Sept 28 HK Rebounds CHINA Drifts WRAP

29 Sep

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HSI +292pts (+1.2%) 24,500 HSCEI +137pts (+1.6%) 8,720 T/O HK$147.47bn (-1% DoD)  

Markets opened lower and selling down with Tech leading the  declines after US bond yields spiked coupled with concerns over Chinese growth.
US Futures
Opened in Asia Dow -4pts, S&P were flat and NDX-0.1% but currently Dow -118pts S&P and NDX lower.
Data ahead Goods Trade Balance,Wholesale Inventories, Redbook, Case/Shiller Home Price, Consumer Confidence, Richmond Fed Manufacturing Index, Powell’s Testimony to Congress, Fed Speakers; Bowman and Bostic. After Market API Crude Oil Stock Change 

Closed +7pts (+0.1%) @ 4,884
Pre market PBOC injected a further 100b Yuan to ensure liquidity; 8th day of injections. Last day for southbound connect (re-opens 9 Oct).
CSI 300 opened lower and dipped as the Industrial Profits number slowed which combined with Power Cuts is raising more slowing concerns. But encouragement from PBOC continuing to inject liquidity and saying it would ensure a stable property market. News of more infrastructure spending +VE Cement. Power names rebounded on news Govt to take steps to ensure supply.
Also China released a paper white paper on journey from poverty to prosperity - the party vows to achieve breakthrough in core technologies by 2035 and to significantly expand middle income groups by 2035
PM saw the market open 4,890 and trade sideways for the first hour before dipping down to flat before ticking higher into the close.
Laggards were Brewery & Liquor, Consumer and Salt Lake
Leaders China Property

Shanghai Composite +19pts (+0.5%) @ 3,602 T/O US$70,887m -23% DoD
Shenzhen Composite -30pts (-0.2%) @ 14,313 T/O US$84,149m -24% DoD
ChiNext Composite -14pts (-0.4%) @ 3,431

Industrials Profits (YTD) Aug 49.5% YoY vs 57.3% Jul (F/cast was 45%)
Industrials Profits Aug 10.1% YoY vs 16.4% Jul
China's National Health Commission reported 31 confirmed COVID-19 cases yesterday (27th), with 18 of them being imported cases and 13 of them being local infections (11 in Heilongjiang, 2 in Fujian).

Pre market opened @ 24,323 +114pts vs +113pts ADR’s with interest in Ecommerce, Energy, Macau and HSBC. Initial weakness in Consumer names and HK Developers but market worked higher hitting resistance at 24,600 in the AM and eased back into lunch. PM worked higher to 24,660 but then trended lower to close +291pts @ 24,500
ECommence names and Property +VE although I remain vary on the Hong Kong developers as Carrie Lam to announce new moves to address housing shortage in HK.
Last day for Southbound Connect flows.

XIAOMI-W (01810.HK)'s statement disclosed that, on 27 September, it has repurchased 6.905 million shares of the company on the Stock Exchange, at a price between $21.3-21.8 per share, involving a total amount of approximately $149 million.

SIHUAN PHARM (00460.HK) announced that, on 27 September, the Company repurchased a total of 2 million Shares on market at an average price of HK$1.8095 per Share. The aggregate purchase price paid was approximately HK$3.62 million.TENCENT (00700.HK)'s statement disclosed that, on 27 September, it has repurchased 220,000 shares of the company on the Stock Exchange, at a price between $455.4-472.8 per share, involving approximately $102 million.

HK reported 13 new covid case; all imported 
Now 42 days without a local case.

SHORT SELLING HSI Tuesday 20.8%  vs 16.7% Monday
Top shorts 
Bud Apac (1876) 60%, Country Garden (2007) 45%,  MTR (66) 44%, Mengniu Dairy (2319) 41%, Hengan (1044) 38%, Meituan (3690) 36%, HSBC (5) 34%, CM Bank (3968) 34%, Wharf REIC (1997) 33%, Power Assets (6) 30%, HKEX (388) 30%,   China Res Land (1109) 29%, CLP  (2) 29%, Petrochina (857) 28%, Hang Seng Bank  (11) 27%, Wuxi Bio (2269) 27%, Hang Lung Ppty (101) 27%, BDY (1211)  26%, Ping An (2318) 25%.

Regional Markets

Market trended lower initially to 7,340 then traded sideways for about a hour and then sold down again to 7,320 level and traded sideways again   Around 1:30pm trended lower again and closed around the day lows; -101pts (-1.4%) @ 7,283  
Energy stocks +VE. Retail sales still suffering from the impact of the lockdowns. Healthcare weak along with Tech and Miners; CSL and BHP the laggards.
Retail Sales Prelim Aug -1.7% MoM vs -2.7% Jul (F/cast was -2%)
Subdued trading ahead of dividend reinvestment flows at today’s and Wednesday’s close (saw T/O increase) plus the LDP leadership vote Wednesday. Value and Energy plays +VE but Growth/Quality laggards.
Leaders Miners, Banks and Apparels
Laggards Shippers, Prec Instruments, Airlines
Sentiment +VE on expectations the Govt will lift restrictions by the end of Sept.
Also note Thursday sees the Nikkei 225 reweight.
Nikkei opened lower around 30,150 but trended down to 30,050 and then 30,000 before rallying back to 30,140 at lunch time -100pts (-0.3%).
PM saw the market trade 30,100/150 for most of the session before testing 30,200 10 mins before the close but failed to hold and closed -56pts (-0.2%) @ 10,184
Topix traded in a similar pattern to close; -6pts (-0.3%) @ 2,082
S Korea
KDCA reported 2,289 new covid cases.
Consumer confidence pre market beat f/casts.
Market weak as Foreigners selling futures. Broker reported their futures desk also is staying better sellers in Korea but are net buyers of HSI/HSCEI contracts for the 2nd successive day, which has been a rarity lately. Looking below at KOSPI Futures Foreign Net Flow vs Hang Seng Index, it is interesting to see that from Sept 7th, Foreigners have net bought KOSPI Futures when at the same time, the Hang Seng Index corrected nearly -14%. As HSI seemingly forming a floor here (for now), that unwind flows likely weighing on Korea today.
Kospi opened flat but trended lower to traded around 3,110 level until around 1pm then dipped and traded around 3,100 to close -37pts (-1.2%) @ 3,097.
Kosdaq trended lower first support at 1,020 but then dipped to 1,016 and later 1,015 and then dipped at the end to close -22pts (-2.1%) @ 1,013
Local Institutions selling Tech (concerns over China power cuts) Internet and buying Financials (rate hike hopes) and Chemical Refinery (margins improving).
Leaders Utiliities (esp Gas)
Laggards Pharm, Apparel
SK Innovation +VE on news tieing up with Ford for a battery plant.
Consumer Confidence Sept 103.8 vs 102.5 Aug (F/cast was 101.5)
Taiex opened lower to 17,113 then traded sideways mainly 17,150/200 and closed -132pts (-0.8%) @ 17,181
Chinese power cuts -VE to manufacturers in varying degrees.
T/O Tuesday US$9.2bn  vs US$10.49bn Monday
CECC reported 7 new covid cases
(all imported)

HK/CHINA Connect Flows
Northbound RMB 58,354m Sell 27,089m vs 31,265m Buy
Southbound HK$  15,981m Sell    6,863m vs   9,118m Buy
Northbound RMB 63,514m Sell 31,452m vs 32,062m Buy
Southbound HK$   20,526m Sell   8,447m vs 12,080m Buy

Active Heavyweights
BABA (09988.HK)  +9.000 (+6.342%)    Short selling $1.54B; Ratio 24.009%    closed at $150.9, up 6.3%
PING AN (02318.HK) +1.157 (+2.145%) Short selling $509.35M; Ratio 24.717% closed at $55.1, up 2.1%
MEITUAN (03690.HK) +3.400 (+1.369%) Short selling $1.81B; Ratio 35.592% closed at $251.8, up 1.4%
TENCENT (00700.HK) +5.200 (+1.119%) Short selling $1.46B; Ratio 14.741% closed at $469.8, up 1.1%
AIA (01299.HK) -0.400 (-0.461%) Short selling $544.46M; Ratio 24.474% closed at $86.4, down 0.5%
HKEX (00388.HK) -1.000 (-0.211%) Short selling $457.34M; Ratio 29.612% closed at $474, down 0.2%
CCB (00939.HK) 0.000 (0.000%) Short selling $193.31M; Ratio 14.596% closed at $5.41, unchanged

HSI & HSCEI Constituents on Move:
SUNAC (01918.HK)  +1.920 (+14.815%)    Short selling $202.14M; Ratio 14.179%    closed at $14.88, up 14.8%
CG SERVICES (06098.HK) +3.750 (+7.150%) Short selling $157.03M; Ratio 14.569% closed at $56.2, up 7.1%
LONGFOR (00960.HK) +2.250 (+7.042%) Short selling $39.34M; Ratio 6.038% closed at $34.2, up 7%
CHINA OVERSEAS (00688.HK) +0.980 (+5.911%) Short selling $130.01M; Ratio 17.715% closed at $17.56, up 5.9%
COUNTRY GARDEN (02007.HK) +0.430 (+5.890%) Short selling $185.34M; Ratio 45.196% closed at $7.73, up 5.9%
CNOOC (00883.HK) +0.490 (+5.778%) Short selling $174.06M; Ratio 5.436% closed at $8.97, up 5.8%
KUAISHOU-W (01024.HK) +4.600 (+5.651%) Short selling $227.61M; Ratio 19.402% closed at $86, up 5.7%
EVERGRANDE (03333.HK) +0.120 (+4.706%) Short selling $34.60M; Ratio 7.406% closed at $2.67, up 4.7%
NTES (09999.HK) +5.600 (+4.382%) Short selling $205.79M; Ratio 16.214% closed at $133.4, up 4.4%
CHINA RES LAND (01109.HK) +1.300 (+4.355%) Short selling $258.30M; Ratio 29.410% closed at $31.15, up 4.4%
SANDS CHINA LTD (01928.HK) +0.540 (+3.634%) Short selling $55.75M; Ratio 11.464% closed at $15.4, up 3.6%
CHINA GAS HOLD (00384.HK) +0.750 (+3.546%) Short selling $40.03M; Ratio 14.281% closed at $21.9, up 3.5%
ENN ENERGY (02688.HK) +4.000 (+3.298%) Short selling $36.02M; Ratio 6.210% closed at $125.3, up 3.3%
WUXI BIO (02269.HK) +3.700 (+3.035%) Short selling $617.20M; Ratio 27.261% closed at $125.6, up 3%

HSMI & HSSI Constituents on Move:
SIHUAN PHARM (00460.HK) -0.320 (-17.978%) Short selling $45.41M; Ratio 7.182% closed at $1.46, down 18%
YANZHOU COAL (01171.HK) +2.160 (+15.517%) Short selling $64.87M; Ratio 9.958% closed at $16.08, up 15.5%
CHINA OVS PPT (02669.HK) +0.790 (+14.158%) Short selling $18.05M; Ratio 13.277% closed at $6.37, up 14.2%
SUNAC SERVICES (01516.HK) +1.740 (+12.682%) Short selling $20.14M; Ratio 6.377% closed at $15.46, up 12.7%
KINTOR PHARMA-B (09939.HK) +6.150 (+11.816%) Short selling $28.09M; Ratio 11.058% closed at $58.2, up 11.8%
CHINA OILFIELD (02883.HK) +0.800 (+11.478%) Short selling $16.00M; Ratio 2.587% closed at $7.77, up 11.5%
S-ENJOY SERVICE (01755.HK) +1.640 (+11.187%) Short selling $6.88M; Ratio 14.392% closed at $16.3, up 11.2%
CGN NEW ENERGY (01811.HK) +0.470 (+6.861%) Short selling $24.14M; Ratio 6.185% closed at $7.32, up 6.9%, hitting new high
CHINA POWER (02380.HK) +0.280 (+6.780%) Short selling $84.63M; Ratio 14.163% closed at $4.41, up 6.8%, hitting new high

Market News
The Government will gazette the extension of most existing social distancing measures for 14 days till October 13. Meanwhile, the maximum number of persons allowed per banquet in catering businesses adopting Type D Mode of Operation will be relaxed to 240.

There is still no light at the end of the tunnel of EVERGRANDE (03333.HK)'s debt crisis. 
Bloomberg cited sources that the Hong Kong Monetary Authority had asked banks to report their exposure to the heavily-indebted developer.  Last week, HKMA queried Hong Kong lenders and gave them 24 hours to report their financial commitments to EVERGRANDE, including loans and derivatives.

MTR CORPORATION (00066.HK)'s invitation for the expression of interest (EOI) will end by 2 pm today. 
At the moment, MTR has received at least 8 EOIs, with the suitors including Chinachem and CHEVALIER INT'L (00025.HK), while EMPEROR INT' (00163.HK) has submitted the EOI online.

The East Asia and Pacific region's revival has been undermined by the Delta variant with economic activities starting to decelerate in the second quarter, according to World Bank's latest report. 
Therefore, China's 2021 economic growth forecast was raised from 8.1% to 8.5%, while that for the rest of the region was trimmed from 4.4% to 2.5%.

The URA closes today (28th) the submission of letters of intent (LOIs) for its project at Hung Fook Street/ Ngan Hon Street in To Kwa Wan. 
According to on-site witness, 21 LOIs have been received, including those from CHI MER LAND (00978.HK), NEW WORLD DEV (00017.HK), CHINA OVERSEAS, KAISA GROUP (01638.HK), COUNTRY GARDEN, EMPEROR INT'L (00163.HK), FE CONSORT INTL (00035.HK), Nan Fung, CIFI HOLD GP (00884.HK) and SEA HOLDINGS (00251.HK)

Hubei Xingji Times Technology Co., founded by Geely Holding Group Chairman Li Shufu, clinched a strategic cooperation agreement with Wuhan Economic and Technological Development Zone, marking an official foray into the handset arena, Chinese media reported. 
The handset project is headquartered in Wuhan Economic and Technological Development Zone, with a position to develop high-end smartphones, integrating global technology and resources to serve the global market.

XIAOMI-W (01810.HK) unveiled its new smartphone series -- Civi yesterday (27th), representing another series targeting the young generation, with the selling prices starting from RMB2,599. The new Civi series will be open for purchase from 30 September.  
XIAOMI-W's founder and CEO, Lei Jun, expressed on Weibo that Xiaomi Civi is a brand new creation and that the company will continue to expand its investment in fashionable smartphone models with a focus on youth.

ZAI LAB-SB (09688.HK) (ZLAB.US) announced that it has reached a strategic alliance agreement with We Doctor, a digital medical health platform, yesterday (27th). 
Through the partnership, the two parties will integrate respective resources to forge a medical health service platform that unifies online and offline services, as well as to explore a new cooperative model in the field of tumor diseases.

BABA-SW (09988.HK)  confirmed market rumor that it had plugged in TENCENT (00700.HK)'s WeChat Pay services onto its several applications, 
including and Youku. BABA-SW added that it will continue to join forces with other platforms in future, so as to "work together in the same direction".

As of the end of August, BlackRock, Inc. (BLK.US), UBS and BlueBay Asset Management under Royal Bank of Canada held EVERGRANDE (03333.HK)-issued bonds, while TCW and HSBC HOLDINGS (00005.HK) closed the related positions, according to the data from Morningstar.

Hong Kong private domestic price index dipped 0.15% MoM in August, to post at 397.1, 
ending the 7-month rising streak, according to data from the Rating and Valuation Department (RVD). The average price of the properties with an area below 99.9 square meters slumped 0.2% MoM, while that of the properties with an area above 100 square meters rose 1.19%.

Chief Executive Carrie Lam will unveil a raft of big land-hunting steps in net week's Policy Address release, in response to the central government's call for tackling home issues, HK01 citing sources. 
For instance, some wetlands in the Lok Ma Chau Loop in the New Territories North may be unlocked and included in the Kwu Tung North New Development Area.
Equally, the authorities intend to lower the threshold for the sale of Tso/Tong lands (i.e. ancestral lands) in the New Territories, thus sharply boosting the potential to develop agricultural lands under public private partnership.
In addition, the Policy Address will propose the implementation of the Lung Kwu Tan reclamation. The government will also weigh up relocating the Kwai Tsing Container Terminals to newly-reclaimed lands in Tuen Mun in order to vacate Kwai Tsing's coastal urban areas for home building in the future.

Since BABA-SW (09988.HK)'s introduction of UnionPay Mobile QuickPass on its Taobao application in August, 
the relevant service has now been extended to all users, reported Chinese media. At the same time, BABA-SW has further adopted WeChat Pay service on applications including, Youku, Damai, Kaola and Shuqi, etc..

Pre Market News
Macau gaming participants said the epidemic flare-up in the city has undermined tourist confidence, citing the booking cancellations by tourists from Guangdong Province,
dashing hope for Golden Week's performance, Macao Daily News reported.
While the VIP segment alone has bolstered the industry for almost two years, the participants do not rule out further tide of business closures by the year end, with unstable plague and policy risk adding fuel to the fire.

EVERGRANDE (03333.HK) is recently reported to be selling part of its projects to SOEs, 
among which Guangzhou Evergrande Football Stadium and the complementary apartments have already been sold to Guangzhou City Construction Investment.
EVERGRANDE, in response, said the construction works of the football stadium is proceeding as planned.

On September 27, the HKSAR government released the "Report on Hong Kong's Business Environment: A Place with Unique Advantages and Unlimited Opportunities". 
The spokesperson of the Office of the Commissioner of the Ministry of Foreign Affairs of China (FMCOPRC) in the HKSAR said that the report illustrates Hong Kong's firm position as a global financial center, rebuts the doomsaying from some Western countries, including the US, about Hong Kong's business conditions, and boosts the confidence of the international business community for investment in Hong Kong.
The spokesperson stated that with the implementation of Hong Kong national security law and the improvement of its electoral system, Hong Kong has transformed from chaos to stability. Tranquility has been restored to Hong Kong, economic development back on track, and its governance improved. All sectors in Hong Kong, not least the finance, now enjoy a sound momentum of growth.

SUNAC (01918.HK) announced that the Company has in the open market repurchased part of the February 2024 Notes in aggregate principal amount of US$33.6 million, 
which are listed on the Singapore Exchange Securities Trading Limited. The Company will cancel the repurchased notes in accordance with the terms of the February 2024 Notes and indentures.

SUNAC (01918.HK) issued a statement in relation to recent reports of SUNAC Shaoxing company seeking for government aid, clarifying that the company has no intention or need for assistance from the government and that the reported incident was purely an operational mistake.  SUNAC remarked that the group's domestic projects are operating normally at the moment with the sales tracking satisfactory performance. The group realized a contracted sales volume   of RMB415.1 billion for the first eight months of 2021, up 33% YoY, further attesting that the group is operating in a healthy manner.

Macau's Novel Coronavirus Response and Coordination Center disclosed that the city's second mass nucleic acid test (NAT) is basically completed. 
Between 3 pm of 25 September to 9 pm yesterday (27th), the Macau government has acquired samples from 650,900 citizens, with 472,700 of them already received the testing results, which were all negative.  Taking into account of those who have voluntarily received the test and were not included in the mass mandatory NAT, the government has provided NAT for 517,200 citizens in total, with all of them tested negative.

EVERGRANDE (03333.HK)'s Evergrande Wealth failed to make a payment on its maturing wealth management products. 
Accordingly, the relevant Shenzhen authorities have amassed public opinions about Evergrande Wealth and initiated a thorough probe into the company, Reuters citing the Shenzhen government's letter to EVERGRANDE's investors.

The Hong Kong Monetary Authority (HKMA) announced to all authorized institutions that with effect from Monday (27 September) 
the list of eligible collateral for the RMB Liquidity Facility will also include the RMB, USD and Euro denominated debt securities issued in offshore markets by the Local People's Governments at various levels of the PRC.Chief Executive Carrie Lam wrote that, along with the stabilisation of the epidemic situation in Hong Kong, the implementation of quarantine-free travel with the Mainland is at present the primary goal. The Hong Kong SAR Government will spare no effort to achieve its goal. The Return2hk Scheme, which allows quarantine exemption for Hong Kong residents returning from the Mainland, has been operating for a period of time. Also, the Come2hk Scheme, through which non-Hong Kong residents coming to the city are not required to undergo quarantine, commenced on September 15, marking a step closer to quarantine-free travel with the Mainland.  On quarantine-free travel to the Mainland by Hong Kong people, Lam has been continuously reflecting this aspiration to the central authorities for some time, expressing the hope of setting up meetings for communication between experts on both sides as soon as possible to create conditions for quarantine-free travel with the Mainland.

ST Hainan Airlines Holding (600221.SH) unveiled its restructuring plan (draft), stating that the company intends to transfer approximately 16.437 billion shares from its capital reserve to its share capital on a 10 to 10 basis, with no less than 4.4 billion shares to be utilized to introduce strategic investors at a designated price.  The raised funding will be used to repay the restructuring expenses and relevant debts of its 11 entities, with the remaining funding serving as replenishment to the working capital to enhance the company's operation ability.

YUEXIU PROPERTY (00123.HK) announced that, its 95.48%-owned subsidiary, Yuexiu Huacheng, has successfully won the bid for two land parcels located in Xinzao Town, Panyu District, Guangzhou City at the respective upset tender price. The parcels contain commercial and residential land with a total site area of 187,081 square meters. The total consideration for the land acquisition amounted to RMB10.296 billion.

CHINA AOYUAN (03883.HK) announced to allot and issue 161 million new shares to its controlling shareholder Joy Pacific, at the subscription price of HK$3.708 per share, representing a discount of 1.9% compared to the closing price on the previous trading day (27th). The subscription shares represent approximately 5.46% of the total number of issued shares as enlarged by the allotment and issue of the new shares.   The gross and net proceeds of the subscription are expected to be approx HK$600 million and HK$599 million respectively. The company intends to utilise the net proceeds principally for the group’s working capital and general corporate purposes.

CHINA AOYUAN (03883.HK) announced to issue 107 million new shares to Lee Ka Kit, the co-chairman of HENDERSON LAND (00012.HK), representing 3.85% of the share capital of the Company as enlarged. The Subscription Price of HK$3.708 each represented a 1.9% discount to the closing price on the last trading day (27 September).   The gross proceeds of the Subscription is expected to be HK$400 million. The net proceeds will amount to HK$399 million.

CHINA EAST AIR (00670.HK)   announced that the Company's application for the Non-public Issuance of A Shares has been approved by the CSRC. So far, the Company has not yet received the written approval from the CSRC.

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