Oct 8 HK +136pts as China re-opens and trades higher.

08 Oct

This and previous notes can be found at  Substack ( Asian Market Sense )
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HSI +136pts (+0.6%) 24,838 HSCEI +63pts (+0.7%) 8,776 T/O HK$105.33bn (+55% DoD as connect flows resume)  

European Markets trading around flat ahead of US payrolls  Autos and Energy +VE but Utilities weak.  German trade balance missed estimates.

US futures flat ahead of the payrolls data

CHINA CSI 300 +64 pts (+1.3%) @ 4,930
Markets reopened strongly although upside limited by concerns over property sector debts.
Leaders were Ping AN, Petrochina, Sinopec.
Weakness in Coal and IPP names.

China's National Health Commission reported 22 confirmed COVID-19 cases 
on 7 October, all being imported cases.
Caixin Services PMI Sept 53.4 vs 46.7 Aug (F/cast was 49)
Caixin Composite PMI  Sept 51.4 vs 47.2 Aug (F/cast was 49)
The China Logistics Prosperity Index (LPI) hit 54% in September 2021, up 4.5 ppts on a monthly basis, 
according to China Federation of Logistics & Purchasing (CFLP).

Pre market opened @ 25,064 +363pts with Tencent +3.9% but ACC Tech -10% after its profit warning. But market sold down to trade around yesterdays close for most of the morning. PM saw the market work slightly better and into the green.

HK reported 2 new covid case; 1 local case 
breaking the 51 days without a local case.   One of them being a local infection, involving a 48-year old who works at the airport cargo terminal. The patient has received two shots of COVID-19 vaccine and is listed as a case with an unknown infection source.

SHORT SELLING HSI Friday vs 20.5% Thursday
Top shorts 
Country Garden (2007) 51%, Wharf REIC (1997) 46%,  SHKP (16) 39%, Bud Apac (1876) 39%, BYD (1211) 38%, AIA (1299) 37%,  CKII (1038) 35%, HK & China Gas (3) 33%, Henderson Land (12) 32%, Haidilao (6862) 31%, China Overseas (688) 30%, Meituan (3690) 29%,  HKEX (388) 28%, AAC Tech (2018) 27%, Sunny Optical (2382) 26%, Techtronics (669) 26%, China Res Land (1109) 26%, Sinopec (386) 26%, Xiaomi (1810) 26%, CLP (2) 25%, MTRC (66) 25%.


BYD COMPANY (01211.HK) (002594.SZ) announced that the company's subsidiary Golden Link is planning to join the investment fund Community Fund LP with an investment of USD300 million. The fundraising scale of the fund is estimated to be less than USD600 million, with an investment focus on
outstanding underlying funds in fields such as technology and medical innovations.

YUZHOU GROUP (01628.HK) announced that for the month ended September 2021, the sales of the Group was RMB9.032 billion, down 22.5% year-on-year.

OOIL (00316.HK) announced that for the third quarter ended 30th September 2021, total revenues increased by 125.3% to USD4.314 billion, as compared to the same period in 2020.  This record result was achieved despite severe congestion around the network, which drove down liftings by 7.2% and loadable capacity by 7.6%. The overall load factor was 0.4% higher than the same period in 2020. Overall average revenue per TEU increased by 142.7% compared to the third quarter of last year.

Chinese President Xi Jinping has held a phone conference with the new Japanese Prime Minister Fumio Kishida today (8th) through which both parties agreed on maintaining constant communication to steer the relationship between the two nations onto the right direction, reported CCTV.  Xi stressed the geographic proximity between China and Japan, stating that upkeeping a friendly cooperative relationship is beneficial to the basic interests of the people of both nations, as well as to safeguarding world peace. China expressed its willingness to strengthen communication and cooperation with Japan, in order to forge a China-Japan relationship suitable to the needs of the new era.

Yang Jiechi, a member of the Communist Party's Politburo, met with the U.S. national security adviser Jake Sullivan in Zurich, Switzerland, said Chinese Foreign Ministry Spokesman Zhao Lijian at a regular news conference. Both sides had a comprehensive, candid and thorough exchange of views on Sino-US relations, as well as international and regional problems of common concern.  Zhao said the meeting was constructive and salubrious to boosting mutual understanding.

China's State Administration for Market Regulation (SAMR) announced that it imposed administrative penalty on MEITUAN-W (03690.HK) for its "picking one from two" monopoly practice on online food delivery platform within China.  The regulator ordered the company to stop all illegalities and fully refund the exclusive cooperation deposits of RMB1.289 billion. It also fined MEITUAN-W at 3% of the RMB114.748 billion of domestic sales in 2020, running into RMB3.442 billion.
MEITUAN-W (03690.HK) said it sincerely accepted the administrative penalty decision made by the State Administration for Market Regulation on 8 October. The Company is set to resolutely implement the Notice of Administrative Penalty and the Administrative Guidance through comprehensive and thorough self-inspection and rectification, in order to eradicate the "picking one from two" practice.

Centa-City Leading Index (CCL) dropped 0.36% WoW to post at 188.93.
CCL Mass last stood at 192.15, down 0.16% WoW.
CCL (small-and-medium units) likewise lost 0.22% WoW to post at 189.58.
CCL (large units) last posted 185.5, down 1.08% WoW.

The research department of Centaline Property, found the Policy Address released on 6 October favorable to the property market and supportive for home prices to stay high and solid. This will be reflected in the CCL starting late October 2021.

Regional Markets

Tested 7,320 in initial trades but then eased back to 7,256 over the next 90minutes before rebounding to test 7,320 again and trade around that level for the rest of the day to close +63pts (+0.9%) @ 7,320
BNP and the Miners leading the market higher but EML payments -14.6%
Pre market household spending was weaker than expected but the Current Account came in higher. Later the EcoWatchers data was better than forecast.
Opened higher but saw resistance at 28,320 late morning.  PM the market drifted lower to close +371pts (+1.3%) @ 28,049
Topix traded in a similar pattern to close +22pts (+1.2%) @ 1,962

S Korea
Kospi opened higher but sold down and traded 2,960/70 until 1pm and then dipped to trade 2950/60  Closed -3pts (-0.1%) @ 2,956
Kosdaq traded in a similar pattern to close -0.3pt (unch) @ 953.
Samsung Electronics operating profit Q3 may stretch 28% to KRW15.8 tn (USD13.3 bn), slightly below the market estimate of KRW16.1 trillion. The forecast operating profit, nonetheless, will be the highest in three years, mainly due to the rising memory chip prices and monitor display demand driven by the launches of flagship models by other smartphone makers.

Opened higher but drifted lower in choppy trading to close -73pts (-0.4%) @ 16,640 T/O US$9.66bn vs US$10.49bn Thursday
Market will be closed on Monday for National Day; re-opens Tuesday
After Market
TSMC announced that its revenue in September NT$152.685 billion, up 11.1% MoM, or 19.7% YoY, setting an all-time high in a single month.
Balance of Trade Sept $6.45b vs 3.48b Aug (F/cast was 2.5b)
Exports Sept 29.2% vs 26.9% Aug (consensus was 25%)
Imports Sept 40.4% vs 46.2% Aug revised (Consensus was 41.2%)
CECC reproted 12 new covid cases all imported

HK/CHINA Connect Flows
Northbound  Rmb 74,295m    Sell 37,326m vs 36,969m Buy
Southbound HK$ 20,930m Sell 9,929m vs 11,001m Buy
Northbound Rmb 75,307m Sell 38,761m vs 36,546m Buy
Southbound  HK$  19,689m     Sell   9,183m vs  10,506m Buy

Active Heavyweights
BABA (09988.HK)  +8.200 (+5.567%)    Short selling $1.90B; Ratio 22.377%    closed at $155.5, up 5.6%
PING AN (02318.HK) +1.550 (+2.753%) Short selling $658.33M; Ratio 19.545% closed at $57.85, up 2.8%
TENCENT (00700.HK) +10.400 (+2.206%) Short selling $1.71B; Ratio 11.912% closed at $481.8, up 2.2%
MEITUAN (03690.HK) +5.200 (+2.073%) Short selling $1.95B; Ratio 29.061% closed at $256, up 2.1%
HKEX (00388.HK) -6.800 (-1.420%) Short selling $487.05M; Ratio 28.384% closed at $472, down 1.4%
CCB (00939.HK) -0.030 (-0.543%) Short selling $249.99M; Ratio 17.313% closed at $5.49, down 0.5%

HSI & HSCEI Constituents on Move:
AAC TECH (02018.HK)  -4.600 (-12.585%)    Short selling $420.23M; Ratio 27.266%   closed at $31.95, down 12.6%
CPIC (02601.HK) +1.500 (+6.410%) Short selling $49.00M; Ratio 5.150% closed at $24.9, up 6.4%
WUXI BIO (02269.HK) -7.000 (-5.882%) Short selling $752.00M; Ratio 22.497% closed at $112, down 5.9%
LI NING (02331.HK) -5.000 (-5.817%) Short selling $370.45M; Ratio 16.068% closed at $80.95, down 5.8%
ALI HEALTH (00241.HK) +0.480 (+4.412%) Short selling $57.11M; Ratio 11.252% closed at $11.36, up 4.4%
NTES (09999.HK) +6.000 (+4.317%) Short selling $367.19M; Ratio 17.190% closed at $145, up 4.3%
CHINA LIFE (02628.HK) +0.540 (+4.173%) Short selling $145.69M; Ratio 12.140% closed at $13.48, up 4.2%
ENN ENERGY (02688.HK) -5.000 (-4.016%) Short selling $12.43M; Ratio 4.201% closed at $119.5, down 4%
CHINA FEIHE (06186.HK) -0.500 (-3.726%) Short selling $22.94M; Ratio 11.095% closed at $12.92, down 3.7%
HANSOH PHARMA (03692.HK) +0.700 (+3.700%) Short selling $1.99M; Ratio 2.960% closed at $19.62, up 3.7%
JD LOGISTICS (02618.HK) -1.150 (-3.605%) Short selling $16.20M; Ratio 11.091% closed at $30.75, down 3.6%
CG SERVICES (06098.HK) +2.100 (+3.568%) Short selling $131.58M; Ratio 18.992% closed at $60.95, up 3.6%

HSMI & HSSI Constituents on Move:
E-HOUSE ENT (02048.HK)  +0.250 (+20.325%)    Short selling $2.43M; Ratio 4.660%    closed at $1.48, up 20.3%
HENGTEN NET (00136.HK) +0.370 (+16.444%) Short selling $26.58M; Ratio 7.363% closed at $2.62, up 16.4%
CGN NEW ENERGY (01811.HK) -1.400 (-16.279%) Short selling $55.54M; Ratio 7.715% closed at $7.2, down 16.3%
DONGYUE GROUP (00189.HK) -3.170 (-15.810%) Short selling $112.44M; Ratio 5.636% closed at $16.88, down 15.8%
CHINA COAL (01898.HK) -0.870 (-12.927%) Short selling $109.36M; Ratio 24.902% closed at $5.86, down 12.9%
CHINA RES POWER (00836.HK) -2.650 (-12.018%) Short selling $143.20M; Ratio 9.542% closed at $19.4, down 12%
YANZHOU COAL (01171.HK) -1.700 (-11.097%) Short selling $218.52M; Ratio 26.451% closed at $13.62, down 11.1%
CEB GREENTECH (01257.HK) -0.380 (-10.983%) Short selling $2.92M; Ratio 4.887% closed at $3.08, down 11%
SITC (01308.HK) -2.750 (-10.536%) Short selling $79.10M; Ratio 12.877% closed at $23.35, down 10.5%

Market News
South Korea's Ministry of Land, Infrastructure and Transport (MOLIT) expressed that the South Korea and Singapore have inked an agreement on the air travel bubble scheme, 
which allows vaccinated South Korean citizens to travel to Singapore without being subject to quarantine measures, starting from 15 November.

One of the government's top tasks in the next legislative year is to submit a draft legislation to the LegCo on the abolition of MPF offsetting mechanism, s
aid Law Chi-kwong, Secretary for Labour and Welfare. The related job is slated for January 2022, and the authorities are now making all-out efforts to prepare the relevant legislation and unroll other preparatory work.

Evergrande Real Estate Pearl River Delta Real Estate Development Co., Ltd. issued a statement that online rumors on the Evergrande Group's exit from the Canglian renovation project of old urban areas were completely inaccurate, 
according to the "Hengda Real Estate in Pearl River Delta" WeChat account. The Company has not signed any document in relation to the termination of such project.

Centaline Property Agency took EVERGRANDE (03333.HK)'s companies to the High Court to seek claims on over-$100-million commissions, involving 443 flats at Emerald Bay in Tuen Mun and The Vertex in Cheung Sha Wan.  
The plaintiff was Centaline Property Agency Limited, and the defendants were Fortune Choice Development Limited and Twin City Holdings Limited.

The Arles, a Fo Tan residential project under Centralcon Properties, has received over 10,000 subscriptions in two days, with 55% stemming from the New Territories and 30% from Kowloon. The group is rolling out 268 units under the first price list, with price headroom for future flat launch.  Several banks, including HANG SENG BANK (00011.HK) and ICBC (Asia), have confirmed mortgage provision for the project.

Reuters reported signs of the spillover of EVERGRANDE (03333.HK)  0.000 (0.000%)   's debt crisis into other Chinese property companies, according to Reuters. Two tranches of FANTASIA (01777.HK)'s domestic corporate bonds plummeted after market resumption today (8th), with 19 Fantasia 02 (163025.SH)'s price slipping over 50%.  Equally, multiple bonds under Yango (000671.SZ) , YUZHOU GROUP (01628.HK), CHINA AOYUAN (03883.HK) and R&F PROPERTIES (02777.HK) have tracked steeper slide.

The merchants on BABA-SW (09988.HK)’s Taobao special edition, Taote, are recently beginning to ink agreements on diversified payment methods, and WeChat Pay is expected to be adopted on Taote within this month, reported Chinese media. 
According to the payment agreement, Taote will actively propel diversified product sales and payment channels by introducing third party payment institutions to provide services such as payment collection.

Macau Government Tourism Office (MGTO) announced that the city's visitor arrivals figures hit 8,159 during the National Day Golden Week (1-7 October), 
90% of them being Mainland tourists (i.e. 7,393).China's Ministry of Culture and Tourism (MCT) has recently issued a notice, stating that it will cooperate with local law enforcement institutions to further strengthen the regulation on the online game market and strictly punish illegal and improper operating behavior.  The ministry further announced to enhance cyber oversight and inspection, while releasing a batch of typical case studies, with the aim to remind the gaming companies of their responsibilities to operate in compliance with the relevant anti-addiction measures for minors.

People's Bank of China (PBOC)'s Vice Governor Liu Guoqiang published an article on China Finance, stating that the central bank will continue deepening the reform of loan prime rate (LPR) and gradually propel market-driven deposit rates, so that the interest rate policies of PBOC can be more smoothly transmitted to the loan and deposit rates through the market interest rates.

Chubb Limited announced a definitive agreement to acquire the life and non-life insurance companies that house the personal accident, supplemental health and life insurance business of Cigna in seven Asia-Pacific markets for US$5.75 billion in cash.

These operations generated approximately US$3 billion in net premiums written in 2020. The transaction is expected to be completed in 2022 and is subject to required regulatory approvals and customary closing conditions, the announcement added.

The Government estimated, in the latest Hong Kong 2030: Planning Vision and Strategy report, that the city's 2019-2048 land shortage at around 3,000 hectares, far above the 1,200-hectare assumption unveiled in 2016.  
The prior estimate was way too conservative, said Secretary for Development Michael Wong in the Policy Address news conference. Hong Kong's potential land supply could reach up to 4,100 hectares, with proposed medium to long-term programmes like the Lantau Tomorrow Vision and the Northern Metropolis. Hence, he was confident in securing enough land for shortage. He also noted thaat the Hong Kong and Shenzhen governments have set up a task force to study the construction of cross-border railway.  Chan added that the task force has already initiated the feasibility study on the railway project connecting Hung Shui Kiu and Shenzhen Qianhai.

The President of the American Chamber of Commerce in Hong Kong (AmCham HK), Tara Joseph, expressed that the efforts to lobby the Hong Kong government to ease the border control measures have been futile so far 
and that the government's zero case policy might damage Hong Kong's future as an international financial center. Joseph remarked that AmCham has been voicing its concerns to the Hong Kong government in various forms but has received no response.

TENCENT (00700.HK)'s League of Legends Mobile announced the official launch of unlimited closed beta testing at 10a.m. today (8th), 
implying the debut of the title's local server.  Afterwards, there will be stringent curbs on minors' login and in-game spending in compliance with national regulation.

Pre Market News
China Foreign Exchange Trade System announced on Friday (8th) that the central parity of USD/ RMB rose 250 bps from the last trading day to 6.4604.

Celestial Pioneer Ltd, held by the chairman of NEW WORLD DEV (00017.HK), Henry Cheng, on 30 September, reached two agreements with the major shareholder of I-CABLE COMM (01097.HK), Forever Top Asia, in relation to the purchase of a stake of 40.5% in Forever Top Asia, according to disclosure from the Stock Exchange.  
After the completion of the purchase, Celestial Pioneer Ltd's stake in Forever Top Asia will increase to 72% from 31.5%.

China will continue to combat monopoly in the fintech sector and that the People's Bank of China (PBOC) has required fintech service platforms to form holding companies to consolidate balance sheets and strengthen prudential regulation, 
PBOC Governor Yi Gang expressed during a meeting with Bank for International Settlements, reported multiple media.
Chinese regulators will actively tackle the issue of algorithm discrimination and other newly formed anti-competition behavior, while enhancing the regulation on the payments sector in various respects, including personal information service, Yi added

As at 24:00 on 7 October, the box office revenue of the 2021 National Day holiday period amounted to RMB4.387 billion, 
with over 93 million moviegoers, reported Chinese media, citing data from "Dengta Professional Data". The revenue of RMB4.387 billion is the second best performance only after that of 2019, the report added.

Over the period of 1-7 October, China's visitor volume for domestic travel amounted to 515 million, representing a decline of 1.5% YoY 
in comparable terms, and recovered to 70.1% of the pre-COVID corresponding periods, Ministry of Culture and Tourism (MCT) expressed. The realized domestic travel revenue amounted to RMB389.061 billion, down 4.7% YoY, and recouped to 59.9% of the pre-COVID corresponding periods.

AAC TECH (02018.HK)  issued a profit warning, 
forecasting that the consolidated profit attributable to owners of the company for the three months ended 30 September 2021 (“Q3 2021”) is expected to decline to a range of RMB166 million and RMB210 million, representing a decline of approximately 51% to 61% as compared with that for the corresponding period in 2020.

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