Bilibili Reports Q4, Hong Kong Outperforms Mainland China

Key News

Asian equities were mixed but mostly higher. Internet and growth stocks were also a mixed bag as some reported positive earnings.

Travel booking platform Trip.com surged +10.77% overnight prior to earnings. The company has beaten estimates in the past two quarters on strong demand for its services in international markets, especially Europe. However, the company’s outlook depends on China’s lifting of its covid zero policy. In another demonstration of the disconnect between Hong Kong and US markets, the ADRs are down over -2% in US trading this morning, as of the time of writing.

Trip.com and fast-food operator Yum China rallied in the US yesterday on reports of China migrating away from its zero-tolerance covid policy, which should also be a strong catalyst for the rest of the internet/E-Commerce space, which has been faltering on lackluster Q4 earnings due to a consumer slump in China caused, in part, by the country’s zero covid policy.

Bilibili Q4 Earnings Overview

• Revenue +50.5% to RMB 5.8 billion
• Net Income RMB -1.7 billion
• Net Income Margin -28.6%

Online video and live streaming platform Bilibili reported earnings that were mostly in line with analyst estimates. The company’s January monthly active users (MAUs) exceeded 300 million versus 271 million in Q4 2021. Clearly, the company is still investing in growth and analysts would like to see margins improve, but that has not happened yet. Nonetheless, the platform continues to see strong user growth, though monetization remains an issue.

Kuaishou Technology has come under pressure in the past few days on reports of pop-up ad bans as markets remain in shoot first/ask questions later mode when it comes to regulatory noise.

Head of the China Banking and Insurance Regulatory Commission (CBIRC) Guo Shuqing gave a press conference on Wednesday to discuss the status of Ant Group and 13 other internet platforms with financial business segments that have been under rectification since 2020. He reported that progress towards bringing these firms into compliance with China’s financials regulatory regime has been smooth. However, challenges remain, including identifying financial products, ensuring the protection of data, personal information, personal privacy, and commercial secrets.

Interestingly, the issuance of green bonds rose more in China between 2020 and 2021 than in any other singular country. This type of debt issuance will be crucial to securing the astronomical financing that China will need to achieve carbon neutrality by 2060 after reaching peak emissions in 2030.

Because of the diverging monetary policy between the two countries, the spread between US and Chinese 10-year yields has dwindled to only 97 basis points from 185 one year ago. This spread could go to zero before the end of the year.

The Hang Seng gained +0.55% overnight on volumes that were +0.85% higher than yesterday. Internet and growth stocks were lower overall as the Hang Seng TECH Index fell -1.16%.

Shanghai, Shenzhen, and the STAR Board fell by -0.09%, -0.83%, and -1.66%, respectively, on volumes that were +12.54% higher than yesterday.

Last Night’s Exchange Rates, Prices, & Yields

• CNY/USD 6.32 versus 6.32 yesterday
• CNY/EUR 6.99 versus 7.01 yesterday
• Yield on 1-Day Government Bond 1.70% versus 1.75% yesterday
• Yield on 10-Year Government Bond 2.83% versus 2.82% yesterday
• Yield on 10-Year China Development Bank Bond 3.09% versus 3.07% yesterday
• Copper Price +0.37% overnight