Feb 3 HK/CHINA WRAP Late rally for HK, China weak on PMI and PBoC data

03 Feb

HSI +58pts (+0.2%) 29,308  HSCEI +43pts (+0.4%) 11,652 T/O HK$225.5bn (-2% DoD)

Markets opened higher on good earnings before the bell but sold down on mixed data. Italy rallied on news that Draghi may form a government.All sectors in the green with Telcos leading.Siemens rising after significantly raising its full-year guidance after a strong fiscal Q1 with orders, revenue and net income outstrip market expectations.
Publicis higher after it beat earnings expectations.
Italian lenders Banco BPM, Intesa Sanpaolo and UniCredit, along with infrastructure group Atlantia and postal service Poste Italiane, all rallied after news that former ECB President Mario Draghi is expected to become Prime Minister of a new unity government in Italy.
Argenx strong, touching its highest point on record, after a $1 billion equity raise.
Freenet strong after announcing a share buyback plan and restoring its dividend.
Services PMI Jan 45.4 vs 46.4 Dec (F/cast was 45)
Composite PMI Jan 47.8 vs 49.1 Dec (F/cast was 47.5)
Core Inflation Rate Flash Jan +1.4% YoY vs +0.2% Dec (F/cast was +0.5%)
Inflation Rate Flash Jan +0.9% YoY vs -0.3% Dec (F/cast was +0.3%)
Inflation Rate Flash Jan +0.2% MoM vs +0.3% Dec (F/cast was +0.5%)
PPI Jan +0.8% MoM vs +0.4% Dec (F/cast was +0.4%)
PPI Jan -1.1% YoY vs -1.9% Dec (F/cast was -1.5%)
Services PMI Jan 46.7 vs 47 Dec (F/cast was 46.8)
Composite PMI Jan 50.8 vs 52 Dec (F/cast was 50.8)
Services PMI Jan 47.3 vs 49.1 Dec (F/cast was 46.5)
Composite PMI Jan 47.7 vs 49.5 Dec (F/cast was 47)
Budget Balance Dec Euro -178.1b vs -176.85b Nov (F/cast was -170b)
Services PMI Jan 39.5 vs 49.4 Dec (F/cast was 38.8)
Composite PMI Jan 41.2 vs 50.4 Dec (F/cast was 40.6)
US Futures 
Opened slightly higher Dow +30pts, S&P +0.3% and NDX +0.4% in Asian time. S&P and NDX rallied on good Amazon and Alphabet earnings but DOW flat. Earnings still in focus and the retail frenzy seems to have abated for the time being. ADP jobs data in focus ahead of Friday’s payrolls report.
MBA Mortgage Applications and 30 yr Mortgage Rate, Services and Composite PMI, ISM Non Manufacturing Data (Business Activity, Prices, Employment, PMI, New Orders, EIA Oil Stocks Change Report.
Earnings: Qualcomm, Boston Scientific, GlaxoSmithKline, Abbvie, Biogen, Humana, Apollo Global Management, Allstate, eBay, PayPal, Check Point Software, Aflac, MetLife, Grubhub, KLA Corp

CHINA CSI 300 Closed -16pts (-0.3%) @ 5,485
CSI 300 opened lower ahead of the Caixin PMI data and traded down to 5,480. Data was weaker than forecast hitting a 9 month low and market traded sideways 5,480 to 5,510 until 11am when it rallied to 5,529 going into lunch. PM initially tested higher but without conviction and sold down to yesterdays close which held and traded sideways but then sold down to 5480 around 2:20pm and then saw small bounce into the close.
Concerns again about liquidity as PBoC withdrew more money from the system today; 180b yuan of 7-day interbank funding matured today, and PBOC today offered 100b yuan of 7-day funds. With another 380b yuan comes due next week, that means 480b yuan will now come due before the Lunar New Year holiday starts next week. Tech weak as BABA said Ant IPO has numerous issues.
Weakness in Defence, Chips, Mobile phone chain and HIT battery names. Buying interest in nonferrous metals, banks, and agricultural stocks.
With Chinese New Year next week expect to see retail money exiting the market, although the expectation is that there will be less physical red packets but more virtual ones.
Shanghai Comp -16pts (-0.5%) @ 3,517
Shenzhen Comp -103pts (-0.7%) @ 15,233 just off day low
ChiNext Index -5pts (-0.1%) @ 3,224
Caixin Services PMI Jan 52.0 vs 56.3 Dec (F/cast was 55.8)
Caixin Composite PMI Jan 52.2 vs 55.8 Dec (F/cast was 55.4)

HSI Pre Market Opened @ 29,305 +57pts vs +85pts ADR’s despite PMI being stronger than expected.  E Commerce seeing interest but BABA weak after earnings; having said Ant IPO had issues. Insurers weak ahead of Ping An earnings due after market.  Other sectors mixed.
Market sold down from the open first to 29,100 level before a bounce and then sold down to 29,000. Bounced again to 29,160 before selling back down to test 29,000. Then worked slightly higher into lunch (29,100 level).
PM opened higher and tested 29,250 (yesterday’s closed but failed at the first attempt and eased back, re tested an hour later and broke to 29,280 but failed to hold and retrenched again before rally to 29,310 in the last few minutes to close at the day high. Sentiment cautious on fund raising placements and then the weaker than expected Caixin data.
Pre market Jan PMI 47.8 vs 43.5 Dec (F/cast was 44)
Centre for Health Protection said there were 19 new COVID-19 cases in Hong Kong today; (vs 25 Tuesday) with 7 of unknown origin,

SHORT SELLING Wednesday 20.7% vs 17.5% Tuesday
Top Shorts:  Bank of China (3988) 42%, Bud Apac (1876) 40%, Ping An (2318) 40%, Wuxi Bio (2269) 37%, Anta (2020) 36%, SHKP (16) 33%, China Res Land (1109) 32%, CKH (1) 31%, Hengan (1044) 31%, Wharf REIC (1997) 28%, Sinopec (386) 28%, CCB (939) 27%,  Link REIT (823) 27%, MTRC (66) 26%, Sino BioPharm (1177) 25%, Hang Seng Bank (11) 25%,   BABA-SW (9988) 24%.

CARDIOFLOW-B (02160.HK), whose shares will be listed tomorrow, closed at $20.2 ingray market, +65.6% or $8 against the listing price $12.2, on volume of 18.7 million shares and turnover of $377 million, PhillipMart data showed. Excluding the handling fee, the book gain is $8,000 per board lot size of 1,000 shares.
Wheelock Properties announced that MONACO, its property project in Kai Tak, accumulated sales of 324 flats in three rounds, cashing in over $3.8 billion.  The phase two of the project, having obtained the pre-sale consent, is likely to launch after Lunar New Year, the developer revealed.
HSBC HOLDINGS (00005.HK)  is considering relocating a handful of management staff from London to Hong Kong or Singapore to strengthen its presence in the Asian market, said Bloomberg.
TIMES CHINA (01233.HK) announced that the contracted sales for January amounted to RMB8.28 billion, +24.1% YoY. The contracted gross floor area reached 421,000 square meters.
EMPEROR WATCH&J (00887.HK)  Profit Warning  expecting a net profit of not less than HK$30.0 million (2019: HK$90.03 million) for the year ended 31 December 2020, while a net loss of HK$114 million was recorded for the six months ended 30 June 2020.
LENOVO GROUP (00992.HK)'s online results news conference, Chairman Yang Yuanqing said the industry component shortage primarily stemmed from robust demands during the pandemic. Foretelling the under-supply in chips and displayers to rage on in 1H21, Yang foresaw ongoing business growth of the company with sound inventory established correspondingly. The chairman also expressed optimism over the coming quarter and year ahead given recovering corporate demands for equipment and resurgent infrastructure.
The Stock Exchange announced that with effect from 8 February 2021, the listing of the shares of MASTER GLORY GP (00275.HK) will be cancelled under Rule 6.01A of the Listing Rules.
SINO BIOPHARM (01177.HK) announced that, on 3 February 2021, the Board has approved a preliminary proposal for the possible issue of RMB Shares and listing on the Science and Technology Innovation Board of the Shanghai Stock Exchange (Sci-Tech Board). The Proposed Domestic Issue shall be conditional upon and subject to market conditions, the approval of the Shareholders at the general meeting of the Company and the necessary Regulatory Approvals.  After deducting the issuance expenses, the proceeds of the Proposed Domestic Issue are preliminarily intended to be used for the development of the principal businesses of the Company, merger and acquisition in the industry, and general working capital.
HKT-SS (06823.HK)  announced that the Company joins hands with Kai Tak Sports Park Limited (KTSPL) and Hip Hing Engineering in a cross-industry partnership to realise Hong Kong’s largest sports infrastructure, which is also the first construction site in the city to be equipped with a dedicated 5G network infrastructure. The parties have equipped the Sports Park’s construction site with dedicated 5G coverage. 5G-powered applications such as mobile management system, robotics and Internet of Things (IoT), will boost work efficiency and communication among construction personnel.
COUNTRY GARDEN (02007.HK) announced that for the single month of January 2021, the Group had achieved contracted sales of approx RMB40.32 billion, up 22.5% yearly.
EVERGRANDE (03333.HK) announced that the Group had in January achieved contracted sales of properties of RMB58.12 billion, representing an increase of 43.3% from the same period last year.
PING AN FY20 NP -4.2% to RMB143.1B, In-line with RMB122.393-146.99 billion in broker forecasts. EPS equaled RMB8.1. Final DPS was RMB1.4. Full-year DPS was RMB2.2, above RMB2.05 in the previous year.
Ant Group has struck an agreement with Chinese regulators on an overhaul that will transform the group into a finance holding company, Bloomberg citing insiders. Accordingly, Ant will be subject to similar capital requirements for banks.
BRILLIANCE CHINA (01114.HK +13.5) announced that the Company noted there were certain media reports published regarding the FAW Group’s potential acquisition of shares and privatization of the Company.   The Board clarified that, to the best of the Company’s knowledge, information and belief, and having made all reasonable enquiries, the Company does not have any knowledge of the source of information contained in the Media Reports. The stock once rocketed 25.6% to peak at $7.99 after midday.
Centa-Salesman Index (CSI) last printed at 61.26, +1.63 pts from the previous week. 
CSI surpassed 60 this week on a six-week uptick, close to the 62.59 peak before the 3rd Covid wave, said the research department of Centaline Property. This indicated the front-line agents maintained the upbeat spirit, while foretelling a home price rebound prior to Spring Festival. Second-hand deals continued to be vibrant, they added, forecasting the CSI to get close to 70 in the next few weeks.
China has kicked off tender for the fourth batch of Group Purchasing Organization (GPO) of drugs in Shanghai.  A total of 158 types of drugs have been shortlisted in the simulation results, with a planned average price cut of 52% and a maximum price chop of 96%.

*PETROCHEMS Firm Oil closed at its highest in a year in the US and then after US markets closed API data showed a fall in inventories. CH OILFIELD (2883 HK +4.5%) CNOOC (883 HK +3.7%) ANTON OIL (3337 HK +2.1%) PETROCHINA (857 HK +1.3%).
*E-COMMERCE FIRM  ALIBABA (9988 HK +0.7%) resumes plan this week for US$5b bond sale after revenue gain, after reporting a 37% increase to 221b yuanin quarterly revenue that beat analysts’ expectations. Stock traded lower for most of the day but rebound into the close on the news that ANT has reach agreement with regulators on overhaul to be regulated as a bank.JD.COM (9618 HK +1.4%) logistics unit will file for a HK IPO soon, aiming to raise US$4b targeting a valuation of US$40b. JD.com is also planning to spin off its fintech arm JD Digits in Shanghai Star Market to raise around 20b yuan.
ByteDance's short video app Douyin has filed a complaint with a court in Beijing to sue TENCENT (700 HK +2%) for monopolistic behavior and asked for 90m yuan in compensation. Tencent refuted the charge.
PING AN HEALTHCARE (1833 HK +6.4%) reported FY net loss of 948m yuan, vs a net loss of 734m yuan in 2019.
*PHARMA MIXED after. WUXI BIO (2269 HK -2.6%) sells 118m shares at HK$112.00 in a placement; a discount of 7% to the last closing price of HK$120.40.  The proceeds are to be used for expanding manufacturing capacities. WUXI APPTECH's unit Hequan Pharm announced it will acquire Bristol-Myers Squibb (BMY US) production base in Switzerland. INNOVENT (1801 HK +6.3%) and Lilly jointly announce the Approval of TYVYT®
(sintilimab injection) by China NMPA in combination with Pemetrexed and Platinum
Chemotherapy as 1st-line therapy for nonsquamous non-small cell lung cancer.
*AUTOS MIXED BRILLIANCE (1114 HK+14%) on rumour that Chinese state-owned FAW GROUP is considering taking BMW partner Brilliance China Auto private in a deal with a potential US$7.2b price tag.  Later denied by Brilliance management.BYD (1211 HK +1.8%) to inject a total of 11.5b yuan into its units to enhance R&D and operation capabilities. GEELY (175 HK -1.8%) and GREAT WALL (2333 HK -3.8%).
* HK RETAILERS FIRM after a smaller-than-expected drop of retail sales value in Dec. HK retail sales plummeted by a record 24.3% in 2020 to HK$326.5b due to the pandemic. The December retail sales fell 13.2% YoY to HK$31.4b,  following a 4.1% decline in Nov. Retail sales have fallen for 23 straight months as the industry has been hard hit by anti-govt protests and Covid-19. LUK FOOK (590 HK +1.8%)  SA SA (178 HK +4.2%) BONJOUR (653 HK +4.6%) LIFESTYLE (1212 HK +1.2%).
CH EASTERN AIR's (670 HK -0.9%) board approved the issue of 2.49b A shares at 4.34 yuan apiece to controlling shareholder China Eastern Air Holding. Issued shares represent ~13.2% of enlarged total issued share capital.
SING TAO NEWS's (1105 HK +12%) chairman and major shareholder Charles Ho Tsu-kwok has sold a 28% equity in the company to Guo Xiaoting at HK$1.5/shr, daughter of chairman of Kaisa Prop Guo Yingcheng, for HK$370m, according to a disclosure of interests on the HKEX.
LONGi Green Energy Tech (601012 CH) will purchase no less than 91,400 tons of polysilicon materials from Jiangsu Zhongneng Polysilicon Tech, a unit of GCL-POLY (3800 HK -2.7%).

Regional Markets
Nikkei 225 opened higher saw an initial dip ahead of PMI data which beat and the market then traded higher to 28,670 before easing back to 28,500 and working higher into lunch. PM opened around the 28,500 level and worked higher to close at the high +284pts (+1%) @ 28,647
Topix traded in a similar pattern currently +24pts (+1.3%) @ 1,871
Data after the open
Services Jan PMI 46.1 vs 47.7 Dec (F/cast was 45.7)
Composite Jan PMI 47.1 vs 48.5 Dec (F/cast was 46.7)
Kosdaq opened higher and tested to 970 in early trades but then sold down through the morning to 960 level before rebounding to 968 but then eased back before working higher to close +7pts (+0.7%) @ 971
Kospi followed a similar trading pattern to close +33pts (+1.1%) @ 3,130
Foreign Exchange Reserves Jan $442.73b vs 443.1b Dec (F/cast was 453b)
Auto and Tech driving the market higher in early trades. But Pharma seeing some weakness.
S Korea and Cambodia agree free trade deal for broader economic cooperation
Opened higher and initially tested to 15,860 but then sold down to 15,745 before working back to 15,850 in choppy trading.  Then traded sideways 15,810/15,840 but then sold down from midday; but saw an uptick to close +11pts (+0.1%) @ 15,771

Northbound Rmb 55,744m Buy 27,589m vs 28,155m Sell
Southbound HK$ 27,653m Buy 11,441m vs 16,212m Sell
Northbound Rmb 71,363m Buy 34,253m vs 37,110m Sell
Southbound HK$ 34,921m Buy 13,667m vs 21,254m Sell

Active Heavyweights
MEITUAN (03690.HK) +4.9%, hitting new high
PING AN (02318.HK) -1.6%
TENCENT (00700.HK) +1.6%
BABA (09988.HK) +0.4%
CCB (00939.HK) -0.2%
HKEX (00388.HK) unchanged
AIA (01299.HK) unchanged

HSI & HSCEI Constituents on Move:
SUNNY OPTICAL (02382.HK) + 5%
CNOOC (00883.HK) +3.5%
CM BANK (03968.HK) +3.4%
HANG LUNG PPT (00101.HK) -3.4%
NTES (09999.HK) +3.2%
CPIC (02601.HK) +3.1%
CSPC PHARMA (01093.HK) -3.1%
LONGFOR (00960.HK) -3%
HAIDILAO (06862.HK) +2.1%, hitting new high

HSMI & HSSI Constituents on Move:
COFCO JOYCOME (01610.HK) +27.9%
KASEN (00496.HK) +25.2%
MEITU (01357.HK) +21.3%
FRONTAGE (01521.HK) +17.9%, hitting new high
INNOCARE (09969.HK) +17%, hitting new high
BRILLIANCE CHI (01114.HK) +13.5%
LUYE PHARMA (02186.HK) +11.3%
JXR (01951.HK) +11.3%, hitting new high
MAOYAN ENT (01896.HK) +11%
MOBVISTA (01860.HK) +10.3%, hitting new high
ZHOU HEI YA (01458.HK) +10.1%, hitting new high
CMGE (00302.HK) +10.1%

BYD COMPANY (01211.HK) is soon to shake up its automobile business structure, as rumor transpired on the market. Later, person within BYD's circle said the news was basically true, according to Chinese media.
SHUI ON LAND (00272.HK) announced a 50/50 joint-venture with Grosvenor Asia Pacific to acquire a mixed-use Grade A landmark property at Nanjing IFC.
HK01 will lay off over 40 employees, representing around 5% of the total workforce, according to the online news portal's internal email.  The sports unit will be bearing the brunt, with roughly half of the headcount to be dismissed, Hong Kong Economic Times citing insiders.
Taobao Picked as Exclusive E-commerce Partner of CCTV's CNY Gala in the Year of the Ox, Taobao has established a project group to hand out at least RMB2-billion red envelopes during the event, reported Chinese media.
China expanded her imports of computer chips and relevant machines last year in response to the widening U.S. technology ban, Bloomberg reported.  Taiwan became one of the biggest winners from worldwide chip demands, where TSMC recorded leaps and bounds in order volume, and her economic growth hence leapfrogged China's for the first time in three decades.
LENOVO GROUP (00992.HK)  Q3 PBT beats consensus; Overall Results RobustIt also announced a new organizational structure. Effective April 1, 2021, the company will bring together services and solutions teams and capabilities from across the company to form a dedicated organization - the new Solutions & Services Group (SSG). SSG will further drive the company’s transformation by delivering incremental business across smart verticals, attached services, managed services and the “as a service” offerings including DaaS and Truscale.
BRILLIANCE CHINA (01114.HK) rallied on a rumour that FAW Group intends to acquire BRILLIANCE CHINA shares with approximately US$7.2 billion.
SING TAO (01105.HK) announced that on 28 January 2021, the Company was informed by Chairman Ho Tsu Kwok, Charles that Luckman Trading (a company wholly-owned by Ho) entered into a sale and purchase agreement with Vast Resources International (a company owned by Kwok Hiu Ting, daughter of KAISA GROUP (01638.HK)  Chairman Kwok Ying Shing) to sell nearly 247 million shares, representing approximately 28% of the entire issued shares of the Company, at a total consideration of nearly HK$370 million. Before completion, Ho shall dispose of the remaining 29.645 million shares held by Luckman Trading to other independent third parties, meaning Ho would sell the entire 31.37% stakes in the Company. Application has been made to the Stock Exchange for the resumption of trading of the shares on the Stock Exchange with effect from 1:00 p.m. today.
NISSIN FOODS (01475.HK)’s controlling shareholder, Nissin Japan, has announced the results for the first three quarters ended 31 December 2020. Total sales for its China segment reached JPY36.156 billion, up 13.8% year-on-year.
LENOVO GROUP (00992.HK) announced the results for the first three quarters ended December 31, 2020. The net profit amounted to US$918 million, up 47.4% yearly.  The Group will further push product innovation and accelerate 5G smartphone launches. It will also seek to enhance competitiveness in Latin America, North America, and Europe to grow at a premium to the sector and drive profitable growth.  In its DCG business, the Group aims to deliver premium-to-market growth and enhance profitability.
TENCENT (00700.HK)'s Interactive Entertainment Group said it concluded a cooperation intention with Universal Beijing Resort, whereby the latter's seasonal event will introduce the intellectual property (IP) of TENCENT games, such as Honor of Kings. The launch was expected to be in 2022.
Apple Inc will invest KRW4 trillion in Hyundai Motor's Kia to explore electric vehicle partnership, expecting to ink an Apple Car production deal this month, reported South Korea's Dong-A Ilbo.  Apple reportedly aims to launch Apple Car by 2024, and expand the annual capacity to up to 400,000 cars, up from 100,000 cars as preliminary capacity.
Moody's mentioned China's stable housing demand amid the pandemic in 2020. This, coupled with sequential economic revival, had underpinned a benign growth in full-year real estate sales.  However, Beijing unrolled new real estate loan policies targeting banks at end-2020, leading to gradual credit tightening in the Chinese property sector. Thus, Moody's expected the contract sales increment to slow down in 2021.
Huawei announced that its next-generation foldable Mate X2 phone will make an official debut on 22 February.
TENCENT (00700.HK) has rented a roughly 10,000 sq. ft. office in Tower 5, The Gateway, Tsim Sha Tsui at a floor rental price of around $55/sq. ft., representing 20% recession from two years ago's level, inside sources were quoted as saying by Hong Kong Economic Times.  The Chinese tech giant decided to rent the office as part of its expansion plan, said the insiders.
OOH HOLDINGS (08091.HK)   announced that on 1 February 2021, a subsidiary of the Company, MSML, subscribed for EVERGRANDE (03333.HK)'s Corporate Bond in the principal amount of US$400,000 at a consideration of US$399,900.

RAZER (01337.HK)  announced that it intends to acquire console accessories brand Controller Gear.  The acquisition of Controller Gear, which specializes in creating licensed peripherals and merchandise for popular console brands including Xbox, PlayStation and Nintendo, will strengthen Razer’s position in the fast-growing premium console market as the entire gaming market is forecast to cross its first US$200 billion year in 2023.
Apple intends to issue bond to raise US$14 billion leveraging the low interest rate environment, Bloomberg reported. The offering will reportedly comprise of a 40-year bond, from which the proceeds will be used for share repurchase and dividend payment. Apple's cash in hand whopped US$196 billion in the latest quarter with debt of US$112 billion.
The PBOC mounted the RMB100 billion seven-day reverse repos today on the open market with a bidding interest rate staying flat at 2.2%.  There was RMB180 billion of reverse repos due today, hence the single-day net withdrawal amounted to RMB80 billion.
Shenzhen Stock Exchange announced that HENGTEN NET-NEW (00136.HK) is admitted to the Southbound Trading list with effect from today (3 February).
SUNAC SERVICES (01516.HK) Positive Profit Alert expecting an increase of more than 120% in the profit attributable to owners of the Company for the year ended 31 December 2020 as compared to that of the previous year.
SUNAC (01918.HK)  Positive Profit Alert expecting that the profit attributable to owners of the Company for the year ended 31 December 2020 will increase by over 35% as compared with last year, primarily attributable to the increase of the area delivered in the sales of properties and gains on changes in fair values of financial assets generated from equity investments.
BABA-SW (09988.HK) announced proposed offering of senior unsecured notes, of which the net proceeds were intended to be used for general corporate purposes. The offering size will not exceed US$5.0 billion, said street rumors, and the notes will be offered in different tranches.
China Resources Holdings reported gross profit and net profit of RMB80.2 billion and RMB59 billion in 2020, up 11% and 16% yearly, as Securities Times learnt from the group's 2021 manager annual meeting.
GCL-POLY ENERGY (03800.HK) announced that the Company entered into the long-term polysilicon purchase and sale cooperative framework agreement with Tianjin Huanrui, a subsidiary of TJSEMI (002129.SZ).  Pursuant to the Agreement, the Company shall sell a total of 350,000 metric tonnes of polysilicon to Tianjin Huanrui from 2022 to late 2026.It also announced entering into the polysilicon procurement agreement with LONGi (601012.SH) and its seven subsidiaries.  Based on the average transaction price of monocrystalline high purity silicone materials of RMB90,600/metric tonne as announced by the Silicon Industry Branch of China Nonferrous Metals Industry Association on 27 January 2021, the total amount under the polysilicon procurement agreement is expected to be RMB7.328 billion.

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