Feb 1 HK/CHINA WRAP HK Rebounds but on lower T/O and China hits a resistance

01 Feb

HSI +609pts (+2.2%) 28,893  HSCEI +245pts (+2.2%) 11,454  T/O HK$201.21bn (-16.2% DoD)

Markets opened higher following the lead from Asia and and rose through the morning before trading sideways in the PM. Covid and vaccine roll outs still in focus along with talk of the biggest short squeeze in 25 years. All sectors positive with Basic Resources leading.
PMI data showed a decline MoM as covid lockdowns impacted but were better than forecast. German retail sales missed badly -VE for sentiment; it would appear consumers are less convinced about the recovery.
Fresnillo strong as the Reddit-fueled frenzy for highly-shorted stocks spilled into silver, sending futures surging.
Klepierre weak after announcing that 70% of its malls had been affected by coronavirus restrictions across Europe.
Manufacturing PMI Jan 54.8 vs 55.2 Dec (F/cast was 54.7)
Unemployment Rate Dec +8.3% vs 8.3% Nov (F/cast was 8.3%)
Retail Sales Dec -9.6% MoM vs +1.1% Nov revised (F/cast was -1.2%)
Retail Sales Dec +1.5% YoY vs 5% Nov revised (F/cast was +4.7%)
Manufacturing PMI Jan 57.1 vs 58.3 Dec (F/cast was 57)
Manufacturing PMI Jan 51.6 vs 51.1 Dec (F/cast was 51.5)
New Car Registrations Jan -5.8% vs -11.8% Dec (F/cast was -16%)
Manufacturing PMI Jan 54.1 vs 57.5 Dec (F/cast was 52.9)
Consumer Credit Dec GBP -0.965b vs -1.467b Nov (F/cast was -1.2b)
Mortgage Approvals Dec 103k vs 105k Nov (F/cast was 105k)
Net Lending to individuals Dec GBP 3.6b MoM vs 4.3b Nov (F/cast was 3.7b)

US Futures 
Markets opened higher in line with the rebound in the US futures through the Asian time but markets sold down initially. Dow now trading sideways, S&P and NDX rebounding. Gamestop was -34% before trading was halted; cold signal a more cautious approach from retail day traders. But Silver stocks are the new Gamestop as Reddit chat room focused on the potential silver squeeze. Shows the power of chat rooms and traders will be no doubt putting them on the radar screen.Republicans are pushing Biden to scale down his stimulus package.
Manufacturing PMI Jan 59.2 vs 57.1Dec (F/cast was 59.1)
ISM Manufacturing Data
New Orders Jan 61.1 vs 67.5 Dec revised (F/cast was 67)
Prices Jan 82.1 vs 77.6 Dec (F/cast was 73)
Employment Jan 52.6 vs 51.7 Dec revised (F/cast was 51)
PMI Jan 58.7 vs 60.5 Dec revised (F/cast was 60)
Construction Spending Dec +1% MoM vs +1.1% Nov (F/cast was 0.6%)
Senior Loan Officers Survey.
Earnings: Cirrus Logic, Rambus, ON Semiconductor, Vertex Pharmaceuticals, Otis Worldwide, Thermo Fisher, Nintendo, NXP Semiconductor, Warner Music, Cabot

CHINA CSI 300 Closed +66pts (+1.2%) @ 5,417
CSI 300 opened flat and initially dipped before rallying 50pts to 5,390 level. It eased back to 5,380 before rallying to test 5,400 but unable to break above and sold down to 5,365 before working back higher into lunch. PM opened higher and worked higher but resistance around the 5,422 level; despite a number of attempts to break higher.
Shanghai Comp +22pts (+0.6%) @ 3,505 (this was the 3 week low, now maybe resistance)
Shenzhen Comp +202pts (+1.4%) @ 15,024 (day high)
ChiNext Index +31pts (+1%) @ 3,160

Caixin Manufacturing PMI Jan 51.5 vs 53 Dec (F/cast was 52.5)

HSI Pre Market opened at 28,458 +174pts vs -17 ADR’s squeezing recent shorts.E Commerce names seeing interest. Most Financials +VE except CCB. Pharma, Miners and Consumer names all as the market sees a broad rebound.  
It then traded in the range 28,500/28635 for most of the morning before rallying 28,700 before lunch. PM opened higher and worked higher but couldn’t get past 28,983 despite testing around there a number of times. Ticked lower in the closing auction.
Compulsory testing a Laguna City blocks completed but finds zero covid cases as local press reports the HK administration is likely to extend social distancing measure and enact more aggressive measures until after Chinese New Year to prevent a new wave.A number of brokers turned more positive on China Consumer names, especially the Sportswear makers.
Macau January GGR -64% YoY slightly better than forecast.
Centre for Health Protection said there were 34 new COVID-19 cases in Hong Kong today; (vs 53 Sunday) with 8 of unknown origin, plus 20 initially confirmed cases.

SHORT SELLING Monday +17.8% vs 19.2% FridayTop Shorts: Ping An (2318) 50%, Bud Apac (1876) 27%, Country Garden (2007) 44%, Galaxy Ent (27) 44%, Hengan (1044) 44%,  Hang Seng Bank (11) 38%, MTRC (66) 35%,  ICBC (1398) 32%,  Bank of China (3988) 27%, HSBC (5) 26%, CCB (939) 25%.

Midland Confidence Index (MCI) last posted at 58.3, down about 2.8% weekly, snapping the four-week upswing. Buggle Lau, Chief Analyst of Midland Realty, elaborated that the receding MCI indicated there was increasing number of price-dropped properties.  Midland Property Price Index last stood at 162.54, up 0.24% weekly, rebounding after three-week decline.
The Department of Justice applied to revoke its appeal against NEXT DIGITAL (00282.HK)  Founder Jimmy Lai Chee-ying's bail. The Court of Final Appeal, after hearing the remarks made by both defendant and plaintiff today (1 February), adjourned the judgement. Lai remained remanded.
AIA (01299.HK) and Henry Cheng-backed CHINA STRATEGIC (00235.HK) are vying for the life insurance assets of BANK OF E ASIA (00023.HK) in the final round, Bloomberg cited sources. The two suitors have submitted their binding tenders for the related assets and entered the final stage of negotiation.  BANK OF E ASIA is expected to raise US$500-600 million through the deal and see outcome as soon as this month.   Yet, people with the knowledge of the matter said there are other competitors in the scene and the negotiation may eventually be postponed or blown up.
AAC TECH (02018.HK) announced in relation to the proposed spin-off and listing of AAC Optics in the PRC. The sponsor of the Separate Listing of AAC Optics submitted an application to the Jiangsu Province Regulatory Bureau of the CSRC for the commencement of the pre-listing tutoring process, which is subject to the acknowledgement of receipt of such application from the Jiangsu Province Regulatory Bureau of the CSRC.
The US Government plans to set up a new fund in July together with other members in The Five Eyes - Japan, UK, Australia and New Zealand - to unfold cooperation in the development and supply of 5G and semiconductors in face of China's rivalry, such as Huawei.

*PETROCHEMS FIRM on oil price optimism and despite PETROCHINA (857 HK unch)  warning net profit estimated to fall by between 25b yuan and 29b yuan in 2020, (55% - 63% YoY). Mainly due to covid causing the oil prices to fall sharply and the sales volume of refined oil to also drop.  On Friday OPEC and its partners estimate they implemented 99% of their agreed oil-supply curbs in January, according to an unnamed delegate. CNOOC (883 HK +3.7%) CH OILFIELD (2883 HK +5%) SINOPEC (386 HK +0.8%).
*MATERIALS/RESOURCE MINERS FIRM after Silver futures surged 7% plus, as the Reddit-inspired frenzy that roiled equities last week spills over into commodities.
CHINA SILVER (815 HK +63%) CHGOLD (2099 HK +5.9%), ZIJIN (2899 HK +14%) prelim FY net income +51% to 55% YoY to 6.45b yuan to 6.65b yuan.
MAANSHAN IRON (323 HK +2.8%) expects for the year 2020 the net profit is estimated to reach approx 1.979b yuan, representing a YoY increase of approx 851m yuan or approx 75.44%. JIANGXI COPPER (358 HK +5%) CHALCO (2600 HK+3%).
*CHINESE  BANKS FIRM after PBOC denied the rumour that it will raise the costs of the  standing lending facility (SLF) that was circulating on Friday and reported the matter to the police. The announcement came after it added cash to the banking system for the first time in a week as the overnight repo rate surged to the highest since 2015. CMB (3968 HK +1.8%)  BOCOM (3328 HK +1.2%) CITIC BANK (998 HK +2%) BOC (3988 HK +0.8%).
*BROKERS FIRM. Starting today, 12 stocks listed on Shanghai's tech-focused STAR board become available to foreign investors via Stock Connect. CICC (3908 HK +2.7%) sees 2020 net profit to rise 6108% to 78.18% YoY to 6.38b to 7.55b yuan. CGS (6881 HK+1.9%) FY net profit +38.55% YoY to 7.244b yuan.
*E-COMMERCE PLATFORMS STRONG talk of a wave of short-squeezes led by retailers, similar to those recently seen in the U.S; where  GameStop soared to record highs, may spread to Asia. I doubt it as Shorting in Asia is more regulated (China) and in some countries like S Korea band.  More likely traders are expecting good earnings results from ALIBABA, AMAZON and ALPHABET which are due tomorrow Feb 2. MEITUAN (3690 HK +9.9%) TENCENT (700 HK +4.2%) WEIMOB (2013 HK +5.1%)
CH LITERATURE (772 HK +10.3%) led the gainers, while ALIBABA (9988 HK+1.9%) lagged due to ongoing regulatory concerns.
*TECH & COMPONENTS FIRM on short-squeeze worries, and after XIAOMI (1810 HK +2%) filed a complaint in a Washington district court on Friday against the U.S. Defense and Treasury Departments, seeking to remove the Chinese smartphone maker from an official list of companies with ties to China's military. SMIC (981 HK +7.9%) HUA HONG SEMI (1347 HK +7%) BYDE (285 HK +7.1%) QTECH (1478 HK +4%).
*HK PROPERTY FIRM  bargain-hunting amid following recent corrections on covid fears  as sales at new projects went well over the weekend. Sino Land (83 HK +2.4%) sold 33 out of 50 units on offer at Silversands on Saturday. CKA (1113 HK +0.4%) SHKP (16 HK +0.6%).
*PHARMA/BIOTECH STRONG as LUYE PHARMA (02186.HK +52%) announced a placement of 292m new shares to Hillhouse NEV at a  premium of 10% over the closing price. Also positive development in Chinese Covid vaccines.
CANSINO (6185 HK +17%) jumped as the company's new coronavirus vaccine successfully reached the pre-set main safety and effectiveness standards in the interim analysis of the Phase III clinical trial, without any serious adverse events related to the vaccine.
WUXI BIO (2269 HK +6.2%) 3SBIO (1530 HK +5.4%) FOSUN PHARM (2196 HK +6%). BEIGENE (6160 HK +7%) gets approval to list yuan shares on Shanghai Star Board.
*AIRLINES FIRM on recovery hopes. 
CH SOUTHERN (1055 HK +2.3%) prelim FY net loss 7.907bn to 10.861b yuan.
CH EASTERN (670 HK +2.2%) prelim FY net loss 9.8b to 12.5b yuan.
AIR CHINA (753 HK +2%) reported preliminary FY net loss of 13.5b to 15.5b yuan. (-VE cross read to CATHAY PAC (293 HK +1.5%)
BEIJING AIRPORT (694 HK -10%) slumped following its 2020 guidance and disclosing future loss of duty-free income.
MEIDONG AUTO (1268 HK +11%) Haitong raised target price by 20% to HK$36 amid earnings preview optimism and attractive valuation. ZOOMLION HEAVY (1157 HK +7.9%) plans to issue 1b yuan 144 days Ultra-short financing for business expansion.

Regional Markets
Nikkei 225 opened slightly lower but rallied to 200pts in early trading and then traded sideways around the 27,9000 level for the rest of the morning. PM opened higher and worked slowly higher, to close at the day high +428pts (+1.6%) @ 28,091
Topix followed a similar patter rallying 19pts in early trades and then trading sideways around 1,823 into lunch with 1,825 a resistance. PM opened higher resistance was 1,830 but tested and number of times and closed +21pts (+1.2%) @ 1,830
Manufacturing PMI Jan 49.8 vs 50 Dec (F/cast was 49.7)
Press reporting that the Govt will extend the State of Emergency Declaration.

Trade data on the open showed a ninth month of surplus, Exports continued to surge whilst Imports rose at a more gradual pace. PMI data 30 minutes later rose to the highest since Feb 2011 showing a sustained recovery underway. Backlogs increases as did raw material and logistic prices.
Pharms stocks seeing big interest, Tech saw some initial weakness but now investors turning more positive.
Kosdaq opened lower and dipped 5pts in early trades before working better with resistance at 950 late morning but market pushed through that at lunchtime to close at the day high +28pts (+3%) @ 957
Kospi traded in a similar pattern working slowly higher to close at the day high; +80pts (+2.7%) @ 3,057
Balance of Trade Jan $3.96b vs $6.94bn Dec (F/cast was $6.3b)
Exports Jan +11.4% YoY vs +12.6% Dec (Consensus was +9.8%)
Imports Jan +3.1%YoY vs +2.2% Dec (Consensus was +1.9%)
Manufacturing PMI Jan 53.2 vs 52.9 Dec (F/cast was 52.5)

Opened higher but dipped -50pts in early trades to 15,100 before working higher with resistance around 15,250 level in the morning. Market pushed higher continued to work higher from about 11am as investors reacted to the good PMI data this morning and good GDP data after market Friday. Closed just off the day high +272pts (+1.8%) @ 15,410
Manufacturing PMI Jan 60.2 vs 59.4 Dec (F/cast was 59)

Northbound Rmb 49,661m Buy 23,407m vs 26,254m Sell
Southbound HK$ 26,847m Buy 9,501m vs 17,346m Sell
Northbound Rmb 62,240m Buy 30,814m vs 31,426m Sell
Southbound HK$ 35,165m Buy 13,288m vs 21,877m Sell

Active Heavyweights
MEITUAN (03690.HK) +9.9%
TENCENT (00700.HK) +4.5%
AIA (01299.HK) +2.6%
BABA (09988.HK) +1.8%
HKEX (00388.HK) +1.3%
CCB (00939.HK) -0.2%
PING AN (02318.HK) +0.1%

HSI & HSCEI Constituents on Move:
SMIC (00981.HK) +8.1%
SHENZHOU INTL (02313.HK) +6.5%
WUXI BIO (02269.HK) +6.2%
HAIDILAO (06862.HK) +5.7%
TECHTRONIC IND (00669.HK) +5.1%
ANTA SPORTS (02020.HK) +4.5%
ALI HEALTH (00241.HK) +4.1%
CNOOC (00883.HK) +3.3%
ENN ENERGY (02688.HK) +3.2%

HSMI & HSSI Constituents on Move:
LUYE PHARMA (02186.HK) +51.7%, hitting new high
XD INC (02400.HK) +26.8%, hitting new high
IGG (00799.HK) +18.3%, hitting new high
CANSINOBIO (06185.HK) +17.3%, hitting new high
ZIJIN MINING (02899.HK) +14.4%
ASCENTAGE (06855.HK) +13.1%
MMG (01208.HK) +12.3%
MEIDONG AUTO (01268.HK) +11.3%
BEIJING AIRPORT (00694.HK) -10.7%
CHINA LIT (00772.HK) +10.3%
JIUMAOJIU (09922.HK) +6.5%, hitting new high

Securities and Futures Commission (SFC) Chief Executive Officer Ashley Alder said at the LegCo meeting that the authority is discussing with TRACKER FUND (02800.HK)'s manager Street Global in respect of earlier averted investment in certain HSI constituents under US sanction, so as to ensure the fund could still assume its index tracking function in principle. The CEO added that the incident only posed minimal effect on American investors. As to Ant Group's brake on listing last year, the Chairman Lui Tim Leung, Tim said the move was made by commercial decision, but the SFC would pay heed to the IPO subscription refund process. No problem has been identified so far.
SFC Chairman Lui Tim Leung, Tim said at the LegCo meeting that the Commission recorded $153 million surplus for FY2020/21, mainly attributable to the estimate-beating transaction revenue on ADT above the previous forecast of $132 billion.  Lui  said the SFC will suspend recruitment this year.  In addition to the 32 to-be-adjusted positions as announced, it will hire four university interns.
Macau's Gaming Inspection and Coordination Bureau (DICJ) announced that the Gross Revenue from Games of Fortune in January declined 63.7% yearly to MOP8.024 billion.  Citigroup had earlier projected the January's GGR to drop 66% yearly to MOP7.5 billion.
SUNART RETAIL (06808.HK) expects to resume a high single-digit business growth next year through investing in innovative units, said Executive Director Lin Xiaohai. He anticipates the group to get back on track for a rapid double-digit growth in two years.  Lin aims to open roughly 30-50 RT-Supers and around 200-300 mini stores this year by focusing on the second and third-tier cities.
Brawl Stars, developed by the TENCENT (00700.HK)-backed Supercell, recorded over US$1 billion of lifetime gross revenue, according to Sensor Tower's data. It was the second-highest grossing title of Supercell in 2020, amassing revenue of US$526 million.
UM HEALTHCARE (02138.HK) Chairman and CEO Tang Chi Fai, and Executive Director and CFO Lee Heung Wing acquired a total of 900,000 shares in the open market from 26-28 January, involving over $5.35 million.
PrimeCredit, one of the three major consumer creditors in Hong Kong, has been offering to sell its business since last year, Apple Daily cited sources. The potential buyer SUN HUNG KAI CO (00086.HK)  0.000 (0.000%)   entered critical negotiation stage with PrimeCredit shareholder(s), whereby SUN HUNG KAI CO proposed to acquire PrimeCredit at approximately US$500 million (approximately HK$3.9 billion).
BABA-SW (09988.HK)  said Alibaba.com recorded 133.3% annual growth in the total actual foreign transaction amount in Guangdong Province in the latter half of last year, with the order volume increasing 119.2%.
HKMA Deputy Chief Executive Arthur Yuen, at the LegCo meeting, said the total loan of Hong Kong hiked 1.2% last year. In terms of loan quality, the classified loans ratio of retail banks rose to 0.75% in 3Q20 and drifted higher in 4Q20. Yet, Yuen said no special attention is needed now as the related ratio does not show loan concentration in specific industries.
GANFENG LITHIUM (01772.HK)  announced to revise the 2020 results forecast. Net profit forecast was revised from RMB400 million to RMB500 million up to RMB910 million to RMB1.07 billion, i.e. an increase of 154.14% to 198.82% as compared with the corresponding period last year.
During the course of bankruptcy restructuring of Huachen Automotive Group, the self-owned passenger vehicle brand of the Group as well as certain subsidiaries have stagnated, where no vehicles of the related brands could be sold at the end-dealers, some of which have turned to other brands, according to Chinese media.
The MPFA announced awarding PCCW Solutions Limited with the contract for the design, build and operation of the eMPF Platform. The contract period of the eMPF Platform project comprises a two-year implementation period and a seven-year operation/ maintenance period, and may be extended for one to three years.
294 first-hand residential transactions were tracked in the last two days, up 44 cases or 17.6% weekly, according to market sources. For January as a whole, there were 1,480 first-hand deals, up 890 cases or 1.5 times monthly.
LP10, co-developed by MTR CORPORATION (00066.HK) and Nan Fung, launched second round of sales on 30 January, selling 173 flats in total, being almost 80% of the entire log of 218 flats. The project cashed in over $1.8 billion in a single day. The developer therefore unrolled the No.4 price list leveraging the sales resilience, totaling 158 flats.

SMIC (00981.HK)  was notified by OTC Markets Group that the firm's American depositary shares (ADS) would be removed from the OTCQX Market before market open today, according to the executive order imposed by former US President Donald Trump last November.
LUYE PHARMA (02186.HK) announced a placement of 292m new shares to Hillhouse NEV (8.26% of the issued share capital of the Company as enlarged by the Subscription Shares) The Subscription Price is HK$4.28 per Share; a premium of 10% over the closing price as quoted on the Stock Exchange on the last trading day.
SUNART RETAIL (06808.HK) announced the results for the year ended 31 December 2020. Net profit climbed 1.3% yearly to RMB2.872 billion with EPS of RMB0.3. No dividend was declared.
XIAOMI-W (01810.HK)  Vice President Lu Weibing, on his Weibo, said Mi Home achieved full coverage in Henan Province.
HUANENG POWER (00902.HK)  Pursuant to China Accounting Standards,  expected its net profit attributable to the shareholders for 2020 to grow 163%-195% yearly.
FIRST TRACTOR (00038.HK)  The net profit attributable to the shareholders of for the year 2020 is estimated to be RMB222 million to RMB332 million, representing a year-on-year increase of 261% to 440%.
ZIJIN MINING (02899.HK) It is estimated that a realised net profit attributable to owners ranging from RMB6.45 billion to RMB6.65 billion for the year 2020, representing an increase of 50.6% to 55.2% compared with the same period last year.
CHINA EAST AIR (00670.HK) It is expected that the net loss of for 2020 would be RMB9.8 billion to RMB12.5 billion, against net profit of RMB3.195 billion for 2019.
AIR CHINA (00753.HK) expects that the net loss for 2020 would be RMB13.5 billion to RMB15.5 billion, against loss of RMB9.441 billion in the first half of year.  -VE cross read to CATHAY PACIFIC.
GTJA (02611.HK)  announced that in accordance with the China Accounting Standards, net profit grew 28.5% yearly to RMB11.102 billion. EPS equaled RMB1.2.
CC SECURITIES (01375.HK) said the net profit attributable to shareholders for the year of 2020 is estimated to be RMB95.94 million to RMB114 million, representing an increase of 64.8% to 95.7% yearly.  The principal businesses showed steady development and revenue generated from securities brokerage business, margin financing and securities lending business and investment business of certain subsidiaries increased.
JUNSHI BIO (01877.HK) Based on PRC enterprise accounting standards, it expects the loss for the year ended 31 December 2020 to be around RMB1.644 billion, up about 120% from a year ago.
SD GOLD (01787.HK) Pursuant to China Accounting Standards, it is expected that it will record a growth in its profit attributable to the shareholders (between RMB2.0 billion to RMB2.65 billion) of 55% to 105% yearly for the year ended 31 December 2020.  During the 2020 Year, the gross profit generated from the sales of the Company’s self-produced gold increased significantly and achieved a greater year-on-year growth in profit.
CHINA SHENHUA (01088.HK) announced that the profit attributable to the equity holders of the Company for the Year 2020 is estimated to be approximately RMB35.9 billion, representing a year-on-year decrease of approximately 14%.
CGS (06881.HK) announced that in accordance with the China Accounting Standards, net profit grew 38.6% yearly to RMB7.244 billion. EPS equaled 71 fen.
CICC (03908.HK)  estimates that the net profit attributable to shareholders for the year 2020 will range from RMB6.828 billion to RMB7.552 billion, representing a year-on-year increase between 61.1% and 78.2%..

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