Sept 3 HK/CHINA Weak as the rest of Asia trends higher.

03 Sep

This and previous notes can be found at  Substack (Asian Market Sense)
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HSI -188pts (-0.7%) 26,052 HSCEI -50pts (-0.5%) 9,292 T/O HK$171.07bn (flat DoD but thats with the HSI rebalance )

Markets saw a weak open; FTSE and CAC trading flat but DAX in the red. Euro zone business activity remained robust in August despite the impact  of the Delta variant of Covid-19 and broad supply chain problems,  according to Friday’s PMI readings.
Basic resources +0.7% while travel and leisure stocks -0.4%.

US Futures
Dow futures rose 47 points. S&P 500 futures and Nasdaq 100 futures both traded marginally higher ahead of Non Farm Payrolls, Unemployment Rate, Ave Weekly Hours, Ave Hourly Earnings, Participation Rate, Government Payrolls, Manufacturing Payrolls, Services & Composite PMI’s, ISM Non Manufacturing Data (PMI, Business Activity, Prices, New Orders, Employment), LMI Logistics Managers Index, Baker Hughes Rig Count and a long weekend in the US. 

CHINA CSI 300 closed -26pts (-0.5%) @ 4,843
Market opened around flat but initially sold down to 4,840 before working better to 4,887 but then sold back down into lunch. PM trended lower to 4,830 before ticking up into close
Brokers rallied on the concept of a new board.
General sentiment mixed; more weak data although some expectation from some that it could mean more support from Beijing. I’m not so sure but its being talked about.
Leaders Financials, especially brokers, along with Leisure, Agriculture and F&B. A number of SME stocks rallied also on the news of a new exchange.
Laggards Non-Ferros Metal, Military and Mining.Shanghai Composite -15pts (-0.4%) @ 3,582 T/O US$105.048bn +5% DoD
Shenzhen Composite -98pts (-0.7%) @ 14,180 T/O US$127.317bn -10% DoD
ChiNext Composite Index -21pts (-0.6%) @ 3,427

China's National Health Commission reported 28 confirmed COVID-19 cases yesterday (2nd), 
with all of them being imported cases.

Pre market opened @  26,023 -68pts vs -33 pts ADR’s with pre market weakness in Ecommerce, Ping An, Macau names. Leaders were Petrochems and Chinese Financials. Market then sold down to 25,812 news of Evergrande’s domestic bonds being suspended and ahead of the China Caixin data. It then rebounded to the opening levels only then to trend lower into lunch with concerns over the debt default. PM the market has drifted lower to 25,811 then trended higher into the close with resistance at 25,900 ahead of the HSI rebalance on the close.
Leaders Petrochems, Gas and IPP’s
Meituan -3.5% as Beijing announces a focus on short-term rental apps which must be removed from its platform. Suggests that the government is going to put more focus on Property which is the largest factor is social division.

Pre market PMI Aug 53.3 vs 51.3 July (F/cast was 51)
Marking the seventh successive month in which the private sector of Hong Kong economy has seen improvement, while logging the highest growth rate since February 2014.
HK reported 4 new covid cases; all imported.
World Health Organization (WHO) previously expressed that it is monitoring the development of a new COVID-19 mutant strain named "Mu", which was first discovered in Columbia in January this year. There have already been three "Mu" mutant variant imported cases recorded in Hong Kong.  WHO suggested earlier that the "Mu" mutant variant possesses a cluster of mutations which make it less susceptible to the immune system and may potentially be resistant to the COVID-19 vaccines.
The Census and Statistics Department (C&SD) announced that, in the second quarter of 2021, total port cargo throughput decreased by 18.4% compared with the second quarter of 2020 to 55 million tonnes.  Within this total, inward port cargo decreased by 28.1% compared with the second quarter of 2020 to 34.3 million tonnes, while outward port cargo increased by 4.8% compared with the second quarter of 2020 to 20.7 million tonnes.

After Market News

While China Securities Regulatory Commission (CSRC) is opening public consultation on the basic arrangement of the setup of Beijing Stock Exchange
, Yang Zhe, Deputy Director of Public Company Department of CSRC, revealed that the Exchange will not set any day limits for ups and downs for the IPO debut, before constraining the limits at +/-30% from the second day.

KWG GROUP (01813.HK)  -0.140 (-1.687%)    Short selling $6.18M; Ratio 6.263%   announced that, for August 2021, the pre-sales value of the group and its joint ventures and associates amounted to RMB7.19 billion, representing a year-on-year decrease of 25.2%. The pre-sales area amounted to approximately 383,000 square meters, representing a year-on-year decrease of 41.7%.

PING AN (02318.HK)  -0.300 (-0.495%)    Short selling $178.66M; Ratio 6.235%   announced the repurchase of more than 532,000 A-shares 
of the Company on Shanghai Stock Exchange today (3rd), at a price ranging between RMB50.72-50.95, involving around RMB27.056 million.

C-MER EYE (03309.HK)  +0.590 (+7.564%)    Short selling $14.52M; Ratio 15.018%   announced the acquisition of a 55% stake in Shenzhen CKJ.  Lam Shun Chiu Dennis, Chairman and Chief Executive Officer of C-MER EYE, anticipated stronger brand effect upon the takeover. Going ahead, both sides will align with each other in terms of development, while tapping regions other than entry ports.

CENTRAL CHINA (00832.HK)  -0.013 (-0.746%)    Short selling $891.06K; Ratio 21.314%   announced that the group's contracted sales for August amounted to RMB5.255 billion, down slightly by 0.1% YoY, while the contracted sales gross floor area rose 8% to 731,100 square meters.

HKEX (00388.HK)  -10.800 (-2.167%)    Short selling $543.91M; Ratio 15.224%   issued a letter to brokers, notifying them of a new monthly fee discount plan scheduled to be launched in October,
which will provide a half-price discount to every participant for their first Stock Exchange trading right, the first central gateway session monthly fee and the first Stock Exchange monthly fee for additional throttle, for a period of two years, with the total amount of discount exceling over $64,500, reported local media.

Maria Helena de Senna Fernandes, Director of Macao Government Tourism Office, expressed that the COVID-19 outbreak in early August this year has dampened the inbound visitor number over the summer holiday, as the tourist figure for the month amounted to mere 410,000, down 47%, compared to 790,000 recorded in July, reported Radio Macau.  The tourism director remarked that, with the outbreak in Macau beginning to stabilize and the pandemic restrictions starting to be eased, the government hopes to rebuild the desire and confidence for Mainland China's travelers to visit Macau before the October 1 Golden Week.

SHIMAO GROUP (00813.HK)  +0.100 (+0.605%)    Short selling $50.53M; Ratio 17.045%   announced that in August, the Group’s contracted sales amounted to approximately RMB24.04 billion, down 18.67% yearly. Contracted sold area amounted to 1.36 million sq.m..

CK ASSET (01113.HK)  -0.450 (-0.897%)    Short selling $180.93M; Ratio 30.606%   announced that Li Ka Shing Foundation has acquired a total of 1.62 million shares in CK Asset at the average price of HK$50.8502, HK$50.9175, HK$51.1485 and HK$50.4471 per share on 30 August, 31 August, 1 September and 2 September 2021 respectively.  As a result, the deemed interests of Li Ka-shing, Victor T K Li and Li Ka Shing Foundation Limited in CK Asset increased from 45.9% to 45.95%; increased from 45.97% to 46.02%; and increased from 11.19% to 11.23%, respectively.

YUZHOU GROUP (01628.HK)  -0.040 (-2.581%)    Short selling $591.57K; Ratio 12.021%   announced that the group's contracted sales for August amounted to RMB9.011 billion, down 21.81% YoY, while the corresponding gross floor area sold amounted to 431,200 sq.m., down 38.43%. The average selling price was RMB20,898 per sq.m., up 27% YoY.

TIMES CHINA (01233.HK)  -0.020 (-0.258%)    Short selling $1.87M; Ratio 15.197%   announced that in August,
the Group’s contracted sales amounted to approximately RMB6.75 billion, up 24.33% YoY, with contracted gross floor area of approximately 319,000 square meters.

HONGLIANG HLDG (02772.HK)  +0.040 (+0.853%)    Short selling $386.10K; Ratio 4.006%   announced that the group's contracted sales for August amounted to approximately RMB12 billion, down 29% YoY, with the contracted sales gross floor area amounted to about 959,000 square meters.

All three major Centaline Property indices slightly recovered the lost grounds over this week and continued to fluctuate at a close range to respective record peaks, suggested the research department of Centaline Property.
Bound within the range of 189-191 for the fifth consecutive week, Centa-City Leading Index (CCL) last stood at 189.75, up 0.13% WoW.
CCL (small-to-medium flats) oscillated within the narrow range of 190-191, up 0.56% over the past five weeks.
CCL (large units) was likewise seesawing between 186-191, up 0.32% over the past five weeks.

SHORT SELLING Friday 15% vs 14.7% Thursday
Top shorts 
Shenzhou (2313) 43%,  CK Assets (1113) 31%, BYD (1211) 27%, WH Group (288) 26%, MTRC (66)  26%, Bank of China (3988) 25%.    

Regional Markets
Market opened higher as Miners and Biotech forms rallied, Energy was +VE and offset the weakness in Tech. It worked better to 2pm when the market touched 7,539 but then trended lower and closed +37pts (+0.5%) 7,523.
Data out
Group Construction Index Aug 38.4 vs 48.7 Jul (F/cast was 44)
Services PMI Aug 42.9 vs 44.2 Jul (F/cast was 43.3)
Composite PMI Aug 43.3 vs 45.2 Jul (F/cast was 43.5)
Retail Sales Jul -2.7% MoM vs -1.8% Jun (F/cast was -2.7%)
Markets gapped higher over lunch after PMSuga supprised investors by announcing that he would stand down from the LDP; allowing a change of leaderships and PM.  All sectors closed higher even retail that opened lower after poor SSS; Outperformers Iron/Steel, Consumer Finance and Brokers
Nikkei opened higher and was trading sideways as PMI data was firm for the first two hours but then worked higher on news that PM Suga would address the press at 1pm Tokyo time. After gapping higher it continues to work higher; currently +585pts (+2.1%) @ 29,128
Topix traded in the same way currently +32pts (+1.6%) @ 2,016
Data out after the open
Services PMI Aug 42.9 vs 47.4 Jul (F/cast was 43.5)
Composite PMI Aug 45.5 vs 48.8 Jul (F/cast was 45.9)
S Korea
KDCA announced 1,709 new covid cases (-252 DoD)
Foreigners net buyers focused on Tech, Pharma and Services. Autos +VE on news Hyundai to going fullt EV earlier and rumours about the Apple car.
Kospi opened higher initial dipped to 3,182 but then rallied to 3,203 before easing back to test support at 3,190 and then traded sideways/higher to close +25pts (+0.8%) @ 3,201
Kosdaq similar; initially dropped to 1,048 and rallied to 1,055 eased back but the worked higher but saw resistance at 1,054 level. Closed +7pts (+0.6%) 1,054
Data out
Foreign Exchange Reserves Aug $463.93 vs 458.68b Jul
Taiex opened higher and worked better to 17,541 around 11am, before easing back and trading sideways to close +197pts (+1.1%) @ 17,517
T/O was US$13.05bn vs US$12.54bn Thursday
CECC reported 6 new covid cases (4 imported).

Northbound RMB 78,029m Sell 36,918m vs 41,111m Buy
Southbound HK$   17,595m Sell  9,372m vs    8,223m Buy
Northbound RMB 85,777m Sell 41,451m vs 44,326m Buy
Southbound HK$   19,175m Sell   9,120m vs 10,056m Buy

Active Heavyweights:
BABA (09988.HK)  -6.100 (-3.567%)    Short selling $923.06M; Ratio 33.164%    closed at $164.9, down 3.6%
MEITUAN (03690.HK) -8.800 (-3.470%) Short selling $662.94M; Ratio 13.037% closed at $244.8, down 3.5%
HKEX (00388.HK) -10.800 (-2.167%) Short selling $260.84M; Ratio 15.212% closed at $487.6, down 2.2%
TENCENT (00700.HK) -8.000 (-1.613%) Short selling $396.55M; Ratio 7.137% closed at $488, down 1.6%
PING AN (02318.HK) -0.300 (-0.495%) Short selling $94.06M; Ratio 7.427% closed at $60.35, down 0.5%
CCB (00939.HK) +0.010 (+0.177%) Short selling $54.95M; Ratio 20.494% closed at $5.67, up 0.2%
AIA (01299.HK) +0.050 (+0.054%) Short selling $195.62M; Ratio 21.295% closed at $92.7, up 0.1%

HSI & HSCEI Constituents on Move:
EVERGRANDE (03333.HK)  -0.170 (-4.177%)    Short selling $46.37M; Ratio 14.182%    closed at $3.9, down 4.2%
EVERG SERVICES (06666.HK) -0.220 (-3.780%) Short selling $5.09M; Ratio 3.583% closed at $5.6, down 3.8%
WH GROUP (00288.HK) -0.230 (-3.628%) Short selling $13.37M; Ratio 23.400% closed at $6.11, down 3.6%
CONCH CEMENT (00914.HK) +1.450 (+3.233%) Short selling $85.10M; Ratio 21.192% closed at $46.3, up 3.2%
SINOPEC CORP (00386.HK) +0.120 (+3.158%) Short selling $87.87M; Ratio 20.437% closed at $3.92, up 3.2%
CITIC (00267.HK) +0.250 (+2.554%) Short selling $17.78M; Ratio 12.715% closed at $10.04, up 2.6%, hitting new high

HSMI & HSSI Constituents on Move:
SHANGHAI PECHEM (00338.HK)  +0.280 (+16.471%)    Short selling $10.97M; Ratio 5.404%    closed at $1.98, up 16.5%
E-HOUSE ENT (02048.HK) -0.240 (-10.860%) Short selling $1.99M; Ratio 14.336% closed at $1.97, down 10.9%
HUANENG POWER (00902.HK) +0.400 (+9.709%) Short selling $18.99M; Ratio 4.724% closed at $4.52, up 9.7%, hitting new high
CHINA POWER (02380.HK) +0.180 (+5.590%) Short selling $40.72M; Ratio 9.333% closed at $3.4, up 5.6%, hitting new high
WESTCHINACEMENT (02233.HK) +0.070 (+5.385%) Short selling $78.32K; Ratio 0.095% closed at $1.37, up 5.4%, hitting new high
LEGENDHOLDING (03396.HK) +0.740 (+4.947%) Short selling $2.94M; Ratio 1.811% closed at $15.7, up 4.9%, hitting new high

JD-SW (09618.HK)  -2.800 (-0.889%)    Short selling $147.82M; Ratio 39.223%   is planning to acquire a controlling stake in CNLP (01589.HK)  0.000 (0.000%)   for $4.35 per share, representing a premium of 7.4%, compared to the latter's closing price at $4.05 before the trading halt,
reported Bloomberg News, citing sources.  The transaction will be announced today (3rd) at the earliest, the sources added. Both sides have not responded to the news yet.

BABA-SW (09988.HK)  -6.100 (-3.567%)    Short selling $923.06M; Ratio 33.164%   announced that it will pump RMB100 billion into the implementation of ten initiatives with an attempt to propel common prosperity proposed by the Chinese government. Alibaba Group will officially set up a Common Prosperity Working Team as a regular institution, responsible for the grounding of the related work by 2025. The Team will be headed by Group Chairman and CEO Daniel Zhang. Alibaba will facilitate ten initiatives in promoting China's common prosperity, including amplifying technology input, supporting the maturity of micro-and-small companies, and assisting agricultural industrialization construction.

JD-SW (09618.HK)  -2.800 (-0.889%)    Short selling $147.82M; Ratio 39.223%   announced to forbid the sale of 87 games, including Animal Crossing: New Horizons, The Last of Us Part II, and Super Mario Maker 2. Titles yet to be approved and put on record are not allowed to be sold on, the retailer added in the notice. Subsequently, the heavy-handed governance of these products would be a norm for JD.The 14th Five-Year Plan on Guangzhou's financial development has been reviewed and passed. In short, Guangzhou's overall financial buildout position would comprise the construction of "three hubs, one benchmark and one high ground" during the 14th Five-Year Plan period, revealed Qiu Yitong, Party Member and Director General of Guangzhou Municipal Financial Regulatory Bureau.
"Three hubs" means the establishment of a risk management center, a world-oriented wealth management center, and an influential global financial resources allocation center.
"One benchmark" means the building of a digital financial "benchmark city".
"One high ground" means a highland for green finance and innovative development.

EVERGRANDE (03333.HK)  -0.170 (-4.177%)    Short selling $46.37M; Ratio 14.182%   announced on its official website that all five vehicle models under its Hengchi EV brand -- The Hengchi 1, Hengchi 3, Hengchi 5, Hengchi 6 and Hengchi 7, have completed the summer testing on 3 September, signifying that the group's automobile production project has entered a new phase.
SMIC (00981.HK)  +0.100 (+0.418%)    Short selling $58.74M; Ratio 2.915%   announced that, on 2 September 2021, the company and China (Shanghai) Pilot Free Trade Zone Lin-Gang Special Area Administration (Lin-Gang FTZ Administration) had entered into the cooperation framework agreement. Pursuant to the agreement, the company and Lin-Gang FTZ Administration intend to jointly establish a joint venture company based in the Lin-Gang Special Area. The joint venture company will plan to set up a production line with a production capacity of 100,000 12-inch wafer per month, focusing on the production of integrated circuit foundry and technology services on process nodes for 28 nanometer and above.

HSBC HOLDINGS (00005.HK)  +0.100 (+0.242%)    Short selling $91.21M; Ratio 7.481%   's CEO Noel Quinn expressed during an interview with Bloomberg News that the wealth management market in China harbors immense opportunities and that the group has recruited 600 wealth managers in China as part of the plan to acquire 3,000 wealth management talents over the coming three to four years.

FOSUN PHARMA (02196.HK)  +0.600 (+1.212%)    Short selling $6.27M; Ratio 3.257%   announced that the first batch of COVID-19 Comirnaty vaccine (BNT162) produced by BioNTech (BNTX.US)  -3.970 (-1.194%)    and designated for the Taiwan region has arrived in Taiwan Taoyuan International Airport from Europe. The batch includes 932,000 doses of vaccine and will be utilized for the voluntary vaccination of adolescents older than 12 years old and adults, with the aim to prevent diseases triggered by COVID-19 infection.

China's employment market contracted a little in August along with huge inflationary pressure, citing Wang Zhe, senior economist at Caixin Insight. The official July macro data came in lower than market expectation, in addition to enormous economic downside pressure.


HKEX (00388.HK)  -10.800 (-2.167%)    Short selling $543.91M; Ratio 15.224%   CEO Nicolas Aguzin told Bloomberg that the data security check in China is applicable worldwide, thus viewing Hong Kong is not exceptionally favored in this regard
. Wire had previously reported that the Chinese authority's toughened scrutiny on overseas-listed companies with enormous data may prompt them to change course for Hong Kong debut.  Given persistent regulatory reform in China, the number of listing enquiries in Hong Kong have increased recently, the CEO added, some of which have planned to shift their locations to Hong Kong from the U.S.. Nevertheless, in mid-to-long term, companies will select Hong Kong or the U.S. for listing as these markets are more beneficial for market expansion.

EVERGRANDE (03333.HK)  -0.170 (-4.177%)    Short selling $64.06M; Ratio 11.008%   was informed by at least two large-scale non-banking creditors to repay part of the liabilities immediately, Bloomberg citing sources.  The two creditors are trust companies anxious about EVERGRANDE's financial condition, therefore demanding for repayment.
CHINA RE (01508.HK)  0.000 (0.000%)    Short selling $394.27K; Ratio 1.611%   announced that China Re Finance, a subsidiary of the Company, would dispose a 10% ownership of the Logicor Group to Chengdong, Pearl Bidco S.a r.l. and Aurora Investment (together, the Acquirors), comprising its shares in Eurologi II S.a r.l. (HoldCo) and preferred equity certificates issued by a subsidiary of HoldCo.  The cash consideration was EUR718 million (equivalent to approximately HKD6.61 billion).  The Asset Portfolio comprises approximately 600 logistics assets in Europe with a total area of approximately 14 million square meters.

China's complaint against the tariff measures taken by the U.S. to limit the import of solar panel cells has been overruled by the World Trade Organization (WTO) which deemed that the U.S. did not violate any global trade regulations by imposing said measures.

KUAISHOU-W (01024.HK)  +1.800 (+2.037%)    Short selling $654.07M; Ratio 16.678%   announced the launch of a special campaign starting 28 August to severely punish and rectify We-media accounts with non-compliant financial information, racketeering and aggressive social feedback, according to Kaishou Blackboard's WeChat account.  This time, a total of 363 non-compliant videos have been handled.

China's Central Propaganda Department has recently issued a notice on the integrated cultural and entertainment rectification with stringent regulation of contents and variety shows, aiming to create a sound review mechanism.  Authorities have adopted a raft of measures to deepen film and TV sector's integrated reform, propel its healthy development and step up online content oversight. Accordingly, the watchdog will keep beefing up rectification of sky-high remuneration for stars, "yin-yang contracts", tax evasion, vulgar content hype and management of tainted stars.

The National Equities Exchange And Quotations Co., Ltd. (NEEQ) expressed that it will endeavor to safeguard the market position of SMEs dedicated to service innovation and to strengthen the bonding effect of the proposed Beijing Stock Exchange in multi-layer capital markets.  NEEQ further pledged to ensure the smooth opening and stable operation of the Beijing Stock Exchange while facilitating cooperation and linkage between the exchange and the new OTC market.

CHINASOFT INT'L (00354.HK)  +0.760 (+5.564%)    Short selling $124.09M; Ratio 28.722%   announced that Chen Yuhong, the controlling shareholder and chairman of the Company, acquired a total of 600,000 shares of the company at the average price of HK$13.61 each on the open market on 2 September, with a total amount of approximately HK$8.165 million.

CKH HOLDINGS (00001.HK)  +0.150 (+0.264%)    Short selling $48.71M; Ratio 13.188%   's statement disclosed that it has repurchased 320,000 shares of the company on the Stock Exchange on 2 September, at a price ranging between $56.8-57.05 per share, involving a total amount of approximately $18.22 million.

OOIL (00316.HK)  +2.100 (+1.262%)    Short selling $6.47M; Ratio 5.446%   announced that the Company ordered Dalian and Nantong, both subsidiaries of COSCO SHIP HOLD (01919.HK)  +0.420 (+3.070%)    Short selling $105.50M; Ratio 13.962% , to build ten units of 16,000 TEU container vessels for an aggregate consideration of US$1.576 billion (equivalent to approximately HK$12.291 billion), likely funded from internal resources and bank financing.  The Vessels are expected to be delivered between the fourth quarter of 2024 and the fourth quarter of 2025.

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