This and previous notes can be found at Substack (Asian Market Sense)
Check out ERI-C.com for your research needs
HSI -312pts (-1.2%) 25,502 HSCEI -157pts (-1.7%) 9,082 T/O HK$140.94bn (+6.2% DoD)
Markets opened lower but DAX rebounded to traded in the green around flat. FTSE and CAC working back to flat. UK employment data was mixed and many are watching to see the US inflation data due later.
JD Sports +7.1% in early trades after reporting a sevenfold surge in 1H earnings.
Allfunds Group -4% in early trades after a share placement.
Claimant Count Aug -58.6k vs -7.8k Jul (F/cast was -26k)
Ave Earnings Ex Bonus Jul +6.8% vs +7.4% Jun (F/cast was +6.7%)
Unemployment Rate Jul 4.6% vs 4.7% Jun (F/cast was 4.7%)
But still have 1.6m people on furlough
Employment Change Jun 183k vs 95k May (F/cast was 150k)
CHINA CSI 300 closed -75pts (-1.5%) @ 4,917
CSI 300 opened lower and tested down to 4,960 level in first 15 mins then worked better to 4,995 only to sell back down into lunch at -15pts @ 4,977. PM saw further weakness in the market on concerns about covid after the government advised people not to travel over the Mid Autumn festival holiday. Market sold down to 4,907 before a small up tick into the close.
CATL +5% on news of new investment into a lithium battery plant. Huawei Harmony +VE as users exceed 100m
Leaders Pharma, Battery, CyberSec.
Laggards Coal, Metals and BrokersShanghai Composite -53pts (-1.4%) @ 3,663 T/O US$100,246bn -2% DoD
Shenzhen Composite -80pts (-0.5%) @ 14,626 T/O US$126,476bn +6% DoD
ChiNext Composite Index +36pts (+1%) @ 3,547
Reported 120 new covid cases in Fujian
Pre market opened @ 25,828 +13pts vs +5pts ADR’s but quickly reversed down to 25,636; margin call selling combined with weakness in Evergrande and Apparel names (after Nike D/grade) and some Ecommerce names before rebounding back to flat only to sell down again to 25,730 before working better into lunch -13pts @ 25,800. PM saw the market sell down following China with continued concerns over Evergrande -11.9% with volume +113% @ as Beijing calls in its own advisers to review the company related names also weak as a restructuring seems likely. Watch R&F -7.7% which saw Fitch lower its outlook to -VE from stable. Another negative was Beijing advising people not to travel over the Mid Autumn festival holiday due to the Covid outbreak in Fujian -VE Macau names.
Leaders Phama and Energy
Laggards Consumer Staples, Property, Financials
HONG KONG DATA
HK reported 2 new covid cases; both imported.
SHORT SELLING HSI Tuesday 20.4% vs 17.2% Monday
Top shorts Country Garden (2007) 43%, Wharf REIC (1997) 42%, Haidilao (6862) 42%, MTR (66) 37%, CK Asset (1113) 37%, SHKP (16) 37%, Ali Health (241) 37%, Li Ning (2331) 36%, Bank of China (3988) 36%, AIA (1299) 35%, Techtronic (669) 34%, CM Bank (3968) 32%, ICBC (1398) 32%, Sunny Optical (2382) 31%, CKH (1) 31%, China Overseas (688) 30%, CCB (939) 29%, Xiaomi (1810) 28%, Henderson Land (12) 27%, HKEX (388) 27%, Citic (267) 27%, China Res Holdings (1109) 26%, CLP(2) 26%, Anta (2020) 25%. (2313) 27%, BYD (1211) 26%, Anta Sports (2020)25%, PowerAssets (6) 25%.
After Market News
The Census and Statistics Department (C&SD) released the preliminary statistics on Hong Kong's Gross National Income (GNI) and related figures for the second quarter of 2021. Hong Kong’s GNI, which denotes the total income earned by Hong Kong residents from engaging in various economic activities, increased by 10.1% in the second quarter of 2021 over a year earlier to $760.3 billion at current market prices. The GDP estimated at $676.2 billion at current market prices in the same quarter, recorded a 7.3% increase over the same period. The value of GNI was larger than GDP by $84.2 billion in the second quarter of 2021, which was equivalent to 12.4% of GDP in that quarter, mainly attributable to a net inflow of investment income.
Hong Kong’s total inflow of primary income, which mainly comprises investment income, estimated at $478.7 billion in the second quarter of 2021 and equivalent to 70.8% of GDP in that quarter, recorded an increase of 8.2% over a year earlier. Meanwhile, total primary income outflow, estimated at $394.5 billion in the second quarter of 2021 and equivalent to 58.3% of GDP in that quarter, also increased by 3.4% over a year earlier.
Market dipped in early trades down to 7,390. It then saw choppy trading; bounced to 7,414, dipped to 7,400 bounced to 7,424 then back to 7,390 before rallying to 7,430 and then worked higher to close +12pts (+0.2%) @ 7,437.
Energy and Gold names +VE but Iron Ore prices seeing continued weakness. Brambles -8.6% as 2 day investor briefing get underway. Zip weak on saying it would accept crypto Afterpay also weak. Vulcan Energy trading halt; its launching a placement to fund exploration initiatives and expand its dual renewable energy and lithium development strategy.
House Price Index Q2 +16.8% YoY vs +7.5% Q1 (F/cast was +9%)
House Price Index Q2 +6.7% MoM vs +5.4% Q1 (F/cast was +5.8%)
Nikkei opened higher but dipped slightly in early trades to 30,504 before rallying to test 30,800 only to sell down heavily into lunch 30,560 level. PM opened slightly higher and traded sideways before working slowly higher in the last hour to close +223pts (+0.7%) @ 30,670
Topix traded in a similar pattern to close +21pts (+1%) @ 2,119
Leaders Insurers, Oil/Coal, Shippers and Auto
Laggards Utilities, Pharms and Metal Products
Volumes remain reasonable, with talk of increased foreign buying in what is being called the Election Fever Rally.
Industrial Production Jul -1.5% MoM vs +6.5% Jun (F/cast was -1.5%)
Industrial Production Jul +11.6% YoY vs +23% Jun (F/cast was +11.6%)
Capacity Utilisation Jul -3.4% MoM vs +6.2% Jun (F/cast was +1.4%)
Kospi opened higher after two down days and worked higher through the session with resistance around 3,164 and eased back into the close; ended +21pts (+0.7%) @ 3,149
Kosdaq traded steadily higher through the session to close +11pts (+1.1%) @ 1,038
Tech being bought by Foreigners and Local Institutions.
Tourism names rallying ahead of Chusok and re-opening theme, some interest in platform names on recent weakness and Tech.
Laggards Steel, Apparel, Pharma
Google fined $177m for abusing android.
KDCA announced 1,497 new covid cases (+64 DoD)
Export Prices Aug +21.6% YoY vs +19.5% Jul revised
Import Prices Aug +18.6% YoY vs +17.4% Jul revised
Taiex opened higher tested 17,530 a few times in the first 40 mins but failed to break out and then sold down to 17,425 and traded around flat until around 11:30am when it worked better to 17,500 only then to ease back to close -11pts (-0.1%) @ 17,435
Laggards Shipping/Transport, Pharms and Property
Leaders Utilities, Energy, Consumer and Financials
T/O was US$9.29 vs US$9.12bn Monday a slight rise after 6 days of falling.
CECC reported 5 new covid cases
Northbound RMB 68,568m Sell 36,176m vs 32,392m Buy
Southbound HK$ 13,595m Sell 7,056m vs 6,539m Buy
Northbound RMB 75,335m Sell 37,840m vs 37,495m Buy
Southbound HK$ 15,830m Sell 7,652m vs 8,178m Buy
PING AN (02318.HK) -1.550 (-2.620%) Short selling $425.14M; Ratio 17.477% closed at $57.6, down 2.6%
CCB (00939.HK) -0.140 (-2.414%) Short selling $480.80M; Ratio 28.497% closed at $5.66, down 2.4%
BABA (09988.HK) -2.500 (-1.555%) Short selling $726.03M; Ratio 20.471% closed at $158.3, down 1.6%
MEITUAN (03690.HK) -2.800 (-1.130%) Short selling $986.48M; Ratio 21.471% closed at $245, down 1.1%
TENCENT (00700.HK) -5.200 (-1.088%) Short selling $600.32M; Ratio 6.351% closed at $472.8, down 1.1%
HKEX (00388.HK) -3.500 (-0.689%) Short selling $559.16M; Ratio 26.988% closed at $504.5, down 0.7%
AIA (01299.HK) -0.600 (-0.637%) Short selling $505.11M; Ratio 35.078% closed at $93.65, down 0.6%
HSI & HSCEI Constituents on Move:
EVERG SERVICES (06666.HK) -0.550 (-12.009%) Short selling $30.74M; Ratio 5.875% closed at $4.03, down 12%
EVERGRANDE (03333.HK) -0.400 (-11.869%) Short selling $53.56M; Ratio 10.018% closed at $2.97, down 11.9%
SUNAC (01918.HK) -2.060 (-11.220%) Short selling $211.71M; Ratio 16.534% closed at $16.3, down 11.2%
ALI HEALTH (00241.HK) -0.860 (-6.815%) Short selling $247.70M; Ratio 36.697% closed at $11.76, down 6.8%
COUNTRY GARDEN (02007.HK) -0.437 (-5.254%) Short selling $92.24M; Ratio 42.899% closed at $7.88, down 5.3%
ENN ENERGY (02688.HK) -7.900 (-5.204%) Short selling $38.18M; Ratio 6.477% closed at $143.9, down 5.2%
JD LOGISTICS (02618.HK) -1.600 (-4.665%) Short selling $86.38M; Ratio 29.980% closed at $32.7, down 4.7%
CG SERVICES (06098.HK) -2.700 (-4.588%) Short selling $135.22M; Ratio 23.986% closed at $56.15, down 4.6%
PETROCHINA (00857.HK) +0.140 (+3.911%) Short selling $253.13M; Ratio 19.491% closed at $3.72, up 3.9%
PSBC (01658.HK) -0.220 (-3.774%) Short selling $63.20M; Ratio 17.589% closed at $5.61, down 3.8%
HAIDILAO (06862.HK) -1.150 (-3.533%) Short selling $158.93M; Ratio 41.563% closed at $31.4, down 3.5%
CPIC (02601.HK) -0.850 (-3.491%) Short selling $51.18M; Ratio 21.791% closed at $23.5, down 3.5%
CM BANK (03968.HK) -2.300 (-3.348%) Short selling $291.03M; Ratio 32.067% closed at $66.4, down 3.3%
CHINA RES LAND (01109.HK) -1.000 (-3.300%) Short selling $115.20M; Ratio 26.413% closed at $29.3, down 3.3%
HSMI & HSSI Constituents on Move:
AK MEDICAL (01789.HK) +1.610 (+20.252%) Short selling $71.07M; Ratio 15.136% closed at $9.56, up 20.3%
JW THERAP-B (02126.HK) -3.400 (-13.821%) Short selling $23.82M; Ratio 3.084% closed at $21.2, down 13.8%
HENGTEN NET (00136.HK) -0.310 (-10.131%) Short selling $77.81M; Ratio 38.329% closed at $2.75, down 10.1%
CARSGEN-B (02171.HK) +4.100 (+10.099%) closed at $44.7, up 10.1%
Hong Kong's export index in 3Q stumbled after rising for five consecutive quarters, down 9.7 pts to post at 39, as multiple countries continued to be plagued by the COVID-19 outbreak. All sub-indices for various sectors and markets plunged, reflecting Hong Kong businesses' bleak view on the sales of the upcoming Christmas holiday. Hong Kong merchants' confidence in near-term export performance has been undermined by the fluctuating COVID-19 pandemic and the rising freight rate, with a mere 20.2% of the interviewed businesses projecting to see sales increase during Christmas this year, remarked Nicholas Kwan, Director of Research at The Hong Kong Trade Development Council (HKTDC).
Chinese ambassador to the U.S. Qin Gang expressed when attending the virtual welcome event hosted by the US-China Business Council that China sincerely hopes the U.S. would cultivate the appropriate conditions and atmosphere needed for the two countries to implement the phase one trade agreement and bilateral economic and trade exchanges. Qin said that China has been actively propelling the trade agreement despite the impact wrought by the COVID-19 pandemic and has made significant progress in strengthening protection on intellectual property rights and expanding market access of agricultural products and financial sector. The U.S., however, continued to impose various forms of sanctions on China, including putting 900 Chinese entities on restriction lists, which has been a major setback for the implementation of the trade agreement.