Science & Tech Board IPOs Evaluated
The Hang Seng had a roller coaster session opening higher and reaching an intra-day high of +0.59% only to fall -0.77% before clawing back to end +0.14%/41 index points. Volumes were above the 1 year average and up day over day slightly on mixed breadth of 24 advancers and 21 decliners. For the week the Hang Seng gained +0.35% as the 30,000 resistance level has yet to be breached. Insurance giant AIA gained +1.11%/+31 index points while China Mobile’s weak results led to another off day -1.44%/-22 index points, conglomerate CK Hutchison, aging founder Li Ka-Shing is known as Superman for his business prowess, gained +2.7%/18 index points as a potential bidding war breaks out for a stake in their AS Watson retail chain. Tencent gained +0.55% as broker chatter held the view that investors expected the online gaming slowdown as several units such as cloud computing surprised to the upside. Within the MSCI China All Shares’ HK stock -0.05%, discretionary was led higher by Geely and autos following a sell side upgrade post earning results +2.65%, tech +0.85% as Micron’s surprisingly strong results lead to a global rally. Utilities and healthcare lagged -2.45% and -0.85%. Southbound Connect volumes were lower with buyers outpacing sellers though volume leader Tencent had 3 to 1 sellers. Pork giant WH Group saw strong buying (again).
Shanghai & Shenzhen mirrored HK’s roller coaster move to end the day +0.09% and +0.20% and the week +2.37% and +2.73%. Volumes were lower day over day though still 2X the 1 year average on mixed breadth. Small caps underperformed led lower by tech names. Within the MSCI China All Shares’ mainland stocks -0.32%, discretionary was +0.68% and healthcare +0.51% though communications -1.62%, financials –0.98% and tech -0.9%. Northbound Connect volumes were moderate as foreigners were net buyers by a small margin though Ping An saw moderate selling.
As you can tell it was a quiet night. The Shanghai Stock Exchange’s Science & Technology board is evaluating 30 to 40 companies. IPOs require capital which has led to investors selling current holdings to buy a new issue. I don’t believe we can point to small cap/tech weakness on these coming IPOs but it is worth watching.
Mainland headlines reiterated the coming VAT cut as they will be implemented April 1.
CNY 6.71 .
Yield on 1 Day Chinese Gov’t Bond 2.12%
Yield on 10 Year Chinese Gov’t Bond 3.17%
Yield on 10 Year China Development Bank Bond 3.61% .
Commodities were mixed on the Shanghai & Dalian Exchanges w/Dr. Copper -0.49%