China: Tencent, JD.com Inc (ADR), Dongfang Electric, China Treasury, OneConnect Financial Technology, PC Partner, Hopson Development and more

• MSCI comprehensively evaluates the free float for stocks at the May SAIR. The changes will be announced on 12 May and implemented at the close on 31 May.
• We expect an increase in the FIF for some stocks. Largest inflows are expected on Tencent (700 HK), Kuaishou Technology (1024 HK), JD Health (6618 HK) and KakaoBank (323410 KS). 
• There is reasonably large short interest on some of the stocks and there could be some short covering on stocks where there could be large passive inflows.

• JD dismissed employees in many businesses, such as Retail, International, and Jingxi.
• However, we believe the layoff only covers minor businesses and functions.
• We believe the stock still has a upside of 48%.

• We think the recent price weakness of Dongfang Electric (1072 HK) is overdone, and there is strong value proposition on the stock based on its current multiples.
• DEC’s orderbook has well covered in the next two years, while we see cost management measures will help mitigating the pressure on margin. 
• It is well positioned to capture the wind power boom (26% of FY21 revenue) and remains the prime beneficiary of China’s hydrogen economy and pumped storage demand in the longer-term.

• Financial markets are dominated by uncertainties being created by Russia’s invasion of Ukraine and the potential economic impact of the Fed raising rates and unwinding its balance sheet simultaneously.
• The volatility and level of rates in EM are rising with the US but with differentiation: Asia and Central Europe are underperforming, while Latin America is outperforming.
• The possibility of binary economic scenarios playing out as a result of the current uncertainties makes me pause for more clarity before making new trade recommendations.

• OneConnect Financial Technology (OCFT US) is a leading technology-as-a-service provider for financial services industry in China.
• The company is currently listed in the US and recently filed for a secondary listing in Hong Kong in an attempt to boost the liquidity of its shares.
• OCFT still relies on its parent Ping An to generate most of its revenues and despite seeing strong growth in top line, the company is still far from profits.

• PC Partners has solid bull base line support to stage a fresh bull cycle. Old high support and key lows rest at the 7.50 level. 
• RSI is due to rally off of the bull wedge breakout support. Buy volumes are constructive on strength with weak sell volume on recent weakness (underlying bullish).
• 12.50 and 14 bull targets with the later the hurdle to clear to open the way higher.

Lucror Analytics Morning Views comprise our fundamental credit analysis, opinions and trade recommendations on high yield issuers in the region, based on key company-specific developments in the past 24 hours. Our Morning Views include a section with a brief market commentary, key market indicators and a macroeconomic and corporate event calendar.

• China Hongqiao
• Hopson Development
• Times China