The market has obviously picked up since the beginning of this year, with the Hang Seng Index up 12.64% since the beginning of the year. The Hang Seng Index rose 2.78% this week to close at 29113.36 points, with turnover slightly narrower than the previous week. In this continuous rising market, investors are more concerned about whether it is the beginning of a bull market or a phased rebound. At the moment, perhaps the biggest worry in the market is the bears so far this year.We believe that the rise since the beginning of the year is only a rebound. In the future, with the gradual spread of external uncertainties, Hong Kong stocks will bear certain downside risks. On the other hand, the real bottom is often not achieved overnight, the market still needs a period of time to build a bottom.

Internationally, the newly released euro zone manufacturing purchasing managers' index (PMI) in March hit a 69-month low of 47.6, while Germany's manufacturing PMI fell to 44.7 in March, a 79-month low for the third month in a row. The initial PMI for French manufacturing fell to 49.8, well below expectations. The IHS Markit US manufacturing purchasing managers' index (PMI) fell to a 21-month low in March, while the services PMI index fell to a two-month low. A series of weak economic data from the US and the eurozone also heralds a further slowdown in the outlook for global growth in 2019. The Fed's dovish statement this week also confirmed this fact.We believe that with further economic uncertainty, the European Central Bank and the Federal Reserve will return to the path of loose monetary policy.On the other hand, US bond yields are upside down for the first time, with the yield on 10-year Treasuries falling to 2.437 per cent and that of three-month Treasuries at 2.453 per cent. The spread between three-month Treasury yields and 10-year yields was upside down for the first time in nearly 12 years, with the panic index VIX rising more than 20 per cent on Friday, sparking concern.Historically, the upside-down of yields is usually regarded as a leading indicator of economic recession, and the last round of upside-down occurred on the familiar "subprime crisis".

Domestically, the pork industry, affected by the accelerated spread of African classical swine fever, aquaculture companies have also ushered in the overall capacity reduction. Under the influence of this round of classical swine fever, the capacity gap is more serious. According to industry statistics, the stock of breeding sows has fallen to an all-time low, and production capacity can not be restored immediately in the short term. In addition, after this round of epidemic, small and medium-sized farmers have been emotionally hit, and they will not easily fill the fence in the short term. And summer is approaching, high temperatures will make it easier to spread classical swine fever, so we do not rule out the possibility of a new outbreak after spring. At that time, pork prices will continue to rise. We believe that pork prices are already in the rising channel and are very likely to break through 20 yuan in the future. However, we still need to guard against the risk of inflation caused by the rapid rise in pork prices, which will lead to CPI. Pork import substitution opportunities appear in the context of rising pork prices. With the gradual easing of Sino-US trade frictions, China will further increase US pork imports.Investors are advised to pay attention to pork food giant and pork importer WH Group Limited.

In the new energy vehicle industry, although car sales are gradually declining, the popularity of the new energy vehicle market is still high. According to data disclosed by the China Automobile Association, the production and sales of new energy vehicles completed 90700 and 95700 respectively in January, up 110 per cent and 140 per cent respectively over the same period last year. In February, the production and sales of new energy vehicles completed 59000 and 53000 respectively, an increase of 50.9% and 53.6% respectively over the same period last year. On the other hand, the new energy replacement policy that spread so far last year has not yet landed, according to relevant sources, even if the new policy is introduced in the short term, it will set a certain transition period, which is quite different from the previous version. In addition, the Minister of Finance's support for the consumption of new energy vehicles today also shows that there is still a need to tap more potential consumption in the context of the economic downturn, such as new energy vehicles, home appliances and so on. We believe that the introduction of the subsidy policy for new energy vehicles in the future may not be as pessimistic as the market imagines, while the hot sales of new energy vehicles will continue to maintain and maintain rapid growth.Investors are advised to pay attention to 01211.HK, the leader of new energy vehicles, and 300750.SZ, the leader of power batteries.

Market review

As for Hong Kong stocks, this week, the Hang Seng Index rose 101.10 points, or 0.35%, to close at 29113.36 points, with a total weekly turnover of HK $541.156 billion, while the Hang Seng China Enterprises Index rose 9.31 points, or 0.08%, to 11517.48 points.

In terms of A shares, A shares as a whole rebounded this week, with the Shanghai Composite Index up 2.73% to close at 3104.15 points, the Shenzhen Composite Index up 3.44% to close at 9879.22 points, and the gem Index up 1.88% to 1693.87 points this week.

1. Market trends

1.1 impact of major news

Major economic data this week: on the domestic side, the Ministry of Finance announced that the national general public budget revenue from January to February was 3.9104 trillion yuan, an increase of 7% over the same period last year; of which, personal income tax was 232.6 billion yuan, down 18.1% from the same period last year; stamp duty on securities transactions was 19.7 billion yuan, down 41.1% from January to February last year, an increase of 14.6% over the same period last year. Of this, 66.6 billion yuan was spent on energy conservation and environmental protection, an increase of 45.3%. International aspectThe Fed left the federal funds rate unchanged at 2.25%, 2.50%, in line with expectations. Fed interest rate resolution statement: members unanimously agreed to the interest rate decision; continue the shrinking policy, which is expected to be suspended at the end of September; and the US economic growth has slowed since the fourth quarter.The Fed cut its forecast for an interest rate hike in 2019 to zero on the previous two occasions. It also lowered its economic outlook to forecast GDP growth of 2.1 per cent in 2019, rather than the 2.3 per cent previously expected. PCE's inflation forecast fell to 1.8 per cent this year from 1.9 per cent before.

(1) Premier Li Keqiang of the State Council presided over an executive meeting of the State Council, which determined the division of responsibilities in the "Government work report" and stressed the task of paying close attention to implementation to ensure the achievement of the annual development goals. The meeting defined the supporting measures for value-added tax reduction, decided to extend some expired tax preferential policies and gave tax concessions to third-party enterprises for poverty alleviation and pollution prevention and control. The meeting decided to further expand the scope of input tax deduction to include passenger transport services, and to refund the amount of tax retained by taxpayers after the implementation of the policy in accordance with relevant regulations; accordingly adjust the export tax rebate rate of some goods and services, the deduction rate applicable to the purchase of agricultural products, and so on.

(2) Chinese Finance Minister Liu Kun said at the "China Development Forum 2019" on the 24th that a larger scale of tax cuts will be implemented this year, with a total amount of nearly 2 trillion yuan. It is necessary to ensure that taxes and fees in all industries are reduced but not increased. The standard of payment for old-age insurance for urban workers can be lowered to 16%, and we will continue to clean up and standardize enterprise-related fees and release water for fish farming.

Affected by factors such as larger tax cuts and fee cuts, China's fiscal revenue growth will slow down this year, and the central government will reduce general expenditure. In the face of revenue and expenditure pressure, it will ensure that every penny is spent properly and safely.In order to cope with the downward pressure of the economy, we will continue to increase the scale of infrastructure, support new energy vehicles, and tap the potential of rural consumption.

(3) the Shanghai Stock Exchange announced the first batch of 9 enterprises accepted by Science and Technology Innovation Board, namely Jingchen Semiconductor, Ruichuang Weinar, Tiannai Technology, Jiangsu Beiren, Liyuanheng, Ningbo Rongbai, Hejian Chip, Anhan Technology, Wuhan pre-Science and Technology.

(4) in the game industry, the official website of the former State Administration of Press, publication, Radio, Film and Television shows that the tenth batch of game version numbers have been issued, with a total of 73, and the examination and approval time is March 20. The games of Tencent and NetEase, Inc were not approved in this batch of version numbers. Tencent disclosed in the annual report released yesterday that since the version number was restarted, the company has approved a total of 8 models (including 7 mobile games and 1 PC game).

(5) in the real estate industry, the Ministry of Finance announced the legislative work arrangement in 2019, but did not mention the real estate tax. The arrangement points out that it is necessary to strive to complete the departmental drafting of the value-added tax Law, the consumption tax Law, the Stamp tax Law, the Land value-added tax Law, the Customs tax Law, and the Lottery Administration regulations (revision) within this year, and submit them to the State Council in a timely manner.

(6) in the new energy vehicle industry, eight ministries, including the Ministry of Industry and Information Technology, the Ministry of Science and Technology, the Ministry of Public Security and the Ministry of Ecological Environment, issued the "guidance on the Application of methanol vehicles in some areas". Focus on Shanxi, Shaanxi, Guizhou, Gansu and other areas with good resource endowment conditions and methanol vehicle operation experience, speed up the application of M100 methanol vehicles. Encourage the use of methanol vehicles in areas such as public service, rental and short-distance passenger transport in conditional areas.

1.2 Corporate dynamics

Tencent (HK.00700)

After trading on March 21, Tencent announced its annual results for 2018. According to the financial report, Tencent's 2018Q4 revenue was 84.896 billion yuan, an increase of 28% over the same period last year. The net profit was 14.229 billion yuan, down 32% from the same period last year and 39% from the previous month. The adjusted net profit was 19.73 billion yuan, an increase of 13% over the same period last year, which was basically flat from the previous month. In 2018, revenue exceeded 300 billion to 312.694 billion yuan, an increase of 32 percent over the same period last year; net profit was 78.719 billion yuan, up 10 percent over the same period last year; and adjusted net profit was 77.469 billion yuan, an increase of 19 percent over the same period last year.The poor performance of net profit is mainly due to 1) a Q4 subsidiary recognized the non-cash expenses related to fund-raising; 2) compared with the previous, the number of IPO of Q4 investment company decreased significantly, and the related investment income decreased significantly.

We believe that the main purpose of Tencent's investment is to build an ecology. After these investment companies have been listed one after another, it is normal for investment income to return as an one-time bonus. From another point of view, the successful listing of Bilibili Inc., HUYA Inc., Pinduoduo and others is also a manifestation of the mature stage of the ecology that Tencent has been committed to building, and is expected to play a greater role in Tencent's main strategic coordination in the future. Therefore, our focus on Tencent should still be focused on:

1） Social advertising.18Q4 macro environment is in the doldrumsBut Tencent's advertising business is very eye-catching.It grew 38% year-on-year, of which social advertising grew 44% year-on-year. In the fourth quarter, Wechat MAU grew 11% year-on-year to 1.098 billion, QQMAU grew 13% year-on-year to 807 million, and Mini Program users per capita daily visits increased 54% year-on-year.The data show that Tencent's social flow ecology is still stable.And social advertising is more attractive to advertisers.With the economic recovery and the continuous improvement of Tencent's ability to deliver precision advertising, advertising business will become an important growth pillar of Tencent in the future.

2）The game business.18Q4 Tencent's online game revenue fell slightly to 24.199 billion yuan compared with the same period last year, with online game revenue growing by only 6 per cent for the whole of 2018. The share of revenue from the latest games has dropped to 35.57%. The negative impact of the suspension of the version number on Tencent is very obvious, but we believe that with the gradual release of the version number, the replacement ecology of the head game is expected to reconstruct and superimpose the good prospect of the game going out to sea. Tencent's future performance of the game business is expected to exceed the current market expectations of its generally low.

3）Other:Under the To B strategy, cloud business is advancing by leaps and bounds to seize the market; WeChat Pay's overseas expansion; and future cash space in the field of pan-entertainment such as video.

WH Group Limited (HK.00288)

Recently, the prices of piglets, live pigs and pork in China have rebounded to varying degrees. Judging from the historical cycle, pork prices usually continue to rise in the 9-10 months after the end of the classical swine fever epidemic. The current round of classical swine fever began in August 2018, and by February this year, some provinces in China have lifted the blockade, but the tension has not completely dissipated. Although some live pigs have been released in panic due to the release of the seal, which has alleviated some of the supply tension in the short term, in the long run, the supply of pork is insufficient this year.The prices of piglets, live pigs and pork will enter a new round of rising market.

The high domestic pork prices in China reflect the weakness of pork prices in the United States. Before that,，Due to Sino-US trade frictions and other factors, the export of US agricultural products is hindered and the supply of pork is oversupplied, which leads to a rapid decline in US pork prices. At present, as the Sino-US trade negotiations are getting better and better, trade frictions are easing day by day, and problems such as import tariffs on fresh pork to the United States are expected to be improved or even resolved; at the same time, the tight supply of pork in China and the rising price gap between China and the United States are pushing China to increase its imports of high-quality and inexpensive pork from the United States. In this expectationThe American aquaculture industry has benefited from this, and pork prices have recovered.。

China purchased 23800 tons of pork a week on March 7, according to the U.S. Department of Agriculture. Stimulated by this kind of news, the futures prices of lean pigs in the United States rose all the way, rising by the daily limit on Wednesday. At the same time, in view of the fact that the supply of pork in China will continue to be insufficient and prices will continue to rise this year, it is also expected that pork prices in the United States will continue to be supported and remain high.

WH Group Limited, one of the world's largest pork food companies, accounted for 58 per cent of US revenue in 2018. Prior to this, there was a glut of pork in the United States and lower meat prices, and WH Group Limited did not perform well in the fresh meat business of Meisheng, with losses expanding. This year, US pork prices have recovered and the Chinese pork market is in short supply and prices are rising as a support. WH Group Limited's domestic business, especially overseas, is expected to improve. WH Group Limited rose for three consecutive days this week to an one-year high of HK $8.82, with a weekly amplitude of 11.79, an increase of 8.59 per cent.

two。 Market data analysis

2.1 list of major indices

In terms of valuation, the Hang Seng Index recently reached 11.31, higher than the-1 standard deviation. The PE of Hang Seng state-owned enterprises reached 9.22, higher than the standard deviation of-1. This week, the PB of the Hang Seng Index is 1.37, slightly higher than the-1 standard deviation. The PB of Hang Seng state-owned enterprises is 1.20, slightly higher than the-1 standard deviation, but still at a low level.

Main index comparison

2.2 Overview of industry data

Among the constituent stocks of the Hang Seng Index this week, the top three gainers were CSPC Pharmaceutical 11.74%, Geely Automobile 10.27% and WH Group Limited 8.59%. The top three stocks that fell were China Mobile Limited-4.71%, New World Development-3.61% and Sunny Optical Technology-3.59%.

In the Hong Kong stock industry, the top three increases were health care, daily consumer goods and non-daily consumer goods, with increases of 9.38%, 6.74% and 2.78%, respectively. In addition, in terms of valuation, the daily consumption sector ranks first, followed by optional consumption and daily consumption.

2.3 Market sentiment

This week, turnover in the Hang Seng Index was HK $541.156 billion. At the same time, the proportion of short selling in the whole market reached 15.94%.The top three short sellers are retail, household and personal goods, and banks, accounting for 32.82%, 24.86% and 22.39%, respectively.

The premium index of Hang Seng AH shares this week was 123.96.In terms of peripheral market sentiment, the VIX index closed at 16.48 on Friday, with US stock yields hanging upside down and panic rising.

3. Analysis of capital flow between the two places

In terms of individual stocks on the board of Hong Kong stocks.，From the perspective of the degree of activity of southward capital buying and selling, this week, food, insurance, real estate and other sectors were more active, with WH Group Limited, China Pacific Insurance and Ping An Insurance in the top three, and China Construction Bank Corporation, CITIC and China Evergrande Group in the top three respectively.

4. An overview of key new shares

Grand Alliance (HK. 01879)

According to the prospectus, Shengshi Dailian is a professional auto insurance agent and B2B integrated automotive aftermarket service provider, mainly through the "business-to-consumer" (B2B2C) model to operate insurance agency business and car butler service business, has launched auto insurance app and car butler app in 2014 and 2015 respectively.

In terms of industryDriven by the increase in car ownership and the increase in the average age of cars, China's car market grew sharply from 1.9619 trillion yuan to 3.3941 trillion yuan from 2013 to 2017, with an annual compound growth rate of 14.7 percent. The market size is expected to grow to 6.277 trillion yuan in 2022. Among them, in terms of premium, China's auto insurance market grew from 457.6 billion yuan in 2013 to 735.7 billion yuan in 2017, with a compound annual growth rate of 12.6 percent, and is expected to increase to 1.121 trillion yuan in 2022. At present, China's auto insurance market is faced with the trend that the demand for auto insurance products will continue to increase steadily and the demand will continue to be increasingly diversified, the auto insurance agency market will accelerate its industry integration, and technological progress will improve insurance products and further improve operational efficiency.

In terms of competition patternAccording to the Frost Sullivan report, Grand Alliance ranks first among professional auto insurance agencies in China (based on auto insurance premiums acting in 2017) and among China's B2B integrated automotive aftermarket service providers (in terms of sales revenue in 2017).

Financial aspectSheng Shi UnionPay mainly operates two business divisions through the B2B2C model: 1, collecting commission from insurance companies according to the insurance policies sold (usually based on a certain proportion of premiums paid by insurance buyers), generating insurance agency business income; 2, generating car butler service income by collecting service fees from car butler partner customers (mainly large banks and insurance companies).

ValuationAccording to the prospectus, the company's offering price ranges from HK $23.00 to HK $30.80, assuming that the over-allotment right has not been exercised, based on the median issue price of HK $26.90, after deducting underwriting fees and commissions and other estimated fees and expenses paid and payable for the global offering, the net global offering is estimated to be approximately HK $1064.7 million (or RMB912.0 million).The use of fundsAbout HK $425.9 million (about 40% of the net proceeds from the global sale) will be used to develop its insurance agency business; about HK $298.1 million (or about 28% of the net proceeds from the global sale) will be used for the development of its car butler services business; about HK $181.0 million (about 17% of the net global proceeds) will be used for further development of information technology infrastructure.

6. Risk hint

Geopolitical risk, policy risk, world economic stall and decline