Apr 13 HK/CHINA WRAP Markets sell down in reaction to mixed trade and loans data.


13 Apr

HSI +44pts (+0.2%) 28,497 HSCEI -24pts (-0.2%) 10,850  T/O HK$142.83bn (11.1% DoD)  

EUROPE 
FTSE 100 opened slight lower and the DAX and CAC 40 slightly higher; markets have then traded sideways. Caution ahead of earnings and US inflation data.Pre market UK GDP slightly better than f/cast, German ZEW weaker than expected.
Earnings LVMH reporting after the bell while, the U.K.’s JD Sports and French Connection and Switzerland’s Givaudan all report in the morning.
Data out
EUROZONE
ZEW Economic Sentiment Apr +66.3 vs 74 Mar revised (F/cast was +77)
GERMAN
Wholesale Prices Mar +4.4% MoM vs +2.3% Feb (F/cast was +3.3%)
Wholesale Prices Mar +1.7% YoY vs +1.4% Feb (F/cast was +0.6%)
ZEW Economic Sentiment Apr 70.7 vs 76.6 Mar (F/cast was 78)
ZEW Current Conditions Apr -48.8 vs -61 Mar revised (F/cast was -54)
UK
Balance of Trade Feb £-7.1B vs -3.4b Jan (F/cast was -2.2b)
GDP 3 mth Ave Feb -1.6% vs -1.7 Jan (F/cast was -2%)
GDP Feb -7.8% YoY vs -9.2% Jan (F/cast was -8.6%)
GDP Feb +0.4% MoM vs -2.9% Jan (F/cast was +0.4%)
Industrial Production Feb +1% MoM vs -1.5% Jan (F/cast was +0.4%)
Manufacturing Production Feb -4.2% YoY vs -5% Jan (F/cast was -5.4%)
Manufacturing Production Feb +1.3% MoM vs -2.3% Jan (F/cast was +0.4%)
Construction Output Feb -4.3% YoY vs -3% Jan (F/cast was -2.3%)
Goods Trade Balance Feb £-16.442b vs -9.826b Jan (F/cast was -11.6b)
Data due
UK NIESR Monthly GDP Tracker
US Futures 
Opened flat in Asian time and were little changed until the FDA recommended pausing the J&J vaccine due to clotting issues; futures then sold down Dow -118pts, S&P and NDX -0.3%.
Focus will be on the Inflation data.
Data out
NFIB Business Optimism Mar 98.2 vs 95.8 Feb (F/cast was 99.1)
Data ahead
Core Inflation and Inflation, Redbook, API Crude Oil Stock Change. Fed Webinar event on race and economy.
GRAB to go public in a $40bn Spac deal
Nvidia (NVDA.US) said its first-quarter revenue will top earlier assumption of US$5.3 billion. On the release, Nvidia's shares leaped 5.6% overnight. Nvidia's CFO Colette Kress expected chip demand to keep exceeding supply for much of 2021 and also announced to adopt its "Grace" central processing unit (CPU) made from Arm's technology, posing a direct challenge to its rival Intel. Intel's -4.2% after hours

CHINA 
CSI 300 closed -8pts (-0.2%) @ 4,940
CSI 300 opened higher and worked higher through the morning to 4,995 but failed to regain the 5,000 level and eased slightly into lunch. PM saw a sharp selloff to 4,930 and then traded sideways with a small rally into the close. Benchmark indexes were mixed. Trade data was mixed; imports rose in US$ terms reflecting higher commodity prices but exports missed raising concerns about global demand changing from covid safety equipment back to more normal products. It compounds the concerns about tightening following the New Loans data with expectations of further tightening ahead. Next data drop is Friday when we get GDP, House Price Index, Industrial Production & Capacity Utilisation, Retail Sales and Unemployment.
Leaders were Food and Agri products, Liquor, Medical-Beauty, Software, and Electronic Components.
Laggards were Tourism, Household Goods, Carbon-Neutral, Power and Utilities, Mining and Resources.
Shanghai Comp -17pts (-0.5%) @ 3,396
Shenzhen Comp +33pts (+0.2%) @ 13,528
ChiNext Comp +11pts (+0.4%) @ 2,831
CHINA DATA 
Out 30 minutes after market opened
Balance of Trade Mar $13.8bn vs $103.25bn Feb (F/cast was $51bn)
Exports Mar +30.6% YoY vs +60.6% Feb (Consensus is 35.5%)
Imports Mar +38.1% YoY vs 22.2% Feb (Consensus is 23.3%)
HSI 
Pre mareket opened @ 28,578 +105 pts vs +95pts ADR’s
Market worked higher to 28,880 level late morning but sold down into lunch. Selling continued in the PM to 28,460 around yesterdays close before bouncing; worked back to test 28,600 a few times before selling down to test yesterday’s closing level support; ticked up 21pts in the closing auction.
Strong sales data from sportswear makers and news the HK govt's plan to ease social distancing rules pushed the benchmark indexes higher, but the broad market retreated in the afternoon amid regulatory concerns on the E-commerce firms.
HONG KONG DATA 
The Centre for Health Protection reported 13 new covid cases (vs 13 cases Monday)  one from unknown origin
Short Selling Tuesday 14.6% vs 14.8%Monday
Top Shorts  Bud Apac (1876) 48%, Country Garden (2007) 45%, BankComm (3328) 33%, ICBC (1398) 27%, Bank of China (3988) 27%, Henderson Land (12) 27%, Anta Sports (2020) 25% HSBC (5) 25%,  SinoPharm (1177) 25%

AFTER MARKET NEWS 
Guangzhou Juhe Information Technology, an affiliate of BABA-SW (09988.HK)'s UC Browser, was fined RMB2.0916 million for alleged false and illegal advertising, announced SAMR's Guangzhou branch.  The penalty comprised a fine of RMB2.078 million and confiscation of RMB13,400 in advertising fees.
Zhejiang Geely Holding Group is planning to float Polestar, the EV manufacturer, onto Nasdaq through another SPAC, luring US$300 million, foreign media cited sources. The valuation is as high as US$40 billion.
In view of the present economic condition and epidemic repercussion, the Hong Kong government does not perceive now is the right time to adjust rates of profit tax and salary tax, yet review will be ongoing with timely amendment, said Christopher Hui, Secretary for Financial Services and the Treasury.  Separately, there is no condition to introduce new tax items as the government is focusing on fighting plague and revitalizing the economy, Hui added. However, relative study and preparation work will be moved along to seek consensus on new tax items.
Although the Macau SAR government has been striving to revive the Individual Visit Scheme (IVS) e-visas, this is under the purview of the central government, as Radio Macau cited Chief Executive Ho Iat Seng.  Ho is in close contact with China's tourism industry, which promised to put priority on Macau tours once Beijing resumes e-visa approval for travelling abroad.
The NPC Standing Committee had decided to refine Hong Kong's election systems and approved amendments to Annex I and II of the Basic Law, said Chief Executive Carrie Lam at the press conference.  The new Legislative Council election, originally slated for 5 September 2021, shall be postponed until 19 December 2021, Lam added.   The Election Committee subsector elections will be held on 19 September 2021, while the Chief Executive election will be carried out on 27 March 2022.
MEITUAN-W (03690.HK), purportedly planning for share placement, cratered nearly 7.45% to close at $276.  The MEITUAN-W's shares owned by Goldman Sachs or held on behalf of customers rose from 132 million to 434 million weekly, i.e. a stake increase from 2.24% to 7.36%, according to CCASS shareholding information. This may imply the transfer of over 300 million MEITUAN-W shares (or 5.12% shareholdings held in real name) from investors to Goldman Sachs.
NCI (01336.HK) announced that the accumulated gross premium income of the Company for the first three months of 2021 was RMB63.392 billion, up 8.8% year-over-year.
CHINA LIFE (02628.HK) announced that the accumulated premium income of the Company for the period from 1 January 2021 to 31 March 2021 was about RMB323.9 billion (unaudited), up 5.23% yearly.
Bitcoin notched another record high, surpassing US$62,000. The cryptocurrency expanded by 2.47% to last post at US$62,418, after peaking at US$62,568.
TRIP.COM-S (09961.HK) (TCOM.US) IPO was over-subscribed by more than 16 times, with frozen capital of approximately HK$12.5 billion, according to market sources.  The stock was said to be priced at HK$268 each, representing a discount of around 2% to its US closing price yesterday.

MARKET COMMENT 
*E-COMMERCE MIXED ALIBABA's (9988 HK +0.7%) but was +4% intraday after Ant Group agrees to drastically revamp its business, will now effectively be supervised more like a bank, after Chinese regulators called on the company to restructure as a financial holding company. Concerns remain about whether the others will be fined or not. TENCENT (700 HK -1%) and MEITUAN (3690 HK -7.6%) JD.COM (9618 HK -3.6%) BIDU (9888 HK -2%)  34 companies have been called into a meeting and have been asked to to conduct self checks within one month and rectify accordingly
*HK RETAIL FIRM saw support as Hong Kong plans to ease social-distancing rules as outlined  yesterday.   CHOW TAI FOOK (1929 HK +2%) said its first-quarter sales grew 153% YoY. It said its 4Q Mainland China Same-store Sales +141.2%.GIORDANO (709 HK +2.7%) LIFESTYLE (1212 HK +1.2%) BONJOUR (653 HK +3.15) TAI HING (6811 HK +5.7%) CAFE DE CORAL (341 HK +1.2%).
*CHINESE BANKS STRONG after new yuan Loans in March rose ahead of estimates.  That pushed bank lending in the first quarter to a record high of 7.67t yuan +VE short term.
CCB (939 HK +1.8%) BOC (3988 HK +1.3%) ABC (1288 HK +1.3%).
*SPORTSWEAR/APPAREL MAKERS FIRM on strong earnings data.
YUE YUEN (551.HK +5.1%) reported 1Q net operating income +26.6% YoY to US$2.49b.
POU SHENG INTL (3813.HK unch) March consolidated operating income of 2.35b yuan up 55% YoY. Net comprehensive operating income was 7.307b yuan, an increase of 47.8% YoY.
SHENZHOU (2313 HK +4.1%) LI NING (2331 HK +1.7%) ANTA (2020 HK +1.3%) DONGXIANG (3818 HK +3.2%).
*AUTOs MIXED  on increasing rising competition as Huawei has entered into cooperation with BAIC MOTOR (1958 HK +0.4%) the two companies will unroll a series of new vehicles. The firm is also teaming up with GAC GROUP (2238 HK+0.2%) and CHANGAN AUTO to create a sub-brand in the automobile sector. Meanwhile, Huawei will invest US$1b in self-driving and electric-car technologies, accelerating plans to compete with Tesla and Xiaomi.
BYD (1211 HK -1.2%) EVERGRANDE EV (708 HK +1%).
*GAS COMPANIES STRONG on the news that CHINA GAS (384 HK +5.2%) and the gas & power unit of CNOOC (883 HK -1.3%) agree to collaborate on hydrogen projects. CR GAS (1193 HK +0.12%) ENN ENERGY (2688 HK +1.5%).


Regional Markets
AUSTRALIA 
Opened higher and tested to 7,000 late morning but failed to break out and then consolidated back flat. Traded sideways from around midday to 3pm but then sold off to 6,960 level before working slightly better into the close
Data
Business Confidence Mar 15 vs 18 Feb revised (F/cast was 18)
JAPAN
Nikkei opened higher and worked higher through the morning to 29,900 level but then eased back in the pm session To close +213pts (+0.7%) @ 29,752
Topix traded in a similar pattern to close +4pts (+0.2%) @ 1,959
Tomorrow pre market Machinery Orders
S KOREA  
Kospi trended higher though the morning driven by hopes of more earnings hikes and peaked at 3,173 around 12:30 before easing slightly in the PM to 3,160 and then worked higher into the close +34pts (+1.1%) @ 3,169
Kosdaq Traded in a similar pattern but with some exaggerate moves closed +10pts (+1%) @ 1,010 building on yesterday’s ten year high.
Tomorrow pre market Export/Import prices and Unemployment
Press reports Korea's crypto investors appear to be shifting toward minor virtual coins
TAIWAN 
Opened higher and worked higher to 17,041 around 10:30am but the trended lower with selling accelerating in the last hour to close -35pts (-0.2%) @ 16,825
CONNECT FLOWS
Shanghai 
Northbound RMB 39,229m Sell 18,312m : 20,918m Buy
Southbound HK$ 11,743m Sell 6,365m : 5,378m Buy
Shenzhen 
Northbound RMB 45,882m Sell 20,008m : 25,873m Buy
Southbound HK$ 13,193m Sell 5,484m : 7,709m Buy

Active Heavyweights
MEITUAN (03690.HK) -7.4%
AIA (01299.HK) +3.2%
CCB (00939.HK) +1.7%
TENCENT (00700.HK) -0.9%
HKEX (00388.HK) -0.6%
BABA (09988.HK) +0.4%
PING AN (02318.HK) -0.1%
HSI & HSCEI Constituents on Move:
WHARF REIC (01997.HK) +6.2%
CHINA GAS HOLD (00384.HK) +5.8%, hitting new high
SHENZHOU INTL (02313.HK) +4.1%
CHINA RES BEER (00291.HK) +4%
JD (09618.HK) -3.5%
CITIC (00267.HK) +3.3%
KUAISHOU-W (01024.HK) -3.1%
HSMI & HSSI Constituents on Move:
XTEP INT'L (01368.HK) +15.2%, hitting new high
MOBVISTA (01860.HK) +12.7%
GUORUI PPT (02329.HK) +11.1%
CHOW SANG SANG (00116.HK) +6.3%, hitting new high
TONGRENTANGCM (03613.HK) +3.9%, hitting new high
TONGDAO LIEPIN (06100.HK) +3.6%, hitting new high

MARKET HOURS NEWS.
The 30% increment (from 0.1% to 0.13%) on the stock stamp duty aims to raise the government income primarily, without any preset sunset clauses, Christopher Hui, Secretary for Financial Services and the Treasury, reinstated at the Finance Committee Meeting of the Legislative Council. In Hui's observation, the news has been digested by the market for a while, whereas the government does not have a Plan B in hand. That said, the Secretary foretold a review will be mounted based on the economic environment and market changes.
Recently, there have been fake MEITUAN-W (03690.HK) consumer service representatives asking users to unregister campus loan accounts and change identity information, subsequently guiding them to borrow and transfer money.  MEITUAN-W stressed that Meituan Finance had never launched any campus loan products. Equally, its consumer service staff will not ask users to deregister accounts, borrow money or make transfer via phone calls.
State Administration for Market Regulation (SAMR), Cyberspace Administration of China (CAC) and State Taxation Administration (STA) convened an administrative guidance meeting, asking various internet platform firms to conduct comprehensive self-inspections within a month and make thorough rectifications one by one. Equally, platform companies shall make public their commitments to operate upon law and accept supervision from society.
BABA-SW (09988.HK)'s Tmall announced to lower the threshold for new shop opening from next Monday (19 April), under which a "Tmall Operation Trial Period" will be introduced for the first time to streamline the approval steps conducted by BABA-SW. As long as a trial shop is able to pass the seven-month operation assessment, it is eligible to become an official Tmall shop.
XIAOMI-W (01810.HK) announced that its Redmi brand has completed the entry-to-flagship product deployment, and the first Redmi game phone will be unveiled at end-April. The company said it decided to dabble in e-sports arena since its game handset can cater users' demand, given 70% Redmi users being teenagers who spend way-above-average time on game playing.
The Hong Kong government will relax entry curbs on Mainland residents by freeing them from a 14-day mandatory quarantine under the Return2hk Scheme starting mid-May. Citigroup saw this as a vital step for AIA (01299.HK) HK's MCV business, as Mainland travelers with tourist visas will sequentially be permitted to enter Hong Kong. AIA was restated Buy at a $116 target.
Fitch rated TENCENT (00700.HK) (A+/ Stable)'s proposed US dollar senior unsecured notes at A+. S&P Global Ratings gave an A+ long-term issue rating  The notes will be issued under its USD30 billion medium-term note programme.
Overnight HIBOR last posted at 0.0381%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.11393%, marking a 1-month low.Moody's expected Alibaba’s revenue growth and profit margin to be constrained by the recent RMB 18.2bn penalty, likely seeing negative credit impact. However, the behemoth’s robust financial profile and better access to funding channels shall help it navigate the volatility.
At LENOVO GROUP (00992.HK)'s FY21/22 oath-taking ceremony, Chairman and CEO Yang Yuanqing foretold the resumption of promotions and salary hikes for the new fiscal year, reported Chinese media.  The group generated 12% YoY more turnover and 48% YoY more pre-tax profit for the first three fiscal quarters, poised to reach a new milestone in the full year, he added.
Telegram is gearing up for an IPO within the coming two years, likely choosing to list on HKEX (00388.HK) or the Nasdaq, Russia's Vedomosti citing several insiders.  The messaging app, which could be valued at US$30-50 billion, may go public through a traditional IPO model, direct listing or an SPAC merger.

PRE MARKET HOURS NEWS 
HNA Technology (600751.SH) announced the results for 2020. The loss was RMB9.789 billion against earnings of RMB522 million from a year ago. Basic LPS was RMB3.38.
TRIP.COM-S (09961.HK) (TCOM.US) expected to go public on 19 April, priced its offer shares in the Hong Kong dual listing at HK$268 each, down 19.5% against the maximum offer price of HK$333, IFR citing insiders.  Based on Trip.com's US closing price of US$35.2 yesterday, it represented a discount of around 2% to the Hong Kong offer price of HK$268.
XIAOMI-W (01810.HK) held a ceremony at Beijing Xiaomi Technology Park yesterday (12 April) for the donation to Tsinghua University. Through the donation, the company will set up a "Xiaomi Artificial Intelligence Innovation Research Fund" at the University's Intelligent Industry Research Institute, aiming to encourage the innovation and research of AI, robots, medical health, and so on.
Roundtable lawmaker Michael Tien learnt that the Government intended to disburse the $5,000 consumption vouchers in two batches of $2,500 each, reported local media. Recipients will then have two months to spend each installment, Tien added.
The TENCENT (00700.HK) backed Waterdrop is facing pushback from Chinese watchdog on its U.S. IPO plan for its risky business model, Reuters citing insiders. Waterdrop,  gearing up for IPO with financial advisers since mid-2020, had filed confidentially for the float. However, China's CBIRC questioned the insurance tech firm's operation risks, leading to a delayed IPO process.
Morgan Stanley has axed its stake in Baidu (BIDU.US) to 0.9%, falling sharply from a 5.2% stake showed on a previous filing dated 29 March, according to U.S. SEC documents.
BABA-SW (09988.HK) announced that Ant Group, an unconsolidated related party of the Group, announced that since December 26, 2020, when financial regulators put forward five requirements to Ant Group for the rectification of its key businesses, under the regulators’ guidance, and in accordance with regulatory requirements, Ant Group has completed the formulation of its rectification plan.   Ant Group, in its entirety, will apply to set up a financial holding company to ensure its financial-related businesses are fully regulated.
TENCENT (00700.HK) announced that on 13 April 2021, the Company has updated the global medium term note programme to include, among other things, the Company’s recent corporate and financial information and increase the Programme Limit from US$20 billion to US$30 billion. The Company also proposes to conduct an international offering of the Proposed Notes to certain professional investors. The Company has appointed Morgan Stanley, BofA Securities and Deutsche Bank as the arrangers under the Programme.
COL (300364.SZ) announced the conclusion of the strategic cooperation framework agreement with Tencent Technology, whereby both sides are set to forge a close alliance in creating an environment for industrial Internet development, improving the level of video transformation in the digital publishing industry, and engaging in the WeChat ecological strategy.
TENCENT (00700.HK)'s first data center in Indonesia has been put into use in Jakarta, Sina Technology reported. The tech magnate will also establish data centers in Thailand and South Korea.   Three years ago, Tencent Cloud ignited expansion globally, operating approximately 19-20 data centers overseas currently. With the continuous growth of data traffic, the demand for data centers is vibrant.   According to the latest report of Synergy Research, the data center market will maintain steady growth in five years.
China's PBoC, CBIRC, CSRC and SAFE met with Ant Group again yesterday (14 April).
Accordingly, Zhejiang's local financial regulatory bureau and the concerning units will act in concert with central authorities and urge Ant Group to rectify thoroughly and effectively based on regulatory requirements and reformative plans. The group will be asked to ensure its law-abiding operation.
Governor of Jiangsu Province Wu Zhenglong, meeting with XIAOMI-W (01810.HK) President Xiang Wang in Nanjing, expressed his hope that both parties could expand cooperation fields and deepen the degree, Xinhua Daily reported.  Wang said XIAOMI-W will regard Jiangsu as an important base for development layout, while amplifying technological development, expediting project construction and perfecting the industry ecology.
SD GOLD (01787.HK) issued a profit warning. Based on China Accounting Standards for Business Enterprises, it is expected that the Group will record a loss of between RMB250 million to RMB350 million for 2021 1Q (net profit for the corresponding period of last year: RMB563 million).
XIAOMI-W (01810.HK) disclosed that it repurchased 19.97 million shares on the Stock Exchange on 12 April, involving approximately $499 million.

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