In today’s briefing:
- HK Connect SOUTHBOUND Flows (To 26 Apr 2024); Strong Net Buying on Banks/Energy Telco SOEs. Again.
- [Xiaomi (1810 HK, BUY, TP HK$20) Rating Change]: Xiaomi EV Came at the Right Time of Consolidation
- A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A
- Mainland Connect NORTHBOUND Flows (To 26 Apr 2024): Big NB Buy Friday
HK Connect SOUTHBOUND Flows (To 26 Apr 2024); Strong Net Buying on Banks/Energy Telco SOEs. Again.
- A shares were up small on the week, largely due to a big rally on Friday (led by record Northbound buying). HK Stocks had a HUGE week.
- Net SOUTHBOUND buying was +HK10.3bn. Net buys every day and now 20 days straight, but buying was foreign-led.
- Little market news. More geopolitical news. Big SOE bank H-shares see relentless buying. HSTECH +13.4%, HSI +8.8%, HSCEI +9.1%.
[Xiaomi (1810 HK, BUY, TP HK$20) Rating Change]: Xiaomi EV Came at the Right Time of Consolidation
- Performance of SU7 so far, margin of EV biz and globalization potential prompted us to take another look at Xiaomi and we like what we saw;
- Xiaomi surprised during the Investor Day by guiding SU7 gross margin of 5-10%. Delivery guidance also surprised to ship 100k units in 2024.
- We raise EV profitability estimates on margin guidance and expect market share to expand as it expands to SUVs.
A/H Premium Tracker (To 26 Apr 2024): Best Week in a LONG Time for Hs Vs As – Time To Get Long H/A
- The New/Better A-H Premium Tracker has tables, charts, measures galore to track A/H premium positioning, southbound and northbound positioning/volatility in pairs over time, etc.
- SOUTHBOUND’s consecutive buying streak ended on Monday 25-March, then started again. 20 days straight net buying. NORTHBOUND saw big inflows Friday. A record day I believe.
- HK stocks bounced VERY hard. Seemed like big allocation trade. HSCEI +8.7% vs CSI300 +1.2%. In H/A Pairs, liquid pairs saw Hs outperform their A by 4+% on average.
Mainland Connect NORTHBOUND Flows (To 26 Apr 2024): Big NB Buy Friday
- The Quiddity Mainland Connect NORTHBOUND Monitor. Like the A/H Premium Monitor and HK Connect SOUTHBOUND Monitor. Lots of Flows/Position Tables and Charts with which to play.
- Last week saw NORTHBOUND net BUY RMB 25+bn of A-shares on low gross volume but a huge Friday playing catchup to a massive up-week in HK shares.
- H outperformed As and it feels like the massive day Friday was just to play reversion on underperformance vs HK shares.
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