Jan 7 HK/China Wrap HSI -144pts but China higher.

07 Jan

HSI -144pts (-0.5%) 27,549  HSCEI -103pts (-1%) 10,797  T/O HK$227.82bn (+4.4% DoD )

EUROPE Markets opened higher DAX and CAC trading sideways just above yesterday’s closing level but the FTSE sold down into the red before trading sideways.Construction and material stocks lead the gains. Travel and leisure sector weak.
EUOZONE Consumer Confidence Dec -13.9 vs -17.6 Nov (F/cast was -13.9)
Core Inflation rate Dec +0.2% vs +0.2% Nov (F/cast was +0.1%)
Economic Sentiment Dec 90.4 vs 87.7 Nov revised (F/cast was 89.5)
Inflation Rate Flash Dec -0.3% YoY vs -0.3% Nov (F/cast was -0.4%)
Inflation Rate Flash Dec +0.3% MoM vs -0.3% Nov (F/cast was +0.2%)
Retail Sales Nov -6.1% MoM vs +1.4% Oct revised (F/cast was -3.8%)
Retail Sales Nov -2.9% YoY vs +4.2% Oct revised (F/cast was +0.6%)
Services Sentiment Dec -17.4 vs -17.1 Nov revised (F/cast was -16)
Industrial Sentiment Dec -7.2 vs -10.1 Nov (F/cast was -8.6)
Consumer Inflation Expectations Dec 14.8 vs 15.4 Nov (F/cast was 15.9)
Factory Orders Nov +2.3% MoM vs 3.3% Oct revised (F/cast was -1.2%)
Retail Sales Nov -18% MoM vs +2.5% Oct revised (F/cast was -3.2%)
Retail Sales Nov -15.7% YoY vs +5.2% Oct revised (F/cast was +4.2%)
US Futures 
Indicate +127pts with S&P +0.6% and NDX +0.8% as Congress confirmed Biden as the next US President and the Democrats having control of Congress.
Bed Bath & Beyond, Constellation Brands, Walgreens Boots Alliance and Conagra report quarterly earnings before the bell on Thursday. Chipmaker Micron reports after the bell.
Challenger Job Cuts Dec 77.03k vs 64.797k Nov (F/cast was 69k)
Balance of Trade Nov $-68.1b vs 63.1b Oct (F/cast was -67.6b)
Initial Claims 787k vs 790k prior revised (F/cast was 755k)
Initial Claims 4 weeks ave 818.75k vs 837.5k prior (F/cast was 810k)
Continuing claims 5.072m vs 5.198m prior (F/cast was 4.98m)
Exports Nov $184.2b vs 182.0b Oct (F/cast was 183.4b)
Imports Nov $252.3b vs 245.1b Oct (F/cast was 251b)
To come
ISM Non Manufacturing (Business Activity, New Orders, Prices, PMI)
EIA Natural Gas data

CHINA CSI 300 Closed +96pts (+1.8%) @ 5,514 
Opened slightly higher and trended higher through the morning, despite worsening US/China tensions. Investors encouraged but the World Bank prediction of strong Chinese growth. Market saw some resistance around 5,460 level but broke above just before lunch. PM initially sold off down to yesterday’s closing level which it tested a couple of times before rallying 90pts into the close
Shanghai Comp +25pts (+0.7%) @ 3,576
Shenzhen Comp +169pts (+1.1%) @ 15,356
ChiNext Index +47pts (+1.5%) @ 3,162

Foreign exchange reserve Dec US$3.217 T vs 3.178T (F/cast was 3.2T)

HSI Pre Market Opened @ 27,715 +23pts vs -134pts ADR’s
Telcos weak on news the NYSE will resume the delisting of the Chinese Telco’s concerns also of Baba and Tencent being sanctioned in the US by Trump in his last days in office.
Choppy trading trough the day. Market ticked higher initially but then sold down to 27,620 and then rallied to the day high 27,750 which it tested a couple of times before selling down to 27,560. Rebounded to yesterday’s closing level but unable to break above and sold down into lunch. PM trended lower to 27,470 mid afternoon and then worked higher but only to 27,670 and then traded slightly lower into the close. Lost another 71pts in the closing auction.
Sentiment cautious as Democrat won control of the Senate which is likely to make it easier for Biden to introduce his policies; which many feel will be bad for business. There is also concerns over more sanctioning of Chinese companies by Trump in his remaining days.

After Market
Foreign Exchange Reserves Dec $491.6b vs 485.7b Nov revised (F/cast was 502b)

Centre for Health Protection said there were 33 new COVID-19 cases in Hong Kong today (vs 25 Wednesday) 5 local cases from unknown sources. Plus 30+ initially confirmed cases.

SHORT SELLING Thursday 13.8% vs 14% Wednesday Top Shorts: Ping An (2318) 43%, Hengan (1044) 40%, Anta Sports (2020) 31%, Henderson Land (12) 30%, CK Asset (1113) 30%, Bud APAC (1876) 30%, Hang Seng Bank (11) 28%, MTRC (66) 28%, Wharf REIC (1997) 25%, Mengniu Dairy (2319) 25%.

HSBC will slash bonus for entry level employees by 22%, Hong Kong Economic Times reported. According to an internal notice seen by the media which sent to entry level employees at grades 6-8, their bonus for 2020 will be cut by 22% at maximum uniformly, due to the material repercussion from external environment on the bank's business and results.  The HSBC spokesman replied local media's inquiry that the Group’s reported profit after tax decreased by 62% and adjusted profit before tax fell by 44%, hence the bank decided to make the adjustment on bonus. Yet, the overall salary of related staff will be broadly flattish or inch up, considering their devotion during hardship.
HKBN Enterprise Solutions (HKBNES) announced to team up with leading local software solutions expert Achiever Technology Limited (Achiever) to introduce a remote-enabled human resources (HR) management system for SMEs.
L'OCCITANE (00973.HK) announced that it had in December 2020 transferred out of treasury 1.9219 million ordinary shares of the Company, with an aggregate nominal value of EUR57,700.
BYD ELECTRONIC (00285.HK) announced that it had on 7 January (after trading hours) entered into the Assets Purchase Agreement with its controlling shareholder BYD, comprising die-casting machines and peripheral supporting equipment, vertical machining center, drilling machining center and six-axis robot.
The Lands Department (LandsD) issued 10 pre-sale consents for residential developments and two pre-sale consents for non-residential developments in the fourth quarter of 2020.  The 10 pre-sale consents for nine residential developments (of which five are phased developments) involve a total of 4,491 residential units.
Taking into account the pre-sale consents issued in the first three quarters in 2020, the LandsD issued a total of 33 pre-sale consents for residential developments involving 12,898 residential units in 2020.
On 4 January, SUNAC (01918.HK)  Chairman Sun Hongbin acquired on-market 2.90 million shares, involving $77.9572 million.  Subsequently, Sun's shareholding was boosted to 45.19%.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 210,000 shares in CK ASSET (01113.HK) at the average price of HK$39.7428 and HK$40.1500 per share on 31 December 2020 and 6 January 2021.  As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK ASSET have respectively increased from 35.89% to 35.90% and from 35.96% to 35.97%.
Regarding Macau government's 2021 GGR forecast of MOP130 billion, Secretary for Economy and Finance Lei Wai Nong expected the stable GGR uptrend assumption to remain intact, reported Radio Macau (TMD).  He will keep close tabs on market changes as well.
New York Stock Exchange will maintain its decision to delist the ADRs of China's top-three telcos. Chinese Foreign Ministry Spokeswoman Hua Chunying replied that various international media has noticed NYSE's flip-flop saga, citing a Nikkei commentary on the capital market confusion led by NYSE's U-turns.
EVERG SERVICES (06666.HK) Positive profit alert, expecting profit attributable to the shareholders at approximately RMB2.6 billion for the year ended 31 December 2020, representing an upsurge yearly.  The net profit and the profit attributable to shareholders are both expected to be approximately 2.8 times of that of last year.
Centa Valuation Index (Major Banks) (CVI) last printed at 34.77, down 0.19 pts weekly. CVI has seen narrower volatility since the 4th Covid outbreak, said Centaline Property. The index plunged 8.72 pts in the first week, gradually shrinking to a 0.19-pt fall this week.

Market Comment
*E-COMMERCE WEAK on news ALIBABA (9988 HK -3.9%) & TENCENT (700 HK -4.5%) ADRs tumbled after a report the U.S. is considering adding the two internet giants to the China stock ban list. There is also ongoing regulator concerns on the sector after the PBOC said it will tighten oversight of online platforms' financial activities, payments firms and credit-scoring businesses, and will prohibit excessive marketing of financial products. The PBOC will also step up anti-monopoly efforts. JD.COM (9618 HK -3.8%) NTES (9999 HK +4%).
*TELCOS WEAK  sold off on the news that the NYSE is considering reversing course for a second time to delist three major Chinese telecommunications firms after conferring further with senior authorities on how to interpret an executive order Trump issued Nov 12. CH MOBILE (941 HK -7.2%) CH TEL (728 HK -11.4%) CH UNICOM (762 HK -9.4%).
*INSURERS MIXED  after the CBIRC issued a notice to various life insurance cos, intending to clarify that only insurance companies with certain capabilities can operate Internet life insurance business, and the products sold must be exclusive products. CH LIFE (2628 HK +0.35%) NCI (1336 HK -0.6%) ZA ONLINE (6060 HK -0.7%) CPIC (2601 HK +4.6%) CHINA RE (1508 HK -1.2%) PING AN (2318 HK +1.5%).
*CHINA PROPERTY MGRS WEAK saw profit-taking following yesterday's surge after Chinese regulators encouraged enterprises to use technology to improve services. Ten departments including the Ministry of Housing and Urban Rural Development and the NDRC also encouraged the enterprises to extend services to the elderly and childcare. CH OVS PPT (2669 HK -2.2%) POLY PROP SERV (6049 HK -4.9%) A-LIVING (3319 HK -1%).
*CHINA PROPERTY STEADY following sales data.
CH OVERSEAS LAND (688 HK +0.8%) Dec contracted sales +37.8% YoY to 39.79b yuan. Contracted sales in 2020 +12.5% YoY260.7b yuan.
CH OVS GRAND OCEANS (81 HK -0.7%) Dec contracted sales +30.9% YoY to 7.14b yuan.Contracted sales in 2020 +20.4% YoY to 64.71b yuan.
CH VANKE (2202 HK unch) Dec contracted sales +77% YoY to 101.54b yuan.
*AUTOS STRONG amid recent volatility around news on EV development.
GEELY AUTO (175 HK +5.1%) reported vehicle sales for Dec +19% YoY or +2% MoM to 154,202 units. It targets 16% increase in 2021 sales volume to 1.53m units.
GAC (2238 HK -1.7%) Dec vehicle sales +12.4% YoY to 209,059 units. It sets 2020 vehicle sales target at 2.04m units vs 2.06m in 2019.
BYD (1211 HK +5.5%) GREATWALL (2333 H K+10%).
*PHARMA/BIOTECH MIXED  following placement news and amid vaccine speculations. AKESO INC (9926 HK +1%) is selling 30 million shares in a placement, with offering price at HK$39.60 each, represents a discount of 4.6% to Wednesday’s closing price of HK$41.50.
CANSINO (6185 HK +10.1%) SINO BIOPHARM (1177 HK +1.1%) WUXI APP TECH (2359 HK +1.2%) SINOPHARM (1099 HK -1.9%) CSPC (1093 HK -1.2%).
XIAOMI (1810 HK -5.6%) profit-taking and valuation concerns following a strong rally since its last share placement in Dec.
XINYI SOLAR (968 HK +7.5%) amid speculation of a massive stimulus program in the U.S.
CH LONGYUAN (916 HK+14.5%) reported 2020 power generation +4.6% YoY, and it is expected to benefit after the Ministry of Ecology and Environment has authorised the sale of carbon-emission quotas.

Regional Markets
Announced a state of emergency for Tokyo and three neighbouring prefectures valid until Feb 7.Opened higher and worked higher thought the morning briefly breaking 27,600 before easing back into lunch. PM saw the market trend lower but with a small uptick at the end to close +434pts (+1.6%) @ 27,490
Topix followed a similar pattern to close +30pts (+1.7%) @ 1,826Data Pre MarketAve Cash Earnings Nov -2.2% YoY vs -0.7% Oct (F/cast was-0.6)
Kospi opened higher and worked higher to 3,055 early afternoon. It then eased slightly to close +64pts (+2.1%) @ 3,032
Kosdaq followed a similar pattern rising to 994 but then sold down heavily to test yesterday’s closing level before bouncing to close +8pts (+0.8%) @ 989.
Opened higher and initially traded sideways but then worked higher from late morning to end at the day high. +230pts (+1.5%) @ 15,214
After Market
Wholesale Prices Dec -5.1% YoY vs -5.94% Nov revised (F/cast was -6.5%)
Inflation Rate Dec +0.17% vs +0.36% Nov revised (F/cast was +0.2%)
Inflation Rate Dec +0.06% vs +0.09% Nov (F/cast was +0.1%)
Northbound Rmb 62,985m Buy 30,669m vs 32,316m Sell
Southbound HK$ 31,094m Buy 11,956m vs 19,138m Sell
Northbound Rmb 76,864m Buy 37,624m vs 39,240m Sell
Southbound HK$ 27,863m Buy 9,812m vs 18,051m Sell

Active Heavyweights
TENCENT (00700.HK) -4.7%
BABA (09988.HK) -3.9%
AIA (01299.HK) +2.1%
HKEX (00388.HK) -1.3%
PING AN (02318.HK) +1.2%
MEITUAN (03690.HK) -0.6%

HSI & HSCEI Constituents on Move:
CHINA UNICOM (00762.HK) -11.4%
CHINA MOBILE (00941.HK) -7.2%
JD HEALTH (06618.HK) -6.1%
CM BANK (03968.HK) + 6.1%
XIAOMI (01810.HK) -5.6%
GEELY AUTO (00175.HK) + 5.1%, hitting new high
HANG SENG BANK (00011.HK) + 4.7%
HSBC HOLDINGS (00005.HK) +4.6%
ENN ENERGY (02688.HK) +4.3%, hitting new high
CPIC (02601.HK) +4.1%, hitting new high
NTES (09999.HK) +4.1%
JD (09618.HK) -3.8%
WUXI BIO (02269.HK) -3.1%
ALI HEALTH (00241.HK) -3%HANSOH PHARMA (03692.HK) +2.1%, hitting new high
HAIDILAO (06862.HK) +1.3%, hitting new high

HSMI & HSSI Constituents on Move:
GCL-POLY ENERGY (03800.HK) +20.7%
CHINA LONGYUAN (00916.HK) +14.5%, hitting new high
ANGANG STEEL (00347.HK) +10.3%
CANSINOBIO (06185.HK)  +10.1%

U.S. Secretary of State Mike Pompeo said, in a statement, that he was considering sanctions and other curbs on those involved in the arrest of over 50 pro-democracy activists in Hong Kong. Shocked by the arrest of a U.S. citizen in the saga, Pompeo stressed that Washington will not tolerate the arbitrary detention or harassment of American citizens.
Government Economic Advisor Andrew Au, during an online seminar, predicted the business sentiment to weaken again amid ongoing fourth wave of local epidemic. As labor market still faced headwinds, the unemployment rate in the fourth quarter was expected to edge up and surpass 6.3% as recorded in September-November 2020.
COVID-19 mutation and vaccine researchers warned that the new coronavirus variant which is surging across South Africa may render the existing vaccines less effective, but is unlikely to be by all means resistant to them.
Overnight HIBOR last posted at 0.03881%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.13304%, marking a 1-month low.
The U.S. State Department plans to unveil a fact sheet urging local investors' compliance with an executive order barring investment in alleged Chinese military firms, Reuters citing sources.  The blacklist includes SMIC (00981.HK) and CNOOC (00883.HK)
Peruvian President Francisco Sagasti mentioned a deal to buy Sinopharm's inactivated COVID-19 vaccine, with the first batch of 1 million doses arriving in the country this month, reported Xinhua.
Trading in the shares of BONJOUR HOLD (00653.HK)  0.000 (0.000%)   has been halted with effect from 9:57 a.m. on Thursday, 7 January 2021 pending the release of an inside information announcement.
Call of Duty: Mobile, developed by Activision in partnership with TENCENT (00700.HK)'s Timi Studios, has garnered more than US$14 million in player spending during the first week of launch in China.
S&P Dow Jones Indices announced that it will remove ADRs of CHINA TELECOM (00728.HK), CHINA MOBILE (00941.HK) and CHINA UNICOM (00762.HK) from its benchmarks.
BYD COMPANY (01211.HK) sold 36,753 units of Tang models in 2020 at an ASP of nearly RMB270,000, revealed Auto Sales General Manager Zhao Changjiang. The production capacity of the BYD Han remained insufficient, added Zhao.
CATHAY PAC AIR (00293.HK)  announced that it will resume flight services from Hong Kong to London Heathrow (LHR) from 12 January in order to assist customers needing to travel to the UK.  The carrier intends to operate CX251 flights to London Heathrow on 12, 14, 15, 17, 18, 21 and 24 January.

SUNAC (01918.HK) Chairman SUN Hongbin acquired 1.8 million shares in the market on 30 December 2020, involving $49.8206 million, revealed HKEX.
U.S. State and Defense Department officials are discussing expanding the list of firms banned from U.S. investments over alleged ownership or control by the Chinese military, WSJ citing insiders. Washington also considers adding BABA-SW (09988.HK) (BABA.US) and TENCENT (00700.HK)  to the blacklist.  Alibaba's shares were -5.35% to US$227.61 in the U.S.
Chinese Ministry of Housing and Urban-Rural Development announced it will firmly stick to the principle that homes are built for residency, instead of speculation, in unswerving adherence to the central government's economic strategy, cited Xinhua News Agency. Never regarding real estate as a short-term means of stimulus, the ministry will always zero in on property market monitor. The study and compilation of "14th Five-Year" residential market development blueprint are meanwhile in full swing.
CHINA VANKE (02202.HK) announced that from January to December of 2020, the Company achieved an accumulated contract sales area of approximately 46.675 million sq. m. and a contract sales amount of RMB704.15 billion, up 13.5% and 11.6% yearly.
XIAOMI-W (01810.HK) announced that on January 6, the group had awarded a total of 16.8663 million Award Shares to 2,405 Selected Participants under the Share Award Scheme.  On the same date, a total of 6.25 million Options to subscribe for Shares were granted under the Post-IPO Share Option Scheme.
SMIC (00981.HK) announced that it had on 6 January been notified by OTC Markets Group, the market operator of OTCQX Market, that the Company is being removed from the OTCQX Market effective at the close of trading on 6 January and the Company’s securities (SIUIF, SMICY) will no longer be eligible for quoting or trading on OTC Link ATS in accordance with the Executive Order and related regulatory guidance.
CASH FIN SER GP (00510.HK) announced that on 5 and 6 January, the Group had acquired an aggregate of 43,000 BYD COMPANY (01211.HK) shares through the open market at an aggregate consideration of HK$9.9 million.  On 6 January, the Group had further acquired an aggregate of 217,000 CHINA MOBILE (00941.HK)    shares through the open market at an aggregate consideration of HK$10.0 million.
CHINESE EST H (00127.HK) announced that as at 31 December 2020, the Group’s portfolio of listed equity investments comprised shares of EVERGRANDE (03333.HK). Based on the preliminary assessment on the closing market price of the Evergrande Shares as at 31 December 2020, it is expected that an unrealised loss on fair value change of approximately HK$5.76 billion would be recorded as other comprehensive expense for the Year.   Accordingly, the cumulative unrealised gain on fair value change of the Evergrande Shares of HK$4.98 billion at the end of year 2019 turned to unrealised loss on fair value change of approximately HK$780 million as at 31 December 2020, which was recorded in the Financial Assets measured at FVTOCI reserve. The unrealised fair value change is a non-cash item and will not affect the cash flow of the Group.

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