This and previous notes can be found at Substack (Asian Market Sense)
Check out ERI-C.com for your research needs
HSI -365pts (-1.5%) 24,668 HSCEI -131pts (-1.5%) 8,806 T/O HK$150.82bn (-4% DoD but with Southbound connect)
Holidays next week
Japan Closed Monday and Thursday
S Korea Closed Monday to Wednesday for Chusok
Taiwan Closed Monday & Tuesday
China Closed Monday & Tuesday
Hong Kong Closed Wednesday
Markets opened higher DAX trading sideways but FTSE and CAC trending slightly higher. Ignoring the weakness in Asia. Travel & Leisure leading. Resources weak.
New Car Registrations Jul -23.1% vs +10.4% Jun (F/cast was -28%)
New Car Registrations Aug -19.1% vs -23.1% Jul (F/cast was -17.6%)
Balance of Trade Jul €20.7B vs €18.1B Jun (F/cast was €30.2B
New Car Registrations Aug -15% vs -35.3% Jul
Opened Dow +30pts, S&P and NDX +0.1% Initial claims data and Retail Sales will be closely watched
CHINA CSI 300 closed -60pts (-1.2%) @ 4,808
CSI 300 opened flat ticked higher initially but then sold down to 4,830 level around 10:15am then rallied back to 4,860 before selling down into lunch. PM trading was initially choppy; tested to 4,850 before selling down to test 4,800 and then traded sideways in choppy trading into the close.
Southbound Connect closed.
Broad based weaknss with concerns over covid and Evergrande, additional concerns bearing in mind the long weekend ahead. Interesting headline that China has started a second, larger scale, purchase of Hog reserves; likely to add to food price inflation. Shanghai Composite -49pts (-1.3%) @ 3,607 T/O US$96,580bn +10% DoD
Shenzhen Composite -278pts (-1.9%) @ 14,536 T/O US$122,756bn +5% DoD
ChiNext Composite Index -87pts (-2.5%) @ 3,450
China's National Health Commission reported 80 confirmed cases yesterday (15th), with 31 of them being imported cases and 49 of them being local infections (48 recorded in Fujian, 1 in Yunnan).
Pre market opened @ 25,042 +9pts vs +15pts ADR’s but market sold down first to 24,680, small bounce to 24,835 before the selling pressure prevailed into lunch. PM there was an initial bounce which faded and then the market traded sideways until around 3pm when the market worked better into the close and ticked higher into the closing auction.
Macau and Chinese Developers and Financial under pressure. Also news that Chinese regulators are reviewing game content, to ensure suitable content.
BUYBACKS on Wednesday
Xinyi Glass buys 2m shares at a price ranging between $27.65-27.90 per share
Tencent buys 230k shares for $105m
CKH buys 130k shares for $7.03m
Xiaomi buys 8.52m shares for $198m
HONG KONG DATA
HK reported no new covid cases.
Unemployment Aug 4.7% vs 5% Jul (F/cast was 4.5%)
SHORT SELLING HSI Thursday 18.5% vs 15% Wednesday
Top shorts China Overseas (688) 48%, Wharf REIC (1997) 47%, Henderson Land (12) 46%, Country Garden (2007) 46%, Ali Health (241) 40%, HSBC (5) 40%, Haidilao (6862) 38%, BYD (1211) 36%, CK Asset (1113) 34%, Xiaomi (1810) 34%, Mengniu Dairy (2319) 34%, Bank of China (3988) 32%, Wuxi Bio (2269) 32%, Power Assets (6) 31%, Shenzhou (2313) 31%, Xinyi Glass (868) 31%, Hengan (1044) 30%, HKEX (388) 30%, MTR (66) 29%, SHKP (16) 29%, CM Bank (3968) 27%, CKI (1038) 26%, Bud Apac (1876) 25%
After Market News
China announced to release more metal reserves. Headline only on BBerg.
The Census and Statistics Department (C&SD) released today (September 16) the volume and price statistics of external merchandise trade for July. In July 2021, the volume of Hong Kong's total exports of goods and imports of goods increased by 20.1% and 19.5% respectively over July 2020. Comparing July 2021 with July 2020, the prices of total exports of goods and imports of goods increased by 5.6% and 5.5% respectively
EVERGRANDE Hengchi New Energy Vehicle (Guangdong) Co. Ltd. has changed its legal representative from Weng Manshan to Zhang Mingming, with Weng also resigning from the positions of executive director and general manager, which will also be taken over by Zhang, reported Chinese media, citing data from qcc.com.
A spokesperson of China's Ministry of Commerce (MOC) expressed when asked about China-U.S. relationship that, China will endeavor to implement the vital understanding reached between the two nations during the leaders meeting and that the economic and trade teams of both countries have been in constant communication. The ministry reiterated that unilateral trading is harmful to both China and the U.S., as well as the global economic recovery.
Tencent Games announced that, during the Mid-autumn festival holiday, the company's online games operating in China will continue to adhere to the playing-time restrictions for underaged players. Minors are allowed to log into games between 8-9 pm every night during the Mid-autumn festival holiday (17, 19-21 September) with the exception of 18 September since it is a working day, the company illustrated.
Market traded higher through the morning hitting 7,487 around 11.20am before easing back. Then worked higher but resistance at 7,480, has trended lower since 1.20pm; saw a small bounce but then trended lower to close +43pts (+0.6) @ 7,460 Employment data out generally +VE
Energy leading shares higher along with BHP and Commonwealth Bank and Macquarie. Myer +VE as it returns to profit and Telstra higher as it’s investor day takes place.
Consumer Inflation Expectations Sept +4.4% vs +3.3% Aug (F/cast was +3.2%)
Part Time Change Aug -78.2k vs +8.1k Jul revised (F/cast was -18k)
Unemployment Rate Aug 4.5% vs 4.6% Jul (F/Cast was 4.9%)
Employment Change Aug -146.3k vs +3.1k Jul (F/Cast was -66k)
Full Time Employment Change Aug -68k vs -5k Jul revised (F/Cast was -48k)
Participation Rate Aug 65.2% vs 66% Jul (F/Cast was 65.6%)
New Home Sales Aug 5.8% MoM vs -20.5% Jul (F/Cast was -9%)
Nikkei opened slightly higher but weak trade data prompted selling and the market trended lower through the morning. After lunch traded lower but seeing support around 30,200 level. Bounced and traded sideways around 30,300 to close -188pts (-0.6%) @ 30,323
Topix traded in a similar fashion, support at 2,080 closed -6pts (-0.3%) @ 2,090
Leaders Oil/Coal, Mining, Foods
Laggards Other Products, Sec & Cmdty, Info & Comm.
Balance of Trade Aug ¥-635.4B vs ¥441B Jul (F/cast was ¥-60B)
Exports Aug +26.2% YoY vs 37% Jul (Consensus was 34%)
Imports Aug +44.7% YoY vs 28.5% Jul (Consensus 40%)
Foreign Stock dropped but Bond Investment rose.
KDCA reported 1,943 new covid cases
Foreigner and Local Institutions net sellers. Tech & Insurance weak but Chem seeing interest along with Internet names. Some closing of positions ahead of long weekend.
Kospi opened higher but sold down through the session but found support at the 3,130 level, and closed there -23pts.
Kosdaq traded in a similar fashion; closed -3pts (-0.3%) @ 1,039
Taiex initially rallied to 17,400 and traded around there until 9:30am but then sold down to flat which gave brief support but then sold down to 17,300 which gave support until 11:30am and then the market dipped lower. Closed -75pts (-0.4%) @ 17,279
T/O was US$8.62b vs US$9.55 Wednesday a new low ahead of the long weekend approaching.
CECC reported 12 new covid cases; 10 imported
Northbound RMB 79,297m Sell 39,576m vs 39,721m Buy
Northbound RMB 81,889m Sell 42,524m vs 39,365m Buy
HK/China Connect Southbound closed today re-opens Thursday
Northbound will close Friday and re-open Thursday
HKEX (00388.HK) -12.300 (-2.438%) Short selling $334.93M; Ratio 32.329% closed at $492.2, down 2.4%
AIA (01299.HK) -1.900 (-2.111%) Short selling $216.58M; Ratio 17.553% closed at $88.1, down 2.1%
BABA (09988.HK) -2.500 (-1.623%) Short selling $191.51M; Ratio 8.559% closed at $151.5, down 1.6%
PING AN (02318.HK) +0.700 (+1.235%) Short selling $229.03M; Ratio 20.072% closed at $57.4, up 1.2%
MEITUAN (03690.HK) -1.400 (-0.598%) Short selling $275.47M; Ratio 14.285% closed at $232.6, down 0.6%
TENCENT (00700.HK) -2.400 (-0.529%) Short selling $253.97M; Ratio 4.371% closed at $451, down 0.5%
CCB (00939.HK) -0.020 (-0.352%) Short selling $164.33M; Ratio 18.713% closed at $5.66, down 0.4%
HSI & HSCEI Constituents on Move:
SUNAC (01918.HK) -1.740 (-11.255%) Short selling $184.66M; Ratio 34.307% closed at $13.72, down 11.3%
CG SERVICES (06098.HK) -5.800 (-10.701%) Short selling $63.16M; Ratio 10.641% closed at $48.4, down 10.7%
SANDS CHINA LTD (01928.HK) -1.340 (-7.957%) Short selling $109.79M; Ratio 6.164% closed at $15.5, down 8%
COUNTRY GARDEN (02007.HK) -0.520 (-7.232%) Short selling $62.44M; Ratio 35.570% closed at $6.67, down 7.2%
EVERGRANDE (03333.HK) -0.180 (-6.406%) Short selling $9.20M; Ratio 5.909% closed at $2.63, down 6.4%
GEELY AUTO (00175.HK) -1.300 (-4.924%) Short selling $127.51M; Ratio 19.740% closed at $25.1, down 4.9%
XINYI SOLAR (00968.HK) -0.840 (-4.746%) Short selling $29.01M; Ratio 13.088% closed at $16.86, down 4.7%
HAIDILAO (06862.HK) -1.200 (-3.883%) Short selling $32.27M; Ratio 33.738% closed at $29.7, down 3.9%
CK ASSET (01113.HK) -1.800 (-3.762%) Short selling $81.26M; Ratio 28.711% closed at $46.05, down 3.8%
LONGFOR (00960.HK) -1.250 (-3.650%) Short selling $36.23M; Ratio 23.381% closed at $33, down 3.6%
BYD COMPANY (01211.HK) -9.400 (-3.638%) Short selling $319.55M; Ratio 29.753% closed at $249, down 3.6%
CSPC PHARMA (01093.HK) -0.340 (-3.571%) Short selling $39.53M; Ratio 22.231% closed at $9.18, down 3.6%
EVERG SERVICES (06666.HK) -0.150 (-3.529%) Short selling $2.43M; Ratio 2.167% closed at $4.1, down 3.5%
CHINA RES LAND (01109.HK) -0.950 (-3.339%) Short selling $36.19M; Ratio 20.248% closed at $27.5, down 3.3%
HSMI & HSSI Constituents on Move:
SHIMAO SERVICES (00873.HK) -2.040 (-12.977%) Short selling $24.65M; Ratio 42.479% closed at $13.68, down 13%
GREENTOWN CHINA (03900.HK) -1.400 (-12.259%) Short selling $28.99M; Ratio 36.753% closed at $10.02, down 12.3%
SUNAC SERVICES (01516.HK) -1.780 (-11.898%) Short selling $46.48M; Ratio 12.095% closed at $13.18, down 11.9%
R&F PROPERTIES (02777.HK) -0.660 (-11.871%) Short selling $43.83M; Ratio 49.638% closed at $4.9, down 11.9%
JINKE SERVICES (09666.HK) -4.250 (-10.143%) Short selling $9.49M; Ratio 21.350% closed at $37.65, down 10.1%
Chinese regulatory institutions are slowing down the pace at which approvals for new games are granted, in order to ensure that all the games are in compliance with the stricter requirements on content and minor protection which were introduced in August, reported Bloomberg News, citing sources.
Regulators are now revisiting the approval applications of the games developed by several game publishers, including TENCENT (00700.HK) and NTES-S (09999.HK) , the sources added.
China's handset industry is under the blow of chip shortage and pandemic. Under which, Chinese smartphone maker Oppo will axe around 20% of its key software and device staff after merging with its arm OnePlus, reported Bloomberg.
COUNTRY GARDEN (02007.HK) invested in Wanda Light Asset Commercial Management, running into approximately US$1.5 billion, Chinese media reported. Slated for Hong Kong listing by the year end, Wanda Light Asset Commercial Management has wrapped up the pre-IPO financing, capturing almost US$6 billion, according to earlier report. This round of financing purportedly introduced COUNTRY GARDEN, CITIC Capital, TENCENT (00700.HK) and Ant Group. The valuation is expected to whop US$28 billion as a result of the financing.
CHINA TELECOM (00728.HK) and NeuSoft (600718.SH) reached an agreement of strategic partnership on industry digitalization and 5G ecology construction, through which the two parties will actively cooperate in multiple major industry fields, with the aim to realize integration and complementarity of products, solutions, channels.
Stock prices of Dotcom giants went south amid market concerns over regulatory landscape changes for China's Internet and data platforms, along with uncertainties looming over the sector.
Particularly, China's Internet sector oversight is affecting the tech behemoth TENCENT (00700.HK) on multiple fronts, including tighter anti-indulgence policy supervision on games. TENCENT is piloting gameplay and spending restrictions for Honor of Kings and Game for Peace, where minors are limited to play games for an hour a day on each non-statutory holiday and two hours per day on each statutory holiday. Equally, gamers below 12 are banned from in-game spending. In this way, TENCENT aims to crack down on impostor accounts and trading of adult accounts by third-party platforms.
On another note, BOCOM International expected China's common prosperity program to account for 20% of leading Internet companies' GAAP profits in the coming 4-5 years.
The golden age of China's property industry has been gone a long time ago, said HANG LUNG PPT (00101.HK) Chairman Ronnie Chan at the Boao Real Estate Forum. Nevertheless, housing is a necessity for the people and this industry is thus bound to keep moving forward.
Didi Global (DIDI.US), the parent company of Didi Chuxing, floated in the U.S. in June, however, later, the company was ordered by Chinese watchdog to make rectification, under which the company suspended new user registration and removed their app from online platform, with data security check underway. Financial Times reported that Didi Global saw its number of daily users has fallen 30% since the parent's listing.
LONGFOR GROUP (00960.HK)'s Longfor Smart Service acquired the entire equity interest in a property management company in China from WHARF HOLDINGS (00004.HK), and has recently concluded a transaction agreement, Chinese media reported.
The acquisition of the property management company involves a contracted management area of almost 9 million sq.m., report said. The company manages mid-to-high-end residential projects in Shanghai, Suzhou, Wuxi, Changzhou, Hangzhou, Wuhan, and so on.
PwC lowered the full-year retail volume growth forecast of Hong Kong to only 10%, representing a volume of $360 billion, lower than the February forecast of a 15% growth to $376 billion. The downward revision on the forecast is mainly triggered by the fact that the originally predicted 4Q border reboot between Hong Kong and China is now deemed unlikely, remarked Michael Cheng, Asia Pacific, Mainland China and Hong Kong Consumer Markets Leader, PwC China. Despite the relatively stabilized epidemic in Hong Kong since April, there has been no concrete timeframe in reopening the border due to the recent resurgence of Delta and Mu variants in areas outside of Hong Kong, analyzed Cheng, who contending that Hong Kong may embrace modest recovery from the pandemic with higher vaccination rate, eased social distancing measures, consumption voucher scheme and quarantine-exemption schemes "Return2hk" and "Come2hk".
Early this week, Chinese importers purchased 4-6 bulk cargoes of Brazilian soybeans with shipments slated for October and November, a rare procurement in the peak export period for the United States, its rival supplier, Reuters citing traders with knowledge of the deals.
JD-SW (09618.HK)’s smart industrial park project in the Miyun District of Beijing was approved by the Beijing Municipal Commission of Development and Reform, reported Chinese media. The project is planned to be put into operation in June 2023.
CIMC VEHICLES (01839.HK) (301039.SZ) formally entered into a strategic cooperation agreement with SDQC in the Laiyang city of Shandong. Accordingly, both sides will jointly achieve market breakthrough against the backdrop of logistics and transportation under the van-type trend.PRE MARKET NEWS
HSBC HOLDINGS (00005.HK) -0.100 (-0.249%) Short selling $127.99M; Ratio 38.622% 's CFO Ewen Stevenson expressed on an online forum that the Chinese government's recent crackdown on the technological sectors may be beneficial to the group, as some of the companies which have planned for U.S. IPO may now switch to Hong Kong, while the group's fintech competitors are also expected to be affected negatively. HSBC is planning to dispose as much as USD2 billion for acquisition and has already acquired the Singaporean business of AXA in August for USD575 million.
Hengda Real Estate Group announced that trading of all existing corporate bonds would be suspended for one trading day from market opening on 16 September. The trading will be resumed from market opening on 17 September. Trading methods of the above bonds will be revised from 16 September 2021.
Apple's largest OEM factory Foxconn's Zhengzhou production park has been hiring a vast amount of workers since August ahead of the release of iPhone 13, with the signing bonus ramped up from RMB6,000 in 1H to RMB12,700 by the end of last month, reported Chinese media.However, certain sources suggested that the incentive bonus for returning to the Foxconn Zhengzhou production park has been lowered to RMB7,000 as of mid-September, as the manufacture capacity could not be boosted due to the lack of production material and insufficient chip supply.
HENDERSON LAND (00012.HK) 's residential project located in Eastern District, Hong Kong Island -- "THE HOLBORN" will launch 128 units in its first selling round on Sunday (19th) and has already received over 800 checks as at 6:30 pm yesterday (15th), representing an oversubscription of nearly 5.3x, suggested market sources. For the units set to be launched, the discounted selling prices range between $5.8083 million and $8.0342 million.
PING AN (02318.HK)'s chairman Ma Mingzhe purchased 64,000 A-shares of the company on Tuesday (14th), at an average price of RMB50.34 per share, involving a total amount of RMB3.2218 million, according to data from HKEX. After the purchase, Ma's stake in A-shares of PING AN stretched from 0.02% to 0.03%.
PING AN's Co-CEO Jessica Tan, likewise, acquired 40,000 H-shares of the company on the same day, at an average price of HKD58.45 per share, involving HKD2.338 million.
The Chuzhou Intermediate People's Court of Anhui has recently made a judgment on the unfair competition lawsuit regarding Ele.me, an O2O lifestyle service platform under BABA-SW (09988.HK), reported 21st Century Business Herald. Accordingly, Ele.me was ordered to pay MEITUAN-W (03690.HK) RMB80,000 for forcibly closing a merchant's store after the latter rejected to "choose one from two". The action tarnished the merchant's commercial interests, the Court added.
Cyber Administration of China (CAC) issued a notice highlighting specifically on the online platforms operators' responsibility on managing the information and content that is circulating on the platforms. The notice requires the online platforms to actively fulfil said obligations through various means, including perfecting community rules for the platform, strengthening account management and developing a complete content review system, etc.. Also, the CAC propounded to establish legal requirements for minors protection and to map out concrete plans for protecting underaged users in the cyber space. The internet corporates shall actively expand their input into developing and enhancing anti-addition system and adolescence mode for minors, in order to ensure that the minors are using the internet in a healthy and scientific manner, the notice added.C
Cyber Administration of China (CAC) issued a notice highlighting specifically the online platforms operators' responsibility on managing the information and content on their respective platforms, in which the CAC required the online platforms to set up detailed regulations on managing users accounts, to strengthen account oversight and to effectively regulate the accounts' behavior.
The notice propounded to harden the punishment for accounts involved in improper or rule-violating behavior. The online platforms are asked to establish a specific data base for the blacklisted accounts, with the aim to prevent them from re-registering under a different name, the notice added.
Based on the Metrology Law and the Measures on the Administration of Metrological Benchmarks, China's State Administration for Market Supervision (SAMR) has recently approved three new national measurement standards and replaced two existing measurement benchmarks with technologically-revised standards. These benchmarks involve four professional metrological fields, namely ionizing radiation, flow, optics and radio.
CHINA COMM CONS (01800.HK) -0.010 (-0.225%) Short selling $4.35M; Ratio 7.343% announced that it has received a notice on 15 September 2021 from its controlling shareholder, China Communications Construction Group (“CCCG”), that it has increased its shareholding of H shares in the company by 3 million H shares via the Shanghai-Hong Kong Stock Connect trading system of the Shanghai Stock Exchange. Subsequent to the increase of shareholding, CCCG holds 58.01% of the total issued shares of the company. CCCG intends to continue to increase its shareholding of H shares in the company within twelve months and the cumulative percentage of shareholding increase will not exceed 2% of the total issued shares of the company.
AIR CHINA (00753.HK) announced the key operating data of August 2021. Number of Passengers carried reached 3.2165 million, down 56% yearly and down 58.6% monthly. Total Cargo and Mail carried reached 88,000 tonnes in August, down 9.6% yearly and down 10.4% monthly.