Feb 2 HK/CHINA WRAP The rebound continues ahead of BABA earnings

02 Feb

HSI +356pts (+2.2%) 29,249  HSCEI +155pts (+1.4%) 11,609 T/O HK$225.5bn (+12.7% DoD)

Markets opened higher and worked higher in the first couple of hours of trading; following the lead from Asia for a second day. Encouraged by the expectation of more vaccine supplies shortly. Auto’s leading the gains but all sectors in the green.
Earnings in focus
BP weak in early trades reported a larger than expected loss
Siemens Energy Q1 Net Profit 99m Euro and announced to cut 7,800 jobs by 2025
Fresenius Medical Care weak after cutting its profit guidance.
EQT strong in early trades
GDP Growth Rate Q4 -0.7% QoQ vs +12.4% Q3 revised (F/cast was -2.2%)
GDP Growth Rate Q4 -5.1% YoY vs -4.3% Q3 (F/cast was -6%)
Inflation Rate Prelim Jan +0.6% YoY vs 0% Dec (F/cast was +0.2%) Inflation Rate Prelim Jan +0.2% MoM vs 0.2% Dec (F/cast was -0.3%)
Nationwide Housing Prices Jan +6.4% YoY vs +7.3% Dec (F/cast was +7%)
Nationwide Housing Prices Jan -0.3% MoM vs +0.9% Dec revised (F/cast was +0.3%)
US Futures 
Opened flat in Asian time Dow +18pts, S&P and NDX flat but worked better through the day currently Dow +230 with S&P and NDX +VE. Earnings in focus. GameStop weak in after hours. NXP was weak too but I think could see a bounce after guided higher.
Redbook, ISM New York Index, IBD/TIPP Economic Optimism, API Crude Oil Stock Change
Earnings: Alphabet, Amazon, Exxon Mobil, Pfizer, UPS, BP, Amgen, Electronic Arts, FireEye, Chipotle, Viavi Solutions, PerkinElmer, ConocoPhillips, Sirius XM, Harley-Davidson, Alibaba, McKesson, Eaton, Marathon Petroleum

CHINA CSI 300 Closed +83pts (+1.5%) @ 5,501
CSI 300 opened higher but tested Monday’s close in early trades before working higher to 5,480 but unable to break above, small consolidation to 5,460 before working back to 5,480 again. PM opened flat and broke up to 5,492 before easing back but worked slowly higher to close at the day high.
China’s key cost of overnight borrowing fell from a five-year high, after the central bank extended credit for a second day to ease a cash crunch ahead of Chinese New Year. Lead higher by Auto’s on some good sales numbers, rare earth, steel, liquor, logistics and building materials. Weakness seen in shipping, agriculture, coal, banking and insurers.
Goldmans expect its growth likely to moderate in next few months; I think likely considering the recent covid wave, Chinese New Year and the fact there is likely to be a lag as covid PPE demand easing and China’s more normal exports seeing a pick up.
Shanghai Comp +28pts (+0.8%) @ 3,534
Shenzhen Comp +311pts (+2.1%) @ 15,337 (day high)
ChiNext Index +69pts (+2.2%) @ 3,229


HSI Pre Market Opened @ 29,378 +485pts vs +36pts ADR’sEcommerce +VE; Baba strong ahead of results tonight in the US and CSPC Pharma strong on proposed A share issue.  
HSI worked higher in choppy trading to 29,511 by mid morning but then trend slightly lower into lunch. PM trended lower through the afternoon before finding support around the 29,210 level before a small bounce into the close.
Broad based buying interest with all sectors in the green, E Commerce leading. Pharma names seeing good interest along with Consumer and Alternative energy. Tech strong ahead of earnings and Kuiashou’s debut on Friday.
HONG KONG DATA after market
Retail Sales Dec -14% YoY vs -4.7% Jan (F/cast was -7%)
Centre for Health Protection said there were 25 new COVID-19 cases in Hong Kong today; (vs 34 Monday) with 4 of unknown origin,

SHORT SELLING Tuesday 17.5% vs +17.8% Monday
Top Shorts: Bud Apac (1876) 50%, Ping An (2318) 44%, Hang Seng Bank (11) 38%, CCB (939) 36%, Hengan (1044) 36%, Bank of China (3988) 31%,  MTRC (66) 31%, HSBC (5) 30%, Country Garden (2007) 29%,  ICBC (1398) 28%,  CKI (1038) 29%, AIA (1299) 26%, CK H (1) 25%, Anta (2020) 25% (following broker upgrades Monday).

WUXI BIO (02269.HK) proposed to place 88 million shares to raise up to $9.94 billion, Reuters' IFR reported. The placing price of $110.5-113 represented a discount of 6.1%-8.2% to today's closing price of $120.4.
Chairman of Hong Kong Retail Management Association (HKRMA), at the conference call, predicted retail sales of Hong Kong in the first half of the year to be flattish yearly, in wake of multiple uncertainties, such as unknown end of fourth spike of plague.  HKRMA members were pessimistic about sales during January and Chinese New Year, mainly owing to consumption sentiment undermined by gathering ban and higher jobless rate after the expiry of Employment Support Scheme.
Douyin lodged a lawsuit at Beijing Intellectual Property Court, suing TENCENT (00700.HK)  of monopoly, according to Chinese media. Douyin said TENCENT restricted users from sharing Douyin's contents via WeChat and QQ, constituting violation of China's Anti-Monopoly Law.   Douyin requested the Court to immediately ban TENCENT's restriction on Douyin, order TENCENT to make public statement brushing off adverse impact, and compensate Douyin with RMB90 million as economic loss and reasonable fee.
SING TAO (01105.HK) Chairman Ho Tsu Kwok, Charles unloaded almost 247 million shares of the company at $1.5 each off the market on 28 January, with his stake cut to 3.37% from 31.37%, involving nearly $370 million, according to the disclosure of the Stock Exchange. The transaction price represented a premium of 64.8% over the closing price as quoted before trading suspension last week.   On the same day, KAISA PROSPER (02168.HK) Vice Chairman Kwok Hiu Ting acquired almost 247 million shares of SING TAO at $1.5 each off the market. Upon completion, she would become the substantial shareholder of SING TAO with 28% stake.
SUNLIGHT REIT (00435.HK) and DBS Hong Kong have secured a HK$500 million sustainability-linked loan today.
SINOPHARM (01099.HK)  announced that the coupon rate for the public issue of the 2021 corporate bonds (1st tranche) eventually came in at 3.65%. The actual size of issue would be RMB1 billion.
Shanghai Gold Exchange said the precious metals on international market have marked more rattled prices with escalated market risk. The Exchange hence alerted investors of enhancing risk prevention and making rational investment.
BONJOUR HOLD (00653.HK) announced a plan to run Chinese New Year event on 1-21 February via the new e-commerce platform. A six-day pre-sale period has started from 26 January.
MODERN LAND (01107.HK) announced that for the month ended 31 January 2021, contracted sales of the Group amounted to approximately RMB2.44 billion, up 20.9% yearly.
Tesla (TSLA.US) intends to acquire 20% equity interest in BYD COMPANY (01211.HK)  with US$36 billion, as rumour swirled on the market. Yet, some Chinese media later cited BYD COMPANY that the rumor was untrue. BYD COMPANY's shares leaped 7% to close at HK$262.2 today.  
BYD COMPANY (01211.HK)  (002594.SZ) announced that it had today reviewed and passed a resolution under which it will give up its investment in subsidiaries BYD Auto Industry, BYD Auto and BYD Supply Chain by roughly RMB5.43 billion, RMB3 billion and RMB3 billion respectively.
RONSHINECHINA (03301.HK) announced that during the month ended January 2021, the total contracted sales amounted to approximately RMB12.296 billion, up 67.1% from RMB7.358 billion in the same period in 2020.
PA GOODDOCTOR (01833.HK)  announced the annual result ended December 2020. The loss widened to RMB948 million from RMB734 million in the corresponding period of the previous year. LPS was RMB0.92. No dividend was declared.
China Mobile and China Three Gorges Corporation (CTG) held the signing ceremony for their strategic cooperation framework deal in Beijing today.  Accordingly, both sides will team up for fundamental communication construction, enterprise digital transformation, 5G innovative applications, new infrastructure construction and international business.

*PETROCHEMS FIRM  CNOOC (883 HK +5%) CH OILFIELD (2883 HK +8%) after WTI +2.8% BRENT +2.6% Oil rose to the highest in more than two weeks, lifted by broader  market strength and optimism over demand recovering this year.
*PRECIOUS METALS MIXED following yesterday's rally, while silver jumped to an almost eight-year high to $29.06 per ounce overnight, extending a surge as the retail-trading frenzy spilled into metals, while Platinum jumped 5% to $1131.68. CHINA SILVER (815 HK -21%) ZHAOJIN (1818 HK -1.4%) CHINAGOLD (2099 HK +1%) ZIJIN MINING (2899 HK +2.6%).
*E-COMMERCE FIRM  ALIBABA (9988 HK +3.5%) ahead of today’s earnings before the U.S. open, with consensus expecting revenue +33% and Ebitda +22%, though fresh regulatory scrutiny threatens to overshadow the good results.  Investors also turn bullish after news reported KUAISHOU TECH's (1024.HK) shares, which is set to debut in HK on Friday, saw grey market traded more than double to the listing price. MEITUAN (3690 HK +1.8%) TENCENT (700 HK +1.7%) JD (9618 HK +5.4%) NTES (9999 HK +2.3%) WEIMOB (2013 HK +5.3%).
*TECH & COMPONENTS MIXED AAC TECH (2018 HK -0.8%) announced a proposed spin-off and listing of its optics business, which will be held through AAC Optics (Changzhou) on a stock exchange in mainland China. LENOVO (992 HK +1.7%) ahead of Wednesday’s Q3 earnings, which is expected to beat market estimates. SUNNY OPTICAL (2382 HK +4%) led other component makers higher following broker's upgrade amid increased demand for tech components. TONGDA (698 HK +5.5%) FIT HON TENG (6088 HK +3.9%).
*FINANCIALS MIXED BEA (23 HK +2.2%) after news reported AIA (1299 HK +1%) and CH STRATEGIC (235 HK -7%) are among the final bidders for BANK OF EAST ASIA's life insurance unit. BEA could raise about US$500m to US$600m from a potential transaction.
China’s National Council for Social Security Fund (SSF) sold about 477.8m A shares it held of PICC GROUP (1399 HK +0.4%), according to an exchange statement.
PING AN ( (02318.HK -0.1%) Ahead of earnings Wednesday
*AUTOS FIRM on sales optimism, after two mainland car makers posted strong sales Chongqing Changan +87% YoY and Jiangling Motors +80% YoY.GREAT WALL (2333 HK +7%) GEELY AUTO (175 HK +3.8%) GAC (2238 HK +3.1%) BYD (1211 HK +7.2%).
*PHARMA STRONG on positive outlook. CSPC (1093 HK +9%) proposed to issue of RMB shares under specific mandate to a maximum of 1.33b new shares to list on China's STAR Board.
JUNSHI BIOSCIENCES (1877 HK +6.8%) may receive as much as US$1.11b of upfront payment from COHERUS BIOSCIENCES (CHRS US) for the grant of the license of JS001 and Option Programs.
SIHUAN (460 HK +21%) has recently achieved two milestone breakthroughs in the field of stroke treatment. The company's blockbuster product Kelinao Injection, and the stroke and lower limb rehabilitation external skeletal robot has also completed clinical trials.
*SOLAR STRONG led higher by GCL-POLY (3800 HK +36%) as investors look pass a $500m bond default by one of its unit following correction in the past week. The company said yesterday that the default on the 3-year, 7.1% note due Jan. 30 will trigger a cross default after the offer was terminated. It also announced that the increase in production capacity in Fluidized Bed Reactor (FBR) based granular silicon in Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd., a subsidiary of the Company, will formally commence production on 3 February 2021. The annual effective production capacity will increase from 6,000 metric tonnes previously to 10,000 metric tonnes, and will officially reach the 10,000 metric tonnes capacity benchmark.
COMTECH SOLAR (712 HK +20%) XINYI SOLAR (968 HK +4.7%).
*RESTAURANT CHAINS STRONG, with HAIDILAO (6862 HK +10%) and XIABUZIABU (520 HK +11%) both market records ahead of the Lunar New Year holiday and positive sector outlook.

Regional Markets
Nikkei 225 opened higher but tested yesterday’s closing level in early trades (concerns about extension of the state of emergency) before working higher into lunch. Some resistance seem at 28,300 level but broke above going into lunch.PM opened flat and trading sideways with support at 28,300 Currently +221pts (+0.8%) @ 28,310
Topix followed a similar pattern currently +14pts (+0.8%) @ 1,844
Nintendo seeing some weakness after good results and increasing outlook yesterday.
Pre Market inflation data was higher than expected
Kosdaq opened slightly higher but tested down to 955 before bouncing and working higher 972 level about mid morning. Then reversed and traded back down to 954 before bouncing Currently +5pts (+0.5%) @ 962
Kospi followed a similar pattern but didn’t enter into negative territory; currently +44pts (+1.4%) @ 3,100.
Tech names in focus along with Naver & Kakao. Won was weaker
Inflation Rate Jan +0.6% YoY vs +0.5% Dec (F/cast was +0.2%)
Inflation Rate Jan +0.8% MoM vs +0.2% Dec (F/cast was +0.2%)
Opened higher and work up to 15,800 by mid morning and then traded sideways. Dipped slightly at the end to close +350pts (+2.3%) @ 15,760

Northbound Rmb 54,625m Buy 27,163m vs 27,462m Sell
Southbound HK$ 26,755m Buy 10,173m vs 16,582m Sell
Northbound Rmb 68,795m Buy 32,906m vs 35,888m Sell
Southbound HK$ 33,984m Buy 11,537m vs 22,447m Sell

Active Heavyweights
BABA (09988.HK) +3.5%
HKEX (00388.HK) +3.4%
TENCENT (00700.HK) +1.8%
AIA (01299.HK) +1.7%
MEITUAN (03690.HK) +1%
CCB (00939.HK) +0.2%
PING AN (02318.HK) -0.1% Ahead of earnings Wednesday

HSI & HSCEI Constituents on Move:
HAIDILAO (06862.HK) +10.3%, hitting new high
CSPC PHARMA (01093.HK) +9.2%
JD (09618.HK) +5.5%
ALI HEALTH (00241.HK) +4.7%
CPIC (02601.HK) +4.7%
SUNNY OPTICAL (02382.HK) +4.5%
SINO BIOPHARM (01177.HK) +4.4%
GEELY AUTO (00175.HK) +4.3%
GALAXY ENT (00027.HK) +4.1%
WUXI BIO (02269.HK) +3.9%
CNOOC (00883.HK) +3.8%
CHINA RES BEER (00291.HK) +3.8%SANDS CHINA LTD (01928.HK) +3.1%
CHINA FEIHE (06186.HK) +3%

HSMI & HSSI Constituents on Move:
GCL-POLY ENERGY (03800.HK) +35.7%, hitting new high
SIHUAN PHARM (00460.HK) +20%
FUFENG GROUP (00546.HK) +18.6%, hitting new high
GENSCRIPT BIO (01548.HK) +18%
CMS (00867.HK) +14.9%, hitting new high
INNOCARE (09969.HK) +14.2%
XIABUXIABU (00520.HK) +11.2%, hitting new high
WEICHAI POWER (02338.HK) +10.8%, hitting new high

TENCENT (00700.HK)'s anti-fraud investigation department disclosed via its public WeChat account that the team has uncovered more than 60 fraud cases crossing "Tencent high voltage line" from 4Q19 up till now, according to Chinese media. Over 100 employees were dismissed due to fraud, whilst over 40 were sent to Public Security for suspected crimes. The tech giant, through its "Tencent high voltage line", prevents, investigates and cracks down on any kinds of frauds, such as accepting bribes and embezzlement, so as to ensure its staff to behave in accordance with righteous value.  On another note, almost 40 Chinese companies were blacklisted by TENCENT, where cooperation with those companies would be suspended permanently.
Alibaba Cloud and DR.PENG (600804.SH) have entered into strategic cooperation, under which the two parties will set about cooperation related to SMEs' cloud transition and provide their clients with products of Alibaba Cloud and DR.PENG and relevant cloud network solution.
The Land Registry announced that the number of sale and purchase agreements for all building units received for registration in January was 6,212 (-18.2% MoM but +64.5% YoY).  Among the sale and purchase agreements, 4,562 were for residential units (-24.8 % MoM but +65.2% YoY). The total consideration for sale and purchase agreements in respect of residential units was $39.7 billion (-32.3% MoM but +60.4% YoY).
Tencent Cloud and Fubon Bank (China) nailed a joint innovative laboratory cooperation agreement, under which both parties will leverage a joint innovative laboratory to further explore financial applications in innovative scenarios, integrate business scenarios to incubate forward-looking product solutions and promote commercialization.
The Government accepts the Minimum Wage Commission's Report and decided to put the minimum wage on hold at $37.5 per hour, local media citing sources.
The intelligent vehicle joint venture established by Baidu and Geely may be situated in Shanghai, according to Sina Tech's sources.   The JV is currently recruiting smart car-related talents in Jiangsu, Zhejiang and Shanghai through headhunters, hiring positions including directors, deputy directors and senior managers.
TENCENT (00700.HK)'s Tencent Cloud Future Community said it launches resident electronic access code function so as to enhance the epidemic control at community during Chinese New Year holiday.
In 2020, worldwide semiconductor revenue grew 5.4% from 2019's to US$442 billion, IDC wrote in its research report, foretelling the figure to rise 7.7% higher to US$476 billion in 2021.
During the fourth quarter last year, the worldwide tablet market reported an outstanding performance with shipments up by 19.5% yearly to 52.2 million units, according to IDC's research report.
Overnight HIBOR last posted at 0.10625%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.15964%, up for 7 days, marking a 1-month high.
Today's front-page commentary titled "high-quality development shall not go without entrepreneurial spirit", Shanghai Securities News praised Chinese entrepreneurs including TENCENT (00700.HK) founder Pony Ma, XIAOMI-W (01810.HK) founder Lei Jun, Huawei founder Ren Zhengfei, and BYD COMPANY (01211.HK) founder Wang Chuanfu. However, BABA-SW (09988.HK) founder Jack Ma was not mentioned in the commentary.
BYD COMPANY (01211.HK)'s  "blade battery" has been eyed on by Hyundai Motor Group, Chinese media cited sources. The automaker has therefore established a Hyundai project team, and expected to begin overseas supply next year. For this, the company's director secretary said they did not bar odds of cooperation with Hyundai in future.
The Government hopes to receive the data of China-made vaccines as soon as possible, which will then be passed to local experts for review and approval for recommendation to the Food and Health Bureau for emergency use, said Chief Executive Carrie Lam. Pfizer-BioNTech vaccines, upon arrival in the city, will hopefully be available to use straight away, added Lam, while Oxford-Astrazeneca (AZN.US) vaccines are scheduled to be delivered in 2H21. The city leader deemed the recent eight mandatory virus screenings in cordoned areas highly effective, rather than being "harassing or exhausting."
Databricks, a startup helping companies process large data sets, announced a fresh US$1-billion funding round. Amazon (AMZN.US)'s Amazon Web Services, Alphabet (GOOGL.US) and Salesforce Ventures (CRM.US) have partaken in the round.
The U.S. economy remains stuck in a recession and fresh fiscal relief measures are needed to nudge a full recovery and help the jobless find jobs, foreign media citing Federal Reserve policymakers. Boston Fed Bank President Eric Rosengren opined the US central bank should make all possible moves to restore full employment as soon as possible.  Dallas Federal Reserve Bank President Robert Kaplan called on both the Fed and the Congress to be aggressive in both fiscal and monetary policy actions in order get the economy back to a more healthy footing, while staying optimistic of U.S. recovery in the months and years ahead.
CHOW SANG SANG (00116.HK) has initiated legal proceedings in the Court of First Instance of the High Court of Hong Kong by issuing writs of summons on 1 February 2021 against the Default Customers and their respective guarantors for the repayment of the Outstanding Sum and against the Introducer for the refund of the Introducer Fees respectively. Some of the customers referred by the Introducer defaulted on the payment of commission fees and margin facility interests or the repayment of margin loans in accordance with the relevant client agreements. As at 31 January 2021, the total outstanding sum due from the Default Customers amounted to HK$797 million.
CHINA STRATEGIC (00235.HK) announced that it noted from recent news report that it was named as one of the final bidders for the BANK OF E ASIA (00023.HK)’s life insurance unit (BEA Life). The Company clarified that further to the announcement of the Company dated 4 November 2020, the Group was selected as one of the shortlisted bidders to enter phase two of such bidding process for BEA Life and the Group submitted an offer in phase two subject to further due diligence and entering into legally binding agreements. The bidding process for BEA Life is still ongoing. The Company may or may not win the bid for BEA Life and even if it wins such bid, the Potential Transaction will still be subject to conditions including approval from shareholders of the Company being obtained. As such, there is no certainty that the Potential Transaction will proceed.
US Secretary of State Antony Blinken, in an NBC interview, slammed China for breaking her commitments to Hong Kong. Seeing Hongkongers stand up for their rights, Blinken suggested Washington providing a haven to those fleeing the crackdown. With millions of Americans struggling amid the epidemic, the Biden administration would study whether the tariffs slapped on Chinese imports by Donald Trump had done more harm to the US than to China.
The PBoC announced that it had in January 2021 started 1-year 2.95% MLF operation, in a size of RMB500 billion, on financial institutes.
EVERGRANDE (03333.HK) is unfolding annual promotion event for online home purchase nationwide, The Beijing News reported. The housing prices may be discounted by as much as 25%, together with further price reduction offer, in a bid to accelerate sales return and lower liability.
China Mobile International's German data center was officially put into operation, reported CCTV News. As a global network switching and internet data hub, this center seamlessly connects with other data centers in countries and regions like Britain, Singapore and Hong Kong, as well as its network and cloud services worldwide.
GCL-POLY ENERGY (03800.HK) announced that the increase in production capacity in Fluidized Bed Reactor (FBR) based granular silicon in Jiangsu Zhongneng Polysilicon Technology Development Co., Ltd., a subsidiary of the Company, will formally commence production on 3 February 2021. The annual effective production capacity will increase from 6,000 metric tonnes previously to 10,000 metric tonnes, and will officially reach the 10,000 metric tonnes capacity benchmark.
PING AN (02318.HK) announced that its Shenzhen subsidiary PAB (000001.SZ) unveiled the 2020 results. The latter recorded a net profit of RMB28.928 billion, up 2.6% yearly, with an EPS of RMB1.4.  During the year, the operating revenue added 11.3% to RMB153.542 billion.
CNBM (03323.HK)  announced proposed participation in the H share full circulation program, for which the Company had on 1 February submitted an application to the CSRC.
CSPC PHARMA (01093.HK) announced that the Board had approved the Proposed Domestic Issue of not more than 1.33 billion new shares, representing 10% of the aggregate of the total number of issued Shares.
TRAVEL EXPERT (01235.HK) announced that it had on 1 February disposed on the open market of a total of 98,000 CHINA MOBILE (00941.HK) shares at an aggregate consideration of $4.716 million. Following the Disposals, the Group does not hold any CHINA MOBILE shares.
SUN HUNG KAI CO (00086.HK) made clarification regarding the possible acquisition of PrimeCredit. The company said it looks at various opportunities in the market from time to time. So far, no definitive agreement in relation to the Possible Transaction has been entered into by the Company, and there is no certainty that any definitive agreement will be reached.   The company applied for a trading resumption with effect from today (2 February).

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