Apr 7 HK/China WRAP. HSI re-opens but sells down with China as PBOC tightens

08 Apr

HSI -264pts (-0.9%) 28,675 HSCEI -147pts (-1.3%) 11,071 T/O HK$171.0bn (-4.2% DoD) 

G20 Finance Ministers and Central bankers virtual meeting.IMF and World Bank Spring meetings. IMF revises upgrowth expectations +VE for developed countries.
Market open mixed following the US overnight and the mixed handover from Asia; PMI data was generally good although the UK’s missed slightly. But FTSE opened higher as the weak GBP supported stocks but DAX and CAC opened slightly higher but trended lower with concerns on the inoculation roll out.
Services PMI Mar 49.6 vs 45.7 Feb (F/cast was 48.8)
Composite PMI Mar 53.2 vs 48.8 Feb (F/cast was 52.5)
Services PMI Mar 51.5 vs 45.7 Feb (F/cast was 50.8)
Composite PMI Mar 57.3 vs 51.1 Feb (F/cast was 56.8)
Services PMI Mar 48.2 vs 45.6 Feb (F/cast was 47.8)
Composite PMI Mar 50 vs 47 Feb (F/cast was 49.5)
Services PMI Mar 56.3 vs 49.5 Feb (F/cast was 56.8)
Composite PMI Mar 56.4 vs 49.6 Feb (F/cast was 56.6)
US Futures 
Opened in Asian time slightly higher Dow +27pts  S&P +0.05% NDX +0.04% and have worked slight higher in Asian time but eased back as Europe opened Currently Dow +24pts S&P andNDX +0.1%  Balance of Trade and FOMC minutes in focus tonight.Pre market Airlines and Cruise operators +VE, Bond Yields easing, JPM’s Dimon optimistic about the US recovery in his annual letter.Data out MBA Mortgage Applications -5.1% vs -2.2% prior and 30 yr Mortgage Rate 3.36% vs 3.33% priorDue later Balance of Trade, Export, Imports, EIA Oil Report, FOMC Minutes, Consumer Credit Change.

CSI 300 closed -37pts (-0.7%) @ 5,104CSI 300 opened lower with concerns over PBOC tighten policy and continued poor international relations sold down 5,065 but 11am before a small bounce into lunch.  PM opened at a similar level and traded sideways until around 2pm and then worked higher into the close
Heavy-weight names, such as Kweichou Moutai were weak dragging the benchmark indexes lower. Interest rates and the continued deterioration in International relations hurt market sentiment. PBOC tightening further weighted on investors confidence. Leaders were Steel, port and shipping, coal, power, non-ferrous.
Laggards were liquor, automobiles, digital currency, agriculture, domestic software, integrated circuits.
Shanghai Comp -3pts (-0.1%) @ 3,480
Shenzhen Comp -104pts (-0.7%) @ 13,979
ChiNext Comp -15pts (-0.5%) @ 2,909

After market Foreign Exchange Reserves Mar $3.17tn vs 3.205tn Feb.(F/cast was 3.2tn)

Pre mareket opened @ 29,101 +163pts vs +69pts ADR’s but then sold down as investors reacted to the PBOC’s tightening by keeping loans unchanged YoY; expected to have a significant limiting factor on Property and the rest of the economy.
Financials and Ecommerce weak. But Shipping companies firm along with some tech, domestic consumption names and Pharma.Market sold down to 28,700 in the first hour before a small bounce into lunch. PM opened lower but bounced to 28,800 but then eased for the rest of the afternoon but popped +55pts in the closing auction.With earnings season over analysts are now working through their models and there are a lot of upgrades, it will be interesting to see whether we now see downgrades to reflect the PBOC limiting loans policy.
The Centre for Health Protection reported 8 new covid cases (vs 7 cases Tuesday) 2 from unknown origin.
Short Selling Wednesday 18.1% vs 18.7%Thursday
Top Shorts  Ping An (2318) 38%, Bud Pac (1876) 35%, Bankcomm (3328) 32%, Sands China (1928) 31%, Ali Health (241) 31%, ICBC (1398) 30%, Hang Lung Ppty (101) 30%, Wuxi Bio (2269) 28%, Sunny Optical (2382) 27%, CCB (939) 27%, Galaxy Ent (27) 27%, NWD (17) 25%.
The Market Misconduct Tribunal (MMT) has sanctioned two former executives of Asia Telemedia Limited (ATML) (now known as Yunfeng Financial Group Limited) – Charles Yiu Hoi Ying and Marian Wong Nam – following legal proceedings brought by the Securities and Futures Commissions (SFC).  The MMT’s orders came after the Court of Final Appeal (CFA) allowed an appeal brought by the SFC which argued that the defence under section 271(3) of the Securities and Futures Ordinance (SFO) should not be applicable to Yiu and Wong and found them culpable of insider dealing in the shares of ATML.
TENCENT (00700.HK)'s substantial shareholder Prosus, through its subsidiary MIH TC Holdings, intends to sell up to 191.89 million shares of TENCENT, foreign media reported. Upon completion, the shareholding of Prosus in TENCENT dropped to 28.9% from 30.9%.   Prosus promised not to sell any TENCENT's shares for at least the next three years.  The block was placed at prices of $575-595 per share, representing a 5.5-8.7% discount to the closing price $629.5 today, to cash in up to roughly $114.175 billion, according to sales prospectus.
GEELY AUTO (00175.HK)  announced that the total sales volume of the Group for the month of March 2021 was 100,000 units, an increase of approximately 37% from the same period last year and up approximately 30% from February 2021.
SUNAC (01918.HK)  announced that in March 2021, the Group achieved contracted sales value amounted to approximately RMB47.86 billion, representing year-on-year increase of 55%, and contracted sales area amounted to approximately 3.276 million sq.m., with contracted average selling price of approximately RMB14,610 per sq.m..
AliExpress Russia posted gross merchandise volume (GMV) of US$3 billion for FY2020-21, indicating the online retailer has become one of Russia’s leading e-commerce players.
*CHINA BANKS WEAK as PBOC reportedly told Chinese banks to curtail loans for the rest of the year, as the central bank wants new loans to stay around 2020 levels as it seeks to reign in debt. ICBC (1398 HK -1.4%) ABC (1288 HK -1.3%) CMB (3968 HK -1%)
.*E-COMMERCE WEAK TENCENT (700 HK -3.7%) -backed Krafton, the creator of hit game PlayerUnknown’s Battlegrounds, will submit preliminary review application for IPO to Korea Exchange in April. Daily Journal  Corp, disclosed its holdings of about US37.5m worth of ALIBABA (9988 HK -1.6%) ADRs at the end of March. MEITUAN (3690 HK-2.4%) KUAISHOU(1024 HK -3.6%) JD (9618 HK -3.5%).
*TECH & COMPONENTS MIXED. Some component names traded softer after Samsung Elec reported 1Q operating profit 9.30t won, beating estimate of 8.88t won; AAC (2018 HK -0.2%) Q TECH (1478 HK -1.5%) SUNNY OPT (2382 HK -1.6%), but chip makers rallied after The Semiconductor Industry Association, said Monday that world-wide semiconductor  industry sales reached $39.6b in February, up 14.7% from a year earlier and SMIC (981 HK +5%) announced raising chip prices web. 1April by 15%- 30%ASM (522 HK +6.3%)  HUA HONG (1347 HK +5.2%).
*AUTO MIXED after DONGFENG MOTOR(489 HK -1%) reported March vehicle sales +93.8% YoY to 274,747 units. GEELY (175 HK -0.7%) GAC (2238 HK +3.9%) GREAT WALL  (2333 HK +1.5%).
*CHINA PROPERTY MIXED following sales data.
CH EVERGRANDE (3333 HK -0.7%) March contracted sales +4.4% YoY to 64.8b yuan. CH VANKE (2202 HK +0.9%) contracted sales +14.38% YoY to 62.84b yuan in March. CH JINMAO (817 HK +4.5%) March contracted sales +72% YoY to 22.5b yuan.
*PHARMA FIRM as Chinese vaccines gain international recognition. China's Sinovac and Sinopharm shots may get emergency-use listing from the WHO this month.CANSINO (6185 HK +5.8%) SINO BIOPHARM (1177 HK +2.5%) CSPC PHARM (1193 HK +1.9%).
*SHIPPING STRONG after COSCO SHIP HLGDS (1919 HK +29%) reported prelim Q1net income to be 15.5b yuan vs 292m yuan a year ago, increased by 52 times. OOIL (316 HK +12%) SINGAMAS (716 HK +9.5%) COSCO SHIP ENERGY (1199 HK +8.3%).

Regional Markets
Pre market Constuction Index beat F/casts, PMI’s Services & Composite data improved MoM but missed F/casts,
ASX 200 opened higher and rose to 6,933 in the morning before selling down into lunch. PM it worked its way back to close +40pts (+0.6%) @ 6,926
Constuction Index Mar 61.8 vs 57.4 Feb (F/cast was58)
Services PMI Mar 55.5 vs 53.4 Feb (F/cast was 56.2)
CompositePMI Mar 55.5 vs 53.7 Feb (F/cast was 56.2)
Nikkei opened higher and worked up to 29,870 in the am session but sold down to 29,520 level around 10:45am before bouncing back to flat at lunch. Opened higher but drifted lower and then sideways to close +34pts (+0.1%) @ 29,731
Topix traded in a similar pattern outworked higher to close +13pts (+0.7%) @ 1,967
Foreign Exchange Reserves Mar $1368.5b vs 1379.4b Feb
Leading Economic Index Prelim Feb 99.7 vs 98.5 Jan (F/cast was 99.3)
Coincident Index Prelim Feb 89.0 vs 90.3 Jan (F/cast was 91)
Samsung Electronics foretold first-quarter operating profit to burgeon 44% to KRW9.3 trillion (roughly USD8.37 billion), in-line with analyst forecast, attributable to brisk sales of smartphones and TVs, offsetting the impact from halted U.S. output after a storm.
Kospi opened higher and worked to 3,146 around 10am before selling down to flat at 12 noon. Then worked slowly higher; currently +7pts (+0.3%) @ 3,136
Kosdaq opened higher worked to test 974 in early trades, then traded sideways (974/972)Currently +3pts (+0.4%) @ 972
Current Account Feb $8.03b vs $7.06b Jan (F/cast was $6.9b)
opened higher and tested to 16,816 in early trades but then sold down to flat, bounced but then sold down to 16,715 before working higher to close +76pts (+0.5%) @ 16,815
After market
Foreign Exchange Reserves Mar $539.04b vs 543.33b Feb (F/cast was 548b)
Northbound RMB 52,356m Sell 27,515m : 24,841m Buy
Southbound HK$ 19,456m Sell 9,795m : 9,660m Buy
Northbound RMB 59,503m Sell 29,822m : 29,681m Buy
Southbound HK$ 20,079m Sell 9,547m : 10,531m Buy
Active Heavyweights
TENCENT (00700.HK) -3.7%
MEITUAN (03690.HK) -2.4%
HKEX (00388.HK) -2.4%
AIA (01299.HK) -1.6%
BABA (09988.HK) -1.6%
CCB (00939.HK) -0.5%
PING AN (02318.HK) -0.4%
HSI & HSCEI Constituents on Move:
CPIC (02601.HK) -8.5%
HAIDILAO (06862.HK) -5.6%
SMIC (00981.HK) +5%
KUAISHOU-W (01024.HK) -3.6%
JD (09618.HK) -3.5%
ALI HEALTH (00241.HK) -3.5%
HSMI & HSSI Constituents on Move:
COSCO SHIP HOLD (01919.HK) +29.1%, hitting new high on +VE profit alert
S-ENJOY SERVICE (01755.HK) +11.2%
XTEP INT'L (01368.HK) +10.7%, hitting new high
GOME RETAIL (00493.HK) +10.6%
GREENTOWN SER (02869.HK) +9.7%, hitting new high
SHIMAO SERVICES (00873.HK) +8.5%, hitting new high
CHINA LESSO (02128.HK) +5.9%, hitting new high

SMIC (00981.HK) has informed its clients that price hikes will become effective across the board from 1 April, where booked chips that are pending delivery will be priced at new levels, subject to an increment of roughly 15%-30%.
Hong Kong's IPOs raised funds of $132.8 billion this quarter, up over eight times yearly, marking the highest-first-quarter record, Deloitte said. The fundraising amount ranked the second in the world, closely preceded by Nasdaq's, thanks to new economy stocks. KUAISHOU-W (01024.HK), BIDU-SW (09888.HK) and BILIBILI-SW (09626.HK)   made up approximately 70% of the fundraising amount.
The accounting firm predicted there will be over ten secondary IPOs this year in Hong Kong, fetching over $100 billion; and 4-5 new economy IPOs, luring at least $10 billion. These will prompt local IPO market size this year to potentially zoom past almost-$450-billion new high as set in 2010.  +VE for HK Exchange if they all come to fruition
Cenovus Energy's President and CEO Alex Pourbaix told a Canadian media that the company may consider restarting an asset disposal plan, after the company had wrapped up the merger with CKH HOLDINGS (00001.HK)'s Husky Energy early the year.   During that time, Husky Energy attempted to sell assets at low prices, Pourbaix pointed out, who yet believed Husky's assets will have value appreciation. He furthered that it is deleveraging very quickly without any asset sales given oil price rise.
HKD Index dropped deeper this morning and bottomed at over 1-year low 7.7802 and the spot USD T/T rate is last at 7.7799.
The banking balance was expected to be $457.464 billion this Friday (9 April).
AAC TECH (02018.HK) announced that on 31 March 2021, Moody’s Investors Service issued an updated credit rating report on the company, it adjusted the Company’s issuer rating and senior unsecured rating to “Baa2” from “Baa1” (both investment grades). At the same time, the rating outlook has been revised to stable from negative.
BYD COMPANY (01211.HK) is poised to sell lithium battery for cars as swift as the latter half of the year, and does not bar the odds of ring-fence listing of its Fudi to propel business expansion, The Nikkei reported.
The US sanction on Hong Kong is not going to undermine the city's status as an international financial hub, said the former HKMA Chief Executive Joseph Yam at a radio program, expecting the sanction target not to spill onto organizations or governments.As the biggest indebted nation in the world, Washington will very unlikely leverage on capital restriction, forex control or debt defaults, while Beijing is her largest creditor country, opined Yam
TENCENT (00700.HK) affiliate Linzhi Tencent Investment Management, together with an investment firm (Chinese name: 廈門諾惟合悅創業投資), has invested in Chengdu's game developer startup AvalonGames, with the registered capital up from RMB1 million to RMB1.111111 million, Chinese media reported.
Charlie Munger, Vice Chairman of Warren Buffett's Berkshire Hathaway, holds over 165,000 Alibaba (BABA.US) shares, in market value of around US$37.50 million, as of March 2021, according to Daily Journal.

HKD Index dropped deeper and bottomed at 7.7772, a low since early-March 2020, and the spot USD T/T rate is last at 7.7768.
The PBoC has told major domestic lenders to curtail loan growth for the rest of 2021 following a surge in new loans during the first two months, Bloomberg citing people familiar with the matter.  In January-February this year, Chinese banks advanced RMB4.9 trillion of new loans, up 16% from the same period last year to a new record.
Amazon (AMZN.US)Founder Jeff Bezos has run the top spot of the Forbes' 35th annual list of the world’s wealthiest for the fourth year, whilst NONGFU SPRING (09633.HK) Founder Zhong Shanshan became the richest Chinese man on the chart.
Jeff Bezos' net worth swelled by US$64 billion to US$177 billion, and Zhong Shanshan's ballooned to US$68.9 billion this year.
TENCENT (00700.HK) Chairman Pony Ma's wealth increased from US$38.1 billion to US$65.8 billion, ranking the 15th. BABA-SW (09988.HK) Founder Jack Ma, positioned the 26th, had wealth pumped to US$48.4 billion.
BYD COMPANY (01211.HK) announced that during the first quarter ended March 2021, total production volume was 108,200 vehicles, up 75.71% yearly; total sales volume was 104,100 vehicles, up 69.97%.
After Ching Ming Festival and Easter holidays ended yesterday, Macao Daily cited Public Security Police's statistics that the number of inbound visitors totaled 95,900 on 2-6 April.  The visitor figure to the gambling hub turned out a miss during the long weekend amid ongoing pandemic impacts, despite a mild positive turnaround from 2020 when the plague broke out at earlier stage.
XIAOMI-W (01810.HK)  CEO Lei Jun cited a Weibo's poll that Mi fans hoped the company to produce mid-to-high-end vehicles. As such, the first Xiaomi car model will be a sedan or SUV, priced between RMB100,000-300,000 each, contingent on further discussion.
COSCO SHIP HOLD (01919.HK) issued a positive profit alert, expecting a net profit attributable to the Shareholders for the three months ended March 2021 of approximately RMB15.45 billion, up about 51.9 times from RMB292 million for the three months ended 31 March 2020.
XIAOMI-W (01810.HK) disclosed that on 1 April, it had through the Stock Exchange repurchased 7.665 million shares, involving roughly $202 million.  The Chinese tech firm has repurchased 23.6426 million shares year to date.

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