March 8 HK/CHINA WRAP Markets weak on concerns about inflation, China growth and Tech sanctions


08 Mar

HSI -558pts (-1.9%) 28,541  HSCEI -277pts (-2.5%) 11,015  T/O HK$276.78bn (+15% DoD) 
EUROPE
Markets opened higher following the US rebound and largely ignoring the Asian weakness. FTSE sold down and now trading around flat, DAX and CAC working higher. Banks leading the gains and most sectors in the green except utilities. ABN Amro and Banco de Sabadell climbing more than 6% in early trades.
Re opening names under pressure; Hellofresh -7% while TeamViewer and Ocado both shed more than 4%.
Data
GERMANY Industrial Production Jan -2.5% MoM vs 0% Dec (F/cast was +0.3%)
US Futures 
Now indicating a lower open having started higher in Asian time; Dow -4pts, S&P -0.6% and NDX -1.5%Higher bond yields continue to worry investors and prompt rotation out of Tech/growth names. US T10 was 1.59% in early trading.
Data due Wholesale Inventories, Consumer Inflation Expectations,
Earnings Stitch Fix, Casey’s General Store

CHINA CSI 300 closed -183pts (-3.5%) @ 5,080
CSI300 opened slight higher after the good traded data but trended lower after the first hour and closed at the day low. Investors largely ignored the good headline data and focused on China’s low growth target and the threat of rising bond yield globally. Concerns also about a rise in money market rates as the PBoC maintains a tight control on liquidity. International relations also a concern.Laggards were led lower by Military, Brewing and White liquor but most sectors were weak including Agriculture, Semiconductors, Healthcare, F&B, Brokers, Building Materials, Software, Non-Ferrous Metals. But interest in Power, Oil/Petrochems and Coal. Shanghai Comp -81pts (-2.3%) @ 3,421 T/O was Rmb453.9bnShenzhen Comp -589pts (-3.8%) @ 13,864 T/O was Rmb525.4bnChiNext -143pts (-5%) @ 2,728 T/O was Rmb186.4bn
CHINA DATA No data

HSI Opened at 29,362 +264pts vs +303pts ADR’s  with tech and Ecommerce under pressure but strength in Petrochems and Meitu was +14% on news it spent US$40m buying bitcoin and Ether but later sold down. Market trended lower through the morning but found support at 28,600 and saw a small bounce into lunch. PM inttially traded sideways but around 3pm sold down to the day low (28,422) before working lightly better into the close.  Investors concerns over the low growth target set by China and the tightening grip on Hong Kong; with concerns that it could lead to further sanctions on companies.  Chinese Banks rallied on the expectation that the low Chinese growth rates shows China will exit  some easing policies and focus more on reducing risks. Which may prompt market rates to rise; good for banks with high deposits

HONG KONG DATA 
The Centre for Health Protection reported 9 new covid cases (vs 16 Sunday) 3 imported and 4 from unknown sources.
SHORT SELLING Monday 11.8% vs 14.1% Friday
Top Shorts Ping An (2318) 53.6%, Bud Apac (1876) 39%, Wharf REIC (1997) 38%, ACC Tech (2018) 33%, Sands China (1928) 32%, Hengan (1044) 30%, Galaxy Ent (27) 28%, China Res Land (1109) 27%, Sinopec (386) 27%, CKH (1) 25%.
Earnings due Tuesday inc Wharf (4),  China Telecom (728), Yuexiu Transport (1052), Milo Int (1247), JD.Com (9618)

AFTER MARKET NEWS 
Wang Zhigang, Minister of Technology (MOT), at the fourth session of the 13th National Committee of the CPPCC, said it will continue to push the investment in basic research, which is now 6% of the total R&D investment in society, up to about 8% during the 14th Five-Year Plan period.
GEELY AUTO (00175.HK) announced that the total sales volume of the Group (including the sales volume of LYNK & CO-branded vehicles sold by the Group’s 50%-owned joint venture) for the month of February 2021 exceeded 77,200 units, an increase of approximately 265% from the same period last year, in the month of February 2021.
SANDMARTIN INTL (00482.HK) Positive Profit Alert.  The Group is expected to record a reduction of not less than 90% YoY in its net loss for the year ended 31 December 2020.  This is primarily attributable to the postponement of delivery of the Group’s products to its customers due to the outbreak of novel coronavirus pandemic and the lockdown of certain cities in the North America and South Asia.
The Hong Kong Housing Society (HKHS) announced today (8 March) that with the approval from its Executive Committee, rent concession with a maximum of 75% will be further extended for about 480 eligible commercial tenants and car park operators of HKHS for six months from 1 April 2021 to 30 September 2021.
POWERLONG (01238.HK)  announced that the total contracted sales value and total contracted sales area of the Group for the first two months of 2021 amounted to RMB15.101 billion and 978,000 square meters, respectively, representing a year-on-year increase of 213.2% and 219.5%.
POLY PROPERTY (00119.HK) announced that it had recorded contracted sales of approximately RMB5.6 billion, with contracted area approximately 279,000 square metres, up 75% and 108% yearly, for the two months ended 28 February 2021.
The Stock Exchange announced that the listing of BOLINA (01190.HK)'s shares will be cancelled with effect from 9:00 am on 10 March 2021.
Midland Confidence Index (MCI) last stood at 68.6, up 0.6 pts weekly or approximately 0.9%. The index has risen for five weeks, amassing 17.7% increment. This showed the discounted property projects tumbled significantly.
The five-week upswing of the index also hinted at aggressive price uptick, said Buggle Lau, Chief Analyst of Midland Realty.
CHINA TOWER (00788.HK)’s Analysts briefing noted its capital expenditure was above RMB37.1 billion in 2020, up nearly 37% yearly and surpassing the RMB28-billion assumption made in early 2020. The firm's Chief Accountant Gao Chunlei explained that CHINA TOWER had exceeded its 5G construction target last year.  The group's capex would be around RMB30 billion this year, with about RMB18.4 billion for new 5G site construction and augmentation, Gao added.
Govt Extends Vaccination Priority Groups to 7, Incl. Eatery Staff, Couriers, Etc.  While five vaccination centers have come into operation since February 26, Secretary for the Civil Service Patrick Nip announced Comirnaty jabs will be available at seven centers under the Hospital Authority from March 10.The Government is extending the priority group to seven categories, including workers at restaurants and supermarkets, couriers, public transport drivers, registered construction site workers and workers at other listed premises, furthered Nip.  With the next batch of Sinovac doses scheduled to arrive in the financial hub this month, Secretary for Food and Health Sophia Chan said the Government is closely watching the EU's latent export restriction of Comirnaty while staying in touch with Astrazeneca on the schedule of vaccine delivery.
MARKET COMMENT 
*PETROCHEMS STRONG as Oil extended its rally on Friday, after Saudi Arabia's Ras Tanura export terminal came under attack from drones and missiles, claimed by Yemeni Houthi rebels, although Riyadh pointed the finger at Iran. CNOOC (883 HK +2.6%)  PETROCHINA (857 HK +4.8%) SINOPEC (386 HK +1.1%). China’s imports of natural gas in the first two months of the year to hit record levels for the period. Gas shipments increased 17% on year to 20.8m tons, as buyers scrambled to maintain supplies due to a colder-than- usual winter. KULUN (135 HK +1.6%) CR GAS (1193 HK +2.5%).
*CHINA BANKS FIRM  on speculation earnings growth is set to rise on potentially higher net interest margins as China exits easing policies and reduces  risk . HK BANKS remain attractive amid low valuations. HSBC (5 HK +3.6%) STAN CHART (2888 HK +4%) ICBC (1398 HK +1.6%) BOC (3988 HK +1.4%) ABC (1288 HK +4.2%).
*E-COMMERCE WEAK on regulatory concerns, following the news that JD's (9618 HK-6%) fintech unit JD Technology, is likely to withdraw its IPO from Shanghai’s Star Market, amid changing business circumstances after the halt of Ant Group’s stock sale last November.  ALIBABA (9988 HK -2.8%) TENCENT (700 HK -5.4%) KUAISHOU (1024 HK -6.7%) WEIMOB (2013 HK -13.9%) MEITUAN (3690 HK -8.4%).
*TECH & COMPONENTS WEAK on concerns of more US restrictions amid ongoing tensions between China and the US. The FTSE Russell proposing to remove XIAOMI (1810 HK -8.6%) from indexes effective from the open on March 12, citing executive order by the president of the US as the reason. ZTE (763 HK -5.6%) HUA HONG SEMI (1347 HK -8%) Q TECH (1478 HK -8.3%) TRULY (732 HK -9.6%).
*AUTOS WEAK on uncertainties on industry's policies given China's carbon-neutral plans. Executives from automakers including GEELY (175 HK -9.5%), SAIC, and battery maker CATL have reportedly submitted their proposals on NEV to the political sessions. GREAT WALL (2333 HK -10.3%) BYD (1211 HK -10.2%) GAC (2238 HK -2.1%).
*HK PROPERTY STRONG after HK homes price increased as reflected in the price-tracking Centa-City Leading Index, which was up by 0.33%. About 1,100 checks were received for 216 units in the first two price lists of the Grand Victoria phase I in West Kowloon. The Cheung Sha Wan project is being developed by Wheelock Prop, SINO LAND (83 HK-0.1%), KWAH, SHIMAO, and SEA HLDGS. HENDERSON (12 HK +0.7%) NWD (17 HK +1.4%).
*OTHER : CH TOWER (788 HK unch) 2020 net profit +23.1% YoY to 6.428b yuan.
COSCO SHIPPING (1919 HK -14.5%) as freight rates fall most in 5 years.

Regional Markets
AUSTRALIA
ASX 200 rallied initially to the day high and then trended lower for the rest of the day to close +29pts (+0.4%) @ 6,740. Banks and mining stocks lead the gains:Commonwealth Bank +1% while Rio Tinto added 2.9%, Fortescue was up 0.5% and BHP gained 2.4%.
JAPAN 
Pre market data saw better bank lending but the current account missed badly. Coincident Index, Leading Economic Indicators and Eco Watchers data was all beat forecasts.
Nikkei 225 opened higher but drifted lower for most of the morning before selling down into lunch. PM opened lower and drifted sideways/lower to close just off the day low -121pts (-0.4%) at 28,743 Banks led the gains: Mitsubishi UFJ Financial Group +2.8%, Sumitomo Mitsui Financial Group +2.1% and Nomura +3.2%.
Topix followed a similar pattern currently -3pts (-0.1%) @ 1,894
Data
Current Account Jan Y646.8b vs 1165.6b Dec (F/cast was 1200b)
Bank Lending Feb +6.2% YoY vs +6.1% Jan (F/cast was 6.1%)
Prelim Coincident Index Jan 91.7 VS 88.2 Dec revised (F/cast was 88)
Prelim Leading Economic Index Jan 99.1 vs 97.7 Dec revised (F/cast was 96)
Eco Watchers Current Feb 41.3 vs 31.2 Jan (F/cast was 32)
Eco Watchers Outlook Feb 51.2 vs 39.9 Jan (F/cast was 40)
Tuesday we get Household Spending, Average Cash Earnings, GDP Growth data (Rate, Annualised, External Demand, Capital Expenditure, Private Consumption, Price Index), Machine Tool Orders
S KOREA 
Kosdaq opened slightly higher and traded sideways for the the first couple of hours but then trended lower to close just off the day low; -19pts (-2%) @ 905
Kospi followed a similar patter and closed -30pts (-1%) @ 2,996.
Inflation concerns after the strong China trade data and the US stimulus. The Won was weaker vs USD but trading volumes were moderate with Foreigners net selling. Options & Futures Expiry on Thursday 11 March, so expect increased volatility in the next couple of days. Steel and Financials led but Medical, Chemical and Tech weak.
On Tuesday we get Current Account
TAIWAN 
Opened higher and worked higher in the first hour to 16,075 in the first hour but then reversed and trended lower for the rest of the session to close -35pts (-0.2%) @ 15,820
On Tuesday we get Balance of Trade, Exports, Imports, Inflation Rate, Wholesale Prices
CONNECT FLOWS 
Shanghai 
Northbound RMB 60,297m Sell 32,496m : 27,801m Buy
Southbound HK$ 36,730m Sell 21,568m : 15,162m Buy
Shenzhen 
Northbound RMB 66,822m Sell 35,358m : 31,464m Buy
Southbound HK$ 41,854m Sell 24,314m : 17,540m Buy

Active Heavyweights
MEITUAN (03690.HK) -8.4%
TENCENT (00700.HK) -5.4%
HKEX (00388.HK) -5.1%
BABA (09988.HK) -2.8%
PING AN (02318.HK) +1.3%
CCB (00939.HK) +1.1%

HSI & HSCEI Constituents on Move:
JD HEALTH (06618.HK) -10.9%
WUXI BIO (02269.HK) -9.7%
GEELY AUTO (00175.HK) -9.4%
XIAOMI (01810.HK) -8.6%
SUNNY OPTICAL (02382.HK) -7.1%
ALI HEALTH (00241.HK) -6.4%
HAIDILAO (06862.HK) -6.4%
ANTA SPORTS (02020.HK) -6%
JD (09618.HK) -5.9%
GALAXY ENT (00027.HK) -5.8%
GUANGDONG INV (00270.HK) +5.5%
SMIC (00981.HK) -5.2%
CHINA FEIHE (06186.HK) -4.9%
CM BANK (03968.HK) -4.5%
BOC HONG KONG (02388.HK) +4.5%, hitting new high
SHENZHOU INTL (02313.HK) -4.4%
ABC (01288.HK) +4.2%
PETROCHINA (00857.HK) +4.1%, hitting new high
SINO BIOPHARM (01177.HK) -4%
TECHTRONIC IND (00669.HK) -3.7%
CKI HOLDINGS (01038.HK) +3.7%
HSBC HOLDINGS (00005.HK) +3.6%
CHINA RES BEER (00291.HK) -3.6%
AAC TECH (02018.HK) -3.4%
MENGNIU DAIRY (02319.HK) -3.1%
BUD APAC (01876.HK) -3%
EVERGRANDE (03333.HK) -3%
POWER ASSETS (00006.HK) +3%
HANSOH PHARMA (03692.HK) -3%
WH GROUP (00288.HK) +3%
ICBC (01398.HK) +1.6%, hitting new high

HSMI & HSSI Constituents on Move:
GCL-POLY ENERGY (03800.HK) -25.7%
CANSINOBIO (06185.HK) -16.5%
COSCO SHIP HOLD (01919.HK) -14.5%
WEIMOB INC (02013.HK) -13.9%
GOME RETAIL (00493.HK) -13.8%
YADEA (01585.HK) -13.7%
JIUMAOJIU (09922.HK) -13.4%
CH MODERN D (01117.HK) -12.5%
HENGTEN NET (00136.HK) -11.8%
DONGYUE GROUP (00189.HK) -11.8%
XD INC (02400.HK) -11.7%
MAN WAH HLDGS (01999.HK) -11.6%
FRONTAGE (01521.HK) -11.4%
HYGEIA HEALTH (06078.HK) -11%
MICROPORT (00853.HK) -10.8%
YEAHKA (09923.HK) -10.7%
GREATWALL MOTOR (02333.HK) -10.3%
BYD COMPANY (01211.HK) -10.2%
PHARMARON (03759.HK) -10.1%
CHINA LONGYUAN (00916.HK) -10.1%
COFCO JOYCOME (01610.HK) -10.1%
HUTCHTEL HK (00215.HK) +9.9%, hitting new high
DAH SING (00440.HK) +3.6%, hitting new high

MARKET HOURS NEWS
HSBC announced that Reward+ mobile app has reaped 1 million downloads, with its user pool widened by more than 50%. At this moment, 70% of RewardCash rebate was done via the mobile app.
Chief Executive Carrie Lam told reporters the Government fully backs Chinese government's work to perfect the SAR's Legislative Council election method and her administration team will by all means adhere to the five fundamental principles.  The Government will embark on three aspects of preparation work, starting from public explanation and then followed by opinion solicitation and amendment of local regulations, which will be passed to the Legislative Council for vetting upon the approval by the Executive Council.
14th 5-Yr Plan Sets No Growth Goal; NDRC: Still Aims at Faster GDP Growth. After the Chinese central government outlined no growth target in the 14th Five-Year Planning, National Development and Reform Commission said Beijing is now seeking high-quality development, rather than simply GDP  growth itself. Meanwhile, reasonable growth is needed to realize modernization.
At lunch SITC (01308.HK) announced annual results ended December 2020. Net profit amounted to US$352 million, up 59.8% yearly. EPS equaled US13.22 cents. Final DPS was HK60 cents.
At lunch CHINESE EST H (00127.HK) announced annual result ended December 2020. The net profit amounted to HK$622 million, down 21.3% yearly. EPS was HK$0.326. A final dividend of HK1 cent was declared, flattish year-on-year.
At lunch CHINA TOWER (00788.HK) announced annual results ended December 2020. Net profit amounted to RMB6.428 billion, up 23.1% yearly. EPS equaled RMB0.0368. Final DPS was 2.235 fen, as compared with 1.455 fen in the previous year. The payout ratio was 68%.
GALAXY ENT (00027.HK) Deputy Chairman Francis Lui Yiu Tung told Beijing press that he is confident of Macau's gaming industry maintaining revival in the second half of the year. Lui, also a member of the CPPCC National Committee, said business has been resuming progressively since last September.
Civil Aviation Administration of China announced that it granted to CATHAY PAC AIR (00293.HK) licenses for 15 China-Hong Kong routes originally run by Cathay Dragon, Sing Tao Daily reported.
JD-SW (09618.HK)'s international unit is building a team for its ecosystem innovation projects, planning to create a closed-loop ecosystem of commodities, ads and channels through SaaS products and facility operation based on supply chains.  It also announced the strategic cooperation framework deal with the Datong city of Shanxi, aiming to convert Datong into a newborn smart city in the next five years. Equally, the parties aim to build a JD North China IDC data center in Datong to propel local digitization as well as modern transformation of its logistics system. reported Chinese media.  
TikTok was the world's most installed non-gaming app in February 2021 with 56 million downloads, reported Sensor Tower. 18% of the installs came from Douyin in China, followed by 11% from the United States. Facebook was world's second most downloaded non-gaming app, amassing 45 million installs.
IMPERIUM GP (00776.HK) announced that the strategic cooperation between PUBG NVXQF team, the e-sports team owned by its subsidiary Nova eSports International Limited, and Tencent Video has officially commenced. Tencent Video will officially become the title sponsor of NVXQF, and the team will be renamed as “NV-Tencent Video Team.”
PRE MARKET HOURS NEWS
The Government said the second shipment of about 758,000 doses of the Comirnaty vaccine, jointly developed by FOSUN PHARMA (02196.HK) and BioNTech, arrived in Hong Kong yesterday (March 7). Together with the 585,000 doses delivered to Hong Kong in late February, a total of about 1.343 million of the Comirnaty vaccine has arrived in Hong Kong.
Macau will unlikely finish legislation and nail down the mechanism for gaming licensing in mid-22 as planned, Ming Pao learnt from a legislative source who refused to be named, and the existing licenses may hence be extended. While Beijing is taking a hardline approach against gambling, the insider believes the gambling hub is on ground for moving up the amount of non-gaming licenses. The most bullish bet is keeping the number at six, and down to five, if not three, in more bearish assumptions.
Song Yushui, Vice Dean of the Beijing Intellectual Property Court, and XIAOMI-W (01810.HK) Chairman Lei Jun exchanged their views at a seminar, reported Chinese media.   Lei suggested stepping up the protection and promotion of intellectual properties through news reports and legal knowledge promotion. Thus, China shall create a landscape and ambience with respect for knowledge and safeguarding innovation.
UA Cinemas announced that it will cease business with immediate effect from 8 March 2021 due to unavoidable and devastating pressure faced by its operations since the outbreak of the coronavirus pandemic.
Over 200 new homes were transacted at the weekend, denoting a vibrant home market.  Grand Victoria I, developed by five property developers, announced to launch 108 more units under the second price list.  As for the second-hand market, Centaline's ten major housing estates tracked 22 deals, up 4.8% weekly.
BONJOUR HOLD (00653.HK) announced that on 5 March, the Group entered into letters of intent with the purchaser in relation to the proposed disposal of Bonjour Tower in Tsuen Wan.  The entire issued share capital of Apex Centric, a subsidiary of BONJOUR HOLD which held the property, will be sold to the purchaser at a proposed consideration of not less than HK$800 million.
MEITUAN-W (03690.HK)  announced that it had on March 5 purchased 15,000 units of Ether and 379.1214267 units of Bitcoin (BTC) in open market transactions at an aggregate consideration of approximately US$22.1 million and US$17.9 million respectively. The group opined that cryptocurrency prices in general are still highly volatile and therefore the Board currently decided to invest in the two largest cryptocurrencies by market capitalization, Ether and Bitcoin, which the Board believes should enhance shareholder value in the long-term.
TONGDA GROUP (00698.HK) announced annual results ended December 2020. Net profit amounted to $351 million, down 12.5% yearly. EPS equaled 5.42 cents. No final dividend was declared, against 0.05 cents a year ago.
HKTV (01137.HK) announced that Monthly GMV on Order Intake was $456 million, down 5.4% yearly and 19.1% monthly, in February 2021.
TSINGTAO BREW (00168.HK) announced preliminary results ended December 2020. Net profit amounted to RMB2.201 billion, up 18.9% yearly. Basic EPS equaled RMB1.629.
SUNAC (01918.HK)  announced that the contracted sales achieved in February 2021 amounted to RMB33.25 billion, up 172% yearly.
AGILE GROUP (03383.HK) announced that the pre-sales achieved in February 2021 amounted to RMB15.5 billion, up 420% yearly.
BJ CAPITAL LAND (02868.HK) announced that the cumulative contracted sales amounted to RMB9.07 billion, up 76.1% yearly, during the two months ended February 2021.

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