were choosing domestic alternatives because they’re cheaper?

Look, maybe there’s some truth to the power subsidy story. But markets clearly didn’t buy it—tech hardware got crushed today. It feels like another case of Western media trying to fit China’s tech strategy into a familiar “subsidy” framework when the reality is probably more nuanced.

Consumer Plays and Delivery Wars

Alibaba’s Ele.me rebrand to Taobao Flash Purchase is actually a pretty big deal. They’re pushing hard into instant commerce for both food and daily essentials. And competitors felt it immediately—JD.com down nearly 3%, Meituan down over 2%. This space is getting brutally competitive.

Meanwhile, Yum China continues its steady expansion despite all the economic chatter. 17,514 stores and counting—that’s nearly double since 2019. They’re executing while everyone else is worrying. And Starbucks selling 60% of its China business to Boyu Capital at a $4 billion valuation? That tells you something about how foreign brands are navigating this market.

The Trump-Xi trade developments are worth watching too. That White House fact sheet outlines some substantive progress, and Trump’s talking up potential energy deals from Alaska. But will anyone actually read beyond the headlines? Probably not.

Where This All Leads

So what does tomorrow look like? The IPO pipeline is creating this weird dynamic where investors are selling current growth stocks to fund future purchases. That pressure isn’t going away. And with US rates likely staying higher for longer, growth names could remain under pressure.

But here’s the thing—China’s market doesn’t move in one direction for long. Today’s value stock rally might be tomorrow’s growth stock surge. The AI announcements next week could completely change the narrative. And those Southbound flows? $1.26 billion in net buying suggests someone sees value in this dip.

Basically, we’re in a holding pattern until we get more clarity on earnings, AI developments, and whether those Trump-Xi trade talks actually translate into concrete deals. But one thing’s clear—Yum China keeps serving up growth regardless of the market weather.