Nov 3 HK/CHINA close lower on lighter T/O. Region mixed, Japan closed.

03 Nov

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HSI -75pts (-0.3%) 25,025 HSCEI -7pts (-0.1%) 8,857 T/O HK$119.84bn (-17.9% DoD)  

HK/CHINA Connect Flows
Northbound Rmb 53,456m Sell 27,034m vs 26,421m Buy
Southbound HK$ 13,068m Sell 7,207m vs 5,861m Buy
Northbound Rmb 59,346m Sell 29,001m vs 30,345m Buy
Southbound HK$ 11,567m Sell 5,494m vs 6,073m Buy

Opened flat slightly -VE ahead of the Fed rate decision. Oil & Gas weak but miners rebounding along with the Iron Ore price.
Earnings due from Suez, BMW, Zalando, Lufthansa, Geberit, Wolters Kluwer, Next, Smurfit Kappa and Intesa Sanpaolo on Wednesday.
Unemployment data and Lagarde speaks
Budget Balance Sept €-175.12B vs €-178.05B Aug (F/cast was €-176B)
Nationwide Housing Prices Oct +9.9% YoY vs +10% Sept (F/cast was +9.5%)
Nationwide Housing Prices Oct +0.7% MoM vs +0.2% Sept (F/cast was +0.5%)
Composite and Services PMI
US Futures indicate a flat open
Data due
MBA Mortgage data, ADP Employment Change, Composite and Services PMI, Factory Orders, ISM Non Manufacturing Data, EIA Oil Stock data, Fed Rate Decision
Earnings: Qualcomm, CVS Health, Humana, Marriott, Etsy, Electronic Arts, Booking Holdings, Take-Two Interactive, Fox Corp, Roku, MGM Resorts, Allstate, Virtu Financial, Exelon, Wingstop, BorgWarner, Brinker International, Pitney Bowes, Scotts Miracle-Gro, Steve Madden, Cabot Oil, Cheesecake Factory, Pioneer Natural, Hyatt Hotels, CF Industries

CHINA CSI 300 closed -19pts (-0.4%) @ 4,821
CSI 300 Initially tested higher to test 4,860 helped by good Caixin data but then sold down in reaction to the warning from Premier Li about downward pressure on the economy and the need for fiscal moves to help small businesses. PM saw the market dip to 4,805 before bouncing back to 4,830 but then dipped into the close.
PBoC drained around 150bn yuan.
Solar names weak as Bberg reported that Longi (601012) may see its products stopped at the US border. Concerns also about the MoC notice about stabilising prices but that helped food growers, pork plays and coal names.
Turnover much lighter
Leaders Agriculture, Energy, Property and Healthcare.
Laggards Electrical Equip, Defence, Materials and Consumer

Shanghai Comp -7pts (-0.2%) @ 3,499 T/O US$65,316m (-23% DoD)
Shenzhen Comp -10pts (-0.1%) @ 14,368 T/O US$86,215m (-17% DoD)
ChiNext Comp -2pts (-0.05%) @ 3,534

Caixin Services PMI Oct 53.8 vs 53.4 Sept (F/cast was 53)
Caixin Composite PMI Oct 51.5 vs 51.4 Sept (F/cast was 51) 
Service PMI slightly missed the long-term average of 54.1.
The sentiment continued to improve because the epidemic condition in early-to-mid October kept tapering off, paired with driving force from National Day Golden Week and expansionary momentum in demand/ supply of the service sector.
Trade data due next Sunday.
China's National Health Commission reported 109 confirmed cases of COVID-19 yesterday (2nd), with 93 of them being local infections (9 in Beijing).

Pre market opened @ 25,060 -39pts vs -174pts and trading followed the mainland; initially it rallied to 25,190 level before selling down to test 24,800 level and trading in a band 24,800/900 until around 2pm when the market rallied as Tencent saw interest on news of its first chips being unveiled (an AI, another to compress video’s and one for networking on cloud servers). Also rallying were Sportswear and Local Retail (Watches Chow Tai Fook +2.2%, Oriental Watch +6.4%) on news of developments regarding the border with the mainland and ‘Double Eleven’ shopping festival on the mainland. Mainland developers were mainly +VE BUT Solar names weak on the Longi news; Xinyi Solar -7.3%, GCL-Poly -14.7%. Handset componant makers weak on news shipmentsare losing steam. HSI upside saw resistance at 25,000 level.

Hong Kong reported 3 imported covid cases.
PMI Oct 50.8 vs 51.7 Sept (F/cast was 51.5)
Indicating that the private economy in Hong Kong has improved for the ninth month, while the growth rate has narrowed to the lowest in six months, IHS Markit announced.
Jingyi Pan, Economics Associate Director at IHS Markit, elaborated that the private sector continued to boom into 4Q with the COVID-19 conditions being tamed, although the pace of expansion further subsided in October.
Labor constraints were reflected in the lower employment levels and higher wages, however, private companies remained generally optimistic about the operating environment in the next 12 months, Pan furthered.

SHORT SELLING HSI Wednesday 19.8% vs 16.4% Tuesday
Top shorts 
Wharf REIC (1997) 46%, Country Garden (2007) 46%, Hengan (1044) 44%, Hang Seng Bank (11) 43%, CG Services (6089) 41%, Sinopec (386) 40%, ICBC (1398) 39%, BoC HK (2388) 36%, CKI (1038) 32%, Xinyi Glass (868)  30%, BoC (3988) 29%, China Life (2628) 28%, HSBC (5) 28%, Xinyi Solar (968) 28%,  HKEX (388) 27%, CM Bank (3938) 27%,  Wuxi Bio (2269) 27%, HK & China Gas (3) 25%.


Tesla's Chinese consumers can buy vehicles with zero down payment under financial leasing model, announced the EV maker on its China official website. As an illustration, the Tesla Model 3 Standard Range Plus is priced at RMB235,900 each in China, which can be leased at RMB4,718 per month in 60 installments.

SINOTRANS (00598.HK) announced that Wang Hong, a non-executive director of the Company, has been appointed as the Chairman of the Company with effect from 2 November 2021.HSBC, as one of the major banks in Hong Kong, has been processing 700 million transactions per year, with the monthly amount of transactions processed through mobile banking reaching 12 million, remarked Maggie Ng, Head of Wealth and Personal Banking at HSBC.   Ng expressed that 95% of HSBC's retail banking transactions was carried out through electronic channels and that the number of monthly active users of the bank's mobile application reached 1.6 million.

With reference to experts' advice, eligible persons of specified groups may receive the third COVID-19 vaccine shots for free starting next Thursday (11 November), said Secretary for the Civil Service Patrick Nip at news conference. They can start making online appointments from Friday (5 November). He projected approximately 1.86 million eligible persons. With 1.7 million Comirnaty vaccine doses currently available, the Government will order extra vaccine shots from drugmakers if necessary.  Cancer patients, organ transplant patients, advanced-stage HIV patients and those with low immunity are recommended to take the third doses at least four weeks after their second shots, Nip pointed out.
There is no direct relationship between such decision and border reopening, he furthered. The Government hopes the residents to return to normal life, with border reboot and cross-border travel as soon as possible, by fighting the disease and putting up protective barriers.

Regional Markets
Market tested higher in early trades with broad buying after the RBA scrapped the bond yield projection policy although Tech remained weak; seeing resistance at 7,400 in the first 30 minutes, then pushed higher with resistance around 7,430 level. Tested there for about an hour unable to break out and then drifted lower initial to 7,400 and then 7,380 level and closed +68pts (+0.9%) @ 7,393
Goodman tested a new high after a profit upgrade but Tyro -15% after not giving guidance. Lithium miners strong.
Construction Index Oct 57.6 vs 53.3 Sept (F/cast was 55)
Services PMI Oct 51.8 vs 45.5 Sept (F/cast was 52)
Composite PMI Oct 52.1 vs 46 Sept (F/cast was 52.2)
Building Permits Sept -4.3% vs +7.6% Aug revised (F/cast was-2.1%)
RBA Chart Pack
Markets closed for Culture Day
Dented by the shortages of semiconductor and other electronic components, Nintendo will only manage to produce approximately 24 million Switch gaming consoles this year, which is 20% below the original plan, reported Japanese media.
S Korea 
Foreigners selling heavily in reaction to the BOK minutes that were released after market Tuesday and ahead of the FOMC decision tonight. Local Institutions also net sellers.
Tech weak, EV/Battery names mixed as Musk throws some doubt on the Hertz deal. Kakao Pay +114% on its debut. Earnings still in focus
New covid cases jumped 68% DoD as new ‘living with covid’ regime was introduced -VE for re-opening names.
Kospi opened higher but sold down initially to 3,000 level which held for about 80 minutes before selling down to 2,975 level. It traded around there for the rest of the session and closed -38pts (-1.3%) @ 2,976
Kosdaq opened higher, dipped to 1,005 before a rally to 1,013 then back to 1,005 by 11.20am and traded sideways for the rest of the day to close -4pts (-0.4%) @ 1,005
Foreign Exchange Oct $469.21b vs 463.97b Sept (F/cast was 466.38b)
Market opened higher and tested to 17,140 in early trades; tested there a few times in the first hour but unable to break out and dipped down to test 17,080 level over the next hour but then rebounded but resistance at 17,120 level. Choppy trading throughout the session and closed +56pts (+0.3%) @ 17,122
T/O Wednesday US$11.69bn vs US$13.91bnTuesday.
A European Parliament (EP) delegation visiting Taiwan will meet with President Tsai Ing-wen on Thursday, according to the Presidential Office. It is the first formal delegation from the European Parliament to visit Taiwan.

Active Heavyweights

AIA (01299.HK) -2.150 (-2.438%) Short selling $164.52M; Ratio 15.087% closed at $86.05, down 2.4%
MEITUAN (03690.HK) +6.000 (+2.214%) Short selling $284.17M; Ratio 18.123% closed at $277, up 2.2%
TENCENT (00700.HK) +5.000 (+1.078%) Short selling $961.92M; Ratio 19.056% closed at $469, up 1.1%
BABA (09988.HK) -1.000 (-0.619%) Short selling $425.27M; Ratio 24.830% closed at $160.6, down 0.6%
PING AN (02318.HK) -0.200 (-0.357%) Short selling $72.61M; Ratio 11.654% closed at $55.75, down 0.4%
HKEX (00388.HK) -1.200 (-0.259%) Short selling $232.09M; Ratio 24.833% closed at $462.8, down 0.3%

HSI & HSCEI Constituents on Move:
XINYI SOLAR (00968.HK) -1.120 (-7.292%) Short selling $244.67M; Ratio 30.467% closed at $14.24, down 7.3%
LI NING (02331.HK) +5.450 (+6.659%) Short selling $118.36M; Ratio 11.675% closed at $87.3, up 6.7%
EVERGRANDE (03333.HK) +0.100 (+4.274%) Short selling $3.49M; Ratio 7.324% closed at $2.44, up 4.3%
KUAISHOU-W (01024.HK) -4.050 (-4.050%) Short selling $134.54M; Ratio 15.364% closed at $95.95, down 4.1%
AAC TECH (02018.HK) -1.250 (-3.771%) Short selling $29.20M; Ratio 30.977% closed at $31.9, down 3.8%
SMIC (00981.HK) +0.800 (+3.620%) Short selling $16.43M; Ratio 2.279% closed at $22.9, up 3.6%
SHENZHOU INTL (02313.HK) -5.300 (-3.204%) Short selling $61.68M; Ratio 21.696% closed at $160.1, down 3.2%
EVERG SERVICES (06666.HK) +0.120 (+3.125%) Short selling $4.31M; Ratio 10.182% closed at $3.96, up 3.1%

HSMI & HSSI Constituents on Move:
CARSGEN-B (02171.HK)  -5.600 (-13.827%)    closed at $34.9, down 13.8%
WEIMOB INC (02013.HK) -1.560 (-13.065%) Short selling $210.32M; Ratio 44.070% closed at $10.38, down 13.1%
KAISA GROUP (01638.HK) +0.130 (+12.264%) Short selling $3.91M; Ratio 4.581% closed at $1.19, up 12.3%
MEITU (01357.HK) +0.190 (+11.176%) closed at $1.89, up 11.2%
SKYWORTH (00751.HK) -0.490 (-10.426%) Short selling $22.15M; Ratio 8.922% closed at $4.21, down 10.4%

Market News 

HKEX (00388.HK)  announced that it has joined the "Glasgow Financial Alliance for Net Zero" (GFANZ) and the "Net Zero Financial Service Providers Alliance" (NZFSPA), part of its ongoing commitment to the long-term sustainable development of global financial markets.  HKEX is committed to helping investors and issuers embark on their low-carbon transition journey, building a sustainable finance ecosystem, the announcement added.

Jim Lai, Vice President of TENCENT (00700.HK)  and Chairman of Fusion Bank, expressed during an activity of the Hong Kong FinTech Week that, the consistency in policy is arguably the most crucial factor in forging a reliable business environment and that Hong Kong Monetary Authority (HKMA)'s fintech policies and infrastructure have aided companies in enhancing operating efficiency.  Lai remarked that every  virtual bank  is capable of bringing in unique contribution to the sector's ecosphere. He added that Fusion Bank will be partnering with WeChat under Tencent to study the possibility of capitalizing on the opportunities of the newly introduced cross-border Wealth Management Scheme.

TENCENT (00700.HK) revealed its chip-making progress for the first time at the 2021 Tencent Digital Ecosystem Summit, having rolled out the "Zixiao" AI inference chip, the "Canghai" video transcoding chip, and the "Xuanling" SmartNIC chip, reported Chinese media. In addition, the group officially released the "Aochi" cloud-native operating system.

CHINA TELECOM (00728.HK) responded that, in relation to the U.S. Federal Communications Commission (FCC)'s revocation of the section 214 authorizations for China Telecom (Americas) Corporation, the company has been operating, in both China and other countries including the U.S., in compliance with relevant laws and regulations. CHINA TELECOM remarked that the FCC's decision to revoke the licenses lacks justifiable reason and has harmed the legitimate rights of China Telecom (Americas) Corporation.

The U.S. Federal Communications Commission (FCC) has voted to revoke the section 214 authorizations for China Telecom (Americas) Corporation, a subsidiary of CHINA TELECOM (00728.HK), due to national security concerns. In response, China's Ministry of Industry and Information Technology (MIIT) voiced fierce objection to such decision in a statement.  The MIIT stated that the relevant subsidiary of CHINA TELECOM has been operating in strict compliance with the laws and regulatory requirements of the U.S., for nearly 20 years and that the U.S.'s decision to revoke its licenses would undermine the legitimate rights of the global consumers.
The Chinese authority urged the U.S. to withdraw the decision of revocation and treat Chinese telecommunication companies with a fair and non-discriminating attitude.

WEIMOB INC (02013.HK) announced an in-depth partnership with Xiaohongshu on mini-program mall solution. Through the partnership, WEIMOB INC's merchants will be introduced onto the platform of Xiaohongshu. Based on WEIMOB INC's SaaS ability and operating experience, the partnership aims to assist the mini-program merchants on launching their businesses on the Xiaohongshu platform and optimizing their omni-channel layouts.

TENCENT (00700.HK) will pump over RMB20 billion resources in the next three years into grooming more than 1,000 partner companies which can manifest over RMB10 million per year, Tong Taosang (Dowson Tong), Senior Executive Vice President and President of Cloud and Smart Industries Group, was quoted as saying by Chinese media.

EVERGRANDE (03333.HK) disclosed on its WeChat public account that the group completed 546 batches of delivery of possession during July-October 2021, involving 184 projects and 57,462 owners.  Honoring the "guarantee of delivery of possession" topped the priority of EVERGRANDE's tasks, said the company, adding it will make sure the completion of delivery in terms of quantity and quality with the strongest determination.

Hong Kong International Airport plans to segregate Mainland China flight passengers from other international visitors in an unprecedented step to avoid cross-infection and prepare for China-Hong Kong border reopening, SCMP citing sources.   The proposal also entails assigning staff members to either side of the two airport zones without mixing during working hours, yet details are still being wrapped up. Segregation arrangements will be confirmed by next Wednesday (November 10) for the sake of rollout soon after.

Overnight HIBOR last posted at 0.04214%, logging a 1-month high, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.06482%.

Tech companies have tons of data in possession due to rapid tech development over the decade, giving rise to personal data protection woes like data collection without consent, data abuse and customer information leaks, said People's Bank of China Governor Yi Gang at the Hong Kong FinTech Week. Therefore, he mentioned the pressing need for stronger personal data protection.
A Personal Information Protection Law system has initially been established with an ultimate purpose to foster right and reasonable data use under the premise of privacy protection, while unlocking market vibrancy and innovation, Yi added.

The negotiation for the border reboot between China and Hong Kong is progressing smoothly and has entered the execution phase, reported Sing Tao Daily, citing sources.  The experts from the two places have been striving to establish relevant standards and definitions for the "red, yellow, green" color code system, which illustrate citizens' health conditions. Also, the two parties are studying to set up a "circuit breaker" mechanism, specifying the situations under which the cross-border travel shall be halted or resumed.

The Jiyang shale oil exploration of Sinopec Shengli Oilfield reported a first batch of 458 million tons in predicted geological oil reserves, meeting conditions for a full exploration and development, reported Xinhua.  The Shengli Oilfield completed drilling four exploration wells as of 28 October, where the Fanyeping-1 Well recorded the highest daily flow rate of 171 tons in shale oil, setting a domestic shale oil well record.

ByteDance founder Zhang Yiming no longer serves as chairman of the TikTok owner, after stepping down as chief executive officer in May 2021, according to reports.  The new CEO Liang Rubo will assume the role of chairman of the five-member board, but Zhang will still engage in formulating ByteDance's long-term strategy

Guangzhou BYD Qianyuan Xinjing Automobile Sales Co., Ltd. was established on 29 October, with the legal representative being Ma Hao and registered capital RMB1 million, cited Tianyancha App.  The new company is engaged in used car dealership, new energy vehicle sales, and so on. According to shareholder information, the company is wholly owned by BYD Automobile Industry Co., Ltd..

Joe Tsai, Executive Vice Chairman of BABA-SW (09988.HK), expressed when attending an activity of the Hong Kong FinTech Week that, technology companies enjoy competitive edges in terms of product innovation and comprehension of the customers' needs. However, Tsai remarked that optimal risk management will be necessary for both the fields of technological finance or fintech.

PZER (000780.SZ) announced that, as the divestment of the flawed assets involved in its deal with CHINA LONGYUAN (00916.HK) has been completed, the company is mulling to apply to the China Securities Regulatory Commission (CSRC), for the resumption of the review on the proposed deal of CHINA LONGYUAN acquiring and merging with PZER.

Pre Market News
China's National Development and Reform Commission (NDRC) and National Energy Administration (NEA) issued a notice to kick off the nationwide transformation and upgrade of coal-fired power generation units, proposing to tighten the energy efficiency threshold.  
Meanwhile, China should speed up to create conditions for the energy saving and remodeling of coal-fired generation units consuming over 300g of standard coal per kwh amid power supply. Un-transformable units shall be gradually phased out and shut down.

Shenzhen's second hand commercial building transaction in October 2021 amounted to 180,000 square meters, down 63.3% YoY, according to the data from Housing and Construction Bureau of Shenzhen. The second-hand residential unit transaction likewise plunged 66.42% YoY to 150,400 square meters.
The transaction unit amount for second-hand residential buildings in Shenzhen has slumped to the lowest level in October since March 2012, implying that the transaction volume in the month was at a new low in nearly ten years, according to a survey conducted by the Shenzhen Centaline Research Center.

The Department of Culture and Tourism of Guangdong Province issued a notice, cautioning that as a new wave of COVID-19 outbreak is emerging across multiple regions in China over October, cross-province travel group activities must be strictly controlled and regulated.  The notice remarked that a "circuit breaker" mechanism will be immediately initiated for certain areas if COVID-19 confirmed cases are being recorded in the areas, where travel plans and itineraries should be adjusted or called off timely.

China's real estate loan inputs bounced back sharply in October on a monthly and annual basis, as Shanghai Securities News learnt from relevant departments. Real estate financing from financial institutions basically resumed normal during the month.
RMB property loan balance amounted to RMB51.4 trillion at the end of the third quarter of 2021, up 7.6% yearly as data showed. The growth was 4.3 ppts behind that of various loans.

HSBC HOLDINGS (00005.HK) announced that it has repurchased approximately 3.364 million shares of the company in the London market yesterday (2nd), at a price ranging between GBP4.3845 and GBP4.447, with a  volume  weighted average price of GBP4.4205, involving about GBP14.8705 million (about HKD158 million).

Over October, the overall transaction area of the housing markets in 16 major Chinese cities dropped 7.4% MoM and 24.6% YoY, according to the latest data released by the China Index Academy (CIA).  Also, the growth of the average price of newly built residential units further narrowed over October, both on a MoM and YoY basis, the data illustrated.

Chinese Premier Li Keqiang took an inspection trip to the State Administration for Market Supervision (SAMR), chairing a symposium to develop and strengthen market entities. China shall continue to guide financial institutions through reasonable profit surrender to the real economy and take steps to boost industrial economic operation, he emphasized.   Equally, sound market regulation mechanisms with long-term effectiveness should be established in opposition to monopoly and unfair competition, Li added. In this way, China aims to combat hoarding and profiteering as well as price gouging so as to maintain a fair and just market order.

Zhejiang convened an administrative guidance meeting on platform companies yesterday (2 November), reporting earlier self-inspection and rectification among platform firms in the province. Given standardized "Double Eleven" operation, these players were asked to make "five reinforcements" with "ten don'ts" to further promote platform economy governance.
Specifically, platform enterprises shall step up their rules and announcements, quality control of commodities, price supervision, platform governance, and after-sales warranty.

BEST MART 360 (02360.HK) issued a profit warning. The Group is expected to record a significant decrease of 35% to 40% in the profit attributable to owners of the Company for the six months ended 30 September 2021 as compared with HK$35.69 million for the same period in 2020. Such substantial decrease was mainly attributable to the subsidy in the amount of approximately HK$21 million granted to the Group during the Previous Period under the HKSAR Government’s Employment Support Scheme.

HOPSON DEV HOLD (00754.HK) announced that the gross contracted sales in aggregate for the first ten month of 2021 amounted to RMB36.336 billion, representing an increase of 42.6% as compared to the same period of 2020. Amongst which, property contracted sales amounted to RMB34.604 billion, representing an increase of 42%.

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