Apr 12 HK/CHINA WRAP Markets see further weakness; After market loans data ahead of Trade data Tuesday


12 Apr

HSI -246pts (-0.9%) 28,453 HSCEI -103pts (-0.9%) 10,875  T/O HK$160.7bn (+13.4% DoD)  

EUROPE 
Markets opened flat initially trended lower, following the mixed handover from Asia. India was especially weak as covid cases surge and largely ignoring the positive comments from Powell about growth and keeping interest rates low. DAX and CAC quickly recovered to flat on good retail sales data and then traded sideways. FTSE was weaker initially and despite a rebound is trading sideways in the red. England’s non essential businesses re-open today (Hellofresh an Ocado weak) but so did State Mourning for Prince Philip.
Credit Suisse initial weakness on new it was questioned by Swiss regulator FINMA over its links Greensill Capital “months” before the lender was forced to close out $10 billion of funds tied to the now-insolvent supply chain finance firm; but has now recovered into the green.
DiaSorin strong mid-morning after the Italian diagnostics company announced a $1.8 billion deal to buy U.S.-based Luminex Corp.
Suez and Veolia both +VE after announcing a merger deal.
Data
Eurozone
Retail Sales Feb +3% MoM vs -5.2% Jan revised (F/cast was +1.2%)
Retail Sales Feb -2.9% YoY vs -5.2% Jan revised (F/cast was -5.4%)
France
Retail Sales Feb -1.2% MoM vs -4.3% Jan revised (F/cast was +8.5%)
Retail Sales Feb +1.6% YoY vs +1.8% Jan revised (F/cast was -2%)
US Futures 
Opened flat in Asian time currently Dow -70pts S&P -0.25 and NDX -0.3 after the record close on Friday. Expect some caution ahead of earnings starting this week with the banks on Wednesday and Congress returns to Washington.
Reopening plays fell slightly in early trading Monday with shares of Carnival, United Airlines and Gap off about 1% in the premarket.
Tesla gained 1.5% to $687.01 on a broker upgrade
Nuance Communications jumped 21% in early trading as Microsoft is in talks to acquire the speech-recognition company,
United Airlines weak after the carrier said its first-quarter revenue is expected to fall 66% compared with the same period in 2019. The new guidance fells near the top of the range between 65% and 70% that the company had previously forecast.
Ahead
Consumer Inflation Expectations
CHINA 
CSI 300 closed -88pts (-1.7%) @ 4,948
CSI 300 opened lower and dipped, bounced to test Friday’s close but then sold down dropping through 5,000 level to find support 4,950 and saw a small uptick into lunch. PM traded around the 4,950 and closed -88pts (-1.7%) @ 4,948. Market at a two week low and on lighter volumes ahead of Trade Data Tuesday, the expectation of Loans data and on Friday GDP, House Price Index, Industrial Production & Capacity Utilisation, Retail Sales and Unemployment.
After market; China released new loans data which was higher than expected, outstanding loans dropped MoM along with total social financing and M2 Money supply. With the PBOC saying last week it wanted flat loan growth this year expect the banks to cut back in the forthcoming months. Typically the banks front load their lending anyway, so the slow down may not be so pronounced but will put more pressure on companies, especially those with loans or bonds to refinance.
Sector wise
Leaders were Hainan-theme names, steel (as Gupta’s empire may fall), power, liquor, aquaculture, oil & gas
Laggards were chemical, paper, nonferrous, military, semiconductor, agriculture, and 5G names
Shanghai Comp -38pts (-1.1%) @ 3,413
Shenzhen Comp -317pts (-2.3%) @ 13,476
ChiNext Comp -66pts (-2.3%) @ 2,820

CHINA DATA 
After market
New Yuan Loans Mar CNY 2730bn vs 1360bn Feb (F/cast was CNY 2520bn)
Outstanding Loan Growth Mar 12.6% vs +12.9% Feb (F/cast was 12.8%)
Total Social Financing Mar CNY 3340bn vs 1710bn Feb (F/cast was CNY 3680bn)
M2 Money Supply Mar +9.45 vs 10.1% Feb (F/cast was 9.8%)
Tomorrow we get Trade data pre market
Balance of Trade Mar (Feb was $103.25bn F/castis $51bn)
Exports Mar (Feb was 60.6% Consensus is 35.5%)
Imports Mar (Feb was 22.2% Consensus is 23.3%)

HSI Pre market opened @ 28,792 +93pts  vs +23pts ADR’s
Baba was +5.5% after saying it accepted the fine, would not appeal and had already started the self examination process. Other Ecommerce names were weak. But HSI sold down 500pts in the first hour to the day low, 28,274 before bounce into lunch. PM traded with support at the 28,400 level to close -246pts (-0.9%) @ 28,453 having ticked up 38pts in the closing auction.
After two significant down day expect margin calls on the open tomorrow.
HONG KONG DATA The Centre for Health Protection reported 13 new covid cases (vs 13 cases Sunday)  nine from unknown origin

Short Selling Monday 14.8% vs 15.9% Friday
Top Shorts  Bud Apac (1876) 68%, Ali Health (241) 36%, BankComm (3328) 35%,  HSBC (5) 33%, Country Garden (2007) 31%, Ping An (2318) 30%,  CCB (939) 29%,  Wuxi Bio (2269) 29%, ICBC (1398) 27%, Bank of China (3988) 27%,  Mengniu Dairy (2319) 26%, Hang Lung Property (101) 26%, Hang Seng Bank (11) 25%.
AFTER MARKET NEWS 
FOSUN TOURISM (01992.HK) announced that its Lijiang Resorts - Club Med, had earlier held the "topping-out" ceremony, and expected the business to open this autumn.
TRIP.COM-S (09961.HK) (TCOM.US)’s IPO registered approximately $4.6 billion margin as at around 5:30 pm according to brokers. Based on the public fundraising amount of about $737 million, the IPO was over-subscribed by more than 5.2 times.
CHOW TAI FOOK (01929.HK) announced that the Retail Sales Value (RSV) growth hit 153% yearly for the three months ended 31 March 2021 (the Fourth Quarter).  Same Store Sales (SSS) and SSS volume in Mainland China grew 141% and 86.7%, respectively.
Huawei has entered into cooperation with BAIC MOTOR (01958.HK), whereby the two companies will unroll a series of new vehicles, said Deputy Chairman Eric Xu.  The firm is also teaming up with GAC GROUP (02238.HK)  -0.180 (-2.663%)    Short selling $36.96M; Ratio 19.695%   and CHANGAN AUTOMOBILE (000625.SZ)  -0.28 (-1.934%)   to create a sub-brand in the automobile sector, added Xu.
Chief Executive Carrie Lam, in appearance at the press conference, announced the relaxing of some social distancing measures.  She said it is a good sign that Hong Kong has not found any origin-unknown case for three days in a row, and hence she announced a new roadmap for the anti-epidemic initiatives. Although the measures are not going to move ahead immediately, she hoped local residents and business sectors to be poised for the changes.   Since last November, the fourth wave of plague has been notably under control, Lam viewed, who said that marked phased efforts of the government.She said social distancing measures will be refreshed based on "vaccine bubble".
Catering premises may establish a "clean zone" if all employees are fully vaccinated while all diners have taken their first doses and are using the "LeaveHomeSafe" app, Lam added. The maximum seating capacity can hence be raised from 4 people to 8 people per table, and be increased to 100 for banquet dinners. Equally, dine-in services can be stretched until 2am.Also six premises, including bars, pubs, karaoke lounges, Mahjong/ Tin Kau parlors and nightclubs, will remain closed but be set to reopen gradually based on vaccination progress.Measures expiring on 14 April will be extended by 14 days until 28 April, hopefully being relaxed under a "vaccine bubble" from 29 April, she added.As agreed by the Guangdong government, the requirements on vaccinated cross-boundary truck drivers may be relaxed to "testing every three days", as compared with "testing every day" in current practices, said Chief Executive Carrie Lam. While the "Return2HK" is scheduled to be stretched to districts beyond Guangdong, Lam disclosed the Government is working on a new scheme slated for mid-May, which will allow Mainlanders to visit Hong Kong without quarantine.They plans to shorten the mandatory quarantine period for fully-vaccinated visitors arriving from low-risk areas, like Singapore, Australia and New Zealand, to 7 days or less from 14 days.
The Government expects to remove curbs on UK passenger flights coming to Hong Kong in early May, she added. However, travelers will still be required to undergo virus testing and a 21-day mandatory quarantine upon arrival in Hong Kong.

MARKET COMMENT 
*COMMODITIES/RESOURCES MIXED China will strengthen controls on the raw materials market to help limit costs for companies that have been pressured by a surge in commodity prices Premier Li said.
ANGANG (347 HK +1.7%) MAANSHAN (323 HK +5.1%) as the price of iron ore rises but CH RARE EARTH (769 HK -4.3%) JIANGXI COPPE
R (358 HK -4.2%) CHALCO (2600 HK -6.7%) on concerns on price control.
*E-COMMERCE WEAK except ALIBABA (9988 HK +6.5%), after China antitrust watchdog imposed a record 18.23b yuan fine on the e-commerce giant on anti-monopoly probe, clearing recent uncertainty and ending the investigation into Alibaba. With growing scrutiny, executives of major internet firms are now required to make routine reports to the antitrust bureau for merger deals or of practices that could fall foul of anti-monopoly rules, news reported. TENCENT (700 HK -1.1%) BIDU (9888 HK -3.7%) JD (9618 HK-2.1%).  
BILIBILI (9626 HK -4.5%) and KUAISHOU (1024 HK -3.25) dropped after some video makers want copyrights guarded.
*TECH & COMPONENTS WEAK on sanction fears.
But AAC TECH (2018 HK +12.7%) on a +VE profit warning; as it expects 1Q net profit to jump 10.4 times to 550m yuan.
SUNNY OPTICAL's (2382 HK -1.7%) despite handset lens shipments in March +14.8% YoY or +0.8% MoM to 130.7m units. March vehicle lens set shipments +49.6% YoY or +12% YoY to 6.49m units.
XIAOMI (1810 HK -2.9%) despite buying back 19.4m shares for HK$498m April 9.
TRULY (732 HK -3.9%) SMIC (981 HK -4%) BYDE (285 HK -3%).
*AUTOS WEAK GEELY (175 HK -7%) on the news that Geely was interviewed by Zhejiang Consumer Protection Committee. Sector also dropped on rising EV completion;  SAIC said to invest 300b yuan in electric vehicles by 2025.
BYD (1211 HK -2.7%) GREAT WALL (2333 HK -6.7%) GAC (2238 HK -2.6%).
*CHINA  BANKS MIXED ahead of the China lending data which came out after the close. BOC (3988 HK +0.33%) CCB (939 HK -0.9%) ICBC (1398 HK -0.2%) CMB (3968 HK +1.3%).

Regional Markets
The Thai government will possibly revamp her immigration rules this year to grant expats and long-term tourists an easier access to stay in the country, as part of her strategy to boost investment and tourism revenue once the pandemic fades away.   Bangkok targets at attracting a million pensioners to the country in the next couple of years, said Chayotid Kridakorn, the leader of a government task force to smooth investment into Thailand.
Asia sold down as Powell said the main threat to the US recovery was covid; ignoring his comment that 'economy at an inflection point’ and about to grow much quicker.Indicates the concerns with markets trading at highs
AUSTRALIA 
Opened lower but then traded sideways to close -21pts (-0.3%) @ 6.974
JAPAN
Nikkei opened higher but sold down initially to flat but then started selling down about an hour before lunch.  PM opened slightly lower and drifted lower to close -229pts (-0.8%) @ 29,539
Topix traded in a similar pattern to close -5pts (-0.3%) @ 1,955
Nintendo President Shuntaro Furukawa said the company has sufficient chips for Switch production at the moment. However, component shortages are possible this year due to robust demand for the game console, he added.
Data
Pre Market
Bank Lending Mar +6.3% vs +6.2% Feb (F/Cast was +6.3%)
PPI Mar +1% MoM vs -0.7% Feb (F/cast was +0.4%)
PPI Mar +0.8% YoY vs +0.4% Feb (F/cast was +0.3%)
Later
Machine Tool Orders Mar +65% YoY vs 36.7% Feb (F/cast was +40%)
S KOREA  
Kospi opened higher saw initial choppy trading but tested 3,145 in the first hour but then trended lower hitting 3,127 around midday and then bounced and traded sideways in tight range to close +4pts (+0.1%) @ 3,136, earnings ahead.
Kosdaq opened higher and after an initial drop worked better through the day to close at the day high +11pts (+1.1%) @ 1,000, a new high
TAIWAN 
Opened higher after good trade data after market Friday and tested 16,980 in early trades but then sold down to 16,795 before an small bounce back to 16,900 and then drifted to close +6pts (flat) @ 16,860
TSMC (TSM.US) is ramping up capital expenditure from US$25-28 billion to US$30-31 billion this year, Commercial Times reported, after the Taiwanese chip magnate had announced earlier to pump US$100 billion into output expansion next three years.
CONNECT FLOWS 
Shanghai 
Northbound RMB 42,045m Sell 18,908m : 23,138m Buy
Southbound HK$ 16,172m Sell 9,416m : 6,757m Buy
Shenzhen 
Northbound RMB 47,557m Sell 23,742m : 23,816m Buy
Southbound HK$ 16,243m Sell 8,058m : 8,185m Buy

Active Heavyweights
BABA (09988.HK) +6.5%MEITUAN (03690.HK) -5%
AIA (01299.HK) -1.6%
HKEX (00388.HK) -1.3%
TENCENT (00700.HK) -1.1%
CCB (00939.HK) - 0.9%
PING AN (02318.HK) -0.3%
HSI & HSCEI Constituents on Move:
AAC TECH (02018.HK) +12.7%
GEELY AUTO (00175.HK) -7.1%
SMIC (00981.HK) -3.8%
KUAISHOU-W (01024.HK) -3.2%
HSMI & HSSI Constituents on Move:GUORUI PPT (02329.HK)  +26.9%
XIABUXIABU (00520.HK) -13.6%
TONGDAO LIEPIN (06100.HK) +7.7%, hitting new high
XTEP INT'L (01368.HK) +5.5%, hitting new high
ZHEJIANGEXPRESS (00576.HK) +2.5%, hitting new high
STELLA HOLDINGS (01836.HK) +2.3%, hitting new high

MARKET HOURS NEWS.
GREATWALL MOTOR (02333.HK)  announced that it has recently convened the first session for overseas automobile market research and information exchange conference in Baoding, at which the Overseas Automobile Market Research Information Association has officially been established.   13 Chinese automobile brands were the founding members of the Association, including GREATWALL MOTOR, BYD and Beijing Automotive.
On 8 April, the affiliates of Transfar Chemical and Zhejiang Geely established a vehicle supply chain management company Securities Times citing Tianyancha's findings.
Ximalaya has confidentially filed for a U.S. listing, which will be carried out as soon as the second quarter of the year, aiming to raise US$500 million to US$1 billion, IFR citing insiders.  The Chinese online audio-sharing platform had introduced TENCENT (00700.HK), Primavera Capital, Goldman Sachs, XIAOMI-W (01810.HK), JD-SW (09618.HK)'s JD Digits, and CHINA LIT (00772.HK)  as investors in previous funding rounds.
Procter & Gamble (P&G) joined forces with multiple Chinese tech firms (including ByteDance and TENCENT (00700.HK) and industry groups to test the new CAID advertising technology, hoping to get around Apple (AAPL.US)'s new privacy tool that continues to track users' information, Wall Street Journal citing insiders.
Welink, a Chinese cloud-gaming tech service provider, has recently completed its RMB150-million Series A funding led by XIAOMI-W (01810.HK)  and followed by investors like Shunwei Capital, Dunhong Capital Management, miHoYo and CMGE (00302.HK) the Chinese media reported.   It is expected that the funds will be used for technology research, and development and expansion of the team.
AAC TECH (02018.HK) announced that the group expected the unaudited consolidated profit attributable to owners of the Company for the three months ended 31 March 2021 (Q1 2021) to increase to a range of RMB510 million and RMB550 million, representing an increase of approximately 9.6 times to 10.4 times as compared with that for the same period in 2020 (Q1 2020), mainly due to more normalized market demand in Q1 2021 compared with Q1 2020.
Xiaodian Technology plans to go public in Hong Kong this year, set to file for listing as soon as this month, Chinese media citing insiders. Founded in 2016, the Chinese portable battery-sharing startup recorded over 200 million registered users as of August 2020, with business coverage across 1,600 Mainland cities above the county level, according to its official website.  Xiaodian is now owned as to nearly 9.66% by TENCENT (00700.HK)
Overnight HIBOR last posted at 0.0392%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.11464%, marking a 1-month low.
HSBC HOLDINGS (00005.HK) has blacklisted purchase of MicroStrategy (MSTR.US), a Bitcoin concept stock, on its online trading platform HSBC InvestDirect (HIDC), although users can still hold or sell their existing stakes, said foreign press.
Road Grids struck a partnership with JD Logistics to secure JD-SW (09618.HK)'s designated unmanned delivery points, Chinese media reported.  Both sides will work on data application and innovation of drone delivery, while propelling the normalized operation and safety protection of autonomous delivery in Changshu city as well as other Chinese regions.
TENCENT (00700.HK)'s Tencent Cloud announced the completion and launch of its first Indonesian Internet Data Centre (IDC), marking an addition to its infrastructure network now spanning across 27 regions as well as 61 availability zones.  Indonesia, one of Asia-Pacific's fastest-growing public cloud markets, boasts a CAGR of 25% and expects to ramp up its market size to US$800 million by 2023.
Tencent Cloud announced that it had inked a strategic cooperation deal with Suyin KGI Consumer Finance, backed by Bank of Jiangsu and KGI Bank, and Yunchao Financial Service under the People's Bank of China.  The three parties will join hands in building a joint consumer finance innovation laboratory.

PRE MARKET HOURS NEWS 
FOSUN INTL (00656.HK) announced that on 9 April, it had through the Stock Exchange repurchased 800,000 shares, involving $9.0798 million.
CONCORD NE (00182.HK) announced that its subsidiary Yilan County Century Concord Wind Power had on 9 April entered into two financial lease agreements, respectively involving RMB1.007 billion and RMB143 million.
WANT WANT CHINA (00151.HK)announced that on 9 April, it had through the Stock Exchange repurchased 1.998 million shares, involving $11.7302 million.
Global PC shipments burgeoned 55.2% year-over-year to 84 million units in 1Q21, denoting an extremely high demand during the period, according to IDC's report.
GCL-POLY ENERGY (03800.HK) announced that the Company received a letter from the auditors of the Company, Deloitte Touche Tohmatsu, dated 9 April, in which the Auditors set out issue encountered during the audit process and request the involvement of the Audit Committee in resolving the issue.  The Audit Committee is working together with the Auditors and the management of the Company to resolve such issue in order to finalize the 2020 Annual Results. Trading in the shares of the Company has been suspended since 1 April and will remain suspended until further notice.
The Government said that the preparation work for implementing the consumption voucher scheme (the Scheme) is in full swing, and a number of Stored Value Facility (SVF) operators have been selected to assist in implementing the Scheme.  The selected SVFs include AlipayHK, Octopus, HKT-SS (06823.HK)'s Tap & Go and TENCENT (00700.HK)'s WeChat Pay HK. The Government is discussing with the operators on the detailed arrangements, including system design, detailed procedures, etc., and will announce the details of the Scheme as soon as possible. The target is to commence registration in this summer vacation.
China’s State Administration for Market Regulation (SAMR) is bulking up staff and resources to ramp up efforts in clamping down on anti-competitive behavior, Reuters citing insiders.  Meanwhile, Beijing is revising its competition law by augmenting fines and expanding criteria for judging a firm's market control.
The U.S. government is stepping up scrutiny of China’s plans for digital RMB, Bloomberg learnt from people familiar with the matter, as some officials are concerned about the potential to topple USD as the world’s dominant reserve currency in a long term.
At the 2021 GAC Technology Day, GAC GROUP (02238.HK) (601238.SH) declared the partnership with Huawei to develop an L4-class automatic driving vehicle with mass production slated for 2024.
Premier Li Keqiang stated that the year-to-date economy is on track of stable recovery, but the low base last year has bred incomparable factors whereas the current international landscape has added to overhangs.  With ongoing efforts in normalizing pandemic precautions, Beijing will keep macro policies consistent, stable and sustainable rather than abruptly changing her direction, disclosed Li, and targeted structural tax trims will remain in place.

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