In today’s briefing:
- China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE
- Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)
- HK Connect SOUTHBOUND (To 10 Nov 23); High-Div SOEs AGAIN See Outflows, Tencent and ETFs Big Buys
- A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”
- BeiGene (6160.HK/BGNE.US) 23Q3 – Beautiful Story Is About to Happen
- STAR50 Index Rebalance Preview: Big Impact Expected on the Changes
- EQD | Decoding Last Week’s HSI Retreat: What Lies Ahead?
China Consumption Weekly (13Nov2023): Li Auto, NIO, Alibaba, Best, Meituan, KE
- Li Auto’s revenue increased by 271% YoY and vehicle deliveries increased by 296% YoY in 3Q23.
- NIO will dismiss 10% of its employees and even 20% in some departments.
- We do not believe Alibaba will take over the whole Best Inc.
Mainland Connect NORTHBOUND Flows (To 10 Nov 23): Back To Net Sales (Ping An, Eoptolink, Innolight)
- This is the somewhat-brand-spanking-new Quiddity Mainland Connect NORTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor.
- The same five names continue at the top of the gross flows list – Kweichow Moutai, Contemporary Amperex, Wuliangye Yibin, Foxconn Industrial, and BYD. Nets are still smaller.
- Last week, NORTHBOUND returned to net OUTflow after the previous week saw the first net buy in 3mos. This week saw RMB 7.95bn of net NORTHBOUND selling.
HK Connect SOUTHBOUND (To 10 Nov 23); High-Div SOEs AGAIN See Outflows, Tencent and ETFs Big Buys
- This is the somewhat brand-spanking-new Quiddity HK Connect SOUTHBOUND Monitor. We work off the same presentation as the A/H Premium Monitor and Mainland Connect NORTHBOUND Monitor.
- SOUTHBOUND flows the last four weeks clearly indicate a momentum move. The top net sells are all down. The top buys are all up.
- Tencent and three ETFs see the top net buys as SOUTHBOUND bought HK$18.4bn this past week. Energy and Telco net sales persist. And persist. And persist.
A/H Premium Tracker (To 10 Nov): Bad Week for H | A Across the Board Despite SB/NB Going “Right Way”
- The New and Better (10 weeks old) A-H Monitor has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- HUGE underperformance of Hs vs As across the board. A horrible week and it is not clear why. I doubt it was the short-selling warning or increase in haircuts.
- SOUTHBOUND was a net buy and NORTHBOUND a net sell and the largest net SB flows on H/A pairs were the high-div SOEs.
BeiGene (6160.HK/BGNE.US) 23Q3 – Beautiful Story Is About to Happen
- BeiGene performed well in 23Q3. Product sales maintained strong growth momentum. Together with effective cost control measures, net loss significantly narrowed (close to breakeven), which exceeds expectation.
- BeiGene plans to rely primarily on BRUKINSA/tislelizumab to achieve breakeven, which means BRUKINSA needs to contribute about US$2 billion revenue. Given prescriptions volume, however, Astrazeneca’s Calquence is the biggest holdup.
- Whether BeiGene’s overall revenue can reach US$4 billion is the key point of marginal change in logic. How to further reduce SG&A/R&D expenses has become important topic at this stage.
STAR50 Index Rebalance Preview: Big Impact Expected on the Changes
- With the review period complete, we expect one change for the STAR50 INDEX in December if the index committee continues to use a 6-month minimum listing history.
- With net inflows to mainland China ETFs over the last few months, passive trackers will need to trade between 9-25 days of ADV on the potential add and delete.
- SMIC (688981 CH) will be capped and there will be reverse funding flows on the index constituents. One-way turnover is estimated at 1.8% resulting in a one-way trade of CNY2,580m.
EQD | Decoding Last Week’s HSI Retreat: What Lies Ahead?
- The HSI INDEX last week closed down (CC=-1), down for 3 months (almost 4), quite OVERSOLD and not in sync with the general “rally” (read: rebound) in other markets.
- LONG support for this week is between Q3 and Inner Fence levels: 16800-16300 area, but the current pattern behavior is not really encouraging LONG trades.
- Wait-And-See approach recommended before investment in HSI stocks, but if the index dives for the next 2 weeks it may be the right time to buy for a Christmas rally…
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