HSI +472pts (+1.6%) 29,551 HSCEI +207pts (+1.8%) 11,454 T/O HK$209.22bn (-34.7%DoD)
Markets opened higher FTSE rallied but then traded sideways, CAC and DAX worked slightly higher following the rebound from Asia; Despite China’s PMI data showing slowing. Treasury yields are easing +VE for equities. Sentiment helped by further vaccine roll-outs and the House approving Biden’s stimulus package. Speeches later from ECB’s Guindos and LagardeIAG and Persimmon rallying in early trading.
Manufacturing Final PMI Feb 57.9 vs 54.8 Jan (F/cast was 57.7)
Manufacturing Final PMI Feb 60.7 vs 57.1 Jan (F/cast was 60.6)
Inflation rate Feb prelim due later (Jan was +1% YoY (+0.8% MoM) F/cast is 1% YoY (+0.4% MoM)
Manufacturing Final PMI Feb 56.1 vs 51.6 Jan (F/cast was 55)
New Car Registrations Feb -20.9% YoY vs -5.8% Jan
Manufacturing Final PMI Feb 55.1 vs 54.1 Jan (F/cast was 54.9) Mortgage Lending Jan GBP 5.2b vs 5.3b Dec (revised) F/cast was 5.1b)
BoE Consumer Credit Jan GBP -2.392b vs -0.87b Dec (F/cast was -1.7b)
Mortgage Approvals Jan 99k vs 102.8k Dec (F/cast was 97.5k)
Net Lending to Individuals Jan GBP 2.8B vs 4.5b Dec revised (F/cast was 4.2b)
Open in Asia opened higher but have extended during Asian trading now Dow +334pts S&P +0.88% and NDX +1.2% as Treasury yields ease from the peaks seen last week.
AHEAD Manufacturing PMI, Construction Spending, ISM Manufacturing data (PMI, New Orders, Prices & Employment). Along with speeches from Feds Williams and Brainard
Earnings Zoom Video, MBIA, Ambac Financial, Hilton Grand Vacations, Inovio Pharma, Perrigo, Boingo Wireless, Tegna
CSI 300 closed +82pts (+1.5%) @ 5,419
CSI 300 opened higher but initially sold down with support at 5,346. PMI data remains in expansion but showing signs of slowing. Market cautious ahead of ’two sessions’ annual political meetings of the National People’s Congress and Chinese People’s Political Consultative Conference. Also with US relations showing no signs of thawing as US says China must honour the purchases agreement in made under phase 1 of the Trade Deal.
Market effectively traded sideways in the morning but worked higher in the PM session to close at the day high with interest in cyclicals as US house approves Biden’s stimulus package, now moves to the Senate.
Steel and Rare Earth stocks surged following consolidation, semiconductor names strong as chip shortage expected to continue until 2H 2021. Smart manufacturing names traded limit up after MIIT said China has entered into global frontier of smart manufacturing standard.
Shanghai Comp +42pts (+1.2%) @ 3,551
Shenzhen Comp +350pts (+2.4%) @ 14,857
ChiNext +82pts (+2.8%) @ 3,061
Caixin Manufacturing PMI Feb 51.4 vs 49.8 Jan (F/cast was 51.2)
Lunar new holiday and renewed covid outbreaks impacting but notes Output rose the least since April 2020, while new order growth hit its lowest in nine months. Export sales shrank for the second month, employment fell for the third month in a row, with backlogs of work declining for the first time in nine months. Firms registered a second monthly drop in inventories of purchased items, while stocks of finished goods rose marginally. Prices data showed inflationary pressure continued to increase. Input cost rose substantially due to greater prices for raw materials and higher transport cost while selling prices went up solidly. Looking ahead, sentiment strengthened, with the gauge for future output expectations jumping to the second-highest since August 2014.
China’s Gross Domestic Product hit RMB101.6 trillion in 2020, up 2.3% from the previous year, according to preliminary calculations by National Bureau of Statistics (NBS).
China confirmed 19 additional COVID-19 cases yesterday (28 February), all being imported infections, reported by National Health Commission.
Opened 29,458 +478pt vs +18pts ADR’s. As expected saw some initial margin call selling before rebounding to around the opening level and then trading sideways. E Commerce names saw good interest.
Market had a broad rebound expect for Property stocks after increased covid cases over the weekend. CNOOC which saw weakness on news NY confirmed delisting ADR.
Macau names +VE as Macau's gross gaming revenue (GGR) +135.6% YoY to MOP7.312 billion in February, according to Gaming Inspection and Coordination Bureau.
General sentiment cautious ahead of China’s two session on fears that stimulus may be withdraw as China focuses on curb debt concerns.
HONG KONG DATA
Centre for Health Protection said there 14 were new COVID-19 cases in Hong Kong today; (vs 17 Sunday) with 5 from unknown sources and 3 imported; while the remaining six cases are epidemiologically linked with a local case.
SHORT SELLING Monday 14.3 % vs 11.2% Friday
Top Shorts: Hengan (1044) 55%, Bud Apac (1876) 54%, Ping An (2318) 40%, hang Seng Bank (11) 36%, Sands China (1928) 34%, CCB (939) 33%, MTRC (66) 32%, Bank of China (3988) 32%, Sinopec (386) 32%, BankComm (3328) 31%, HSBC (5) 31%, AAC Tech (2018) 29%, CLP (2) 27%, Country Garden (2007) 26%, Henderson Land (12) 26%, China Life (2628) 26%, China Res Land (1109) 25%
Earnings due Tuesday include Lee & Mann Chems (746), Lifestyle (1212), Lee & Mann Paper (2314), China Tobacco (6055)
AFTER MARKET NEWS
SoftBank’s Z Holdings is seeking to invest JPY500 billion (around USD4.7 billion) in technology field over the coming five years, Reuters reported.
HK announced the extension of existing social distancing measures by two weeks until 17 March. With new instructions taking effect from 4 March, Diane Wong Shuk-han, Deputy Director of Food and Environmental Hygiene Department, said catering premises would be required to arrange staff specifically for table cleaning. Restaurants should either have at least six air changes per hour, or be installed with air purification devices fulfilling the specifications by end-April.
XINYI SOLAR (00968.HK) annual result ended December 2020. The net profit amounted to HK$4.561 billion, up 88.7% yearly. EPS was HK55.4 cents. A final DPS of HK17 cents was declared, against HK8.5 cents in the corresponding period of the previous year. Together with interim DPS, the full-year DPS climbed 82.1% annually to HK25.5 cents.
HSI Co. Aims to Boost HSI Constituents to 80 by Mid-2022; Eventual Target Size 100Hang Seng Indexes Company announced changes that reflect the results of a month-long stakeholder consultation exercise, in which a wide spectrum of market participants took up the call to share their views on proposed enhancements to the HSI, followed by in-depth analysis and deliberation of the findings with the HSI Advisory Committee. 1. increasing the Number of Constituents to 100. Hang Seng Indexes Company targets to increase the number of HSI constituents to 80 through the regular index reviews by mid-2022 and, ultimately, to fix the number at 100.
2. to achieve a more balanced representation of the Hong Kong stock market, the HSI constituents will be selected from seven Industry Groups. The target is to achieve a market capitalisation coverage of not less than 50% for each Industry Group. The combination of the Industry Groups will be reviewed at least every two years.
3. The consultation also proposed that the listing history requirement will be shortened to three months. This will provide flexibility for the timely addition of new listings. Hang Seng Indexes Company will maintain 20 to 25 constituents that are classified as Hong Kong Companies in the HSI. The number of Hong Kong constituent stocks in the index will be evaluated at least every two years.
4. is adopting a Weighting Cap of 8% on All HSI Constituents All HSI constituents, including weighted voting rights and/or secondary-listed constituents, will be subject to an aligned weighting cap of 8%. The same cap will be applied to the Hang Seng China Enterprises Index.
BABA-SW (09988.HK)'s headquarters construction in Beijing is moving along well, expected to complete in June next year, Beijing Daily reported. The operation is projected to commence in 2023. According to the report, the Beijing headquarters has had more than 20,000 employees, where scientific and technological talents account for more than 65%.
*HSI CHANGES in focus. ALIBABA HEALTH (241 HK +9.6%) and HAIDILAO (6862 HK +8.2%) will be added to Hong Kong’s stock benchmark. LONGFOR GROUP (960 HK +3%) will also join HSI, which will expand to 55 members from 52, changes are effective March 15.
*CHINA BANKS WEAK on speculation that China is set to scale back the pandemic stimulus measures that fueled debt by cutting local govt bond quota. CCB (939 HK -1.4%)
ICBC (1398 HK -0.4%) ABC (1288 HK -0.7%) BOC (3988 HK -0.7%).
*E-COMMERCE FIRM ALIBABA's (9988 HK +1%) traded on news Ant Group is talking with shareholders in its new consumer finance unit to increase the company’s capital to comply with rules, news reported. The company could need an extra 30b yuan to meet regulatory requirements, news said. JD (9618 HK +4%) NTES (9999 HK +3.4%). TENCENT (700 HK +4.9%) up on speculation to benefit from HSI's overhaul.
*TECH & COMPONENTS FIRM on news reported that a shortage in chips results in price hikes of mobile phones. Mi 11 shows no investory on its website and the retail price is reportedly going higher. SMIC (981 HK +7.6%) HUA HONG (1347 HK +9.6%) XIAOMI (1810 HK +2%) ZTE (763 HK +3.9%).
*HK LANLORDS WEAK as NWD (17 HK -2.4%) its flagship mall K11 Musea is closed for disinfecting until Friday following a breakout of multiple Covid cases inside the mall. NWD also reported 1H underlying profit was HK$3,718m and profit attributable to shareholders of the company was HK$1,013m, down slightly by 5% and 0.4% respectively. Interim dividend was HK$0.56 per share. HYSAN (14 HK -2%) SHKP (16 HK -4%) SWIRE PROP (1972 HK -3.4%).
*DAIRY STRONG as Danone is reportedly preparing to sell US$1b stake in CH MENGNIU (2319 HK +1.5%), following a strategic review. China Mengniu Dairy board said it understands and respects the decision by Danone over its possible stake sale in the firm, and said Danone’s plans won’t affect Mengniu’s business strategies and plans. CHAODA MODERN (682 HK +11.4%) after reported Friday interim loss narrows to 10.25m yuan.
*MACAU CASINOS MIXED GGR rose 136% in Feb to 7.3b patacas, up for the first time in 17 months, but missed market forecast 145%. Revenue fell 8.9% from the previous month, and is still down 71% from the Feb 2019 level, before the pandemic hit. MELCO (200 HK +5.2%) WYNN (1128 HK +2.3%) SJM (880 HK +1.5%) MGM (2282 HK -5.2%).
*APPLIANCES FIRM as SHENZHEN INTL (152 HK -2%) and Shenzhen Kunpeng Equity Investment Mgmt Co. plan to purchase 8% and 15% of Suning.com's (002024 CH) shares respectively for a total of 14.8b yuan. HISENSE (921 HK +6.4%) GOME (493 HK +1.7%) SKYWORTH (751 HK +7.8%).
*OTHER MOVERS: CNOOC (883 HK -1.6%) as NYSE proceeds with delisting process.CH RAREEARTH (769 HK +17%) following remarks from a Chinese govt official that the metals are undervalued due to tough competition.
Nikkei opened higher as I expected. It was +453pts on the open and worked higher for the first 40 minute, hitting resistance at 29,686 and then eased back and traded sideways with a small uptick at the end to close +697pts (+2.4%) @ 29,664
Topix followed a similar pattern, opened at 1,889, saw resistance at 1,904 and currently +39pts (+2%) @ 1,903
Manufacturing PMI Feb 51.4 vs 49.8 Jan F/cast was 50.6
Tomorrow we get Unemployment data and Capital Spending
Tomorrow pre market we get Industrial & Manufacturing Production and Retail Sales pre market and later Manufacturing PMI
Data out today
Balance of Trade Feb $2.71b vs $3.76b Jan revised from $3.96b (F/cast was $4.3b)
Exports Feb +9.5% vs +11.4% Jan (Consensus is 9.5%)
Imports Feb +13.9% vs +3.6% Jan revised from +3.1% (Consensus was 12.3%)
Market Closed re-opens tomorrow
Tomorrow we get Manufacturing PMI pre market.
CONNECT FLOWS (decreased flows )
Northbound RMB 55,511m Sell 27,297m : 28,214m Buy
Southbound HK$ 25,177m Sell 13,177m : 12,681m Buy
Northbound RMB 63,992m Sell 30,561m : 33,430m Buy
Southbound HK$ 31,217m Sell 15,318m : 15,898m Buy
MEITUAN (03690.HK) +7.9%
TENCENT (00700.HK) +5.2%
HKEX (00388.HK) +3.5%
AIA (01299.HK) +2.9%
CCB (00939.HK) -1.4%
BABA (09988.HK) +0.9%
PING AN (02318.HK) +0.4%
HSI & HSCEI Constituents on Move:
ALI HEALTH (00241.HK) +9.4%
HAIDILAO (06862.HK) +8.2%
ANTA SPORTS (02020.HK) +7.7%
SMIC (00981.HK) +6.8%
WUXI BIO (02269.HK) +6.5%
CHINA RES BEER (00291.HK) +5.3%
CHINA MOBILE (00941.HK) +4.9%
SHIMAO GROUP (00813.HK) -4.9%
CHINA UNICOM (00762.HK) +4.7%
JD (09618.HK) +4.1%
LONGFOR (00960.HK) +3.7%
SHK PPT (00016.HK) -3.7%
NTES (09999.HK) +3.4%
GEELY AUTO (00175.HK) +3.4%
SUNNY OPTICAL (02382.HK) +3.2%
SHENZHOU INTL (02313.HK) +3%
HSMI & HSSI Constituents on Move:KASEN (00496.HK) +25.7%
DONGYUE GROUP (00189.HK) +15.2%, hitting new high
SINOFERT (00297.HK) +13.3%
JS GLOBAL LIFE (01691.HK) +13.1%
CHINA ORIENTAL (00581.HK) +12.7%, hitting new high
CBHB (09668.HK) -12.1%
GENSCRIPT BIO (01548.HK) +11.4%
VALUE PARTNERS (00806.HK) +10.9%
HUA HONG SEMI (01347.HK) +10.9%
FUYAO GLASS (03606.HK) +10.3%
JNBY (03306.HK) +9.3%, hitting new high
PACIFIC BASIN (02343.HK) +7.8%, hitting new high
YANZHOU COAL (01171.HK) +7.6%, hitting new high
MARKET HOURS NEWS
NTES-S (09999.HK)'s NetEase Cloud Music launched the brand-new "Kan Kan" (侃侃) interactive function, said to be benchmarking against the audio-chat hit Clubhouse. "Kan Kan" specializes in audio-based social interactions, allowing users to create chatrooms for specific topics and invite other users to speak by raising their hands.
Fitch Ratings has upgraded LENOVO GROUP (00992.HK)'s Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDR) and senior unsecured rating from BBB- to BBB, with Outlook "Stable.” The ratings agency attributed the upgrade to LENOVO GROUP's solid execution of its strategy, while the global personal-computer (PC) market is showing stronger demands.
Patrick Nip, Secretary for the Civil Service, said over 20,000 residents have received Sinovac vaccine shots last three days after the vaccination program started last Friday. As of 2:00 pm today, more than 135,000 citizens have finished booking. Starting from this Wednesday, Fosun-BioNTech vaccine doses will be open for online booking, added Nip. The public may on 10-30 March be vaccinated at seven centers under the Hospital Authority, subject to a quota of over 140,000.
HANG SENG BANK (00011.HK) announced appointment of Rose Cho as the Head of Global Banking and an Executive Committee member, with effect from 1 March.
The Legislative Council Secretariat has released a Research Brief on "Socioeconomic implications of home ownership for Hong Kong”. The share of younger persons aged below 35 heading home-owning families has plunged from 22.1 per cent in 1997 to 7.6 per cent in 2019, dampened by severe land shortage and worsening affordability. By contrast, the respective proportion for older heads aged 60 and above rose to 41 per cent in 2019, doubled the corresponding figure of 21 per cent in 1997. Net changes in the ownership titles of residential flats during 2009-2019 were mostly acquired by investors or landlords for leasing to tenants, not for owner-occupation. While the average tenant households may also save hard to buy flats, they could easily be priced out from the market with just working income. This has knock-on implications for social mobility.
NEW WORLD DEV (00017.HK) CEO Adrian Cheng is working with advisers on his planned SPAC establishment for listing in the U.S., which may raise US$200-400 million, Bloomberg learnt from people familiar with the matter. The report said the talks are still at preliminary stage, with the specific details subject to further changes. Follows Li Ka Shing who is seeking to do a similar thing.
Given demand for high-price-performance products from consumers in underdeveloped areas, BABA-SW (09988.HK) rolled out Taobao's Special Offer Edition in March 2020. The app's monthly active users exceeded 100 million in December 2020, while its active users topped 100 million for the twelve months ended 31 December 2020.
Tencent Cloud and the Bahrain Economic Development Board (EDB) formally signed a Memorandum of Understanding (MoU) on their cooperation. Today, the parties announced to jointly propel the development of Bahrain's data center industry and cloud computing technology to help the kingdom emerge as the cloud service hub of the Middle East and North Africa (MENA) region. Meanwhile, Tencent Cloud will set up the first MENA cloud computing data center in Bahrain, which will likely debut by end-2021.
Macau's gross gaming revenue (GGR) burgeoned by 135.6% YoY to MOP7.312 billion in February, according to Gaming Inspection and Coordination Bureau.
Top Glove, the world’s biggest rubber glove maker in Malaysia, is pursuing a dual primary listing in Hong Kong by issuing 1.49 billion shares and pooling a maximum of US$1.9 billion, Bloomberg reported. The listing is expected to become the biggest ever by a Malaysian company in Hong Kong. Top Glove is listed on Malaysian Stock Exchange as primary listing, and as the secondary listing on Singapore Stock Exchange. The company has filed the listing application to the Stock Exchange recently. Interesting to see it seeking to raise money have dropped 20% in February as vaccines are rolled out and hence demand for rubber gloves is likely to fall.
PricewaterhouseCoopers published the IPO data for the technology, media, and telecom (TMT) industry. China recorded 109 TMT IPOs in the second half of 2020, with total funding size leaping to around RMB249.6 billion. 164 Chinese TMT firms went public in 2020, up nearly 58% from 2019. The funding amount approximated RMB346.8 billion, almost doubling from the previous year. Shows how the sector is attracting attention after China have made its technical ambitions clear.
Overnight HIBOR last posted at 0.04%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.12179%, marking a 1-month low.
Ant Group is in talks with other shareholders for its new consumer finance unit, seeking RMB30 billion in extra capital in order to meet regulatory requirements, Reuters citing people familiar with the matter. While the Chinese fintech firm had created a new consumer finance firm, Chongqing Ant Consumer Finance, last August, regulators will not easily give green light to the formation until it "fully complies with the capital adequacy rules", said the insiders.
The production and sales volume of new energy vehicles in China ranked the first in the world for six consecutive years, with a cumulative sales of 5.5 million vehicles, said Xiao Yaqing, Minister of Industry and Information Technology.
TENCENT (00700.HK) -backed Tuya Smart plans to raise US$1 billion by listing in the United States, having started pre-marketing and is working with Morgan Stanley, Bank of America and CICC, IFR citing sources.
PRE MARKET HOURS NEWS
Chinese chip makers are wrestling to purchase second-hand chip-making machines with an attempt to shun the US sanction, under the backdrop of heightened chip demand amid epidemic market, The Nikkei reported. Dealers of Japanese second-hand chip manufacturing machines were quoted as saying by the report that prices of such machines increased by 20% year-on-year.
The recurrent social welfare expenditure budget will be HK$105.6 billion for the coming year, up 16.2% from the revised budget in the previous year, wrote Secretary for Labour and Welfare Law Chi-kwong in his blog. The Government shall chase laggard concerning social welfare expenditure for elderly and rehabilitation services under the principle of allocating resources where they are required. However, Financial Secretary Paul Chan said the pace could be adjusted under current economic conditions, given possible fiscal deficits in the foreseeable future, as cited by Law.
Bitcoin, bottoming at US$43,119.16 Sunday, dived 2.2% to US$45,090.13 in 24 hours. The cryptocurrency has tanked 26% from its record US$58,354.14 set on February 21.
MENGNIU DAIRY (02319.HK) announced that as part of its ongoing portfolio review, Danone reached an agreement with CDI to convert its indirect stake in the Company held through CDI into a direct shareholding in the Company. As of now, CDI is deemed to have a shareholding interest of approximately 31.25% in the Company. The conversion process remains subject to regulatory approval and once completed, it is expected that Danone will hold a direct shareholding interest of approximately 9.82% in the Company and CDI’s shareholding interest in the Company will be reduced to approximately 21.43%. The Board was informed that as a next step, Danone is considering a divestment of its stake in the Company.
WING TAI PPT (00369.HK) announced the formation of joint venture with Chee Chen Tung, brother of former OOIL (00316.HK) Chairman Chee Hwa Tung, GALAXY ENT (00027.HK) Deputy Chairman Lui, Francis Yiu-tung, and Luo Jiarui's CHAMPION REIT (02778.HK). The JV aims to acquire the office building property situated at 66 Shoe Lane, London EC4A 3BQ (formerly known as Athene Place) at GBP255 million (approximately HK$2.796 billion).
SHENZHEN INT'L (00152.HK) announced that Shenzhen International (SZ), an indirect wholly-owned subsidiary of the Company, and Kunpeng Equity, as purchasers, and Zhang Jindong, Suning Holdings Group Co., Ltd, Suning Appliance Group Co., Ltd, Xizang Trust Co., Ltd, entered into a framework agreement in relation to the possible acquisition of Suning.com (002024.SZ) Shenzhen International (SZ) and Kunpeng Equity propose to acquire 8% and 15% of the shares of Suning.com, involving 745 million shares and 1.397 billion shares at RMB5.154 billion and RMB9.663 billion, respectively.
WYNN MACAU (01128.HK)'s controlling shareholder Wynn Resorts announced annual report for the fiscal year ended 31 December 2020. Total Macau Operations retreated 78.8% yearly to US$980 million; Adjusted Property EBITDA was -US$237 million, against 2019's +US$1.378 billion.
CNOOC (00883.HK) announced that the NYSE Regulation determined to commence proceedings to delist the American depositary shares of the Company (ADSs). The NYSE will suspend trading in the ADSs at 4:00 a.m. (Eastern Standard Time) on 9 March 2021. The Company regrets the NYSE’s aforesaid decision and actions, and will continue to closely monitor the development of this matter.
GCL-POLY ENERGY (03800.HK) to sell 3.848% equity interest in Inner Mongolia Zhonghuan-GCL to the independent third party Leshan Fund for a cash consideration of RMB600 million. Leshan Sumin, as the project company for the granular silicon project with a production capacity of 60,000 tonnes in Phase I in Leshan, will successfully introduce strategic investors. Pursuant to which the Company would transfer 86.67% of the equity interest in Leshan Sumin to the Leshan Fund for a nominal consideration of RMB1.
It also announced that it had entered into a strategic cooperation framework agreement with WXSJ (603185.SH), under which the parties intend to jointly invest in a research, development and production project of 300,000 tonnes of granular silicon, with an estimated total investment of RMB18 billion, in the Inner Mongolia Autonomous Region of the PRC. 65% equity interest and 35% equity interest are proposed to be held by Jiangsu Zhongneng and Wuxi Shangji, respectively.
GOME RETAIL (00493.HK) profit warning, saying the outbreak of the COVID-19 pandemic caused disruption to the Group’s business. Its sales revenue of 2020 is expected to decline by approximately 23%-29% compared with the corresponding period last year. The Group’s loss is expected to be between RMB6.5-7.2 billion, compared with a loss of RMB2.59 billion for the corresponding period last year. In addition, as of 31 December 2020, the Group’s cash and cash equivalents are expected to be approximately RMB10 billion.