Feb 4 HK/CHINA WRAP Late rally for both HK & China. KUAISHOU strong in grey mkt ahead of IPO


04 Feb

HSI -194pts (-0.7%) 29,114  HSCEI -88pts (-0.8%) 11,564 T/O HK$239.78bn (+8.5% DoD)

EUROPE
Markets opened higher and initially rallied as Deutsche reported good earnings and a return to profit but shares were weak. Shell up small saw a sharp drop in profit as expected. Data was mixed; construction PMI’s were weak but Retail Sales beat. Focus on earnings (Unilever, Royal Mail, BT, ABB, Roche, Dassault and other. We also get a BoE rate decision, no change expected but the comments will be watched. Auto’s leading but White Household good weak.
Data
EUROZONE 
Construction PMI Jan 44.1 vs 45.5 Dec (F/cast was 45)
ECB Economic Bulletin
Retail Sales Dec +2% MoM vs -6.1% Nov (F/cast was +1.1%)
Retail Sales Dec +0.6% YoY vs  -2.9% Nov (F/cast was -0.2%)
GERMANY 

Construction PMI Jan 46.6 vs 47.1 Dec (F/cast was 46.6)
FRANCE 

Construction PMI Jan 39.5 vs 40.5 Dec (F/cast was 42)
Retail Sales Dec +22.3% MoM vs -18% Nov (F/cast was +8%)
Retail Sales Dec +9.1% YoY vs -15.7% Nov (F/cast was -10%)
UK 

BoE Rate Decision

US Futures 
Opened higher Dow +66pts , S&P +0.3% and NDX +0.4% but have eased back to Dow +30pts with S&P and NDX flat.  S&P on the chart is looking tired! Some good after market earnings from eBay and Paypal but QualComm sales missed but gave upbeat guidance.  Initial claims in focus ahead of Friday’s payroll numbers.
Data Challenger Job cuts, Unit Labour costs, Non Farm Productivity, Initial Claims, 4 week Average Claims, Continuing Claims, Factory Orders, EIA Natural Gas Report.
Earnings: Merck, Bristol-Myers Squibb, Ford, Hershey, Cigna, Clorox, Yum Brands, Intercontinental Exchange, Activision Blizzard, Gilead Sciences, Snap, Pinterest, Hartford Financial, Prudential Financial.

CHINA CSI 300 Closed -11pts (-0.2%) @ 5,474
CSI 300 opened lower with concerns about the PBoC draining liquidity but rallied to test as high as 5,510 in the first hour but then sold down into lunch. PM opened lower and tested down to 5,410 level but worked back to 5,490 which it tested a couple of times before easing lower into the close
Investors cautious on earnings and with Chinese New Year (CNY) next week so expect to see retail money exiting the market, although the expectation is that there will be less physical red packets but more virtual ones. Banks led the gains, liquor saw good interest; Kweichow Moutai +5.98% hit a new high; expected increased demand for CNY. Weakness in Rare earth, Agriculture, and Brokers.
Indexes
Shanghai Comp -16pts (-0.4%) @ 3,502
Shenzhen Comp -127pts (-0.8%) @ 15,106
ChiNext Index -23pts (-0.7%) @ 3,201
CHINA DATA 
China in January registered average daily sales of 66,000 cars, +25% YoY but -5% monthly, as revealed by the data of China Passenger Car Association (CPCA). The Association said the production capacity of chips rebounded with the epidemic gradually tapering off.
HSI Pre market opened @ 29,094 -214pts vs -111pts ADR’s  
Initially rallied to test 29,40 but then sold down into lunch at 28,882. PM opened lower but worked higher but hit resistance at 29,200 level and eased lower in the last 45minutes. E commerce names weak except Baba on the bond news and Chinese Financials except Ping An after earnings. Tech and Autos weak. Earnings being watched carefullyI
PO Cardioflow saw good interest. Tomorrow the much awaited KUAISHOU-W IPO which was up 1.4x in grey.

HONG KONG DATA 
The Census and Statistics Department (C&SD) released the latest provisional figures on restaurant receipts and purchases.
Q4 20 value of total receipts of the restaurants sector estimated at $19.5 billion, -25.1% YoY
Q4 20 value of total purchases by restaurants the provisional estimate at $6.3 billion -24.5% YoY
After netting out the effect of price changes over the same period, the provisional estimate of the volume of total restaurant receipts -25.4% YoY
Centre for Health Protection said there were 22 new COVID-19 cases in Hong Kong today; (vs 19 Wednesday) with 10 of unknown origin, plus 30+ initially confirmed cases

IPO 
CARDIOFLOW-B (02160.HK) closed at $18.82, up $6.62 or +54% against the listing price of $12.2, on volume of 186.9 million shares and turnover of $3.781 billion. Excluding the handling fees, a book gain of $6,620 was reported per board lot of 1,000 shares.
KUAISHOU-W (01024.HK) opened up one time at $230 in gray market before listing tomorrow, PhillipMart data showed. It last posted at $278, up over 1.4 times against the listing price of $115.   Trading was paused due to a system breakdown.Worth noting that TikTok yielded US$128 million in user spending in January 2021, 3.8 times its revenue in January 2020, representing the top grossing non-gaming app worldwide, according to Sensor Tower's report.
JBM HEALTHCARE (02161.HK) opened up almost 17% at $1.4 in gray market before listing tomorrow, PhillipMart data showed. It last posted at $1.44, up 20% against the listing price of $1.2.

SHORT SELLING Thursday 19.5% vs 20.7% Wednesday
Top Shorts:  Ping An (2318) 49%, Sunny Optical (2382) 36%, CCB (939) 34%, Henderson Land (12) 30%, Hengan (1044) 29%, AIA (1299) 28%, Hang Seng Bank (11) 27%, Galaxy (27) 26%, BABA-SW (9988) 26%, CKH (1) 26%.

AFTER MARKET NEWS 
CHINA OVERSEAS (00688.HK) January 2021, the contracted property sales amounted to RMB27.018 billion and the corresponding GFA sold was 1.4167 million square meters, with year-on-year increase of 33.3% and 28.4% respectively.
FORTUNE REIT (00778.HK) Annual Income Available for Distribution Dips 2.4% to $970M; Final DPU 24.56 Cents. CEO Chiu Yu, Justina, at the conference call, said the group has been maintaining healthy financial status, hoping it could tide over the pandemic sturdily. As to future dividend payout , the company will make decision based on circumstances.  She projected 34% of the leases to expire in the year of 2021. Given lackluster retail market conditions, the rental reversion may continue to track a negative growth in the short run. As to the timing for a positive rental reversion, Chiu said it would depend on the plague control by the Hong Kong government.
YUXING INFOTECH (08005.HK)  announced that the Company has been allocated with 800 KUAISHOU-W (01024.HK) Shares at the final offer price of HK$115 each. The total amount paid by the Company in respect of the allocated KUAISHOU-W shares is approximately HK$93,000.
HKT-SS (06823.HK) annual result ended December 31, 2020. The net profit amounted to HK$5.303 billion, up 1.6% yearly. Basic earnings per Share Stapled Unit was HK70.01 cents. Final distribution per Share Stapled Unit is HK40.97 cents, resulting in a total distribution of HK71.07 cents per Share Stapled Unit for the year. Total EBITDA decreased by 2% to HK$12.527 billion.
CHINA OILFIELD (02883.HK) released the strategic guidance for 2021. According to the data from third-parties, the total capital expenditure of global upstream exploration and development in 2021 will slightly increase compared with 2020, and the domestic overall exploration and development situation is stable.  It is estimated that the capital expenditure of the Company will be approximately RMB4.3 billion, which will be mainly used for construction of production bases, renovation of the facilities, machinery and equipment.
CNOOC (00883.HK) announced that the Company’s targeted net production for 2021 is 545 million to 555 million barrels of oil equivalent (BOE), of which, production from China and overseas accounts for approximately 68% and 32%, respectively.  The Company’s total capital expenditure for 2021 is budgeted at RMB90 billion to RMB100 billion.
HKMA Deputy Chief Executive Arthur Yuen said No capital has been leaving Hong Kong so far, whilst a lot of fund managers are tracking increased funds under management.  Under the mutual market access between China and Hong Kong, local market still represented abundant opportunities to financial institutions.
MSCI, Inc. released the MSCI China Tech 100 Index, with IT companies having the highest weighting. The top 20 constituents by weight are listed as follows:
Constituents |Weight (%)
MEITUAN-W (03690.HK) |12.85%
Alibaba (BABA.US) |9.62%
TENCENT (00700.HK) |9.42%
Baidu (BIDU.US) |8.11%
JD.com (JD.US)                 |7.3%
XIAOMI-W (01810.HK) |7.01%
NetEase (NTES.US) |6.13%
NIO (NIO.US) |5.6%
Pinduoduo (PDD.US) |5.49%
BYD COMPANY (01211.HK) |2.48%
SUNNY OPTICAL (02382.HK)|2.38%
ALI HEALTH (00241.HK) |2.24%
Global Data Solutions (GDS.US)|1.57%
SMIC (00981.HK) |1.32%
IQIYI (IQ.US) +0.600 |1.3%
Tencent Music (TME.US) |1.29%
KINGDEE INT'L (00268.HK) |1.16%
CATL (300750.SZ) |1.1%
XINYI SOLAR (00968.HK) |1.06%
KINGSOFT (03888.HK) |1.04%

MARKET COMMENT 
*PETROCHEMS FIRM but closed off initial highs (due to the rally in oil overnight). After market news from CNOOC (883 HK-0.1%) and China Oilfield. (2883 HK+0.2%)  PETROCHINA (857 HK+0.4%) SINOPEC (386 HK+0.5%)
*E-COMMERCE WEAK except ALBABA's (9988 HK +0.5%) after Ant Group reportedly struct a deal with China's regulators to restructuring into a financial holding company, making it subject to capital requirements and new its bond issue would proceed. TENCENT (700 HK -0.1%)  MEITUAN (3690 HK -3.2%) JD (9618 HK -2.5%) NTES (9999 HK -2.8%) WEIMOB (2013 HK -4.2%).
*TECH & COMPONENTS WEAK  despite LENOVO (992 HK -3%) after it posted record Q3 profit of US$395m revenue to US$17.25b. Chipmakers weak after Qualcomm missed revenue expectations and warned it is struggling to meet demand; HUA HONG (1347 HK -5.4%) SMIC (981 HK -2.3%) FIT HON TENG (6088 HK -5.1%).  BYDE (285 HK -8.8%) SUNNY OPT (2382 HK -4.3%) XIAOMI (1810 HK -4.8%). COOLPAD (2369 HK +17%) after placing 186m new shs with a 19% discount to an investor.
*INSURERS  FIRM after PING AN (2318 HK +2.1%) earnings beat consensus. CPIC (2601 HK+3.9%) said the standard insurance in January recorded double-digit growth YoY.
*CHINA PROPERTY WEAK positive sales data but more curbs raising concerns.
COUNTRY GARDEN (2007 HK -1%) Jan contracted sales +22.5% YoY to 40.32b yuan.
KWG (1813 HK -1%) Jan contracted sales +31.3% YoY to 6.78b yuan. EVERGRANDE (3333 HK -0.5%) Jan contracted sales +43.3% to 58.12b yuan.
*PHARMA/MEDICAL FLAT recent fund raisingsm, China yesterday announced kicking 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%.
SINOVAC LIFE SCIENCE submitted application to National Medical Products Administration Wednesday for general use of its Covid-19 vaccine CoronaVac with conditions.
SINO BIOPHARM (1177 HK -0.1%) approved a preliminary proposal for the possible issue of yuan shares and listing on STAR Board. Issue of yuan shares will be up to 10% of total Hong Kong shares.
*AUTOS WEAK as yesterdays Brilliance /FAW rumour denied. Sector continue to trade around EV news, as TESLA says it will start making superchargers in a newly built plant in Shanghai. The 42-million-yuan plant will make up to 10,000 supercharger poles annually.
EVERGRANDE EV (708 HK +13%) says the winter calibration testing of Hengchi vehicles has begun Wednesday in China.
GAC (2238 HK unchg) vehicle sales for Jan. of +23.3% YoY to 217,333 units. GEELY (175 HK -2.2%) GREAT WALL (2333 HK -4.5%) BYD (1211 HK -4.5%).

Regional Markets
JAPAN 
Nikkei 225 opened and trended lower to 28,450 before working slightly higher into lunch. PM opened about 100pts lower and trended slightly lower to close -35pts (-1.1%) @ 28,342 Sony closed +9.5% after raising guidance
Topix opened lower but rallied into the green but hit resistance at 1,875, retrenched to 1,867 before working higher into lunch. PM opened lower and traded sideways to close -5pts (-0.3%) @ 1,865
Data 
Foreign Stock Investment Yen -187.5b vs +209.8b prior revised
Foreign Bond Investment Yen +729.6b vs 756.2b prior revised
Tomorrow we get Household spending and Foreign Exchange reserves pre market and later Leading Economic Index and Coincident Index.
S KOREA  
Saw strong foreign and institutional selling; large caps under pressure except Hyundai and Kia on the Apple deal.
Kosdaq opened flat but sold down initially to 961 before seeing a bounce to 968. But then trended lower; support at 960 and a small rally at the end to close -6pts (-0.6%) @ 965Kospi opened slightly higher but followed a similar pattern to the Kosdaq; closed -42pts (-1.4%) @ 3,088.Tomorrow pre market we get Current Account.
TAIWAN 
Opened lower at 15,700, and sold down 15,600 before rebounding to flat and traded sideways around there for about 40 minutes butane sold back down to 15,700 (opening level) and then traded sideways to close -65pts (-0.4%) @ 15,706

CONNECT FLOWS 
Shanghai 
Northbound Rmb 55,886m Buy 27,408m vs 28,478m Sell
Southbound HK$ 30,734m Buy 15,395m vs 15,339m Sell
Shenzhen 
Northbound Rmb 72,655m Buy 33,477m vs 39,178m Sell
Southbound HK$ 33,180m Buy 14,626m vs 18,554m Sell

Active Heavyweights
MEITUAN (03690.HK) -3.2%
PING AN (02318.HK) +2.2%
HKEX (00388.HK) -1.9%
BABA (09988.HK) +0.5%
TENCENT (00700.HK) -0.1%
CCB (00939.HK) unchanged

HSI & HSCEI Constituents on Move:
XIAOMI (01810.HK) -4.8%
CHINA GAS HOLD (00384.HK) +4.4%
SUNNY OPTICAL (02382.HK) -4.2%
CPIC (02601.HK) +3.9%
CHINA UNICOM (00762.HK) -3.6%

HSMI & HSSI Constituents on Move:
MEITU (01357.HK) +28.1%, hitting new high
KERRY LOG NET (00636.HK) +25%, hitting new high
KASEN (00496.HK) +14%
GCL-POLY ENERGY (03800.HK) +11.6%
CR HOLDINGS (01911.HK) +11.3%, hitting new high
COSCO SHIP HOLD (01919.HK) -10.2%
HENGTEN NET (00136.HK) +7.4%, hitting new high
UNI MEDICAL (02666.HK) +3.3%, hitting new high

MARKET HOURS NEWS
YUM CHINA-S (09987.HK) opened 1,165 new stores last year, brining the total to 10,506, revealed CFO Yang Jiawei. He anticipated to step up the pace of store opening going ahead, aiming for 20,000 shops.   Keeping in line with last year's shop opening, YUM CHINA-S targets to set up 1,000 new stores in 2021 with an annual capex of around US$600 million.
STANCHART (02888.HK) is giving up the lease on eight levels in Standard Chartered Bank Building in Central and set to rent out three floors in the Kwun Tong office, reported Bloomberg. The office space will be rented out between March 2021 and April 2022.  HANG LUNG PPT (00101.HK), landlord of Standard Chartered Bank Building, is asking for $6 million in monthly rent for the space, which spans 60,000 sq.ft.
SWIFT, together with the clearing center and the digital currency research institute of the People's Bank of China (PBOC), jointly formed a financial gateway company in China, indicating China is considering a global roll-out of its own Central Bank Digital Currencies (CBDC). The joint venture is called Finance Gateway Information Services Co and was established in Beijing on 16 January.
PING AN (02318.HK) recorded a new business value (NBV) slide last year, mainly because agents' face-to-face sales were improbable amid the COVID-19 pandemic, said Group Co-CEO Jessica Tan. Consumers have gravitated from buying long-term insurance products towards purchasing short-term protection goods, leading to a sharper business impact.  As Ping An Life's reform may last for one more year, Tan expected a feeble NBV growth this year.
XIAOMI-W (01810.HK)  Some users of MIUI reported that they were unable to install Google Mobile Services (GMS) on their devices, reported Chinese media.  Several Mi Community staff members replied that, given compliance reasons in Mainland China, XIAOMI-W MIUI will no longer support self-installing GMS on phones without pre-installed Google service framework.
BOC HONG KONG (02388.HK)’s  Arnold Chow, Deputy General Manager of Personal Digital Banking Product Department, said e-channel transactions burgeoned by 40% YoY given spiking online service demand from customers last year.  The internet banking trading volume of individual customers roughly doubled last year. Of which, US stock trading was nine times higher YoY with US stock customers topping 200,000.
TikTok yielded US$128 million in user spending in January 2021, 3.8 times its revenue in January 2020, representing the top grossing non-gaming app worldwide, according to Sensor Tower's report.  +VE cross read to Kuaishou’s IPO debit tomorrow.
Chief Executive Carrie Lam said the government is set to:-
legislate regulation on tenant of subdivided flats, whilst Secretary for Transport and Housing plans to table the bill within this legislative year.  
The government will legislate to introduce non-local-training doctors since the Hospital Authority is lacking 660 doctors. Related applicants should be Hong Kong permanent residents who are graduated from recognized overseas medical schools with relevant qualifications.
Also mentioned that Financial Secretary will address residents' hardship amid pandemic with economic relief in his upcoming Budget at end-February
Tencent Cloud announced that it clinched a strategic cooperation with the database platform MongoDB, under which authorized MongoDB services are provided to users around the world from now on.  Both parties will beef up cooperation at the product and technical level to deepen the database application scenarios of industries such as games, e-commerce, and social media.
EVERG VEHICLE (00708.HK)  announced that the winter calibration testing of Hengchi vehicles is officially initiated at the Yakeshi test base of China Automotive Technology & Research Center for three weeks.  The Shanghai production base and Guangzhou production base, constructed in accordance with Industry 4.0 Standard, have begun trial production, likely achieving mass production sequentially in the second half of year.
Ant Group is downsizing the years of cooperation with at least 12 Chinese banks on consumer loan platform, Bloomberg cited people with the knowledge of the matter. Since regulatory department has in recent months stated clear its intention to curb online loan, Chinese banks are prompted to discuss loan cap with Ant Group.

PRE MARKET NEWS
The HK Department of Health has been actively following up with Sinovac Biotech (Hong Kong) with a view to obtaining as soon as possible the Phase 3 clinical data of its COVID-19 vaccine for emergency use. According to the latest reply from Sinovac, the company is preparing the relevant information and will submit it to the department as soon as possible.
ASCENTAGE-B (06855.HK)  announced it plans for the top-up placing of 26.5 million shares, representing 10.49% of the enlarged share capital of the Company.  The Placing Price of HK$44.2 per Share represents a discount of 9.43% to the closing price yesterday. The net proceeds are estimated to be HK$1.154 billion.
YUM CHINA-S (09987.HK) annual result ended December 2020. The total revenues -5.8% YoY to US$8.263 billion. The net income amounted to US$784 million, +10%. EPS was US$2.01. A final dividend of US$0.12 was declared.
BRIGHT SMART (01428.HK) announced that it acquired a total of 769,700 BABA-SW (09988.HK)  Shares on the market in a series of transactions conducted between 27 April 2020 and 3 February 2021 for an aggregate consideration of approximately HK$187 million. The average price for the Acquisition of each BABA-SW Share was HK$243.34.
BYD COMPANY (01211.HK) January, the production volume +87.3% to 47,618 vehicles and sales volume of the company + 68.4% yearly to 42,401 vehicles.
HKTV (01137.HK)  announced that the GMV on order intake in January +66.9% yearly but -1.2% monthly to $564 million.

Comments
* The email will not be published on the website.