Feb 11 HK WRAP HSI rallied to 2 year high in shortened trading.


11 Feb

HSI +134pts (+0.5%) 30,173  HSCEI +70pts (+0.6%) 11,880 T/O HK$92.087bn (-48% DoD) No connect flows

EUROPE
Markets opened slightly higher but has eased lower as traders again assess earnings with AstraZeneca, Credit Agricole, Commerzbank and Unicredit and cosmetics company L’Oreal were among the biggest names reporting before the bell, along with other like Arcelormittal, Schneider Electric and Zurich Insurance.Dax working higher but CAC and FTSE trading sideways around flat.
AstraZeneca +VE after reported product sales totaling $25.8 billion for 2020, a 10% rise from the previous year. Q4 sales rise +12% to just over $7 billion.
Credit Agricole +VE as it beat Q4 earnings expectations on the back of higher revenues and lower credit loss provisions.
Commerzbank weak after issuing a weaker-than-expected 2021 revenue outlook.
Royal Mail strong posted an upbeat outlook on the back of a stronger-than-expected holiday season.Rexel strong after Q4 earnings
Unibail-Rodamco-Westfield weak after the company suspended dividend payments for three years.
Data
GERMANY
 
Wholesale Prices Jan +2.1% MoM vs +0.6% Dec
Wholesale Prices Jan 0% YoY vs -1.2%Dec
FRANCE IEA Oil Report
US Futures Opened in Asian time opened Dow +34 pts with S&P and Nasdaq higher and worked higher through the day.  
Pre market jobless claims same in higher than expected.
Earnings in focus with Disney after market.
Pre market PepsiCo beat estimates. Uber weak after it reported a smaller-than-expected loss its ride-hailing business is slowly recovered from the pandemic, while its delivery business boomed.
Others were
Generac (GNRC) +VE as beat estimates on the top and bottom lines for its latest quarter, and said it expected net sales growth of 25 to 30 percent this year.
Restaurant Brands (QSR) Weak; the parent of Popeyes, Burger King and Tim Hortons earnings missed but revenue was slightly beat and comparable restaurant sales fell more than expected.
Tempur Sealy (TPX) strong earnings and revenue beat and it said it expected 2021 sales growth of 15% to 20%.
Molson Coors (TAP) weak as earnings missed were hurt by ongoing Covid-19 restrictions for restaurants and bars.
Kraft Heinz (KHC) +VE it beat estimates on the top and bottom lines for its latest quarter, and also announced the sale of its Planters snacks business to Hormel (HRL) for $3.35 billion in cash.
Sonos (SONO) strong after it beat on both the top and bottom lines helped by stronger margins as no promotions were held during the quarter. It also raised its full-year revenue guidance.
iRobot (IRBT) Strong it beat on top and bottom line and gave strong full-year revenue and profit guidance.
Zillow Group (ZG) strong it beat estimates by 14 cents with adjusted quarterly earnings of 41 cents per share, with the operator of real estate websites also scoring a revenue beat. It also gave upbeat revenue guidance, and announced the acquisition of online home-viewing-scheduling platform ShowingTime.com for $500 million in cash.
Zynga (ZNGA) CEO Frank Gibeau told Barron’s that the mobile game developer is open to an acquisition offer, although it is not actively looking to sell the company. Zynga also reported a 61% jump in the key metric of net bookings during its latest quarter, more than analysts had anticipated
DATA
Initial Claims 793k vs 812k prior (revised up) (F/cast was 750k)
Jobless Claims 4 week Average 823k vs 856.5k prior revised (F/cast was 813.75k)
Continuing Claims 4.545m vs 4.69m prior revised (F/cast was 4.451m)
Due later
EIA Natural Gas Stocks Change
Fed Monetary Policy Report.
Earnings: PepsiCo, Walt Disney, Kraft Heinz, Expedia, AstraZeneca, Generac, Virtu Financial, Yeti, Kellogg, AllianceBernstein, Borg Warner, Duke Energy, Molson Coors, Tyson Foods, ArcelorMittal

CHINA Closed re-opens 18 February
News that President Biden and Xi did speak overnight but the tension between the two countries remain elevated.
Chinese President Xi Jinping said only cooperation can bring mutual benefits to both nations while conflicts do harm, Xinhua News Agency reported. Xi insisted that cooperation is the only way out for both countries. Xi furthered China and the US should reboot all sorts of dialogue mechanisms, understanding accurately the policy intentions of each other to avoid false judgement. As issues involving Taiwan, Hong Kong and Xinjiang are China's internal affairs, Xi asked Biden to respect China's core interest and exercise caution.
The Whitehouse said, Biden raised his “fundamental concerns” about Beijing’s “coercive and unfair economic practices, crackdown in Hong Kong, human rights abuses in Xinjiang, and increasingly assertive actions in the region, including toward Taiwan.”
The statement said the two leaders also discussed countering the Covid-19 pandemic, and “the shared challenges of global health security, climate change, and preventing weapons proliferation.”
Officials said Biden also planned to express his hopes the two leaders could cooperate on issues such as nuclear nonproliferation and climate change.
China's Ministry of Finance (MOF), attaching great importance to the report against Deloitte Touche Tohmatsu, appointed talk immediately with the major responsible person of the accountant firm. Having understood the situation, the Ministry asked the firm to conduct earnest self-investigation.   The MOF will strengthen cooperation with relevant regulatory authorities for strict inspections on relevant reporting matters, adhere to "zero tolerance" principle and deal with it seriously in accordance with laws and regulations, in case of any verified violations.
CHINA DATA 
China's used car market trading volume hit 1.4316 million units in January 2021, -16.18% MoM but +45.37% YoY, announced China Automobile Dealers Association on WeChat. The transaction value reached RMB91.852 billion.
Shenzhen Stock Exchange's annual report on global ETF sector reported, China's domestic ETF market developed rapidly in 2020, with the total product scale surpassing trillion yuan, up 57.68% YoY. The number and scale of ETF products hit new highs in nearly a decade.

HSI 
Pre market opened @ 29,995 -43pts vs -139pts ADR’s.
Ecommerce names were mixed and Kuaishou opened lower.
Market initial traded lower down to 29,828 in the first 20 minutes before reversing and working higher for the rest of the morning to close at the day high ahead of the Lunar New Year break. Hong Kong re-opens Tuesday 16 February.

SHORT SELLING Thursday 23.6% vs 16.2% Wednesday 
Top Shorts:   Hengan (1044) 39%, China Res Land (1109) 39%, AAC Tech (2018) 38%, Bank of China (3988) 38%, SHKP (16) 38%, BABA-SW (9988) 38%, Shenzhou (2313) 37%, Country Garden (2007) 33%, Hang Seng Bank (11) 32%, Hang Lung Ppty  (101) 32%, AIA (1299) 32%, BankComm (3328) 32%, Bud Apac (1876) 32%, Anta (2020) 31%, CCB (939) 31%, Ping An (2318) 29%, Meituan (3690) 28%, Sino Biopharm (1177) 28%, CITIC (267) 27%, Sunny Optical (2382) 27%, Galaxy Ent (27) 27%,  CLP (2) 25%, Henderson Land (12) 25%, HSBC (5) 25%.

AFTER MARKET NEWS 
HNA TECH INV (02086.HK) announced that Bank of Hainan, a creditor of HNA Group (an indirect controlling shareholder of the company), filed to Hainan High People’s Court for a reorganisation petition against HNA Group. On 10 February 2021, the Court issued a civil ruling letter, accepting the Reorganisation Petition. The Company underscored it is independent from HNA Group in respect of business, assets, institutions and finance, and will endeavour to ensure the stability in its operation and management. The commencement of reorganisation procedure of HNA Group may have an impact on the shareholding structure of the Company. The Company will closely follow the development of the aforesaid matters.
Tender for a site, New Kowloon Inland Lot No. 6604 at Kai Tak Area 4E Site 2, has been closed at noon today (11 February). According to on-site observation, the government has received at least five tenders, including those from CK ASSET (01113.HK), SINO LAND (00083.HK) and K. WAH INT'L (00173.HK)

MARKET COMMENT 
*PETROCHEMS WEAK despite Oil futures rising for eight days in New York, as EIA data showed crude stockpiles -6.6m barrels to the lowest since March 2020, falling more than expected. CNOOC (883 HK -0.9%) CHINA OILFIELD (2883 HK +2%) PETROCHINA (857 HK -0.4%).
*E-COMMERCE PLATFORMS MIXED  ALIBABA's (9988 HK -0.5%) as Bloomberg reported Jack Ma spotted playing golf in Hainan, easing China detention fears.  TENCENT (700 HK -0.5%) on news reported one of its executive was held for links to corruption case. Tencent said the case was a personal one and not lined to the company. Twitter profits soar to US$222m in the December quarter. +87% YoY. MEITUAN (3690 HK +3.4%) WEIMOB (2013 HK +11%).
PA GOOD DOC (1833 HK +21%) jumped on report that ARK Fund is buying shares in the market.
*CHINESE BANKS STRONG  following the recent strong loan growth. ICBC (1398 HK +1.4%) CCB (939 HK +1.5%) ABC (1288 HK +1.4%).
*HK BANKS MIXED  after STANDARD CHARTERED BANK (2888 HK +0.7%) said it will consider whether final dividend for the year will be  distributed on Feb 25th following HSBC (5 HK -0.2%) similar announcement. HANG SENG (11 HK +0.6%).
*CONSUMPTION STRONG ahead of the week-long holiday in the mainland, and the news that HK will ease dining and social distancing limits after CNY as local Covid cases continue to drop. HOT POT chains soared, XIABUXIABU (520 HK +13%) JIUMAOJIU (9922 HK +7.8%) HAIDILAO (6862 HK +0.6%).
*HK RETAILERS STRONG  SASA INTL (178 HK +11%) BONJOUR (653 HK +10%) and GOME (493 HK +12%).
*HK LANDLORDS FIRM local Covid cases in HK eased; malls and shops may see pickup in visitor traffic when some social distancing rules are being lifted after the CNY  holidays. SHKP (16 HK +1.5%) HENDERSON LD (12 HK +0.8%) CK ASSET (1113 HK+2.3%).
Wheelock Properties has named the second phase of Monaco development in Kai Tak Grande Monaco, and units will be a 10% increase in price compared to the first phase, given the better location and environment.
*PHARMA MIXED  after Mexico approves emergency use of Chinese vaccines made by CANSINO (6185 HK +2.2%) and SINOVAC. FOSUN PHARM (2196 HK -1%) SINOPHARM (1099 HK +2%) 3SBIO (1530 H K-0.3%) WUXI APPTECH (2359 HK -1.9%).
Regional Markets
JAPAN Closed re-opens Friday
S KOREA Closed re-opens Monday
TAIWAN Closed re-opens 17 February

No CONNECT FLOWS

Active Heavyweights
MEITUAN (03690.HK) +3.4%, hitting new high
CCB (00939.HK) +1.5%
PING AN (02318.HK) -0.7%
TENCENT (00700.HK) - 0.5%
BABA (09988.HK) -0.4%
AIA (01299.HK) +0.3%
HKEX (00388.HK) + 0.2%

HSI & HSCEI Constituents on Move:
SMIC (00981.HK) +4%
HAIDILAO (06862.HK) +1.2%, hitting new high
SHENZHOU INTL (02313.HK) +0.8%, hitting new high

HSMI & HSSI Constituents on Move:GRAND BAOXIN (01293.HK)  + 21%
XIABUXIABU (00520.HK) +16.8%, hitting new high
MEITU (01357.HK) +16.1%, hitting new high
SA SA INT'L (00178.HK) +13.4%, hitting new high
HENGTEN NET (00136.HK) +12%, hitting new high
GOME RETAIL (00493.HK) +12%
MOBVISTA (01860.HK) +11.7%, hitting new high
WEIMOB INC (02013.HK) +10.5%, hitting new high

MARKET HOURS NEWS
TENCENT (00700.HK) said a staff is being probed for corruption allegation, it stressed the incident involves personal behavior instead of company activities, Bloomberg reported, which also cited the company's spokesman that the investigation on Zhang Feng is unrelated to WeChat services.   Earlier, Wall Street Journal said Zhang Feng had allegedly shared data collected from WeChat with Former Chinese Deputy Minister of Public Security Sun Lijun.  TENCENT Chairman Pony Ma has not been investigated, who is able to leave China freely, report cited people familiar with the matter.
MGM Resorts International announced Q4 loss of US$450 million, vs US$2.01 billion in profit a year ago. LPS equaled US$0.92, missing the consensus.  The group is bullish on 2H21 results.
PRE MARKET HOURS NEWS
Airport Authority Hong Kong (AA) released the traffic figures for Hong Kong International Airport (HKIA) for January 2021. The airport handled 71,000 passengers and 11,400 flight movements in January, experiencing year-on-year decreases of 98.8% and 65.8%, respectively. During the month, cargo throughput saw year-on-year growth of 14.1% to 409,000 tonnes, while freighter movements surged 37.2% to 6,055 compared with the same month last year.
A group of IPO investors in BABA-SW (09988.HK)'s Ant Group got their capital stuck as the planned IPO was disrupted, said the Wall Street Journal. Over US$10 billion of the money came from global private funds and mutual funds, such as Silver Lake, Warburg Pincus and Carlyle Group.
Geely Chairman Li Shufu has taken the lead to transform the carmaker into a contract manufacturer (OEM) for electric vehicles, Reuters citing an anonymous worker at the group.  Geely has unveiled four EV-related deals, including a partnership with Taiwan's Foxconn to produce EVs, and a cooperation with Baidu to tap the EV market.
After HKEX (00388.HK) had disclosed the appointment of Alejandro Nicolas Aguzin as CEO, SCMP cited sources that the SFC will look into Aguzin's background before deciding whether to approve his appointment. While the 14 SFC directors will meet Wednesday to discuss the matter, the final approval date is not yet set in stone.
US President Joe Biden is soon to speak on phone with Chinese President Xi Jinping, being the first dialogue between the two presidents after Biden took office, Bloomberg cited people with the knowledge of the matter.  Earlier on, Biden disclosed he had instructed the Defense Secretary to form a work team to review the US national security policy against China.
MANULIFE-S (00945.HK)  -2.200 (-1.477%)   announced that new business value was CAD1.802 billion in 2020, a decrease of 12.1% compared with 2019; diluted
EPS equaled CAD2.93; DPS was CAD0.28. During the year, net income attributed to shareholders was CAD5.871 billion, up 4.8%; core earnings amounted to CAD5.516 billion, down 8.1%.
The HKTB is inviting over 220 foreigners living in Hong Kong to participate in a tourism promotion campaign named Hong Kong Super Fans, under which participants will through a basket of events encourage their overseas relatives and friends to pay a visit to the financial hub once the coronavirus pandemic is over. In the future, the tourism authority will also invite press from the Mainland, Southeast Asia, Japan, South Korea, Australia, the U.S. and Europe for a tour group.
The Stock Exchange yesterday (10th) updated its guidance letter related to disclosure in listing documents of biotech firms.  The updated Guidance Letter, HKEX-GL107-20, provides guidance on presenting fair, balanced and accurate disclosure and additional expectations on disclosing certain key business and product areas of biotech companies listed under Chapter 18A of the Exchange’s Listing Rules.
Baidu (BIDU.US) is raising funds to build a stand-alone artificial intelligence chip company, CNBC citing insiders. The chip company will be a subsidiary of Baidu. Venture capital firms GGV and IDG Capital are in talks with Baidu over early-stage investment.
BABA-SW (09988.HK) founder Jack Ma had made an appearance at an online event earlier. He has been in the recent weeks working on the golf game at Sun Valley Golf Resort, Sanya, Hainan, Bloomberg citing people familiar with the matter.
NTES-S (09999.HK) announced that its subsidiary Youdao, Inc. expected the total net income for the three months ended December 2020 to be between RMB1.1-1.12 billion, an increase of 168%-173% year-on-year. It also estimated an operating loss to range from RMB430-470 million, up 111%-130%.
CANSINOBIO-B (06185.HK) announced that having made enquiry with respect to the Company as is reasonable in the circumstance, the Company confirmed that save as disclosed in the Announcement in relation to its Recombinant COVID-19 Vaccine being approved by the Federal Commission for Protection against Sanitary Risks of Mexico for emergency use, the Company is not aware of any information which must be announced to avoid a false market in the Company’s securities or of any inside information that needs to be disclosed under the Securities and Futures Ordinance. The company applied for a trading resumption with effect from this morning (11 February).

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