Sept 29 HK rebound continues CHINA continues to slip. Asia mixed ahead of quarter end


29 Sep

This and previous notes can be found at  Substack ( Asian Market Sense )
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HSI +163pts (+0.7%) 24,664 HSCEI +40pts (+0.5%) 8,760 T/O HK$123.52bn (-16.2% DoD no Southbound  connect)  

Europe
Markets opened higher and initially trading sideways.  Investors  watching for comments from the ECB Forum on Central Banking.
Retail +VE but Oil & Gas names weak.
Earnings from Next, Travis Perkins
Data 
Eurozone 
Economic Sentiment Sept 117.8 vs 117.5 Aug (F/cast was 115.9)
Industrial Sentiment Sept 14.1 vs 13.7 Aug (F/cast was 12.9)
Services Sentiment Sept 15.1 vs 16.8 Aug (F/cast was 15.9)
Consumer Confidence Sept -4 vs -5.3 Aug (F/cast was -4)
Consumer Inflation Expectations Sept 33.1 vs 31.1 Aug (F/cast was 32)
German 
Import Prices Aug +16.5% YoY vs +15% Jul (F/cast was +16.2)
Import Prices Aug +1.4% MoM vs +2.2% Jul (F/cast was +1.1%)
UK 
Consumer Credit Aug £0.4B vs £-0.042B Jul (F/cast was £-0.2B )
Mortgage Approvals Aug 74.5k vs 75.2k Jul (F/cast was 75k)
Mortgage Lending Aug £5.3B vs £-1.4B Jul (F/cast was £3.5B)
Net Lending to Individuals Aug £5.6B vs £-1.4B Jul (F/cast was £2.8B )
US Futures
Currently Dow +167pts, S&P and NDX both +VE
Ahead MBA Mortgage Applications, 30 yr Mortgage Rate, Pending Home Sales, EIA Oil change report. Powell’s speech


CHINA
Closed -50pts (-1%) @ 4,833
CSI 300 opened lower at 4,846 and traded sideways for most of the morning although it dipped to test 4,800 just before lunch. PM opened higher at 4,840 climbed to 4,870 before easing back to close -34pts (-0.7%) @ 4,850
Gree to cancel 220m shares worth approx Rmb 10b
Leaders Financials and Consumer
Laggards Materials and Energy

Shanghai Composite -66pts (-1.8%) @ 3,536 T/O US$72,733m +3% DoD
Shenzhen Composite -235pts (-1.6%) @ 14,079 T/O US$86,304m +3% DoD
ChiNext Composite -78pts (-2.3%) @ 3,353

CHINA DATA
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).
Thursday pre market Manufacturing and Non Manufacturing PMI

HONG KONG 
Pre market opened @ 24,277 -224pts vs -180pts ADR’s but market worked better through the morning to 24,400 at lunch. PM opened 24,400 and tested the support before working higher. Saw some resistance at 24,600 but then pushed higher to 24,695 level. It dipped around 3pm to 24,500 before rebounding into the close.
No South bound connect flow; resumes on 8 Oct.
Laggards Gaming after new regulations released aftermarket Tuesday.
Leaders Property on talk that CR Land, Vanke and Jinmao being pushed to buy Evergrande assets
IPO
On debut, DRCB (09889.HK) closed at $8.25, up 4.2%
against the listing price of $7.92, on volume of 29.2 million shares and turnover
of $214 million. Excluding the handling fees, a book gain of $330 was reported per board lot of 1,000 shares.

BUYBACKS
SIHUAN PHARM (00460.HK) announced that the Company repurchased a total of 5 million Shares on market at an average price of HK$1.5145 per Share on the last trading day. The aggregate purchase price paid was approximately HK$7.57 million.

XIAOMI-W (01810.HK)'s statement disclosed that, on 28 September, it has repurchased 3.8702 million shares of the company on the Stock Exchange, at a price between $21.65-22 per share, involving a total amount of approximately $84.61 million.

TENCENT (00700.HK)'s statement disclosed that, on 28 September, it has repurchased 220,000 shares of the company on the Stock Exchange, at a price between $465-476 per share, involving approximately $104 million.

CKH HOLDINGS (00001.HK)'s statement disclosed that, on 28 September, it has repurchased 450,000 shares 
of the company on the Stock Exchange, at a price between $50.6-50.8 per share, involving a total amount of approximately $22.84 million.

HONG KONG DATA
HK reported 5 new covid case; all imported 
Now 43 days without a local case.

SHORT SELLING HSI Wednesday 21.9% vs 20.8% Tuesday
Top shorts 
Country Garden (2007) 53%, Bud Apac (1876) 49%, China Res Land (1109) 39%, BDY (1211) 36%, CM Bank (3968) 35%, Meituan (3690) 34%, HK & China Gas (3) 33%, Baba (9988) 33%,Wuxi Bio (2269) 33%, Mengniu Dairy (2319) 33%, HKEX (388) 31%, HSBC (5) 31%, CSPC Pharma (1093) 30%, Bank of China (3988) 27%, Shenzhou (2313) 26%, Power Assets (6) 26%,  Sino BioPharm (1177) 26%, CK Asset (1113) 25%, Anta Sports (2020) 25%, AIA (1299) 25%,


AFTER MARKET NEWS
Michael Wong: Govt To Sell 2 Residential Sites in Tai Po, Repulse Bay 
in 3FQ, Offering 210 Flats

JD-SW (09618.HK) announced the opening of its first JD MALL in Xi'an on 30 September.
The five-storey mall has an operating floor area of 42,000 sq.m., offering more than 200,000 commodities from some 150 electric appliance and 3C brands at home and abroad, including Apple, Huawei, Intel, Midea, Haier, Gree, Aux Group and Philips.

Regional Markets

Australia
Market opened dipped on the open and spent most of the day trading between 7,150/200 and currently -100pts (-1.4%) @ 7,175
Weakness in Banks, Tech and CSL. Utilities seeing interest and gold miners +VE with St Barbara the strongest.
Japan
Nikkei opened lower as a large number of firms went Ex div and sentiment weak as US markets sold down. Additional caution ahead of the LDP leadership vote.
Market drifted lower through the morning but saw support around 29,400 level. PM traded 29,400/600 to close -640pts (-2.1%) @ 29,544
Topix traded in a similar pattern. 2,020/40 to close -44pts (-2.1%) @ 2,038
Leaders Shippers rebounded and Airlines +VE
Laggards Tech, Precision, Banks, Insurers and Machinery.
Run off vote saw Fumio Kishida win the leadership. No change on monetary policy but could see more fiscal spending by the year end.
Tomorrow pre market Retail Sales, Industrial Production and Nikkei rebalance.
S Korea 
Foreign & Local Institutions selling large cap Tech. All sector in the red. Samsung weak on poor Q1 guidence.
Kospi opened lower traded initially around 3,060 level before dipping down to traded around 3,040 from 10am until around 1pm and then saw small rally to close -38pts (-1.2%) @ 3,060
Kosdaq opened lower @ 994 but initally rallied to 1,005 but then sold down to 989 and traded around that level until just after 1pm when itworked higher to close -11pts (-1.1%) @ 1,002
Pre market tomorrow Business Confidence, Industrial & Manufacturing Production, Retail Sales and Construction Output.
Taiwan 
Concerns over China power cuts hurting production
Taiex opened lower and traded around 16,900 level for most of the day before trending lower in the last hour to close just off the day low -326pts (-1.9%) @ 16,856
T/O Wednesday US$11.55bn vs US$9.2bn Tuesday
CECC reported 11 new covid cases
(10 imported)

HK/CHINA Connect Flows
Shanghai
Northbound RMB 61,645m Sell 31,344m vs 30,300m Buy

Shenzhen
Northbound RMB 64,338m Sell 31,780m vs 32,558m Buy

Movers
Active Heavyweights
AIA (01299.HK)  +2.600 (+3.009%)    Short selling $301.27M; Ratio 21.864%   closed at $89.05, up 3.1%
CCB (00939.HK) +0.160 (+2.957%) Short selling $109.25M; Ratio 18.345% closed at $5.57, up 3%
BABA (09988.HK) -2.500 (-1.657%) Short selling $431.88M; Ratio 26.523% closed at $148.3, down 1.7%
TENCENT (00700.HK) -4.800 (-1.022%) Short selling $403.21M; Ratio 8.158% closed at $465, down 1%
PING AN (02318.HK) -0.600 (-1.089%) Short selling $72.81M; Ratio 10.865% closed at $54.55, down 1%
MEITUAN (03690.HK) -1.800 (-0.715%) Short selling $417.92M; Ratio 29.522% closed at $250, down 0.7%
HKEX (00388.HK) +0.800 (+0.169%) Short selling $232.59M; Ratio 39.418% closed at $474.8, up 0.2%

HSI & HSCEI Constituents on Move:
EVERGRANDE (03333.HK)  +0.400 (+14.981%)    Short selling $15.90M; Ratio 5.219%    closed at $3.07, up 15%
EVERG SERVICES (06666.HK) +0.410 (+8.932%) Short selling $13.04M; Ratio 8.085% closed at $5, up 8.9%
PETROCHINA (00857.HK) -0.260 (-6.616%) Short selling $143.51M; Ratio 35.181% closed at $3.67, down 6.6%
SHENZHOU INTL (02313.HK) +7.300 (+4.716%) Short selling $52.55M; Ratio 18.793% closed at $161.9, up 4.6%
NEW WORLD DEV (00017.HK) +1.300 (+4.228%) Short selling $7.46M; Ratio 12.441% closed at $32.05, up 4.2%
PSBC (01658.HK) +0.220 (+4.255%) Short selling $32.84M; Ratio 33.110% closed at $5.38, up 4.1%
SHK PPT (00016.HK) +3.450 (+3.632%) Short selling $40.83M; Ratio 20.151% closed at $98.4, up 3.6%
CM BANK (03968.HK) +2.150 (+3.574%) Short selling $250.06M; Ratio 37.403% closed at $62.3, up 3.6%
HENDERSON LAND (00012.HK) +0.850 (+2.911%) Short selling $6.48M; Ratio 11.509% closed at $30.2, up 3.4%
WHARF REIC (01997.HK) +1.250 (+3.311%) Short selling $9.26M; Ratio 26.711% closed at $39, up 3.3%
CG SERVICES (06098.HK) +2.000 (+3.559%) Short selling $43.40M; Ratio 14.555% closed at $58.05, up 3.3%
HANSOH PHARMA (03692.HK) +0.620 (+3.277%) Short selling $4.59M; Ratio 13.976% closed at $19.54, up 3.3%

HSMI & HSSI Constituents on Move:
HENGTEN NET (00136.HK) +0.250 (+12.690%) Short selling $4.26M; Ratio 11.269% closed at $2.22, up 12.7%
YANZHOU COAL (01171.HK) -1.760 (-10.945%) Short selling $41.21M; Ratio 17.477% closed at $14.34, down 10.8%
KINTOR PHARMA-B (09939.HK) -5.250 (-9.021%) Short selling $9.85M; Ratio 14.356% closed at $51.95, down 10.7%


Market News
Chinese regulators are stepping up control over the forex market in the nation, pressing banks to reduce transactions and to deal within less bid-ask spread, Reuters reported.
  Sources said such scrutiny forms part of the blanket initiatives taken by China in clamping down speculations.

Macau's chief executive, Ho Iat-seng, expressed that, should there be no new confirmed cases in the coming two days, Macau could potentially resume the previous cross-border travel arrangement with Zhuhai, 
which would benefit Macau citizens and foreign domestic workers who reside in Zhuhai, reported Radio Macau.
Ho, however, remarked that the resumption of the travel arrangement would be of minimal help to Macau's economy during the 1 October Golden Week holiday. The latest wave of COVID-19 outbreak happened in the last week of September has severely impeded the outlook for the Golden Week period and the Macau economy, with not only the GGR being affected, but also the SMEs, the chief executive added.

XIAOMI-W (01810.HK)'s revenue in Hong Kong region has stretched about 30% QoQ in 2Q and leaped 114% compared to the corresponding period in previous year, said the operation director for Hong Kong and Macau region at the company, Kenelm Cheng.
Cheng expressed that XIAOMI-W's effort in expanding the sales channels over the period has also benefited the business growth. Apart from its official website and Mi Home, the company has set up Mi stores in Kwun Tong, Tseung Kwan O, Wong Tai Sin and Tuen Mun within this year, and is currently planning to open another new store in Taipo by next month.

WeChat Pay HK announced that the size of active merchants burgeoned 200% in August 
from that in the first half of 2021. Citizens and merchants should be able to dig deeper into WeChat Pay HK's product and service offerings following the consumption voucher programme, added the payment solution.

Pursuant to HNA Group's draft reorganization plan, each creditor can obtain a one-off cash settlement of ordinary debts of only RMB30,000, Bloomberg reported. 
For ordinary debts of more than RMB30,000, except for aid loans, settlement will be made on ordinary trust share rate based on a uniform proportion. However, the relevant plan is subject to the approval of the creditors and the court.  The draft revealed that as of 13 September 2021, creditors declared nearly RMB1.5 trillion of claims to the administrator, about half of which were confirmed or expected to be confirmed.

BABA-SW (09988.HK)  announced that the number of merchants and brands on Tmall Hong Kong has doubled to over 4,000 under a constant rise since its trial operation from May. 
With furniture category ramp-up, the platform has introduced Pricerite and launched over 2,000 of its furniture and household items alongside after-sales service.

NEW WORLD DEV (00017.HK)  announced that it will found a non-profit social enterprise "New World Build for Good", with 
Adrian Cheng, the CEO and executive vice chairman of NEW WORLD DEV, as its chairman. The new enterprise will focus on devising a solution to aid Hong Kong citizens to purchase properties. The social enterprise will set up an advisory committee which will be formed with experts from different sectors, with the aim to study the persisting housing shortage issue in Hong Kong.

E-commerce platform Boutir announced to partner with BABA-SW (09988.HK)'s Cainiao and other brands to provide product and free-shipping discounts, so as to aid the product promotions of its merchants.  
In addition, Boutir will also cooperate with the U.S. short clip live streaming platform Firework to introduce products offered by its merchants through live streaming.China is considering to ramp up the industrial power tariff to deal with issues of power shortage and soaring coal prices in multiple areas across the country, reported Bloomberg News, citing sources.  Should the increase of the industrial power tariff fail to tame the problem of power shortage, the Chinese government would also consider hiking the residential power tariff for ordinary citizens, the report added. Relevant plans, however, are still pending for approval from senior officials and may see further changes.

Apple (AAPL.US)'s new smartphone model iPhone 13 has reported delay in delivery as the component assembly of the new camera of iPhone 13 is mostly being carried out in Vietnam where the COVID-19 outbreak has been raging, reported Nikkei.

The component shortage issue is expected to ease by mid-October at the earliest as a major manufacture factory for iPhone camera modules in southern Vietnam has recently resumed operation, the report added.

Fitch Ratings downgraded the Long-Term Foreign-Currency Issuer Default Ratings (IDRs) of EVERGRANDE (03333.HK) and its arms Hengda Real Estate Group and and Tianji Holding from "CC" to the lowest "C" level, reflecting the non-payment of bond interest payment. 
The downgrade indicated that Evergrande will likely miss senior unsecured note interest payment and enter a 30-day grace period before its non-payment becomes an event of default.

JD-SW (09618.HK), Dada Nexus and Dell formed a strategic alliance through which the three parties will cooperate to propel the digitalization of traditional brick-and-mortar stores and to jointly build a new omni-channel 3C digital growth model.  Through the partnership, the three parties will work on multiple aspects including product management, digital marketing and refined user operation, etc., with the aim to forge a closed ecological loop for instant spending on digital 3C category.

France's TotalEnergies has signed a deal with China Three Gorges Corporation to build a JV in China for EV high-power charging infrastructure and service development.  The French giant will buy back US$1.5 billion of shares this quarter and ramp up its renewable energy investment with the help of oil price surge.

Japan's Government Pension Investment Fund (GPIF) expressed that, even though the RMB-denominated China sovereign bonds will be included in the major bond index later this year, it will not invest in said bonds due to settlement and liquidity concerns.
Masataka Miyazono, the president of GPIF, illustrated three major risks in investing in Chinese bonds, namely the limited liquidity for Chinese bond market, the fact that Chinese sovereign bonds cannot be settled in an international settlement system and that foreign investors are barred from the futures trading

Trading in the shares of CHINESE EST H (00127.HK) has been halted in the middle of trading session this morning.  
pending the release of an announcement containing inside information of the Company and pursuant to the Hong Kong Code on Takeovers and Mergers issued by the SFC.  The stock once skyrocketed 43% to $3.12. Before trading halt, the share shot up 33% to last at $2.9, on turnover of $8.446 million.

The 31st session of the 13th NPC Standing Committee (NPCSC) will be convened in Beijing from October 19 to 23, 
to review the draft amendments to the Anti-Monopoly Law and other bills submitted by the State Council, reported Xinhua News Agency.

Pre Market News
HKSAR Chief Executive Carrie Lam intends to revise the Land (Compulsory Sale for Redevelopment) Ordinance in her last Policy Address before her current term ends, HK01 citing sources.

The Government is looking to lower the forced auction threshold for old buildings aged 50 or above by trimming the ownership requirement from 80% to 75%, or even 70%, according to sources.

EVERGRANDE (03333.HK) announced that Evergrande (Nanchang), a wholly-owned subsidiary of the Company, would sell 1.753 billion non-publicly traded domestic shares in SHENGJINGBANK (02066.HK), representing 19.93% of the existing issued share capital of Shengjing Bank. The consideration is RMB5.7 per share, totalling RMB9.993 billion.  The Purchaser is Shenyang Shengjing Finance Investment Group, a subsidiary of the State-owned Assets Supervision and Administration Commission of the Shenyang Municipal People’s Government.  The Company’s liquidity issue has adversely affected Shengjing Bank in a material way. The introduction of the Purchaser, being a state-owned enterprise, will help stabilise the operations of Shengjing Bank and at the same time, help increase and maintain the value of the 14.75% interest in Shengjing Bank retained by the Company.

The Chinese government is deterring domestic airlines from purchasing tens of billions of U.S. dollars of Boeing Company (BA.US) airplanes, 
failing to abide by commitments under the China-US phase one trade deal, said U.S. Commerce Secretary Gina Raimondo.

The smartphone company founded by Li Shufu, the chairman of Zhejiang Geely Holding Group, is planning to launch its smartphone product in 2023 a
nd is targeting an annual sales
volume  of 3 million units for the first year, which will translate into a sales revenue of RMB10 billion, reported Reuters, citing documents obtained.

Trading in the shares of COLOUR LIFE (01778.HK) and FANTASIA (01777.HK)  
0.000 (0.000%)   has been halted with effect from this morning for pending the release of an announcement in relation to a proposed very substantial disposal.

Macau's Information Bureau announced that the chief executive Ho Iat-seng has conducted a video meeting with several officials from the Zhuhai city, discussing issues including the arrangement of travel resumption between the two cities, latest anti-epidemic measures, etc.. 
The two parties reached an understanding that the existing pandemic prevention measures for the Zhuhai-Macau control points would be maintained until 24:00 on 30 September. Officials from Macau and Zhuhai will maintain constant communication and will make appropriate adjustment to the travel resumption arrangement, according to the development of the pandemic situation in Macau.

HUTCHMED (00013.HK) announced that new and updated clinical data from several ongoing combination studies of surufatinib (SULANDA) or fruquintinib (ELUNATE) with PD-1 inhibitors were presented
at the 24th Chinese Society of Clinical Oncology (CSCO) Annual Meeting which has been taking place on September 25-29.  HUTCHMED currently retains all rights to SULANDA worldwide and all rights to ELUNATE outside of China.

HUTCHMED (00013.HK) announced that it has completed the sale of its entire indirect interest in Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited (HBYS) to GL Mountrose Investment Two Limited, a company controlled and managed by GL Capital Group. The aggregate amount which will be received by HUTCHMED is US$169 million in cash. Of the proceeds, approximately US$127 million related to its shareholding in HBYS has been received.

Macau's Novel Coronavirus Response and Coordination Center announced last night that Macau's second mass nucleic acid test (NAT) has been completed 
and that the government has provided testing for a total of 689,800 citizens, with all of them being tested negative.

Francis Chung, Chairman of Hong Kong’s specialist independent MPF research group, MPF Ratings, warned that MPF members should brace themselves for significant losses as a plethora of negative news from Mainland China continues to impact MPF returns.  
MPF Ratings is forecasting that the MPF system will deliver a total loss of approximately $55 billion in the September quarter, the equivalent of an average investment loss of about $12,000 per member and the largest quarterly loss since the start of the COVID pandemic; a loss which will see average MPF balances shrink to about $259,000 for Hong Kong’s 4.5 million MPF account holders.

Certain holders of the USD260 million offshore note issued by a connected party of EVERGRANDE (03333.HK) with a coupon rate of 8.5%, which will mature on 3 October, have formed a provisional committee to press their claims in the case of default, 
as they believe EVERGRANDE and its unit Tianji Holding should bear guarantor responsibility of the relevant bond, reported Bloomberg News.  The issuer of said bond -- Jumbo Fortune Enterprises Limited, is a joint venture company whose owners include EVERGRANDE, the report added.

Chinese President Xi Jinping attended the Central Talent Work Conference, reported CCTV. During his important speech, President Xi emphasized to expedite the construction of global pivotal talent centers and innovation highlands. 
China must take a firm grip on strategic initiatives and do well in top-level design as well as strategic planning, he added.

Chinese Officials from regulatory departments have signaled to strengthen the oversight on the payment sector at the 10th China Payment and Clearing Forum recently held in Beijing, reported Economic Information Daily. 
The data security and management of the payment sector will become the focal points of future regulation as the regulatory departments are prepared to roll out a series of risk-prevention measures to rectify the chaotic market order and to punish capital chains involved in gambling and fraud, the report added.

As the Chinese government is unlikely to resolve the EVERGRANDE (03333.HK) debt crisis through direct intervention, Beijing is urging the SOEs or other Chinese developers such as CHINA VANKE (02202.HK) 
to acquire some of EVERGRANDE's assets, so as to avoid or alleviate the social disruption which the potential collapse of EVERGRANDE may cause, reported Reuters, citing sources.

State Grid Corporation of China convened an emergency videoconference call on power supply, at which it targeted to ensure the safety of power grid and basic supply to people's livelihood. Also, it pledged to closely track the conditions of electricity, coal, gas supply and incoming water, and devote upmost efforts in load forecasting.  To actively facilitate the Chinese government's improvement in orderly power consumption, the Corporation will stringently control the consumption by industries which log intense energy consumption and pollution.

HP LIVING TECH (01682.HK) announced that during the period from 27 September to 28 September, the Company has disposed on the open market a total of 700,000 CNOOC (00883.HK) Shares 
at an aggregate consideration of approximately HK$6 million at an average price of HK$8.57 per Share.  The Group is expected to recognize a gain of approximately HK$320,000.

CG SERVICES (06098.HK) announced to acquire 100% of the equity interests in Link Joy Holdings, which is the core asset of COLOUR LIFE (01778.HK), at a consideration of no more than RMBB3.3 bn, which will be paid by the internal resources of CG Property Services HK and/or through equity financing and/or loans, etc.. Upon completion of the acquisition, CG SERVICES will hold 100% of the equity interests in the core asset of COLOUR LIFE and the acquisition will supplement the group’s business.

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