Apr 30 HK/CHINA WRAP Market close lower; weakness in banks and e-commerce China closed Monday

30 Apr

HSI -578pts (-2%) 28,725 HSCEI -225pts (-2%) 10,825  T/O HK$125.83bn (+5.1% DoD but just +3.1% if you exclude the Tsingtao Brewery placement)

Markets opened slightly higher on some good premarket data but are drifting lower as Eurozone data mixed.
Also helping on the open was Barclays announced Q1 beat forecasts but largely due to provision write backs which saw the bank selling off
BNP Paribas also weak despite beating forecasts in Q1 It posted a net income of 1.8 billion euros versus the 1.2 billion euros estimated by analysts. AstraZeneca strong in early trading, after it said on Friday its coronavirus vaccine added $275 million in sales in the first quarter.
Flash Core Inflation Rate Apr +0.8% YoY vs +0.9% Mar (F/cast was +1%)
Flash Inflation Rate Apr +1.6% YoY vs +1.3% Mar (F/cast was +1.5%)
Flash Inflation Rate Apr +0.6% MoM vs +0.9% Mar (F/cast was +0.5%)
Flash GDP Growth Rate Q1 -0.6% QoQ vs -0.7% Q4 (F/cast was -1%)
Flash GDP Growth Rate Q1 -1.8% YoY vs -4.9% Q4 (F/cast was -2%)
Unemployment Rate Mar 8.1% vs 8.2% Feb revised (F/cast was +8.4%)
GDP Growth Rate Flash Q1 -1.7% QoQ vs +0.5% Q4 revised (F/cast was -1.4%)
GDP Growth Rate Flash Q1 -3% YoY vs -3.3% Q4 revised (F/cast was -2.9%)
GDP Growth Rate Prelim Q1 +0.4% QoQ vs -1.4% Q4 (F/cast was -0.3%) Household Consumption Mar -1.1% MoM vs +0.3% Feb revised (F/cast was +0.3%)
Inflation Rate Prelim Apr +1.3% YoY vs +1.1% Mar (F/cast was +1.4%)
Inflation Rate Prelim Apr +0.2% vs +0.6% Mar (F/cast was +0.3%)
PPI Mar +1% vs +0.9% Feb revised (F/cast was +0.3%)
Nationwide Housing Prices Apr +7.1% YoY vs +5.7% Mar (F/cast was +4.9%)
Nationwide Housing Prices Apr +2.1% MoM vs -0.3% Mar (F/cast was +0.7%)
US Futures 
Opened in Asian time lower Dow -20pts, S&P -0.1% and NDX slight -VE despite good result from Amazon; they are currently Dow -150pts S&P -0.6% and NDX -0.7%
Twitter weak as active users missed, Apple weak as EU upholds Spotify’s complaint that it broke EU competition rules; which could influence its case with Epic
Personal Income and Spending, Employment Cost data (Index, Benefits and Wages) PCE Price Index, Core PCE Price Index, Chicago PMI, Michigan Data Final (Consumer Expectations, Current Conditions, 5 year Inflation Expectations, Consumer Sentiment) Baker Hughes Rig Count.
Earnings: ExxonMobil, Chevron, Colgate-Palmolive, AstraZeneca, Clorox, AbbVie, Weyerhaeuser, Illinois Tool Works, CBOE Global Markets, Lazard, Newell Brands, Aon, LyondellBasell, Pitney Bowes, Phillips 66, Charter Communications

CSI 300 closed -41pts (-0.8%) @ 5,124
CSI300 opened lower on weak PMI data , whilst the logistics jam, tight container supply and shipping rate impacted, the worry was that new orders declined. As I warned many of the firms that re-tooled for PPE are seeing orders decline as inoculations are rolled out whilst their core businesses are not seeing a recovery.
Market drifted lower in the first hour to 5,133 level before a small rally on the Caixin PMI data which improved and showed costs being passed on (inflationary), but it failed to regain yesterday’s close and eased lower into lunch. PM saw an initial sell off to 5,095 level which was tested for about 20 minutes before a bounce and then traded sideways into the close.
Some de-risking ahead of the holiday with markets closed Monday and Tuesday for Labour Day holidays.
Leaders were Healthcare as the India continues to see a high level of cases
Laggards were energy and financial sectors
Shanghai Comp -28pts (-0.8) @ 3,447
Shenzhen Comp -26pts (-0.2%) @ 14,439
ChiNext Comp +16pts (+0.5%) @ 3,041

Manufacturing PMI Apr 51.1 vs 51.9 (F/cast was 52.1)
Non Manufacturing PMI Apr 54.9 vs 56.3 (F/Cast was 56.5)
Caixin Manufacturing PMI Apr 51.9 vs 50.6 Mar (F/cast was 50.9)
Manufacturing weak as Output, New Orders and Exports were at slower rates.  Employment fell but input costs and output charges grew and sentiment weakened.
Non Manufacturing New Orders and Exports fell Employment shrank at a faster rate. Input costs rose for the twelfth month and selling charges increased less.

NBS senior statistician Zhao Qinghe said that issues like chip scarcity, international logistics jam, tight container supply and shipping rate hike remained formidable, as cited respondents' feedback when interpreting China's April 2021 PMI data.Whilst that is fair it doesnt explain the drop in New orders, which is the key factor.

Caixin Output, New orders and Exports rose along with employment. Suppliers’ delivery times fell deeper into negative territory, amid logistical delays. Prices data showed that higher raw material costs led to a steeper increase in input prices, which were generally passed on to clients in the form of higher charges. Sentiment remained upbeat.

Pre market opened @ 29,143 -160 vs +174pts ADR’s
Market sold down to 28,890 level and then traded sideways into lunch. PM eased lower to 28,800 level and traded sideways until about 2:45pm after which it drifted lower to the 28,720 level and then sideways for the last 30 minutes into the close.
Chinese Financials weak after the bank results along with E-Commence the drag on the index but most stocks weak; except Shippers (good Cosco #’s overnight) Pharma and Petrochina (after swinging into profit) all saw interest.
The Hong Kong Monetary Authority (HKMA) announced that excluding the deposits created by the initial public offering (IPO)-related loans, total deposits -2% in March and Hong Kong dollar deposits with authorized institutions -0.4% in March 2021.
Q1 2021 as a whole, total deposits +1.2% and Hong Kong dollar deposits +2.7% and increased by +0.9% and +2.1% respectively if the deposits created by IPO-related loans were excluded.
The Hong Kong Monetary Authority (HKMA) announced the results of the residential mortgage survey. Mortgage applications March  +44.1% MoM to 17,946.
Mortgage loans approved in March +39% MoM to HK$53 billion.
Estimated number of residential mortgage loans (RMLs) in negative equity decreased to 67 cases at end-March 2021 from 185 cases at end-December 2020.
These cases were related to bank staff housing loans or RMLs under mortgage insurance programme, which generally have a higher loan-to-value ratio.

The Centre for Health Protection reported 4 new covid cases (vs 15  Thursday), 1 local from unknown source.  
As the case involves the N501Y mutant strain, the CHP carried out prudent measures on infection control to stop the potential risk of spread of the N501Y mutant strain. Compulsory quarantine for asymptomatic residents was arranged last night for units on all floors of the building where the patient resided (Tower 11, Carmel Cove, Caribbean Coast, 1 Kin Tung Road, Tung Chung).
Short Selling Friday 15%  vs 17.4% Thursday
Top Shorts
  Haidilao (6862) 41%, Ali Health (241) 36%, Wharf REIC (1997) 36%, Sunny Optical (2382) 33%, CK Asset (1113) 31%, Sino BioPharm (1177) 30%, Bank Of China (3988) 30%, BOCOM (3328) 27%, Bud Apac (1876) 26% (reports 5 May), Galaxy Ent (27) 24%

Secretary for Food and Health Sophia Chan told reporters that the double mutant strain had been diagnosed in a 39-year-old Filipino domestic helper.  Accordingly, all foreign domestic helpers (FDHs) in Hong Kong will have to take compulsory COVID-19 tests by 9 May as the double variant is more transmissible than older strains, she added. Equally, Labour and Welfare Bureau will ask FDHs applying for employment visas or visa renewal to receive vaccine shots recognized by Hong Kong, said Secretary for Labour and Welfare Law Chi-kwong.
SWIRE PROPERTIES (01972.HK) announced the launch of a featured three-room unit of EIGHT STAR STREET, in salable area of 913 sq. ft., which will be open for tender from 4 May to 15 June.  The indicative price is $43.688 million, or $47,900/sq. ft..
Chinese State Administration of Market Regulation announced RMB500,000 in penalty on TENCENT (00700.HK) and such other enterprises under the antitrust regulation.
Centa-City Leading Index (CCL) last tracked at 183.16, up 1.65% weekly. The figure busted above the 2020 peak and hit an 84-week high, reflecting market conditions for the first week following Easter holiday.  Centaline Property Research, noted an expanding home price uptick amid homebuyers' enthusiasm during the long holiday. They believed CCL will track a wider volatility going ahead, nearing the historical high set in June 2019 (i.e. 190.48).
*PETROCHEMS MIXED  Crude oil held gains overnight on a confident outlook on demand from OPEC and its allies, despite risks from India’s Covid-19 crisis. PETROCHINA (857 HK +2.5%) reported IFRS net 1Q of 27.72b yuan vs loss 16.20b yuan last year
CH OILFIELD (2883 HK +0.6%) SINOPEC (386 HK -2.3%) ANTON (3337 HK -2%).
*CHINESE BANKS WEAK after results showed margins squeezed. ICBC (1398 HK -3.6%) reported profit +1.46% for the period. Its smaller rivals, including BOCOM (3328 HK -2.4%), ABC (1288 HK -1.6%), BOC (3988 HK -1.9%) and CCB (939 HK -3.4%), all saw profit increases but all below 3%.
*HONG KONG BANKS MIXED . STANDARD CHARTERED (2888 HK +2.3%) plans to halve its global branch networks to around 400 to cut long-term costs after the British bank reported a stronger than expected first-quarter profit. Hong Kong branches will not be affected. HSBC (5 HK +1.1%) HANG SENG (11 HK -0.7%).
BOCHK (2388 HK -0.9%) reported 1Q net operating income before impairment HK$13.42b, -9.8% YoY but +16.3% QoQto HK$13.42b.
*E-COMMERCE/INTERNET WEAK a major drag on the index after Chinese regulators summoned 13 internet companies and ordered them to rectify their digital financial businesses. The golden days of fintech and innovation for these companies and the financial institutions they worked with has ended.
TENCENT (700 HK -1.3%) ALIBABA (9988 HK -2.7%) KUAISHOU (1024 HK -3.5%) MEITUAN (3690 HK -3.6%).
JD.COM's (9618 HK -2.7%) logistics unit has been given green light for its HK IPO. JDLogistics is seeking to raise up to US$4b.
*HK PROPERTY WEAK despite good demand at new projects and rising prices. HENDERSON LAND (12 HK -0.7%) priced its project in Kai Tak the highest ever in the district amid bullish sentiment as ROADKING (1098 HK -0.4%) received 5,500 cheques for its SouthLand project in Wong Chuk Hang. HENDERSON LAND also revealed the first price list of The Henley I yesterday, offering 96 units, at an average psf price came in at HK$26,448, which is 11 percent more expensive than Wheelock Properties' Kai Tak project Grande Monaco launched in January. SHKP (16 HK -1.5%) NWD (17 HK -1.9%) CKA (1113 HK -0.6%).
*BREWERS WEAK  after TSINGTAO's (168 HK.-4.4%) shareholders sold 33m shares in block trade to raise $304m. The shares were being offered at ~3.9% discount to the last closing px of HK$73.75.
BUD APAC (1876 HK -3.35) reports 5 May, CR BEER (291 HK -3.2%).
*AUTO WEAK  after earnings results.
GAC (2238 HK -1%) reported 1Q net income surged 1897% YoY to 2.37b yuan vs 118.5m yuan.
GREATWALL (2333 HK -5%) GEELY (175 HK -3.8%) BYD (1211 HK -5%).
TSE SUI LUEN JEWELLERY (417 HK +7.8%) expects to report a net loss of at least HK$40m for the year ended March, compared with a loss of HK$90 million a year ago.
CANSINO BIO (6185 HK +3.5%) after reported 1Q revenue 466.8m yuan, net loss 14.1m yuan.
WEICHAI PWR (2338 HK -2.9%) after reported 1Q Net Income 3.34B Yuan Vs. 2.06B Yuan YoY
 Regional Markets 
ASX opened lower and drift lower through the day, currently -63pts (-0.9%) @ 7,020 the day low.
PPI Q1 +0.4% QoQ vs +0.5% Q4 (F/cast was +0.7%)
PPI Q1 +0.2% YoY vs -0.1% Q4 (F/cast was +0.4%)
Private Sector Credit Mar +1% YoY vs +1.6% Feb (F/cast was +1.8%)
Private Sector Credit Mar +0.4% MoM vs +0.2% Feb (F/cast was +0.4%)
JAPAN I said Japan was closed apologies my mistake it will be closed Mon - Wed (Consitution Memorial Day, Greenery Day and Children’s Day) and re-open Thursday
Nikkei opened lower on mixed data CPI missed but Industrial Production beat, and then Manufacturing PMI came out better saw a small rebound but then trended lower before a final uptick to close -241pts (-0.8%) @ 28,813
Topix opened flat and traded sideways for the first two hours but dipped into lunch. PM the downward trend continued and it close just off the day low -11pts (-0.6%) @ 1,898
Market now closed until Thursday.
Data pre market
Unemployment Rate Mar 2.6% vs +2.9% Feb (F/cast was +2.9%)
Tokyo Core CPI Apr -0.2% vs -0.1% Mar (F/cast was zero %)
Tokyo CPI Apr -0.6% vs -0.2% Mar (F/cast was -0.1%)
Jobs/Application Ratio Mar 1.1 vs 1.09 Feb (F/cast was 1.05)
Industrial Production Prelim Mar +2.2% MoM vs -1.3% Feb (F/cast was -1.5%)
Industrial Production Prelim Mar +4% YoY vs -2% Feb (F/cast was -1%)
Foreign Stock Investment ¥492.2B vs ¥286.3B prior
Foreign Bond Investment ¥132.8B vs ¥906.5B prior
After the open
Manufacturing PMI Apr 53.6 vs 52.7 Mar (F/cast was 53.3)
Consumer Confidence Apr 34.7 vs 36.1 Mar (F/cast was 35.5)
Housing Starts Mar +1.5% YoY vs -3.7% Feb (F/cast was -7%)
Construction Orders Mar 12.5% vs +2.5% Feb (F/cast was +3.7%)
Kospi A choppy start after mixed data dipped to 3,160 in the opening minutes then back to trading around flat before a sell off to 3,145 level. Bounced to 3,165 but then sold down to test 3,145, then a small bounce before drifting lower into the close -26pts (-0.8%) @ 3,147
Kosdaq Similar pattern currently -7pts (-0.7%) @ 983
Data Pre market
Construction Output Mar -5.7% YoY vs -8.7% Feb (F/cast was -3.5%)
Industrial Production Mar +4.7% YoY vs +0.9% Feb (F/cast was +2.5%)
Industrial Production Mar -0.8% MoM vs +4.3% Feb (F/cast was +0.9%)
Manufacturing Production Mar vs +1% Feb (F/cast was +3.5%)
Retail Sales Mar +2.3% MoM vs -0.8% Feb (F/cast was +1.1%)
Retail Sales Mar +10.9% YoY vs +8.4% Feb (F/cast was +10%)
Opened flat initially rose to 17,676 then down to 17,590 before working higher to 17,710 and then sold down over the next 2 hours to 17,550 before a small bounce and traded sideways around flat to close -1pts (unch) @ 17,567
Data out after market
GDP Growth Rate for Q1Adv 8.16% vs +5.09% Q4 revised (F/cast was +4.5%)
CONNECT FLOWS (no southbound trading)
Shanghai Northbound     RMB 55,248m               Sell 28,370m :  26,878m Buy
Shenzhen Northbound     RMB 61,862m               Sell 30,991m :  30,871m Buy

Active Heavyweights
AIA (01299.HK) -4.4%
MEITUAN (03690.HK) -3.6%
CCB (00939.HK) -3.5%
BABA (09988.HK) -2.8%
HKEX (00388.HK) -2.1%
PING AN (02318.HK) -1.5%
TENCENT (00700.HK) -1.3%
HSI & HSCEI Constituents on Move:
PSBC (01658.HK) -4.2%
GEELY AUTO (00175.HK) -3.8%
JD HEALTH (06618.HK) -3.7%
ICBC (01398.HK) -3.6%
GALAXY ENT (00027.HK) -3.6%
KUAISHOU-W (01024.HK) -3.5%
SANDS CHINA LTD (01928.HK) -3.4%
BUD APAC (01876.HK) -3.3%
CHINA RES BEER (00291.HK) -3.2%
TECHTRONIC IND (00669.HK) -3.2%
SUNNY OPTICAL (02382.HK) -3.2%
HSMI & HSSI Constituents on Move:
HEC PHARM (01558.HK) -13.2%
FOSUN PHARMA (02196.HK) +7%, hitting new high
XINYI GLASS (00868.HK) +3.2%, hitting new high
HOPSON DEV HOLD (00754.HK) +3%, hitting new high

As part of the overhaul plan of Founder Group, certain equity interest of Founder Securities (601901.SH)  may be bought by PING AN (02318.HK), Bloomberg quoted people with the knowledge of the matter.  The working team of PING AN has conducted due diligence on Founder Securities, and considered the merger between the latter and Ping An Securities, people familiar with the matter said.  The related plan is purportedly still subject to the final approval of shareholders, creditors and regulatory authorities.
BABA-SW (09988.HK) freezes the pay rise on senior executives this year, and instead gives bigger wage hike on junior staff in a bid to retain manpower amid regulatory clampdown, Reuters cited people with the knowledge of the matter.
PING AN (02318.HK) Co-CEO Jessica Tan, in McKinsey's Future of Asia Podcast, predicted China's healthcare market scale to jump from RMB6 trillion in 2019 to RMB16 trillion in 2030. She attributed the rapid growth in such demand to population ageing, higher household income, compliance with national incentive policies and regulation landscape.
Alibaba Cloud and QiaoYin (002973.SZ)  teamed up to help with the construction of a smart city big butler and big data platform. Accordingly, both parties strive to fuel digital development of both city management and big data through a cross-border and multi-dimensional city management service cloud platform, plus an intelligent city big butler IoT.
Panasonic is in talks with TCL for a plan to outsource its TV production to the latter. A deal was expected as soon as next month.
Canning Fok, Group Co-Managing Director of CKH HOLDINGS (00001.HK), had earlier sold his No. 64 and 66 Houses at Chung Hom Kok Road, Stanley at approx $900 million by way of selling companies. According to the Land Registry, Fok resigned as the director of the related companies early this month, as such the houses were transferred.   The purchase prices of Fok's houses were not shown on the Registry. Yet agent revealed that the two properties had been bought in around 1992 and 1994 for a total consideration of $58.5 million. Based on the transaction price, the book gain exceeded $840 million, marking a valuation appreciation of 14 times.
The Transport and Housing Bureau (THB) announced latest statistics on private housing supply in primary market as of 31 March 2021, expecting 93,000 units to be offered in the coming three to four years, up 1,000 units from the end-2020 figures.
This will include 12,000 unsold units in completed projects, 56,000 units under construction less not yet sold by presale, and 25,000 units from disposed sites where construction may start anytime.
BioNTech CEO Ugur Sahin told CNBC he is confident that the Covid-19 vaccine co-developed by the drugmaker with Pfizer will be effective against a "double mutant" identified in India.
The Government announced that two batches of the BioNTech vaccine which were put on hold earlier due to packaging defects will be returned to the manufacturer in Germany.  Vaccine batches 210102 and 210104 have been suspended for use since March 24 as  a precautionary measure after the Government was notified of packaging defects including loose vial caps and leakage from the vials.

The Government announced that, in view of a local preliminary positive case with unknown sources of infection involving N501Y mutation strain, five premises (including Citygate Outlets) where the preliminary positive case had patronised are included in the compulsory testing notice.   In addition, nine schools with outbreaks of upper respiratory tract infection (URTI) are also covered in the compulsory testing notice.
Midea Group (000333.SZ) announced 1Q21 results that net profit attributable to shareholders went up 34.45% yearly to RMB6.469 billion. Basic EPS equaled RMB0.93.
FOSUN INTL (00656.HK) announced the planned placing of 33 million H shares of TSINGTAO BREW (00168.HK), accounting for 5.04% of its total issued H shares and 2.42% of its total share capital. The placing price per share was $70.88, being a discount of approximately 3.89% to its closing price yesterday. The total consideration amounted to $2.339 billion.
NIO (NIO.US)  announced that the loss for the first quarter of 2021 narrowed to RMB451 million from RMB1.692 billion a year ago.  However, the automaker warned of car delivery impact from the global chip scarcity.
The application for concessionary low-interest loan with 100 per cent guarantee commitment has started Wednesday (28 April). HSBC spokesperson said the bank has received almost 4,000 applications and inquiries within two days, and successfully granted loan to individual applicants.
The People's Bank of China and other financial management departments jointly mounted supervision and consultation meetings with key online platforms engaged in financial business. The actual controllers or representatives of 13 network platform companies, including TENCENT (00700.HK), JD Finance, ByteDance, Meituan Finance and LU (LU.US), partook in the meeting. The Chinese financial management departments raised seven requests for rectification against those network platforms, for example, all of their financial activities should be scrutinized; the inappropriate linkage between payment tools and other financial products should be severed; information monopoly should be stopped; equity structure should be regulated, and so on.
ANGANG STEEL (00347.HK) announced the first quarter report ended March 2021. Net profit amounted to RMB1.52 billion based on Chinese accounting standards, up 420.6% yearly. EPS was 16.2 fen.
MINSHENG BANK (01988.HK) announced the first quarter report ended March 2021. Net profit amounted to RMB14.747 billion based on Chinese accounting standards, down 11.4% yearly. EPS was 34 fen.
WUXI APPTEC (02359.HK) announced the first quarterly report for financial year 2021. Net profit was RMB1.5 billion, up 394.9% yearly. EPS equaled 62 fen.
CHINA COMM CONS (01800.HK)  announced the first quarter report ended March 2021. Net profit amounted to RMB4.326 billion based on Chinese accounting standards, up 85.3% yearly.  EPS was 25 fen.
COSCO SHIP HOLD (01919.HK) released the first quarterly report for 2021. It recorded a net profit of RMB15.452 billion, an annual increase of 52 times, with an EPS of RMB1.26.
COSCO SHIP DEV (02866.HK) announced the first quarter report ended March 2021. Net profit amounted to RMB828 million based on Chinese accounting standards, up 142% yearly.  EPS was 6.68 fen
PSBC (01658.HK) announced the first quarter report ended March 2021. Net profit amounted to RMB21.201 billion, up 5.5% yearly.  EPS was 24 fen.
AIR CHINA (00753.HK) announced the first quarterly report for the period ended 31 March 2021 prepared in accordance with the PRC Accounting Standards. Net loss deepened to RMB6.208 billion from RMB4.805 billion in the corresponding period last year. LPS equaled 45 fen.  -VE feed into Cathay Pacific’s next numbers
CHINA SOUTH AIR (01055.HK) announced 2021 first quarterly financial report prepared in accordance with the PRC Accounting Standards. Net loss narrowed to RMB4.006 billion from RMB5.262 billion in the corresponding period last year. LPS equaled 26 fen.
ICBC (01398.HK) announced that it resolved that Zhang Weiwu be appointed as Senior Executive Vice President of the Bank. After the Board considered and approved Zhang’s appointment, the qualification is further subject to the approval of the China Banking and Insurance Regulatory Commission.
HTSC (06886.HK)announced the first quarter report ended March 2021. Based on China Accounting Standards, the net profit amounted to RMB3.309 billion, up 14.6% yearly. EPS was 37 fen.

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