May 3 HK/CHINA WRAP HSI -367pts on light volume expect margin calls at the open

03 May

HSI -367pts (-1.3%) 28,358 HSCEI -112pts (-1%) 10,713  T/O HK$94.84bn (-23.8% DoD but more if you exclude Friday’s Tsingtao placement (HK$2.34b) and todays Fuyao Glass (HK$4.3bn) reflects no connect flows)

Markets trading higher with German retail sales stronger than expected and US futures indicating higher. UK closed. They dipped to flat after the mixed PMI data but rebounded
Lufthansa strong said it will offer flights to more than 100 holiday destinations.
Siemens Healthineers rising after it raised its full-year sales and profit forecast.
Manufacturing PMI Final Apr 62.9 vs 62.5 Mar (F/cast was 63.3)
Retail Sales Mar +7.7% MoM vs +2.7% Feb revised (F/cast was +2.9%)
Retail Sales Mar +11% YoY vs -6.6% Feb revised (F/cast was -3.2%)
Manufacturing PMI Final Apr 66.2 vs 66.6 Mar (F/cast was 66.4)
Manufacturing PMI Final Apr 58.9 vs 59.3 Mar (F/cast was 59.2)
New Car Registrations Apr +568.6% vs +191.4% Mar (F/cast +195%)

US Futures 
Opened in Asian time Dow +85pts, S&P +0.34% and NDX +0.28% and rose through the day currently Dow +125pts S&P +0.45% and NDX +0.33%.  
Another key week for earnings and the Jobs report on Friday.
Estee Lauder earnings beat, revenue missed stock weak pre market
Meredith Corp. Meredith strong in advanced talks to sell its 17 local TV stations to Gray Television
Verizon (VZ) close to a deal to sell media assets like AOL and Yahoo to Apollo Global Management (APO), according to multiple reports.
Berkshire Hathaway (BRK.B) higher in the premarket and is set to hit a record high in today’s trading following its annual meeting over the weekend.
Moderna (MRNA) higher after it struck a deal to provide 500 million Covid-19 vaccine doses to low- and middle-income countries through a United Nations-backed program.
Canadian Pacific Railway (CP) filed an objection to a ruling which exempts rival Canadian National Railway (CNI) from tougher merger rules based on its smaller size.
Align Technology (ALGN) announced a $100 million accelerated share repurchase agreement with Goldman Sachs.
Li Auto (LI), Nio (NIO), XPeng (XPEV) announced their April delivery figures, with Li Auto deliveries up 111% vs. a year ago, Nio up 125%, and XPeng up 285%. Li Auto rose 2.3% in the premarket, while XPeng gained 1.2%.
Tilray (TLRY) – The Canada-based cannabis producer saw its shares rise 1% in premarket trading after it announced it has completed its merger with rival Aphria.
Data due 
Manufacturing PMI, Construction Spending, ISM Manufacturing Data (PMI, Prices, Orders and Employment)

CHINA Markets closed re-open Wednesday

HSI Pre market opened @ 29,143 -160 vs +174pts ADR’sBut market sold down further 120pts in the opening minutes with margin call selling after Friday’s sell off.   Saw a brief bounce before selling down to 28,280 level and then traded sideways for the rest of the day with a slight uptrend in the last hour. But with China, Japan and UK closed volumes were light.  Chinese financials remain under pressure along with E-commerce names.  Pharma and shippers +VE
After Market
GDP Growth Rate Adv Q1 +5.3% QoQ vs +0.5% Q4 revised (F/cast was -0.3%)
GDP Growth Rate Adv Q1 +7.8% YoY vs -2.8% Q4 revised (F/cast was -2%)
The larger increase in GDP in the first quarter of 2021 was mainly attributable to the strong performance of external trade during the quarter and the low base of comparison last year.
Analysed by major GDP component, private consumption expenditure increased by 1.6% in real terms in the first quarter of 2021 over a year earlier, as against the 6.9% decline in the fourth quarter of 2020. Government consumption expenditure measured in national accounts terms grew by 6.7% in real terms in the first quarter of 2021 over a year earlier, after the increase of 6.1% in the fourth quarter of 2020. Gross domestic fixed capital formation increased by 4.5% in real terms in the first quarter of 2021 over a year earlier, compared with the increase of 3.6% in the fourth quarter of 2020.
The Centre for Health Protection reported 2 new covid cases both imported

Short Selling Monday 19  vs 15% Friday 
Top Shorts
  Bank Of China (3988) 42%, Country Garden (2007) 41%, Sino BioPharm (1177) 39%, Hengan (1044) 39%, China Res Land (1109) 37%,  CK Asset (1113) 35%, Ali Health (241) 35%, Bud Apac (1876) 35% (reports 5 May), Bank Of China HK (2388) 35%, Galaxy Ent (27) 35%, Sunny Optical (2382) 34%, Mengniu Dairy (2319) 33%, BOCOM (3328) 32%,  HSBC (5) 32%, Shenzhou (2313) 31%, NWD (17) 31%, Hang Seng Bank (11) 28%, Wharf REIC (1997) 27%,  Tencent (700) 26%, China Overseas Land (688) 26%,

The European Commission advocated to ease the travel ban on business and leisure tourists who complete Covid vaccination, indicating possible normalization of traveling with vaccination picking up pace, Bloomberg reported.  The related department is reportedly studying on the introduction of a vaccine passport system so as to relax travel restrictions for those inoculated or can prove they have recovered from Covid and are deemed immune.W
ANT WANT CHINA (00151.HK) announced that it had repurchased today through the Stock Exchange 1.50 million shares, involving roughly $8.444 million.
On 27 April, Citigroup purchased 97.0941 million ABC (01288.HK) shares at an average price of $3.0399 each, according to the shareholding disclosures at the Stock Exchange.
The Hong Kong Monetary Authority announced the relevant per annum interest rate for the first interest payment of iBond Series due 2023 (04239.HK) issued under the Retail Bond Issuance Programme of the Government Bond Programme. The relevant interest rate for the first interest payment is determined and announced as 2 per cent per annum.
Hang Seng Indexes Company launched the Hang Seng Stock Connect
China 80 Index,
which measures the performance of the 80 largest Stock Connect-eligible Chinese companies that are listed in Hong Kong, Shenzhen or Shanghai.  The Hang Seng Stock Connect China 80 Index is a well-diversified broad-based index that gives onshore and offshore investors a highly investable way to gain exposure in Hong Kong and mainland China and allocate their assets effectively
Online sales represented 19% of total retail turnover in 2020, as compared with 2019's 16%, due to the pandemic outbreak, UNCTAD wrote in a report.
CK ASSET (01113.HK) sold a standard duplex under "21 BORRETT ROAD" phase 1, together with two parking spaces, by way of tender for a consideration of $250 million, or roughly $84,890/sq. ft., according to the register.

PETROCHEMS WEAK as Oil dropped on demand concerns from India and data showed Japan imports also lower; CNOOC (883 HK -1.3%) PETROCHINA (857 HK -0.4%) SINOPEC (386 HK +1%).
BASE METALS STRONG as output cuts still expected; ANGANG (347 HK +2.6%) MAANSHAN (323 HK +2.4%) CHALCO (2600 HK+1.2%).
*E-COMMERCE/INTERNET PLATFORMS WEAK on regulatory curbs. 33 applications, including map navigation software provided by BAIDU (9888 HK) and TENCENT (700 HK unch), violated regulations, with most collecting personal information that wasn’t relevant to their services. The operators of the apps were asked to rectify the issues within 10 working days or be subject to penalties, the Cyberspace Administration of China said in a statement, without elaborating.
Authorities had carried out recent checks into apps that were widely used, the agency said. ALIBABA (9988 HK -0.6%) KUAISHOU (1024 HK -1.8%) MEITUAN (3690 HK -1.9%) CH LIT (772 HK -1.8%).
*INSURERS WEAK on news a unit of PING AN (2318 HK -1.8%) intends to acquire 70% of the shares in the restrucutring of FOUNDER HLG (418 HK +78%) for a max of 50.7bn yuan. The reorganization entity uses the retained assets other than all the rights and interests of Shenzhen Founder Microelectronics to invest in the establishment of the Founder Group, and then the investor will purchase the shares of Founder Group. The assets of Founder Group that investors  intend to acquire in this reorganization include equity, debt and other assets in the medical, finance, I.T.,  education, commerce and real estate sectors of the reorganization subject.
Separately, SBI Holdings, Japan's biggest online brokerage terminated a joint venture investment with PING AN INSURANCE on concerns that cooperation with a Chinese company will lead to customer data breaches, Kyodo news agency reported.
CH LIFE (2628 HK -2.1%) NCI (1336 HK -1.2%) CH TAIPING (966 HK -1.6%) PICC P&C (2328 HK -1.6%).
*MACAU WEAK, after Macau's monthly gaming revenue lagged analyst estimate for a third time, reported gross gaming revenue rose 1,014% in April to 8.4b patacas. That trailed the median analyst estimate for a 1,054% jump. Macau’s CEO is expecting  a 20% increase in daily visitation during the Golden Week period, pushing visitor numbers to new 16-month highs. MELCO (200 HK -1.3%) WYNN (1128 HK -3.2%) SJM (880 HK -2.4%) MGM (2282 HK -3.7%).
*HK PROPERTY WEAK despite  the weekly home price-tracking Centa-City Leading Index continued to rise. Sector sentiment hurt by worries that the new Covid variant cases may have spread to the local community. Mortgage loans  approved in March increased by 39% vs February to HK$53b.  
HENDESON LAND (12 HK-0.7%) received 192 subscriptions on the first day of launching for the first batch of 96 units at the Henley project at Kai Tak.
SHKP (16 HK -0.2%) SINO LD (83 HK -0.4%) WHARF (4 HK -0.8%) CKA (1113 HK -0.9%).
*ALTERNATIVE ENERGY MIXED  China will make cutting emissions a focus in the next 5 years, Xi Jinping told the Politboro, vowing to call off high-energy consumption and high-emissions projects that don't meet environmental standards. Local governments need clear plans to move to low-carbon development, he said. COMTEC (712 HK +6.4%) DATANG RENEWABLE (1798 HK +13.8%) JNCEC (579 HK +0.6%).
Profit-taking seen in some counters as investors de-risk amid uncertain market outlook; especially solar panels linked to Xinjiang; XINYI SOLAR (868 HK -7.4%) LONGYUAN (916 HK -4.5%).
*PHARMA  STRONG as India's continues to see surging Covid cases and local vaccine production will take months to ramp up to meet demand FOSUN (2196 HK +20%) SINOPHARM (1099 HK +11%) SHANGHAI PHARM (2607 HK +6.9%) BAIYUNSHAN (874 HK +3.8%) JACOBIO (1167 HK +12%).

Regional Markets 
Opened higher on good pre market manufacturing data but them sold down to flat and traded sideways on disappointing inflation and job adverts. Closed +3pts (unch) @ 7,029
Manufacturing Index Apr 61.7 vs 59.9 Mar (F/cast was 60)
Manufacturing PMI Final Apr 59.7 vs 56.8 Mar (F/cast was 59.6)
Inflation Gauge Apr +0.4% MoM vs +7.8% Mar revised (F/cast was +0.6%)
Job Ads Apr +4.7% MoM vs +7.8% Mar revised
Markets closed re-open Thursday
Kospi dipped initially but then worked higher to 3,174 before selling down to flat after a disappointing PMI number (but still solid growth). Traded sideways for a couple of hours before selling down in theist two hours to 3,120 before a small bounce in the final minutes of trading. Closed -21pts (-0.7%) @3,127Kosdaq dipped initially to 975 in the first 30 minutes but then worked back to flat briefly; before trending lower for the rest of the day to close around the day lows -22pts (-2.2%) @ 962Data after market opened Manufacturing PMI Apr 54.6 vs 55.3 Mar (F/cast was 55)
opened lower despite good trade data after market Friday and a strong Manufacturing PMI pre market driven by strong export sale, although supply chain bottlenecks remain. Sold down to around 17,350 in the first 45 minutes and then traded sideways for most of the day below dipping lower to close -344pts (-2%) @ 17,222
Manufacturing PMI Apr 62.4 vs 60.8 Mar (F/cast was 61)

CONNECT FLOWS (no trading)

Active Heavyweights
AIA (01299.HK) -2.6%
PING AN (02318.HK) -2.5%
MEITUAN (03690.HK) -1.6%
CCB (00939.HK) -1.1%
HKEX (00388.HK) -1.1%
BABA (09988.HK) -0.5%
TENCENT (00700.HK) +0.2%

HSI & HSCEI Constituents on Move:
MENGNIU DAIRY (02319.HK) -3.5%
HSBC HOLDINGS (00005.HK) -3.2%

HSMI & HSSI Constituents on Move:
FOSUN PHARMA (02196.HK) +19.6%, hitting new high
JACOBIO-B (01167.HK) +11.6%
COSCO SHIP HOLD (01919.HK) +10.8%, hitting new high
SINOPHARM (01099.HK) +10.8%, hitting new high
PACIFIC BASIN (02343.HK) +8.1%, hitting new high
SH PHARMA (02607.HK) +6.9%, hitting new high

Tmall Hong Kong announced the introduction of e-commerce services in Hong Kong with trial running on 5-7 May. Asked about the mature development of rivals like HKTV (01137.HK) in Hong Kong's market, Chen Zijian, the head of Tmall Taobao Hong Kong and Macau, said every peer has its own positioning, underscoring Tmall's MAUs are way ahead of fellows, although no disclosable official figures can be presented now. Chen did not bar the odd of the company selling fresh goods in future.
AlipayHK has decided to revise down the ceiling of authenticated users' credit card transfer from $2,000 to $1,000 each month. The ceiling on unauthenticated users remains unchanged at $500.
HKMA CEO Eddie Yue expected the launch of Southbound Bond Connect and Wealth Management Connect in early 2H21. The capital flow of Hong Kong remains stable with a bilateral flow, accentuated Yue.
As of 11:00 on 3 May, Macau recorded 8,381 inbound travelers, slightly down from nearly 9,000 of the same time yesterday, Radio Macau reported.
Waterdrop is building books and running roadshow on 3-6 May for its plan to go public in the U.S. on 7 May. The TENCENT (00700.HK) backed Chinese online insurer plans to offer 30 million ADSs, each representing ten ordinary shares.
Industry participants mostly anticipate the implementation of SPAC in Hong Kong to stand a little chance ultimately since the SFC worries about SPAC bubble burst, compounded with tightened grip by the US SEC, Sing Tao Daily cited sources. That said, quite a number of Chinese brokers are still progressively preparing for that to happen.
Overnight HIBOR last posted at 0.03467%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.08179%, marking a 1-month low.
Fosun Group, JD-SW (09618.HK), PING AN (02318.HK), JUNEYAOAIR (603885.SH)  and AIR CHINA (00753.HK) are pondering over acquisition of HNA Group’s assets, Bloomberg learnt from people with knowledge of the matter.A deal, if materialized, could raise billions of USD, said the report.
FOUNDER HOLD (00418.HK) announced that it had on 30 April received a notification letter from the administrator of Peking Founder, stating that Zhuhai Huafa (on behalf of Zhuhai State-owned Assets), PING AN (02318.HK)  -2.100 (-2.472%)    Short selling $623.40M; Ratio 11.115%   and Shenzhen SDG Group and entities designated by them had entered into a restructuring investment agreement with the Five Companies including Peking Founder.
Hong Kong recorded a loan growth of 2.8% in the first quarter with an annualized increment of 11.1%, said HKMA Deputy Chief Executive Arthur Yuen. In his opinion, the asset quality remains healthy as the growth of classified loans subsided during the quarter whereas such loans have not concentrated in specific industries.
Hong Kong's Exchange Fund tracked $11.6-billion investment gain during the first quarter of 2021, as compared with $112-billion loss in the same period of 2020, the HKMA said at the Legislative Council meeting.
Ximalaya and Qiniu, backed by TENCENT (00700.HK) and BABA-SW (09988.HK)   respectively, have lodged their IPO filings at the US SEC.  The Chinese online audio platform and cloud services platform were respectively founded in 2012 and 2011.
PING AN (02318.HK) announced that it entered into a Restructuring Investment Agreement Relating to the Founder Group Restructuring with parties.  The final amount of the restructuring investment amount payable by the Investors for participating in the Founder Group Restructuring and the proportion of equity interest in New Founder Group to be acquired by the Investors shall depend on the creditors’ selection of the debt repayment plan. Among other things, Ping An Life will acquire 51.1% to 70% equity interest in New Founder Group at a consideration of RMB37.05 billion to RMB50.75 billion.
The passage of the Inland Revenue (Amendment) (Tax Concessions for Carried Interest) Bill 2021 by the Legislative Council on April 28 will waive the profits tax and salaries tax on the carried interest distributed by eligible private equity funds, wrote the Secretary for Financial Services and the Treasury, Christopher Hui, on his blog. As the next step, the authority weighs to introduce mechanisms and measures to attract more overseas-established funds to relocate and settle in Hong Kong.
The travel bubble between Hong Kong and Singapore is set to unfold as brisk as 26 May. Jason Wong Chun-tat, President of Travel Industry Council of Hong Kong, told a radio program that air tickets are pricey in wake of large demand for business trips and family visits with limited seats. For the first two weeks, seats have been fully booked.  Meanwhile, travel tours may not be ready to go until this summer holiday, Wong predicted.
Following six consecutive quarters of local economic contraction, the Government is taking forward the electronic consumption vouchers program while the four SVF operators are assisting more merchants to install the facilities.  iBond will be rolled out later this month, added Chan.

The global undersupply of semiconductors will unlikely be resolved for a few more years, according to Intel Corps new Chief Executive Officer Pat Gelsinger.The US-based chip magnate is reworking some of its factories to ramp up production and address the chip shortage across the vehicle industry, said Gelsinger.
ByteDance announced that CFO Shou Zi Chew was nominated to an additional position as TikTok CEO, while TikTok's interim CEO Vanessa Pappas will assume office as TikTok COO.
The Macao Government announced that over 44,000 inbound tourists were recorded on 1 May, hitting a new intra-day high, cited Macao Daily. The number of inbound travelers surmounted 36,000 on 2 May, said Radio Macau (TMD).
Macau's GGR surged 10.14 times yearly to MOP8.401 billion in April, posting a positive growth for three months, Gaming Inspection and Coordination Bureau (DICJ) announced.
FUYAO GLASS (03606.HK) placed up to 101 million new H shares pursuant to Specific Mandate at a placing price of $42.9, representing an almost 5% discount to the closing price as quoted on the last trading day.   The net proceeds from the placing were expected to be $4.312 billion.

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