Oct 7 HK Closes +735pts ahead of China re-opening Friday.

07 Oct

This and previous notes can be found at Substack ( Asian Market Sense )
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HSI +735pts (+3.1%) 24,741 HSCEI +300pts (+3.6%) 8,713 T/O HK$105.33bn (+1.3% DoD no connect flows)  

Markets opened higher but drifting lower.  Broad gains, Auto’s leading but Oil/Gas the laggards.
Iberdrola +6% in early trade on a media report that the company is in talks with the Spanish government over energy pricing.
TeamViewer -6% after a 25% plunge on Wednesday, on the back of weak quarterly earnings and a cut to FY guidance.
ECB Policy Meeting
Industrial Production Aug -4% vs+1.3% Jul (F/cast was -0.6%)
Balance of Trade Aug €-6.67B vs €-7.08B Jul revised (F/cast was €-5.7B)
Current Account Aug €-1.3B vs €-3.4B revised (F/cast was €-2.8B)
Halifax House Price Index Sept +1.7% MoM vs +0.8% Aug revised (F/cast was +1.2%)
Halifax House Price Index Sept +7.4% YoY vs +7.2% Aug revised (F/cast was +6.6%)
Labour Productivity Q2 +0.1% QoQ vs +0.6% Q1 revised (F/cast was -0.5%)
BBA Mortgage Rate due Sept (Aug was +3.61%, F/cast is +3.61%
US Futures
Opened Dow +42pts, S&P and NDX +0.1%, and rose through the morning but then eased now Dow +125pts with S&P and NDX +VE
Ahead the Initial claims data which will be watched closely ahead of Friday’s payrolls data.

Closed re-opens on Friday

China's foreign exchange reserves posted at USD3.200626 trillion by the end of September, 
down by USD31.49 billion MoM, while the market had originally expected the reserves to only decline to USD3.22 trillion, according to the data released by the People's Bank of China (PBOC).  Slight -VE

Pre market opened @ 24,339: +373pts vs +26pts ADR’s but as I mentioned increased shorting yesterday made a squeeze likely, especially with light volumes as China is closed. A broad rebound with Ecommerce, Tech and AIA the leaders. Petro and WH Group the laggards. Market worked higher in the morning but resistance approaching 24,600. That broke in the PM and the market continued to work higher into the close. Recent shorts covered ahead of China re-opening and with +VE news flow from the Ecommerce names.
HK Developers +VE on news of a new town development and no curtailment of their current operations in the policy address. Some pre-positioning in Southbound connect favourite names. Historically China outperforms post Golden Week as Mainlanders put cash back to work.

TAM JAI INTL (02217.HK)  -0.250 (-7.508%), on debut, closed at $3.08, down 25 cents or 7.5%
against the listing price of $3.33, on
volume of 227 million shares and turnover of over $700 million. Excluding handling fee, the book loss was $250 per board lot size of 1,000 shares.

HK reported 8 new covid case;  all imported 
Now over 51 days without a local case. But that could end as a local employee of Hong Kong Air Cargo Terminals tested preliminarily positive for novel coronavirus, according to sources.
After Market
The Hong Kong Monetary Authority (HKMA) announced that the official foreign currency reserve assets of Hong Kong amounted to US$495 billion as at the end of September, below US$497.1 billion as at end-August.
The total foreign currency reserve assets of US$495 billion represent about seven times the currency in circulation or 48% of Hong Kong dollar M3.

SHORT SELLING HSI Thursday 20.5% vs 23.4% Wednesday
Top shorts 
Country Garden (2007) 52%, Hengan (1044) 43%, Wharf REIC (1997) 42%, Bud Apac (1876) 40%, Haidilao (6862) 38%,  Xinyi  Glass (868) 37%,  AIA (1299) 37%, MTRC (66) 32%, Xiaomi (1810) 32%, Meituan (3690) 31%, HKEX (388) 30%, AAC Tech (2018) 30%, Bank of China (3988) 29%, Geely (175) 29%, Power Assets (6) 29%, Henderson Land (12) 29%, HK & China Gas (3) 26%, Mengniu Dairy (2319) 26%, Techtronics (669) 25% .


Although the US$260-million bond guaranteed by EVERGRANDE (03333.HK)  matured, some holders have yet to receive repayments as of today (7th), Bloomberg citing sources.  The effective due date of the 8.5% USD bond, issued by EVERGRANDE's JV company Jumbo Fortune Enterprises Ltd, was Monday (4th), as the original due date was a Sunday (3th).

CHALCO (02600.HK) announced that Chalco Hong Kong Investment Company Limited, a subsidiary of the Company, will redeem the US$500-million Senior Perpetual Capital Securities in whole at the principal amount together with any distribution accrued to such Call Date.

Centa Valuation Index (Major Banks) (CVI) last stood at 55.26, down 6.2 pts form last week's 61.47. CVI has dropped for five consecutive weeks and has accumulated a loss of 27.82 pts in total, remarked the research department of Centaline Property.
Adding that, prior to the release of the latest Policy Address, the enthusiasm for bank mortgage has been significantly dampened, signaling upcoming pressure for the rise of home prices. After the Policy Address release, they believe that the banks' valuation attitude will be reflected on the CVI of the next few weeks, which should be closely monitored.

Regional Markets

Market tested 7,260 in initial trading pulled back to 7,230 over the first hour and then worked back to test 7,260 but failed to break out and from 1pm traded 7,260/40 and closed +50pts (+0.7%) @ 7,257
Tech rebounds as energy names give up some of their recent gains. Consumer staples and Industrial easing. BHP joins a number of firms making vaccinations compulsory.
Australia's state of New South Wales (NSW) has achieved a 70% vaccination rate on adults announced to ease the pandemic restrictions for the vaccinated citizens from next Monday (11th). If the local vaccination rate reaches 80%, the pandemic measures on vaccination people will be further relaxed, including allowing up to 20 people for family gathering and 50 people for outdoor gathering, the NSW government added. +VE
Data out
Services Index Sept 45.7 vs 45.6 Aug (F/cast was 49.8); slight -VE
Tomorrow Building Permits and RBA Financial Stability Review.
Nikkei opened higher, initial resistance around 27,820 but then worked higher with resistance at 28,000. PM opened lower and traded between 27,800/700 fof most of the afternoon but sold down to close +149pts (+0.5%) @ 27,678.
Topix traded in a similar fashion; resistance at 1,960 level. PM opened lower and trending lower; closed -2pts (-0.1%) @ 1,940
Leaders Shippers, Autos, Financials
Laggards Miners, Oil/Coal, Utilities, Airlines.
Co Incident Index Prelim Aug 91.5 vs 94.4 Jul (F/cast was 95)
Leading Economic Index Prelim Aug 101.8 vs 104.1 Jul (F/cast was 104)
Tomorrow pre-market we get Average Cash Earnings, Household Spending and Current Account
S Korea 
Kospi opened higher, traded around 2,940 for the first 90 minutes then worked higher but resistance at 2,960 level and then traded around that level to close +51pts (+1.8%) @ 2,960
Kosdaq traded in a similar pattern with resistance until 950, then in the last 30mins worked higher to close +31pts (+3.4%) @ 953.
Local prop and pension funds buying; SEC in focus ahead of prelims tomorrow. Internet and Pharma also +VE But weakness in Energy and Chemicals.
Data out
Services Index Sept 45.7 vs 45.6 Aug (F/cast was 49.8); slight -VE
Taiex opened higher at 16,466 and worked up to 16,700 in the first hour and then traded around that level to close +321pts (+2%) 16,714. Broad based buying but Tech leading.
T/O US$10.49bn vs US$10.29bn Wednesday

HK/CHINA Connect Flows
Closed until Friday.

Active Heavyweights
MEITUAN (03690.HK)  +22.200 (+9.711%)    Short selling $779.21M; Ratio 30.077%    closed at $250.8, up 9.7%
BABA (09988.HK) +10.000 (+7.283%) Short selling $298.90M; Ratio 13.377% closed at $147.3, up 7.3%
PING AN (02318.HK) +3.700 (+7.034%) Short selling $289.14M; Ratio 25.739% closed at $56.3, up 7%
TENCENT (00700.HK) +25.000 (+5.600%) Short selling $223.28M; Ratio 7.018% closed at $471.4, up 5.6%
HKEX (00388.HK) +7.600 (+1.613%) Short selling $121.73M; Ratio 27.445% closed at $478.8, up 1.6%
AIA (01299.HK) +0.850 (+0.950%) Short selling $201.03M; Ratio 39.617% closed at $90.3, up 1%
CCB (00939.HK) +0.020 (+0.364%) Short selling $85.24M; Ratio 16.627% closed at $5.52, up 0.4%

HSI & HSCEI Constituents on Move:
NTES (09999.HK)  +11.000 (+8.594%)    Short selling $75.32M; Ratio 11.453%    closed at $139, up 8.6%
KUAISHOU-W (01024.HK) +6.750 (+8.491%) Short selling $42.16M; Ratio 5.404% closed at $86.25, up 8.5%
HENDERSON LAND (00012.HK) +2.150 (+7.049%) Short selling $58.13M; Ratio 24.943% closed at $32.65, up 7%
JD (09618.HK) +16.800 (+6.149%) Short selling $235.37M; Ratio 51.565% closed at $290, up 6.1%
HAIDILAO (06862.HK) +1.600 (+6.130%) Short selling $49.06M; Ratio 34.581% closed at $27.7, up 6.1%
JD HEALTH (06618.HK) +3.900 (+5.748%) Short selling $12.85M; Ratio 9.859% closed at $71.75, up 5.7%
CHINA RES BEER (00291.HK) +2.750 (+5.140%) Short selling $43.15M; Ratio 17.625% closed at $56.25, up 5.1%
BIDU-SW (09888.HK) +7.000 (+4.885%) Short selling $25.79M; Ratio 16.096% closed at $150.3, up 4.9%
SUNNY OPTICAL (02382.HK) +8.800 (+4.644%) Short selling $40.81M; Ratio 14.038% closed at $198.3, up 4.6%
ALI HEALTH (00241.HK) +0.480 (+4.615%) Short selling $15.74M; Ratio 9.838% closed at $10.88, up 4.6%
XIAOMI (01810.HK) +0.800 (+3.893%) Short selling $226.65M; Ratio 27.781% closed at $21.35, up 3.9%
BYD COMPANY (01211.HK) +8.800 (+3.670%) Short selling $119.45M; Ratio 29.043% closed at $248.6, up 3.7%
BUD APAC (01876.HK) +0.730 (+3.665%) Short selling $24.49M; Ratio 36.215% closed at $20.65, up 3.7%
CNOOC (00883.HK) -0.320 (-3.490%) Short selling $64.61M; Ratio 10.639% closed at $8.85, down 3.5%
XINYI SOLAR (00968.HK) +0.480 (+3.310%) Short selling $21.59M; Ratio 10.622% closed at $14.98, up 3.3%

HSMI & HSSI Constituents on Move:
COFCO JOYCOME (01610.HK)  +0.330 (+13.525%)    Short selling $3.11M; Ratio 5.411%    closed at $2.77, up 13.5%
HYGEIA HEALTH (06078.HK) +6.900 (+11.969%) Short selling $3.80M; Ratio 2.345% closed at $64.55, up 12%
KINTOR PHARMA-B (09939.HK) +4.100 (+10.948%) Short selling $8.20M; Ratio 13.519% closed at $41.55, up 10.9%
CHINA STATE CON (03311.HK) +0.750 (+10.013%) Short selling $4.67M; Ratio 2.365% closed at $8.24, up 10%, hitting new high
WESTCHINACEMENT (02233.HK) +0.050 (+3.448%) Short selling $616.12K; Ratio 5.008% closed at $1.5, up 3.4%, hitting new high

Market News
MEITUAN-W (03690.HK)'s 2021 Golden Week Consumption Trend Report showed the most popular means of inter-provincial travel during the National Day holiday, with 22.4% users making long-distance spending and 77.6% local spending.  
Meanwhile, the Meituan App tracked a 49% YoY growth in group-buying and in-store dining orders during the period.

The Walt Disney Company announced the launch of Disney+ in Hong Kong on 16 November, giving Hongkongers access to rich film and TV show content from its six most iconic brands,
namely Disney, Pixar, Marvel, Star Wars, National Geographic and Star. 1,200 movies and 16,000 titles will be featured.  Disney+ will charge $73 a month or $738 a year, allowing each account to stream videos on four devices and download them on ten devices at the same time.

MEITUAN-W (03690.HK) struck a strategic partnership with the Department of Commerce of Shanxi Province, 
aiming to push the province's economic transformation and upgrade under the "Internet + New Consumption" model. Both sides are also set to propel online new economy development.

Secretary for Food and Health, Sophia Chan, expressed that the support of Hong Kong citizens is of paramount importance for the government to strive for a border reboot. People who have not yet received vaccine shots ought to get vaccinated as soon as possible, so as to protect themselves and their families from infections, and to create favorable conditions for the resumption of cross-border travel.

Equity markets will be steered by earnings in the next 12 months at a milder magnitude than that of the past 12 months, said Will Leung, Head of Investment Strategy, Wealth Management, Standard Chartered Hong Kong. Earnings from U.S. bourses will likely stay strong despite easing growth, with elevated profit forecasts under the infrastructure plan. Therefore, he regarded the U.S. stock market as the most upbeat one in 4Q21, citing better performance in sophisticated markets.  Leung was optimistic about Hong Kong shares in 4Q21, preferring manufacturing-related tech players to dotcoms.
Chinese developer bonds account for a big slice of high-yield bonds in Asia, and the soaring yields of these high-yield Asian bonds indicate overdone concern on potential default of Chinese property sector, remarked Gavin Lam, senior investment strategist, wealth management, at Standard Chartered Hong Kong. Under the premise of no large-scaled defaults, now is the optimal timing to capture the high bond yields, Lam opined. Apprehensive investors can opt for non-Chinese or non-Chinese developer high-yield bonds in the Asia region, which will likewise offer enticing return, he added.
The U.S. Federal Reserve's austerity policy was deemed a bearish sign market-wide, leading to volatility in the third quarter, said Standard Chartered Hong Kong's Wealth Management arm. However, the unit believed the move should be read as confidence in economic revitalization and a boon to investment market conditions over the medium to long term. The team predicted China's regulatory and deleveraging measures to carry on, suggesting investors adapting to investment against such a big environment.

After Carrie Lam released the latest Policy Address, Joseph Yam, an Executive Council member, expressed that Hong Kong's future is contingent on its key intermediary role in economy and finance between Mainland China and foreign countries.  
Yam further remarked that deepening and diversifying the connections with the Chinese financial system as propounded by the Policy Address is undoubtedly the right direction of development since RMB is unequivocally in need of further internationalization. Hong Kong's offshore RMB market, after 20 years of cultivation, will serve as the ideal avenue to propel free and unrestricted usage of RMB in the capital markets.

Bitcoin soared past the USD55,000 threshold; last posted USD55,029, up 6.64%, according to data from CoinDesk.   
Dawn Fitzpatrick, investment director of George Soros' Soros Fund Management, revealed during a Bloomberg News interview that the company owns certain amount of Bitcoin, although the sum is not big.

HSBC Life rolled out today a complimentary group life offer for all HSBC commercial customers in Hong Kong, 
extending further support to the small and medium enterprise (SME) community.
From 7 October to 5 November 2021, HSBC commercial customers can enjoy complimentary first-year group life benefit of HKD100,000 per member insured under the "HSBC Life Benefits+ Life Insurance Plan".

Pat Gelsinger, CEO of Intel Corporation (INTC.US), one of the largest U.S. chipmakers, expressed that the U.K. would have been one of the possible sites to set up a chip plant before Brexit, reported BBC.  
However, the U.S. chipmaker has since dropped the plan for a U.K. factory after Brexit and turned its focus to EU countries with the aim to seek support from the EU, Gelsinger added.  The CEO remarked that the company has received around 70 proposals on potential locations for a chip plant from about ten EU countries and that Intel hopes to finalize on the location of the new factory by the end of this year.

Hong Kong Chief Executive, Carrie Lam, expressed during the Policy Address Q&A session that the government anticipates the Northern Metropolis Development to take 20 years to complete and that it will map out a 10-year rolling construction progress schedule and reform relevant administrative mechanism and procedures.  
Lam added that relevant bureaux and departments in charge of the development project will be required to submit annual progress report for the supervision of various sectors of the society.

Macau's Novel Coronavirus Response and Coordination Center reported that the third mass nucleic acid test is basically completed as the government collected samples from 681,600 citizens between 9 pm on 4 October and 9 am today (7th). 
Among them, approximately 679,300 citizens have received the testing results, with all of them being tested negative.

HKELECTRIC-SS (02638.HK)  welcomes the announcement today by the Chief Executive that Hong Kong will adopt "net-zero carbon emissions for electricity generation". 
Strategies to cease coal-fired power generation by 2035 and substantially increase renewable energy applications have been set out to achieve carbon neutrality before 2050. A spokesman for HK Electric pledged the Company's full support for the proposed strategies and looked forward to the "The Hong Kong Climate Action Plan 2050", to be announced shortly by the Environment Bureau.

XIAOMI-W (01810.HK) accounted for about 42% of 5G smartphone shipments in Central and Eastern Europe for the third quarter, 
sharply rising from 4.3% in the same period last year, according to Strategy Analytics' research report. Xiaomi topped the 5G smartphone shipment chart in the region, outpacing Apple and Samsung

Hong Kong Chief Executive, Carrie Lam, painted the vision of "Northern Metropolis" in the latest Policy Address.
Lam expressed that the government will move certain non-location specific government facilities and office buildings to the northern districts, with the aim to increase employment opportunity and improve the issue of traffic congestion.

MTR CORPORATION (00066.HK) welcomes the Chief Executive’s 2021 Policy Address. Rex Auyeung, Chairman of the MTR Corporation, said the local and cross-boundary rail projects as well as relevant land development plans presented in the Policy Address 
will help make it more convenient for people to travel around, which will be instrumental to the territory’s urban development while enabling Hong Kong to tap the enormous opportunities offered by the development of the Greater Bay Area. MTR welcomes the above plans and will work with the Government to support relevant studies. In doing so, it will be contributing to the long-term development of Hong Kong, leveraging its expertise in railway development and operations.

Pre Market News
The Hong Kong General Chamber of Commerce (HKGCC) welcomes the Chief Executive’s Policy Address, which provides a broad range of solutions to tackle key challenges, most notably increasing Hong Kong’s housing and land supply. The Chamber also welcomes measures for Hong Kong to further integrate with and capitalize on opportunities arising from the development of the Greater Bay Area (GBA).  
Chamber Chairman Peter Wong said HKGCC welcomes the Government’s commitment to easing the acute shortage of housing and land. The high cost of housing has created unnecessary hardship for ordinary people and made it more difficult to attract and retain the talent Hong Kong needs to grow and expand its economy. The Chamber stands ready to help and advise on how to turn the Chief Executive’s proposals into concrete solutions.

The Hong Kong Housing Society (HKHS) welcomes the measures to increase housing and land supply in the 2021 Policy Address delivered by the Chief Executive and commits to render full support to the Government in increasing housing supply and providing decent accommodation for all.  
HKHS is planning and building 25 projects to provide more than 40,000 housing units in the next 20 years, and most of which is slated for completion within the next ten years providing nearly 28,000 units of various projects, including estate redevelopment, subsidised sale flats, elderly housing, dedicated rehousing estates and redevelopment of urban squatter areas. HKHS upholds the principle of optimisation of land use in its project planning, and the development of the three urban squatter areas in Cha Kwo Ling, Ngau Chi Wan and Chuk Yuen United Village, with the number of housing units increased from the original estimate of 6,300 to 8,700, is one of the examples. On transitional housing, HKHS has provided more than 700 units and will continue to make good use of its existing housing resources to increase the supply of "T-home" units.   Furthermore, HKHS will seek to adopt Modular Integrated Construction (MiC) and other innovative construction technology more widely in its housing projects, in view of the advantages in enhancing efficiency, quality and safety. Two housing projects, i.e. the elderly block at Jat Min Chuen in Sha Tin and the subsidised sale flats project at the dedicated rehousing estate in Hung Shui Kiu Phase 1, have already adopted MiC which will be further extended to more projects as appropriate.

SHK PPT (00016.HK) expressed that the latest Policy Address propounded to build a "Northern Metropolis" and outlined the major direction of Hong Kong's future development. 
The group hence pledged that it will continue to actively cooperate with the government to ensure sustainable land supply, while constructing residential properties with premium quality that cater to the market needs.

The office of Macao's Secretary for Economy and Finance expressed that, at the moment, it has no plan to extend the consultation period for the gaming law reform, and reiterated that there are multiple channels to collect opinions from the citizens such as letters and emails. The office added that the remaining public consultation sessions will be conducted in accordance with the guidance and requirements set out by the Health Bureau.

CHINESE EST H (00127.HK)'s major shareholder, Kimbee Chan, expressed that the trajectory of the group's share price is becoming more difficult to anticipate amid multiple uncertainties in the real estate and financial markets, such as the interest rate hike.  
Taking into consideration the heightened risks which the investors have to face, Chan proposed for the privatization of the company at a premium of approximately 83.5% over the closing price of the group's share on the last complete trading day, thus providing an opportunity for the minor shareholders to cash in without liquidity risk, while passing all risks onto herself.

The Government remains confident that Hong Kong's status as an international aviation hub could be consolidated and enhanced, aiming to commission the Third Runway in 2022, mentioned Chief Executive Carrie Lam in her Policy Address.
  CATHAY PAC AIR (00293.HK) CEO Augustus Tang replied that he looked forward to the above opening and the completion of the entire three-runway system project in 2024, which shall ramp up the Hong Kong International Airport's capacity and competitiveness.

U.S. Secretary of State Antony Blinken expressed during an interview with Bloomberg that the U.S. hopes China will take responsible actions when dealing with the potential impact induced by the EVERGRANDE (03333.HK)  debt crisis. 
As the economies of various countries are so closely intertwined, China's economic decision will have profound effect on other countries around the globe, Blinken added.

Macau's Novel Coronavirus Response and Coordination Centre said around 673,900 people have been sampled under the 3rd round of universal NAT as of 9pm last night (6th).  
Around 540,800 people showed negative test results. This wave of universal NAT is basically complete.

Jones Lang LaSalle is seeking to sell its China business, excluding property brokerage and valuation units, at more than US$500 million, Bloomberg citing sources. 
CHINA RES MIXC (01209.HK) will hopefully trump rivals like SUNAC SERVICES (01516.HK) and CHINA VANKE (02202.HK) to be JLL's preferred bidder. However, no final decision has been made as talks are still underway.

TIMES CHINA (01233.HK) announced that in September, the Group’s contracted sales amounted to  RMB6.89 billion, down 33.4% yearly, with contracted gross floor area of  373,000 square meters.

S HARBOURHOLD (01663.HK) announced that the Company’s chairman and substantial shareholder, Wong Lam Ping, has acquired an aggregate of 450,000 shares of the Company 
in the open market at an average price of HK$0.121 per share on 6 October.

IMAGI INT'L (00585.HK) issued a profit warning. The Group will likely experience a loss for the year ending 31 December 2021 
as compared to profit of HK$271 million for the year ended 31 December 2020, mainly due to the net realised loss of approximately HK$79.1 million for the financial year ending 31 December 2021 arising from selling EVERG VEHICLE (00708.HK)'s shares.

CHINESE EST H (00127.HK) announced that the company's major shareholder and CEO, Kimbee Chan, proposed for the privatisation of the company by way of a scheme of arrangement, at a cancellation price of HK$4 per share in cash, 
representing a premium of 37.93% compared to the closing price prior to the trading halt.  The total maximum cash consideration payable under the proposal on the basis described above is HK$1.908 billion, the announcement added.  The company applied for its share resumption of trading on Thursday (7th).

XIAOMI-W (01810.HK)'s statement disclosed that on 6 October, it repurchased 2.428 million shares of the company on the Stock Exchange at $20.45-20.60 per share, involving approximately $49.8 million.  YTD, the company has repurchased a total of 123 million shares, accounting for 0.49% of the company's share capital.
TRULY INT'L (00732.HK) announced that the net turnover was approximately HK$1.809 billion for September, representing a decrease of 5.4% from that in the same period of 2020.

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