Investment Daily

6 May 2021

Major Market Indicators Market Overview 5 May 4 May 3 May

Mkt. Turn.(mn) 101,200 90,800 95,800 Resistance at 100 Day SMA; Eye on the A share market performance Stock Advances 719 1,023 634 US Treasury Secretary Yellen’s comments on interest rates rattled US markets overnight. Stock Declines 970 662 1,021 fell 139 points to 28,417. H-share Index dropped 43 points to 10,721. HSI 28,418 28,557 28,378 Tech Index dropped 176 points to 8,107. Market turnover was HK$101.2 billion. Resources Change -139 +200 -367 stocks and banks stocks outperformed. PetroChina(857) and CNOOC(883) were up by HSI Turn.($bn) 38.08 32.47 37.69 1.7-1.8%. Hang Seng Bank (11) advanced 3.4%, being the best blue-chip. Tech giants were HSCEI 10,721 10,766 10,713 under pressure, (3690), (700) and Alibaba(9988) fell 1.6-2.3%. Change +18 +53 -112 HSCEI Turn.($bn) 37.58 30.66 34.22 Although US Service PMI and private payroll increase is below expectation in April, but the figure is still strong. Funds continue flowing into energy and material sector. Besides, thanks to strong quarter results, Activision Blizzard and General Motor share price rose HSI Technical Indicators 3-4% on Wednesday, supporting the Dow index once rose near 200 points. However, tech stocks remained weak. 10-days MA 28,816 50-days MA 28,938 The three major US stock index performed mixed on Wednesday, the Dow index rose 97 250-days MA 26,352 points to 34,230 hitting a record closing high. However, the Nasdaq index fell 0.4% to 14-days RSI 44.11 13,582, its short term key support is at 100 Day SMA (13,381). On the other hand, although Primary resistance 28,585 US crude inventory dropped sharply last week, oil price fell slightly to US$65.6 per barrel Primary support 28,000 on Wednesday. HS CEI Technical Indicato rs Stock Connect will resume trading today after Golden Week holiday. It will 10-days MA 10,906 improve the Hong Kong stock market liquidity. Investors will also eye on the performance 50-days MA 11,132 of the A share market. However, overall stock market sentiment turned cautious in May, 250-days MA 10,491 Hong Kong stock market upside is limited in the near term. Resistance will be at 100 Day 14-days RSI 39.81 SMA (28,585). Primary resistance 10,906 Primary support 10,500 Although oil price fell slightly last night, US oil stock performed very well. Buying interest might persist on the oil stocks today. On the other hand, Bud APAC(1876) first quarter HSI Futures revenue and profit beat market consensus, while its market share in also increased. It will provide support to its share price. 5 May 4 May 3 May

May 28,301 28,444 28,133 Volume 82,983 76,278 88,827 HSI Chart Open interests 106,105 115,931 115,512 Jun 28,156 28,299 27,986 Volume 419 335 417 Open interests 5,360 5,364 5,188

HSCEI Futures

5 May 4 May 3 May

May 10,694 10,733 10,650 Sources ：Google Volume 50,488 39,914 58,162 Open interests 161,692 170,258 168,803 Jun 10,616 10,658 10,574 Volume 1,512 322 223 Open interests 37,806 37,626 37,860

Investment Daily Daily Focus HSBC(0005): Latest Update  According to France media report, HSBC (0005) might have to pay 1bn HSBC(0005) Info euro to the buyer on the selling of its France banking operation. HSBC Closed price 48.40 responded that the France operation disposal is still in negiotation. However, HSBC added that considering the France retail bank operation, Expected P/E (X) 12.8 Expected Dividend it is likely to suffer loss in the deal. 4.3 yield (%)  HSBC acquired its France operation in 2000 and currently has 230 branch 52 week high 49.25 in France with 4,000 staff. The disposal of France operation is part of 52 week low 26.33 HSBC restructure plan to reduce risk-weighted assets by US$100bn 14RSI 62 before 2022. Since France economy suffered severely from the COVID 19 epidemic, the selling price of banking business is likely disappointed at the current timing.  However, the HSBC restructure plan is to lower its cost structure and risk exposure, as well as focus its resources on key market such as China and UK. Hence, although individual deal such as France operation disposal will not be at perfect timing, we believe the overall restructure plan is positive for HSBC long term growth.  Thanks to COVID 19 epidemic under control, major countries including China and US economy continued to rebound, investors focus now shift to when major Central bank will normalize its loosen monetary policy. It will favor banking sector NIM. In fact, HSBC NIM has already been stabilized in the past few quarters. Together with strong wealth management business performance, HSBC is still our sector pick. Target price is HK$51.00, suggest investors to Accumulate during weakness.

Analyst: Samuel Chua, CFA

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Investment Daily

Archosaur Games (9990): Tencent increased its holdings  Based on the latest data revealed on the disclosure interests on HKEx, Archosaur Games (9990) Info Tencent (0700) has increased its holdings on Archosaur on 29 & 30 April, Closed price 14.04 with a total consideration at HK$455mn. Its stake in Archosaur rose by 4ppts to 16.88%, with an average purchase price at HK$13.96. Expected P/E (X) 11 Expected Dividend  We think Tencent’s move reflects positive outlook of Archosaur, as - yield (%) currently Archosaur’s games are published by Tencent in China, and 52 week high 28.40 Tencent is the third largest shareholder of Archosaur. Tencent has higher 52 week low 12.30 visibility on Archosaur’s business and its prospect, and hence its share 14RSI 45 purchase bodes well for its share performance going forward.  Besides, due to below-par performance in 2020 and market-wise valuation de-rating, Archosaur’s share price has fallen as much as 40% YTD. The counter now trades at 11x 2021F PE, below its historical average of 19x since listing, near the low-end of its trading range.  Although Archosaur launched its flagship title, Under the Firmament, in China in October 2020, and the grossing rank of games gradually fell from top 30 initially to currently 50-150th, the game will be published in overseas market this year. In April, the game has rolled out in Taiwan, Hong Kong and , with grossing rank at 10th to 40th. Under the Firmament will also launch in other countries, including Japan, Southeast Asia, South Korea and Europe, driving further growth for the title.  Archosaur altogether has three new games to be launched this year, among which the New World, a turn-based MMORPG, has been launched in January 2021. The game ranks at 50th to 300th on the grossing app in China. Noah’s Heart, another MMORPG title, will be launched later this year, with decent pre-registered response. We expect this game to become another game revenue driver.  Therefore, we suggest investors to accumulate the shares for mid-to-long-term investment, and set the target price at HK$19.0, based on 15x 2021F PE. Analyst: Christopher Ho, CFA

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Investment Daily

Shanghai / -Hong Kong Stock Connect Statistics SH Connect SZ Connect Combined Southbound Balance (RMB bn) - - - Balance as % of Quota Amount - - -

Top 10 Most Actively Traded Stocks(SH-HK Connect Southbound) Stock Name Stock code Buy Trades (HKD) Sell Trades (HKD) Turnover (HKD)

Market Closed

Sources: HKEx Top 10 Most Actively Traded Stocks(SZ-HK Connect Southbound) Stock Name Stock code Buy Trades (HKD) Sell Trades (HKD) Turnover (HKD)

Market Closed

Sources: HKEx Other Statistics

Ten Most Actively Traded Stocks Stock Name Code Change Closed Price Turnover(Million) TENCENT 700 -1.85% 610.50 71.33 PING AN 2318 -0.12% 82.10 36.94 MEITUAN-W 3690 -1.65% 287.00 35.37 BABA-SW 9988 -2.31% 220.00 34.08 CHINA GAS HOLD 384 -1.91% 28.25 17.33 ICBC 1398 1.01% 5.02 15.36 AIA 1299 -0.87% 97.10 13.77 CCB 939 1.66% 6.13 13.74 2196 -4.58% 56.25 12.83 BIDU-SW 9888 -3.53% 194.30 11.71

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Investment Daily Ten Short Sell Stocks

Stock Name Code Short Selling Turnover Short Selling Ratio Turnover TRACKER FUND 02800.HK 1.58B 2.20B 71.52% TENCENT 00700.HK 915.26M 7.13B 12.83% BABA-SW 09988.HK 742.44M 3.41B 21.78% HSCEI ETF 02828.HK 358.20M 721.83M 49.62% FOSUN PHARMA 02196.HK 342.13M 1.28B 26.66% BIDU-SW 09888.HK 325.36M 1.17B 27.80% 03988.HK 312.51M 902.02M 34.65% MEITUAN-W 03690.HK 241.51M 3.54B 6.83% AIA 01299.HK 239.76M 1.38B 17.41% PING AN 02318.HK 235.66M 3.69B 6.38% Source: AA Stocks Economic Calendars

Date Country Event Survey Prior Mon US Apr. Markit Manufacturing PMI 60.7 60.6 Euro Zone Apr. Markit Manufacturing PMI 63.3 63.3 China Market will close (Labor Day) Hong Kong Stock Connect will close Tue US Mar. Trade Balance -$73.4b -$71.1b China Apr. Caixin Manufacturing PMI 50.8 50.6 Market will close (Labor Day) Hong Kong SJM (880) Result Stock Connect will close Wed China Market will close (Labor Day) Hong Kong Stock Connect will close Thu US Initial Jobless Claims (Till May 1) 553k Continuing Jobless Claims (Till Apr 24) 3,660k UK BOE Monetary Policy Meeting Hong Kong Bud APAC (1876), BeiGene (6160) Results Fri US Apr. Change in Nonfarm Payrolls 950k 916k China Apr. Imports and Exports

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