May 20 HK/CHINA WRAP Markets stuggling to find a clear direction

20 May

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HSI -143pts (-0.5%) 28,414 HSCEI -11pts (-0.1%) 10,642 T/O HK$168.79bn (+29.3% DoD)

Opened higher but drifting lower and hit flat mid morning and then trended higher, seemingly ignoring the threat of Fed tapering and the volatility of crypto. News of an EU travel standard +VE for tourism stocks.
German PPI slightly higher than F/cast and Eurozone current account better than F/cast.
Trainline -32% as the British government prepares to announce a long-awaited overhaul of the rail system on Thursday.
EasyJet posted a fiscal first-half loss of £701 million ($990 million) and vowed to fly 15% of its pre-pandemic schedule in the third quarter as travel restrictions ease between the U.K. and Europe.
Royal Mail full-year adjusted operating profit of £702 million, a 116% surge from the previous year. However, it refrained from providing a forecast for the current fiscal year, citing uncertainties.
Earnings due from Kingfisher, National Grid, Manchester United and QinetiQ.
Current Account Mar €31B vs €13.2B Feb revised  (F/cast was €25.1B)
Construction Output Mar +18.3% YoY vs -5.4% Feb revised  (F/cast was +17%)
PPI Apr +0.8% MoM vs +0.9% Mar (F/cast was +0.6%)
PPI Apr +5.2% YoY vs +3.7% Mar (F/cast was+5%)
Industrial Trends Orders May 17 vs -8 Apr (F/cast was 5)
US Futures
Opened lower Dow -80pts S&P and NDX -0.3%  eased but then turned weaker Dow -107pts with S&P -0.2% and NDX flat
Expect caution ahead of the Initial claims data
Pre market Cisco weak after weaker than expected guidance.
Hormel Foods (HRL) quarterly earnings beat said demand in its various channels remains elevated compared to pre-pandemic levels.
BJ’s Wholesale (BJ) beat estimates SSS ex-fuel fell by 5%, but that was smaller than the 8.3% drop predicted. BJ’s also said that the rest of 2021 remains difficult to forecast. Its shares sank 3.3% in premarket trading.
Kohl’s (KSS) -3.6% in premarket action, despite beats on both the top and bottom lines for its latest quarter.
Petco (WOOF) +1% quarterly earnings & revenue beat and it raised its full-year outlook.
L Brands (LB) -2% results beat; SSS at Victoria’s Secret unit jumped 25%, while Bath & Body Works SSS +16%. The company is not providing guidance for the full year, and also said it is targeting the completion of its split into two separate companies for August.
Synopsys (SNPS) +2.2 % in the premarket after it beat top and bottom line estimates. The company said demand is strong and that it foresees a new wave of growth ahead.
Data due Philadelphia Fed Manufacturing Index, Initial Claims, 4 week Average Claims, Continuing Claims, EIA Natural Gas Report, CB Leading Index.
Earnings BJ’s Wholesale, Kohl’s, Petco, Ralph Lauren, Applied Materials, Ross Stores, Deckers Outdoor, Hormel Foods, Palo Alto Networks

CHINA CSI 300 closed +14pts (+0.3%) 5,186
CSI 300 opened lower but spent the morning trading around yesterday’s closing level. PM it worked higher to 5,200 but unable to hold and eased back to close.
Financial stocks rebounded and consumer staple firms saw interest Leaders were banks, pork producers and home appliances makers. China Life and China Merchants Bank were among the biggest point contributors to the main index, along with Kweichow Moutai and Wens Foodstuffs.
Laggards were Energy stocks and materials/resource names

Shanghai Composite -4pts (-0.1%) @ 3,507
Shenzhen Composite +51pts (+0.4%) @ 14,535
ChiNext Index +19pts (+0.6%) @ 3,124

Loan Prime Rate 1yr May 3.85% unchanged
Loan Prime Rate 5yr May 4.65% unchanged

Pre market opened 28,413 -180pts vs -97pts ADR’s
Initally dipped to 28,342 before bouncing to 28,500 but then trended lower to the day low 28,293 mid morning and worked slightly better into lunch 28,382. PM dipped initially but then worked better to 28,470 and then drifted lower to close -143pts (-0.5%) @ 28,450

HK Unemployment Apr 6.4% vs 6.8% Mar (F/cast was +6.6%)
The Centre for Health Protection (CHP) reported 1 new covid cases

Short Selling Thursday 18.9% vs 15.5% Tuesday
Top Shorts  
Country Garden (2007) 53%,  Bud Apac(1876) 43%, ICBC (1398) 42%, NWD(17) 39%,  Citic (267) 38%, Bank Comm (3328) 37%, Hengan (1044) 36%,  Shenzhou Int (2313) 35%,  Henderson Land (12) 35%, HSBC (5) 33%, China Life (2628) 31%, HK & China Gas (3) 31%, AIA (1299) 30%,  Hang Seng Bank (11) 29%, Haidlao (862) 29%, CLP (2) 28%, MTRC (66) 25%

The Securities and  Futures  Commission (SFC), in collaboration with the Stock Exchange of Hong Kong Limited (SEHK), is intensifying its efforts to tackle misconduct and improper behaviour related to new listings. 
An SFC-SEHK joint statement released today notes some problematic issues in recent initial public offerings (IPOs) which suggest the lack of genuine investor interest and call into doubt the existence of an open, orderly and fair market in the shares.  Listing applicants and firms involved in the IPO
process have important roles to play in upholding the quality and integrity of the stock market in Hong Kong, said Ashley Alder, the SFC’s Chief Executive Officer. Today’s joint statement signals their determination to combat market misconduct in new listings and they will not hesitate to act if there are red flags indicating a lack of genuine investor interest in an IPO. In the run-up to the effective date of the new profit thresholds, they will place particular focus on new listing applications which rely on aggressive profit forecasts to justify their expected valuations.
As part of the regulatory response to address improper behaviour, problematic applications with red flags are now subject to heightened scrutiny. If necessary, the regulators will use their regulatory powers to object to or reject an application.
JD LOGISTICS (02618.HK), spun off from JD-SW (09618.HK) had its IPO registered approximately $216.3 billion margin as at around 6:00 pm according to brokers.
Based on the public fundraising amount of about $792 million, the IPO was over-subscribed by almost 272 times.
The Stock Exchange today published conclusions to its consultations on the Main Board Profit Requirement and review of Listing Rules relating to disciplinary powers and sanctions. Conclusions focus on market quality and on investor protection.
Profit Requirement will increase 60 per cent, with effect from 1 January 2022. Proposals relating to disciplinary powers and sanctions will be implemented with effect from 3 July 2021.
Each consultation received around 100 non-duplicated responses from a broad range of respondents representing stakeholders across the Hong Kong capital market.
CHINA MOBILE (00941.HK)  announced that in April, 5G Package Customers reached 205 million, with a monthly net addition of 16.538 million, accelerated from March's 15.593 million.
The Urban Renewal Authority (URA) received a total of 14 tenders for the Oak Street / Ivy Street Development Project in Tai Kok Tsui when the invitation for submission of tender closed today (20 May 2021). 
SHK PPT (00016.HK) disclosed a preliminary plan to issue more than $14-million vouchers under a reward program slated for the summer vacation.
The cash coupon program will be available at 22 shopping arcades of the group.
TENCENT (00700.HK) announced that for the three months ended 31 March 2021, the net profit gained 65.3% yearly to RMB47.767 billion, beating the brokers' forecast of RMB25.763-37.221 billion
The non-IFRS net profit added 22% yearly to RMB33.118 billion, in line with the brokers' forecast of RMB29.627-36.951 billion as compiled by our reporters. EPS was RMB3.481.
The EBITDA climbed 17% yearly to RMB49.4 billion. The adjusted EBITDA was RMB52.9 billion, up 17%.  Looking forward, investment in many fields will be amplified by the company, including in enterprise services and software, and high-level industrialized games and short videos, since technological innovation and digital solutions are becoming increasingly popular among users and enterprises, and opportunities continue to appear in various vertical fields of operation.
AGM today, President Martin Lau accentuated that the group accords high  value to oversight and regulation and that compliance has since the  establishment been fundamental to them The  wave of scrutiny in China, although triggered by the behavior by one  particular company, is natural development for every industry, opined  Lau, and the group will view the process positively. He highlighted the company's strong focus on short video sector. Looking ahead, the tech giant will empower content creators with tools or monetization system so as to foster the contents for video accounts.
Meanwhile, the company also hopes to integrate the long and short videos by merging the company's investment and market leading position of long videos with the content production of short videos, diversifying contents for users and enriching the ecology. Although China's internet industry has seen behemoths fighting for throne, Lau emphasized that the focus should be on learning one another instead of competing.

. CNOOC (883 HK -3.5%) CH OILFIELD (2883 HK -6.5%) PETROCHINA (857 HK -4.6%)
Oil dropped on inflation fears and concerns about the global economic recovery. Supplies expected to increase as shipments from the 10 nations in the cartel bound by the OPEC+ deal are up by more than 1m barrels a day in May.
ANGANG (347 HK -9%) CHALCO (2600 HK -6.7%) JIANGXI COPPER (358 HK -7%) ZIJIN (2899 HK -5.6%) as China warns that commodity supplies must be ensured with efforts to prevent their rising costs from passing through to consumer prices, press reported citing a State Council meeting. The cabinet called for tougher oversight of spot and futures markets to prevent speculation.
*E-COMMERCE/INTERNET FIRM ahead of TENCENT's (700 HK +0.2%) earnings, it announced after market Q1 net income 47.8b yuan, beating estimates.
JD.COM's (9618 HK +3.7%) Q1 net profit jumped by 227% to 3.62b yuan YoY, beating market estimates. Net revenues increased 39% to 203.18b yuan during the quarter, topping analysts' average est. of 191.83b yuan.
BAIDU (9888 HK -0.4%) reported a 25% rise in quarterly revenue on Tuesday, powered by advertising on its core search and video-streaming platforms. Net income attributable to Baidu grew to 25.65b yuan, or 73.76 yuan per ADS, from 41m yuan, or 2 yuan per ADS, a year earlier.
ALIBABA (9988 HK -0.8%) KUAISHOU (1024 HK-0.3%) NTES (9999 HK +8.2%).
*AUTOS MAKERS STRONG   China Association of Automobile Manufacturers announced in the first four months of 2021, regarding new energy vehicles production +2.6x to 750,000 and sales +2.5x to 732,000
GREAT WALL (2333 HK +7.5%) reported that between Jan-May of this year, the government subsidy related to the group's income is about 530m yuan, accounting for 9.89% of the company's most recent audited earnings.
GEELY (175 HK +4.3%) GAC (2238 HK +1.5%) DONGFENG (489 HK +2.2%) BYD (1211 HK +6.3%).
CARS INC (699 HK +0.3%) posted net profit attributable to owners of 5.7m in 1Q, reversing a loss of 187.7m yuan it booked a year earlier.
FAST RETAILING (6288 HK -0.3%) after U.S. Blocked Uniqlo shirts on Xinjiang forced-labor concerns, they violated an order prohibiting imports of items suspected to be produced by forced labor from China’s state-owned Xinjiang Production & Construction Corps.
LI NING (2331 HK -2%) ANTA SPORTS (2020 HK +2.8%) DONGXIANG (3818 HK -1%).
*SHIPPING WEAK  OOIL (316 HK -15%) as holder Rongshi Intl sold a stake in block trade of 14.2m shs at HK$106.6. Sector also dropped as commodities traded under pressure.
SITC (1308 HK -6.9%) PAC BASIN (2343 HK -2.9%).

Regional Markets
Market opened flat but worked higher to 7,025 around 3pm after good jobs data and inflation expectations coming in lower than expected. After 3pm the market traded sideways to close +88pts (+1.3%) @ 7,019; led by major banks, health, and technology. Qantas +3.5% announced more job cuts and a wage freeze
Nikkei opened lowered at 27,875 but rallied on better than expected Trade data to 28,145 in the first 35 minutes but then sold back down to 27,900 in the next 50 minutes before rallying back to 28,090 and then eased into lunch. PM worked back to test 28,150 a couple of time before easing to close +54pts (+0.2%) @ 28,098
Topix traded in a similar fashion and closed flat @ 1,896
S Korea
Kospi re opened flat but sold down to 3,140 in the first 75 minutes and then spent the rest of the day working better to close -11pts (-0.3%) @ 3,162
Kosdaq opened lower and tested 964 in the opening minutes before bouncing to 971 in the next 35 minutes only to then sell down to 963 level 35 minutes later. It then spend the rest of the day working better to close +2pts (+0.2%) @ 971
Taiex opened lower, Chopping trading in the first 90 minutes between 16,050 and 16,150 but then sold down to 15,950 before working better to 16,090 around midday and then trended lower to close -90pts (-0.6%) @ 16,042
CECC reported 295 new covid cases (286 local infections)
After market
Current Account Q1 $25.96b vs 27.33b Q4 (F/cast was 18.2b)
Export Orders Apr +42.6% YoY vs 33.3% Mar (F/cast was 32%)

Northbound Rmb  50,628m  Sell 26,057m vs  24,571m Buy
Southbound HK$ 18,896m Sell 8,975m vs 9,922m Buy
Northbound Rmb 60,845m Sell 30,442m vs 30,403m Buy
Southbound HK$ 21,670m Sell 8,618m vs 13,052m Buy

Active Heavyweights
MEITUAN (03690.HK)  +5.1%
CCB (00939.HK) -2.1%
AIA (01299.HK) -2%
PING AN (02318.HK) -0.9%
BABA (09988.HK) -0.8%
HKEX (00388.HK) +0.7%
TENCENT (00700.HK)  +0.2%

HSI & HSCEI Constituents on Move:
NTES (09999.HK)  +8.2%
PETROCHINA (00857.HK) -4.6%
GEELY AUTO (00175.HK) +4.3%
NONGFU SPRING (09633.HK) +4%
JD (09618.HK) +3.7%
SINOPEC CORP (00386.HK) -3.5%
CNOOC (00883.HK) -3.5%
SINO BIOPHARM (01177.HK) -3.3%
SMIC (00981.HK) -3.3%
GUANGDONG INV (00270.HK) -3.3%
HANSOH PHARMA (03692.HK) +3.1%
ENN ENERGY (02688.HK)  +1.2%, hitting new high

HSMI & HSSI Constituents on Move:
HUABAO INTL (00336.HK)  +24.8%
VTECH HOLDINGS (00303.HK) +13.6%, hitting new high
TIAN LUN GAS (01600.HK) +hitting new high
GENSCRIPT BIO (01548.HK) +4%, hitting new high
PHARMARON (03759.HK)  +3.7%, hitting new high

The Hong Kong Housing Authority (HA) announced that eligible Green Form applicants may submit applications from May 28 to June 10. The application fee for GSH 2020/21 will be frozen at $250.
CATHAY PAC AIR (00293.HK) announced that it committed to achieving net-zero carbon emissions by 2050, becoming one of the first airlines in Asia to establish a timeline for making carbon neutrality a reality.  The airline’s commitment precedes the release of the Group’s Sustainable Development Report 2020, which details the Group’s strategy and performance in environmental, social and governance aspects.
At MTR CORPORATION (00066.HK)'s news conference, Property and International Business Director David Tang said the retail performances at their shopping arcades have been stably trending up in the first few months this year, as compared with a year ago given economic revival.  Tang expressed satisfaction with the sales outcome of property projects this year.
Samoa is going to shelve the US$100-million port development plan backed by China, pledged Prime Minister Fiame Naomi Mataafa, citing the heavy indebtedness thereof.  The small Pacific island state hopes to stay in a healthy relationship with Beijing, added the new leader.
General Administration of Customs of the PRC disclosed that 5.08 million tons of soybeans were imported from Brazil in April 2021, as compared with a year ago's 5.939 million tons.  During the month, China imported 2.15 million of U.S. soybeans, way below 7.18 million tons in March, according to the authority.
Yu Chengdong (Richard Yu) was dismissed as the CEO of Huawei Cloud, and replaced by Zhang Pingan, President of Huawei Cloud, as Chinese media cited the internal memo of Huawei.  Yu was purportedly re-designated as the CEO of Huawei Smart Car Solutions Business, and has set a sales target of 300,000 cars for 2022.
SINOPEC CORP (00386.HK) has started operating its first solar-powered gas station, which may reduce up to 105.6 tons of carbon dioxide emissions every year.
CHOW TAI FOOK (01929.HK) nailed an exclusive strategic partnership with the Natural Diamond Council (NDC) to introduce the Chinese consumers to the timeless beauty of natural diamonds through the use of diverse communication channels and accessible digital content, as well as the provision of professional training resources.
XIAOMI-W (01810.HK)'s cumulative sales of Redmi brand Note series have surpassed 200 million units, said Chairman Lei Jun, who also foretold the company's plan to hit the market with Redmi Note10 series next Wednesday (26 May).
HSBC is reserving $40 billion in loan quota for local small-and-medium enterprises under a brand new loan program.
The program covers both existing and new business clients of the bank across various industries and sectors.
K11 announced a joint voucher program with WeChat Pay HK. Consumers who make payments with WeChat Pay HK at K11's shopping malls within the promotion period will be entitled to extra K Dollar rebate, subject to their spending amount.
Details of the two-month reward program will be coming later.
Yin Ming, former vice president of Ant Group and president of insurance business group, had in January jumped to the ship of Sunshine Property and Casualty Insurance, as Chinese media reported. Yet in mid-May, Yin returned to Ant Group and acted as the head of the company's strategic development department and financial institution strategic cooperation department.
BYD COMPANY (01211.HK)  announced that the 1 millionth NEV launched on 19 May, making the company the first Chinese brand which completed production of 1 million NEVs. The automaker delivered the "Han EV" to He Youjun, the Chairman cum CEO of Shenzhen V5 E-sports Club.  In addition, BYD COMPANY plans to deliver 1,500 "Tang EVs" to Norway within the year, with the first batch of 100 units to be shipped at the end of the month. Delivery to local consumers is expected in the third quarter.
The European Union has agreed to ease travel restrictions on non-EU visitors before the summer tourist season, Reuters reported, after the bloc had earlier relaxed the criteria of "safe" countries.
ByteDance co-founder Zhang Yiming will resign as CEO, according to an internal memo seen by Reuters.  Another co-founder Rubo Liang, the head of human resources, is taking the helm.
ZTO EXPRESS-SW (02057.HK) Chairman cum CEO Lai Meisong said the company's market share broadened 1.5 ppts to 20.4% during the first quarter compared to a year ago. During the conference call, Lai foresaw the market to still have extensive growth room, believing the company's market share to heighten progressively. As to more stringent government oversight on the market, Lai opined it is out of good intention, so that the industry could have benign development.

In the first four months of 2021, both the production and sales of new energy vehicles of China zoomed past 700,000 units,
reaching 750,000 and 732,000 units respectively, an annual increase of 2.6 times and 2.5 times, as analyzed by China Association of Automobile Manufacturers (CAAM).
Futu Holdings Limited (FUTU.US) announced that the first-quarter non-GAAP net profit rose 6.3 times yearly to US$152 million.
During the period, its worldwide registered user count shattered 14 million.
In a guidance notice about a reporting platform against cryptocurrency "mining" enterprises, the Inner Mongolia Autonomous Region required comprehensive termination of cryptocurrency "mining" activities.
GDS-SW (09698.HK) announced first quarter results ended March 2021. Net revenue rose 37.5% year on year to RMB1.706 billion. Net loss available to ordinary shareholders widened to RMB301 million from RMB105 million in the corresponding period of the previous year. LPS equaled RMB0.21.
CHONG HING BANK (01111.HK) announced that Yue Xiu Enterprises proposed to privatize the company by way of a Scheme of Arrangement at a cash offer price of $20.8 per share, a 51.16% premium over the price before trading halt, involving almost $5.1 billion.  The company applied for a trading resumption with effect from this morning (20 May).
JD-SW (09618.HK) released the 2021 first quarter results. Net revenues were RMB203.2 billion, an increase of 39% from the first quarter of 2020. Income from operations dropped 28.5% to RMB1.66 billion. Net income was RMB3.617 billion, up 237%. EPS  was RMB1.16.
TRIP.COM-S (09961.HK)  Q1 of 2021 results. Net income attributable to Group was RMB1.78 billion, as compared with a year ago's loss RMB5.353 billion and last quarter's profit RMB1 billion.

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