Feb 25 HK/CHINA WRAP Markets rebound but China remains subdued

25 Feb

HSI +356pts (+1.2%) 30,074  HSCEI +208pts (+1.8%) 11,717  T/O HK$256.8bn (-27.3%DoD) 

Markets opened higher but Dax eased back to trade around flat on weak confidence data but trending lower. FTSE and CAC both initially trading sideways in the green but also dipping lower.
Eurozone data was mixed. Positive sentiment from Powells comments wearing off as FT reports signs of inflation and traders cautious ahead of US initial claims data.
Earnings out from Standard Chartered results NP -69% YoY announced intention to continue share buyback but results were at the lower end of consensus.
AB InBev forecast higher revenues in 2021, but also projected inflated costs and a possible hit to margins, stock was trading lower
Tenaris strong after an initial delay in the start of trading but bumper Q4 earnings +VE
Genus weak after highlighting short-term challenges in its efforts to restock China’s pig farming industry.
Earnings due from Veolia, AXA, Bayer, Aston Martin, Telefonica and Adecco Group

Loans to Household Jan +3% YoY vs +3.1% Dec (F/cast was +3.2%)
Loans to Companies Jan +7% vs +7% Dec (F/cast was +6.7%)
M3 Money Supply Jan +12.5% vs +12.3% Dec (F/cast was +12.4%)
Economic Sentiment Feb 93.4 vs 91.5 Jan (F/cast was 92.5)
Consumer Confidence Feb -14.8 vs -15.5 Jan (F/cast was -14.8)
Consumer Inflation Expectations Feb +15.7 vs +15.4 Jan (F/cast was +14.7)
Industrial Sentiment Feb -3.3 vs -6.1 Jan revised (F/cast was -4.8)
Services Sentiments Feb -17.1 vs -17.7 Jan revised (F/cast was -18.7)
Consumer Confidence Mar -12.9 vs -15.5 Feb revised (F/cast was -12)
Consumer Confidence Feb 91 vs 92 Jan (F/cast was 94)

US Futures 
Opened in Asia: Dow +61pts, S&P +0.17% and NDX +0.14% and rose through the day but eased back as Europe opened. Currently Dow trading around flat, S&P -0.3% and NDX -1%
With Tesla and Facebook weak pre market. Busy day for earnings and data.
Data due
Durable Goods Data, GDP Data (Price Index, Growth Rate), Initial Claims, 4 week Average Claims, Continuing Claims, PCE Prices, Core PCE Prices, Pending Home Sales, EIA Natural Gas Report.
Earnings: Salesforce.com, Norwegian Cruise Lines, Etsy, Best Buy, HP, Shake Shack, Beyond Meat, Anheuser-Busch Inbev, Dell Technologies, Virgin Galactic, American Tower, Cleveland Cliffs, Airbnb, Carvana, Door Dash

CHINA CSI 300 closed +32pts (+0.6%) @ 5,470
CSI 300 opened higher at 5,494 but sold down initially 5,450 before rallying into lunch at 5,515 just off the morning high. PM market sold down to 5,455 level and then traded sideways into the close.
Sentiment remains weak with uncertainty over US relations and PBoC policy. But conglomerates, especially Real Estates companies firm on news of new bidding rules, followed by the financial sector. Tech remained under pressure with ChiNext -0.1% today but the tech-heavy index is -12% since LNY holiday.

Shanghai Comp +21pts (+0.6%) @ 3,585
Shenzhen Comp -42pts (-0.3%) @ 14,829
ChiNext -30pts (-1%) @ 2,977

Pre market opened @ 30,174 +456pts vs +327pts ADR’s with Ecommerce names seeing interest for the first time for several days.
Market initial sold down to 30,453, partly margin selling after yesterday’s sell off but then rallied to test 30,450 ahead of lunch. PM eased slightly initially and then resets the highs but unable to break out and eased back to 30,200. Yesterdays knee jerk reaction seen as a selective buying opportunity but the rebound was on lighter T/O with signs that sector rotation is cautiously continuing.
After Market 
Balance of Trade Jan HK$-25.2bn vs -45.7bn Dec (F/cast was -35bn)
Exports Jan +44% vs +11.7% Dec
Imports Jan +37.7% vs +14.1% Dec
Centre for Health Protection said there were 13 new COVID-19 cases in Hong Kong today; (vs 17 Wednesday) with 3 from unknown sources.
JOINN (06127.HK), debut Friday closed at $145 in gray market, down 4% or $6 against the listing price of $151, PhillipMart data showed. Excluding handling fee, the book loss is $600 per board lot size of 100 shares. That was an improvement on where it opened and remember it was priced at the top end of the indicated range.
SHORT SELLING Thursday 13.6% vs 11.2% Wednesday 
Top Shorts:   Ping An (2318) 45%,  Bud Apac (1876) 35% after earnings Wednesday. Sands China (1928) 31%, CCB (939) 29%, AAC Tech (2018) 26%,  BoC (3988) 26%, Hengan (1044) 25%, HK & China Gas (3) 25%, SHKP (16) 24% reported today.

Earnings due Friday include NWD (17), Great Eagle (41) Asian Citrus (73), Hutch Tel (215), China High Precision Automation (591), NWS (659), Chaoda Modern (682), Sitoy (1023), China Environmental Resources (1130), Solartech (1166), MGM China (2282), Yancoal (3668), Xinyi Electric Storage (8328)

Michael Wong, Secretary for Development, measured that private housing land for the next year (2021/2022) may supply 16,500 flats, consolidating all land sources.  He said the Government plans to roll out 15 residential sites in the next year (2021/2022), potentially providing 6,000 units.  Among the 15 parcels of land, four are from Hong Kong Island, including Kennedy Town, Repulse Bay, Mid-levels West and Wan Chai; one from Broadcast Drive in Kowloon; and 10 from the New Territories, which are located in Tai Po, Lantau, Yuen Long, Tuen Mun, Kwu Tung North New Development Area, Fanling, Tsuen Wan and Kwai Chung. He said 13,020 private residential units may be completed this year, beyond the target of 12,900.
He also said the Government will tender two residential sites in the first quarter of next year (April-June 2021), which are separately located in Kwu Tung and Fanling, providing 980 units. Taking into account different sources, it is expected that the land for private housing in the first quarter of next year will supply 1,530 units.
The Fosun-BioNTech Covid vaccine ordered by the Government will arrive in Hong Kong as quick as Saturday (27 February), as local media cited sources. The vaccine had been expected arrival today.
NTES-S (09999.HK) announced unaudited results ended 31 December 2020. Non-GAAP operating profit was RMB14.706 billion, down 6.1% yearly.  EPS equaled RMB3.65. 4Q20 DPS was US$0.012.
SINO LAND (00083.HK) announced interim results ended December 2020. Net profit amounted to $1.287 billion, -53.7% yearly. EPS equaled 18 cents. Interim DPS was 14 cents. During the period, underlying profit was $2.143 billion, -21.32%.
GALAXY ENT (00027.HK) Results conference; chairman Lui Che Woo made assumption that the company could distribute dividend in 2H21 when the government reopens Macau's tourism market as soon as possible with Covid vaccine taking effect.Deputy Chairman Francis Lui Yiu Tung said the darkest time of Macau gaming industry was over last year. Since the reopening of IVS in last September, the market has experienced sharp rebound. Hence, the company delivered commendable 4Q20 results. He mentioned about the launch of phase three and four projects in 2-3 years from 2H21, providing about 3,000 family rooms and vacation homes for the high-end market and family customers; and 400,000 square feet of convention, etc..
SHK PPT (00016.HK) announced interim results ended December 2020. Revenue +19% YoY to HK$46.07 billion. Net profit amounted to HK$13.578 billion, -11.9% yearly.  EPS equaled HK$4.69. Interim DPS was HK$1.25, flattish yearly.  During the period, underlying profit was HK$17.482 billion, +30.25%.
Management said the stable performance was recorded from its overall businesses despite the challenging environment.The developer disclosed it will go on identifying investment opportunities in Hong Kong and China and focus on various landmarks.
Christopher Hui Ching-yu, Secretary for Financial Services and the Treasury, said the government target is crystal clear, regarding  the proposed hike of stock stamp duty to 0.13% from 0.1%, with a plan to enforce the new duty on 1 August, yet without a "Plan B”.  Hui underscored that the competitiveness of Hong Kong's financial market is not about "striving for cheapest", but about "striving for best”.  
In reply to whether higher stock stamp duty will prompt investors to rotate to US stocks and eventually erode Hong Kong's gains, he said stamp duty only forms part of the transaction cost, besides Hong Kong does not implement dividend tax and value added tax. He was unworried about higher duty at the expense of less Hong Kong's share gains, Hui voiced confidence in ongoing market vibrancy of Hong Kong.
He also commented that HKEX (00388.HK) will review its secondary listing regime, including whether only allows new economy stocks for having WVR share structure and market consultation will be unfolded later.
He said the government intended to establish a central electronic registration platform for the $5,000 e-consumption vouchers distribution, while also offering written registration method.
*PETROCHEMS FIRM  after Crude rose to the highest in more than a year as  traders expect an accelerating decline in global inventories and a bounce back in demand. CH OILFIELD (2883 HK +6%) PETROCHINA (857 HK +2.8%) CNOOC (883 HK +2%).
*E-COMMERCE FIRM rebounded but upside capped as sector rotation continues. News reported various hedge and mutual funds in Canadian & US dumped 101m shares of ALIBABA's (9988 HK +0.2%) ADRs Q4 cutting the market value of their holdings by $89b.  TENCENT (700 HK +0.6%) backed WeDoctor is planning to file for a HK IPO as soon as  next month after fetching a valuation of $6.8b in its latest funding round, localMedia reported.  MEITUAN (3690 HK +1.3%) KUAISHOU (1024 HK +3.6%) NTES (9999 HK +1%) ahead of earnings that came out after market.
*AUTOS FIRM GEELY AUTO (175 HK +2.9%) and Volvo Cars changed their plans and rather than merge set out a new agenda. Both will keep their separate corporate structures while cooperating more closely on electrification,  software and autonomous-driving technology, according to a joint statement (see pre market data below for details).GREAT WALL (2333 HK +2.9%) BYD (1211 HK +1.5%).
*HK BANKS MIXED  STANDARD CHARTERED (2888 HK -2.1%) reported at lunchtime and said would restart its dividend and continue its existing US$254m share buy-back programme BUT reported a worse-than-expected loss in the fourth quarter.
BANK OF EAST ASIA (23 HK +2.8%) yesterday after market announced 2020 net profit +10.8% YoY to HK$3.61b due to improvement in mainland business, but it cut the final dividend nearly by a third.
HSBC (5 HK +3.5%) rebounding after results yesterday along with Hang Seng Bank (11 HK+1.8%).
*HK PROPERTY FIRM  As HYSAN (14 HK +1.5%) reported at lunchtime inline results, FY underlying profit at HK$2..4b vs est 2.43b.
SHKP (16 HK +3%) ahead of earnings that came out after market, as HK private home prices ended a 3-month losing streak and rallied 0.13% MoM in January. Plus positive sentiment on vaccine roll out and budget proposals
LINK REIT (823 HK +2%) acquired a 50% stake in a Shanghai mall for HK$3.33b, marking its first retail property investment in the city.
KERRY PROP (683 HK +4.5%) and Singaporean sovereign wealth fund GIC won the tender for a Shanghai's Pudong site for 6.01b yuan.
*CHINA PROPERTY STRONG on attractive valuations and new land bidding rules.Mainland media reported some cities publish notices of new land policies that stipulate more centralized bidding and transactions, which some analysts say will benefit large state-backed developers. SUNAC CHINA (1918 HK +13%) CR LAND (1109 HK +12%) SHIMAO (813 HK +12%) CHINA VANKE (2202 HK +13%) CIFI (884 HK +11%).
*MACAU CASINOS FIRM on vaccine optimism and quarantine free access for mainlanders. GALAXY (27 HK -1.2%) at lunchtime  reported FY adjusted Ebitda loss HK$1.02b. SANDS (1928 HK +0.9%) MELCO (200 HK+2%) SJM (880 HK +2.7%) after yesterday’s earnings MGM (2282 HK +4.4%).
*PHARMA  MIXED Encouraged by news that Johnson & Johnson Covid vaccine is safe and  effective to use. The vaccine developed by Pfizer-BioNTech will not reach HK on Thursday as planned due to paperwork delays but should arrive at the weekend; FOSUN PHARM (2196 HK-0.1%). SINO BIOPHARM (1177 HK +2.9%) SINOPHARM (1099 HK +1%) CANSINO (6185 HK +11%).

Regional Markets
Nikkei 225 opened higher and traded sideways all day in a tight range to close +497pts (+1.7%) @ 30,168
Topix traded in a similar pattern although slightly weaker start and resistance throughout the day around 1,930 level and sold down at the end to close +23pts (+1.3%) @ 1,926
Leading Economic Index Final Dec 88.3 vs 96.1 Nov (F/cast was 94.9)
Coincident Index Final Dec 95.3 vs 87.8 Nov (F/cast was 87.8)
Tomorrow we get Tokyo CPI, Industrial Production, Retail Sales, Foreign Bond and Stock investment, Housing Starts and Construction Data.
BoK kept rate unchanged at 0.5% as expected.
Kosdaq opened higher and rallied to 922 in the first few minutes of trading and then worked steadily higher through the day to close at the day high +30pts (+3.3%) @ 936
Kospi traded in a similar pattern to close +105pts (+3.5%) @ 3,100.
After market Wednesday there was strong export data which along with the US working higher encouraged the market.
Opened higher and tested 16,475 in early trades but having failed to break out sold down to 16,350 level and traded sideways for the rest of the morning around that level (low was 16,322). After midday market worked better to close +240pts (+1.5%) @ 16,452
After market data out
Unemployment Jan 3.75% vs 3.76% Dec (F/cast +3.8%)
Retail Sales Jan +3.56% YoY vs +1.39% Dec (F/cast was +3.8%)
Industrial Production Jan +18.81% YoY vs +10.3%  Dec (F/cast was +8.8%) 
Tomorrow we get Current Account and M2 Money Supply

CONNECT FLOWS ( reduction in flows)
Northbound RMB 66,068m Sell 32,614m : 33,454m Buy
Southbound HK$ 29,977m Sell 15,291m : 14,686m Buy
Northbound RMB 70,240m Sell 35,907m : 34,333m Buy
Southbound HK$ 32,968m Sell 15,332m : 17,637m Buy

Active Heavyweights
PING AN (02318.HK) +2.6%
HKEX (00388.HK) -1.8%
CCB (00939.HK) +1.8%
MEITUAN (03690.HK) +1.3%
TENCENT (00700.HK) +0.7%
AIA (01299.HK) -0.5%
BABA (09988.HK) +0.2%

HSI & HSCEI Constituents on Move:
SUNAC (01918.HK) +12.4%
SHIMAO GROUP (00813.HK) +12.1%
CHINA RES LAND (01109.HK) +11.2%
CHINA OVERSEAS (00688.HK) +17.7%
LONGFOR (00960.HK) +17.5%
COUNTRY GARDEN (02007.HK) +7.4%
BUD APAC (01876.HK) -7.4%
EVERGRANDE (03333.HK) +6.6%
PSBC (01658.HK) +6.2%, hitting new high
CKI HOLDINGS (01038.HK) +6.1%
CKH HOLDINGS (00001.HK) +4.5%
CPIC (02601.HK) +4.5%
BOC HONG KONG (02388.HK) +3.8%
SUNNY OPTICAL (02382.HK) +3.6%
WH GROUP (00288.HK) +3.6%
CK ASSET (01113.HK) +3.4%
HSBC HOLDINGS (00005.HK) +3.4%
MTR CORPORATION (00066.HK) + 3.4%, hitting new high
SHK PPT (00016.HK) +3.3%, hitting new high
CHINA FEIHE (06186.HK) +3.3%
NEW WORLD DEV (00017.HK) +3%

HSMI & HSSI Constituents on Move:
KWG GROUP (01813.HK) +23.7%
GENSCRIPT BIO (01548.HK) +21%
CHALCO (02600.HK) +16.9%, hitting new high
SEAZEN (01030.HK) +16.5%, hitting new high
GCL-POLY ENERGY (03800.HK) +16.5%
GOME RETAIL (00493.HK) +15%, hitting new high
POWERLONG (01238.HK) +14.8%
DONGYUE GROUP (00189.HK) +12.3%
CHINA COAL (01898.HK) +12.3%, hitting new high
CHINA VANKE (02202.HK) +12.2%, hitting new high
YEAHKA (09923.HK) +11.8%
CANSINOBIO (06185.HK) +11%
CIFI HOLD GP (00884.HK) +10.8%
TIMES CHINA (01233.HK)  +10.1%

BABA-SW (09988.HK)  was commended as the bellwether of poverty alleviation in China at the award ceremony in Beijing today.  According to Chinese media's statistics, the total sales of agricultural products on the Alibaba platform in the past eight years whopped RMB1 trillion; and the company had established a poverty alleviation fund in 2017 to assist the sustainable development of impoverished counties.
BUD APAC (01876.HK)  CEO Jan Craps, at the result conference, said the company's business was resilient because the Chinese government took care of epidemic flare-ups in some regions swiftly during Chinese New Year, and the company's product mix was at higher end for people in coastal areas under "staycation" policy.  With roll-out of vaccination program in China where epidemic was relatively contained compared to other regions, the CEO expressed confidence on the outlook, furthering most sales channels, once being restricted by plague last year, have been reopened.
WeDoctor plans to file for an IPO in Hong Kong as soon as next month after fetching US$6.8 billion in valuation from its latest funding round, Bloomberg learnt from people familiar with the matter. The TENCENT (00700.HK) backed online healthcare platform refused to comment on the news about its fundraising and planned IPO.
At lunch STANCHART (02888.HK) annual results. Last year, statutory profit before taxation fell 57% yearly to US$1.613 billion, lower end of consensus  (which was US$1.431-2.249 billion). Statutory net profit receded 69% yearly to US$724 million. EPS was US36.1 cents. The group declared a final ordinary dividend per share of US9 cents, consensus was US7-17 cents.  Operating profit before tax and provision -16% yearly to $11.903 billion; profit before tax -25% to $9.922 billion.The bank also decided to complete the share buy-back programme that was suspended in April 2020, meaning it will shortly start purchasing and then cancelling up to US$254 million worth of ordinary shares. Bill Winters, CEO said improving prospects for COVID-19 vaccines should enable the global economy to transition back to growth through 2021, with pre-pandemic growth rates reemerging in most of the bank's markets from 2022.  It also announced  plans to trim its office space by a third over the coming three to four years, CFO Andy Halford told Bloomberg TV.Benjamin Hung, Chief Executive Officer for Asia stated that the bank does not set a dividend payout target, reiterating it will return to shareholders through dividend or buyback if CET1 ratio is higher than the target of 13%-14%. If regulators permit, the bank will declare interim and final dividend this year.
At lunch HYSAN DEV (00014.HK) annual results ended December 2020.Turnover declined 7% yearly to $3.71 billion. Loss was $2.547 billion, against $4.845 billion in 2019 profit. LPS equaled 244 cents. Second interim DPS was 117 cents. Full-year DPS was 144 cents, flattish yearly.
HANG LUNG PPT (00101.HK) announced that in relation to the acquisition of Rural Building Lot No. 357 (also known as No. 37 Shouson Hill Road, Hong Kong), the Land Registry of Hong Kong SAR has been advised that The United States of America has complied with the Diplomatic Obligations by obtaining the written consent of the Central People’s Government of China in relation to the sale of the Property, and therefore proceeded with the registration of the Memorandum of Agreement. Completion of the acquisition of the Property by the Tenderer took place on 25 February 2021.
At lunch GALAXY ENT (00027.HK) annual results ended December 2020. Net revenue slid 75.2% yearly to $12.876 billion, in-line with $12.079-15.186 billion (consensus range) During the year, loss was $3.973 billion, milder than $4.168-6.264 billion in broker forecasts and against $13.042 billion in a year ago's profit. LPS equaled 91.6 cents. No dividend was declared.Chairman Lui Che Woo said in the results announcement that in the medium to longer term, the company has great confidence in the future of Macau. It has seen signs of early recovery post the reinstatement of the Individual Visit Scheme in late September 2020 and it may take a few more quarters for business volumes to ramp up. However, it does acknowledge the ongoing difficulties associated with COVID-19 and potential future flare ups of COVID-19 could have a material adverse impact on the company's financial performance. Given the uncertainty caused by the COVID-19 pandemic, today the Board of Directors decided not to declare a dividend.In the Macau Policy Address for 2021, Chief Executive Ho Iat Seng stated that the Government will promote the stable and healthy development of the gaming industry, and to commence preparatory and preliminary work for the new gaming concessions. The company is looking forward to the launching of the public consultation in the 2H21.
Geely Auto CEO In response to questioning about any ring-fence of pure electric vehicle unit, An Conghui, CEO of Geely Auto Group, told Chinese media that the company's door is open to this possibility, and that it will keep researching on a range of proposals.
Forbes released its list of Hong Kong’s Richest 2021. Last year, Hong Kong’s economy contracted by 6.1%, the worst since 1998, but Hang Seng Index’s uptrend drove the 50 richest men in Hong Kong to reap US$331 billion, an increase of 7.5%.  Li Ka-shing reclaimed his prime position as the city’s richest this year with a 20% increment in his wealth to US$35.4 billion. Although CK ASSET (01113.HK)'s share price went down 27% during the period, Li benefited from his stake in ZOOM.
HSBC announced that it plans to splash more than US$3.5 billion in the next five years to accelerate the growth of wealth management and personal banking in Asia.  These investments are primarily used to expand the wealth management team, increase distribution capabilities in Hong Kong, Mainland China and Singapore; enhance digital wealth management capabilities and platforms throughout Asia; and develop new products to render unique wealth experience to the entire customer base.
ShareChat, an Indian social media start-up, is negotiating with TENCENT (00700.HK) on financing, foreign media reported. TENCENT may subscribe for convertible bonds of ShareChat for US$200 million, and the introduction of investment may change the future management right of ShareChat.
JOINN (06127.HK), to be listed tomorrow, was priced at $151, the upper limit of the offer price range $133-151. 309 times of over-subscription was recorded in the public offering. One-lot (100 shares) success rate was 5%.
Li Ka-shing, founder of CKH series of companies, is plotting to set up an SPAC in the US to pool approximately US$400 million (approximately HK$3.102 billion) through US listing, yet no concrete term is set, Bloomberg cited people with the knowledge of the matter.  A company backed by Li family is working with an advisory team for the potential SPAC
IPO, sources said. The company may submit a registration document at the US SEC as soon as this week.
BUD APAC (01876.HK) announced annual results ended December 2020. Revenue declined 14.6% year on year to US$5.588 billion. Net profit amounted to US$514 million, down 42.8% yearly. EPS equaled US3.89 cents. Final DPS was US2.83 cents, compared with US2.63 cents for the previous year.  During the year, normalized profit attributable to equity holders was US$557 million, down 43.96%.
GEELY AUTO (00175.HK) announced that the company and Volvo Cars have found the best combination solution. While maintaining their existing independent corporate structure, the Parties will carry out the following series of business combination and collaboration:
1) The post-merger powertrain company will commence operation this year and will offer products and services to other automobile companies. 2) They will jointly develop the next-generation modular electric vehicle architecture for use by the Parties, the Lynk&Co brand and the Polestar brand, on the basis of the current sharing of two modular electric vehicle architectures. 3) They will jointly develop advanced autonomous driving solution under the lead of Zenseact AB, an autonomous driving software development company and a wholly-owned subsidiary of Volvo Cars. 4) The Lynk&Co brand was officially launched in Europe at the end of last year, and will gradually provide its service to global customers through overseas sales channels and after-sales network of Volvo Cars.
The statement stressed that no concrete timetable or detailed plans of the above Business Combination and Collaboration have been concluded, and it may not necessarily proceed to completion.
CASH FIN SER GP (00510.HK) announced that it had on 24 February disposed on the open market of an aggregate of 352,000 CHINA MOBILE (00941.HK) shares. As a result of the Disposal, the Board considers the Group will realize a book gain of approximately HK$2 million.

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