Jan 12 HK/CHINA Markets rally despite the news and after Market China loans data out; Mixed

12 Jan

HSI +369pts (+1.32%) 28,277  HSCEI +158pts (+1.4%) 11,218  T/O HK$254.14bn (-21.7% DoD )

Markets opened slight higher but the FTSe trended lower whilst the DAC and CAC traded sideways around flat. Covid concerns remain and investors watch the US for more news on stimulus and Trump’s impeachment. Travel & Leisure +VE but Utilities weak. Again no data due for Europe.Zur Rose Group surged after Bank of America initiated the stock at a “buy” recommendation.
Temenos weak after Credit Suisse downgraded the Swiss banking software firm’s stock to “underperform.”
US Futures 
Opened in Asia Dow +30pts, S&P -0.1% and NDX +0.2% and now Dow +64pts S&P and NDX +0.2%
Data due Redbook, JOLT’s Job Openings, IBD/TIPP Economic Optimism. After mkt API Crude Oil Stock Change
Earnings due: KB Homes, Albertsons

CHINA CSI 300 Closed +155pts (+2.9%) @ 5,596
CSI 300 opened lower but worked higher through the day hitting 5,500 going into lunch. PM saw the climb continued and closed at the day high +155pts (+2.9%) @ 5,596. Volumes were high and all sectors saw gains which prompts me to think Team China back driving the market as the Government looks to counter any concerns about US/China relations.
Shanghai Comp +77pts (+2.2%) @ 3,608
Shenzhen Comp +345pts (+2.3%) @ 15,460
ChiNext Index +88pts (+2.8%) @ 3,180

CHINA DATA After Market 
New Yuan Loans Dec CNY 1260b vs 1430b Nov (F/cast was 1120b)
Outstanding Loan Growth Dec +12.8% YoY vs 12.8% Nov (F/cast was 12.7%)
Total Social Financing Dec CNY 1720b vs 2130b Nov (F/cast was 2210b)
M2 Money Supply Dec +10.1% YoY vs 10.7% Nov (F/cast was 10.6%)
New loans beat forecasts but the Total Social Financing missed which suggests that the tightening measures taken by the PBoC during last year are still having a impact.

HSI Pre Market opened at 27,894 -13pts vs -72pts ADR’s.
With E Commerce names weak along with CNOOC, but NWS (659) spiked on proposed asset disposal.Saw some initial selling but then worked higher with morning resistance at 28,100 after which it eased back to 28,040 level at lunch. PM opened lower but worked higher, broke through 28,100 and 28,200 to close at the day high.
Chinese Financials +VE as China markets rally but ECommerce names still seeing weakness. Telcos and SMIC +VE on bargain hunting as various ETF’s and structured products unwind.
The Census and Statistics Department (C&SD)  Monthly Survey on Business Situation of Small and Medium-sized Enterprises (SMEs) for December 2020. 
The current diffusion index (DI) on business receipts Dec 35.6 vs 43 in November 2020 But the one-month's ahead (Jan 2021) outlook DI on business receipts was 39.7.
A government spokesman said that business sentiment among SMEs worsened further in December 2020 amid the fourth wave of the local epidemic, with the sub-indices for all sectors falling by varying degrees. In particular, the sub-index for restaurants dipped to the lowest level since July 2020 amid the further tightening of social distancing measures.
Centre for Health Protection said there were 60 new COVID-19 cases in Hong Kong today (vs 41 Monday) 13 local cases from unknown sources.

SHORT SELLING Tuesday 12.1 vs 11.1% Monday 
Top Shorts: MTRC (66) 54%, Ping An (2318) 46%, Wharf REIC (1997) 38%, Hengan (1044) 36%,  Galaxy Ent (27) 33%,  Bud APAC (1876) 33%, AAC Tech (2018) 32%, Hang Seng Bank (11) 31%,  AIA (1299) 25%.
TRACKER FUND (02800.HK) had earlier said it will not make new investment in sanctioned equities. Joseph Yam, a Non-official Executive Councillor and former HKMA Chief Executive, said if the HSI-tracking TRACKER FUND is unable to deal with certain stocks within the HSI so that the Fund cannot trace the overall price trend of HSI constituents fully, TRACKER FUND is not right for the job.
JD HEALTH (06618.HK) will be admitted to the list of Designated Securities for short selling with effect from next Tuesday (19 January).Tokyo Disneyland and Tokyo DisneySea have respectively curbed their park capacity at 5,000 between 12 January and 7 February, stepping up previous restrictions further, Kyodo citing Chiba Nippo Press.  The opening hours of the parks have been shortened to 7pm as well.
American Economic Liberties Project, an influential anti-monopoly organization based in Washington, urged President-elect Joe Biden's administration to step up antitrust efforts targeting Google and Facebook. The group also called for breaking up these tech giants.
Wilson Bayly Holmes-Ovcon Ltd (WBHO), South Africa's largest construction and engineering firm, said the sale of a 88% stake in Australian construction company Probuild had been rejected by Australia's Foreign Investment Review Board (FIRB) on national security grounds. While WBHO did not reveal the buyer's identity, Australian media reported that China State Construction Engineering initially planned to buy the above shares at AUD300 million.
Chinese Foreign Ministry Spokesperson Zhao Lijian, addressing the NYSE's delisting of three major Chinese telcos, said the US crackdown imposes very limited direct impact on the related companies, but will erode Americans' interest, image and global capital market position ultimately.
Toyota suspends production in China owing to chip shortage, Bloomberg cited Toyota's spokesperson. The Japanese automaker expected the suspension to last for four days, adding its production JV with China will shrink 30% output at most in January, subject to the duration of halt.

Market Comment
*CHINESE BROKERS FIRM who saw a number of broker upgrades as a result of increased trading volumes recently especially in China. CITIC SEC (6030 HK +8%)  HAITONG (6837 HK +6.6%) HTSC (6886 HK +4.7%) CSC (6066 HK +8%).
 *CHINESE BANKS MIXED  despite news that certain commercial banks may be allowed  to sell their non-performing loans (NPLs) to NPL asset managers as soon as this month, Bloomberg cited sources.  Also caution ahead of Dec's lending data. Plus the rising concerns that defaults by Chinese companies are likely to top last year’s record as tighter monetary policy squeezes borrowers.
CCB (939 HK +0.6%) ICBC (1398 HK +2%) BOC (3988 HK +0.4%) ABC (1288 HK +0.3%).
*ENERGY FIRM as icy conditions in the north drove up energy demand. CNOOC (883 HK +2.2%) announced it regrets U.S. adding it to China military list. It is assessing the impact of the situation and will closely monitor relevant development. SINOPEC (386 HK +1.3%) CH GAS (384 HK +1.3%) CR GAS (1193 HK +2.7%).
*TELCOS STRONG continued buying despite being delisted by NYSE with mainland funds seen as the principle buyers following recent selloff. A number of ETF players and other trackers have reduced their holdings in recent days. CH MOBILE (941 +6.8%)  CH TEL (728 HK +10%) CH UNICOM (762 HK +7.3%).
*E-COMMERCE WEAK with sector rotation and regulatory concerns. China regulators intend to seek consumer credit data from large tech firms  including Ant Group, Tencent and JD.Com, Reuters reports. Regulators plan to direct internet platforms to share the data to credit agencies. ALIBABA's (9988 HK -1.5%) Ant and TENCENT (700 HK -0.6%) declined to comment but this has been a big issue in the past, as that data is key to their businesses and it is data that is better than the governments.  JD (9618 HK -0.3%) NTES (9999 HK -3.6%).
*TECH & COMPONENTS MIXED. SIM TECH (2000 HK -1.5%) said Dec core business revenue +16.3% MoM but -53.4% YoY. The unaudited revenue of the group for the year -17.1% YoY. ZTE (763 HK +0.7%) to sell all its 90% stake in the subsidiary Caltta Technologies to a Beijing-based semiconductor investment company for 1.04b yuan. SMIC (981 HK +6.7%) rallied as mainland funds buy into recently battered  U.S.-sanctioned stocks.
*AUTO DEALERSHIPS MIXED  as retail passenger vehicle sales in China gained 6.5% YoY in December to 2.32m units, the PCA said. Full-year sales -6.8%.  Also news that China is looking to build a secondhand car market too.
YONGDA (3669 HK +6%) ZHONGSHENG (881 HK +1%) ZHENGTONG (1728 HK -1.2%) MEIDONG (1268 HK +2.7%).
BYD (1211 -0.9%) after its shares jumped over 6% to a record high of $256.20 yesterday after revealing it had won an order for 1,002 electric buses from Colombia.
GEELY (175 HK -0.2%) also retreated from the news regarding partnership with Baidu to manufacture EV.
*APPLIANCE MAKERS FIRM on optimism of overseas expansions, besides local retail market showed a moderate demand recovery driven by the online market. HISENSE HOME APPLIANCE (921 HK +22.4%) TCL (1070 HK +6.8%) GOME (493 HK +3.2%).
*HK RETAILERS FIRM  after CHOW TAI FOOK's (1929 HK +3.2%) last quarter sales rose 17.5% YoY, thanks to the contribution from the mainland while the same-store sales in HK & Macau -31%. LUK FOOK (590 HK +1.3%) BONJOUR (653 HK +3.7%) LIFESTYLE (1212 HK +1.4%).
Mexico is about to close a deal on Covid-19 vaccines from CANSINO (6185.HK +10%), Mexico's President said.
SUNAC's (1918 HK +2.8%) chairman Sun bought 940,000 shs of the company Tuesday. Exchange data shows that his holdings in the company are now increased to 5.64m shares.

Regional Markets
Re opened lower but quickly rallied to a new high, with resistance as it approached 28,300. It then sold down to flat and traded sideways into lunch. PM saw that continue before rallying in the last 30 minutes but then selling down at the end to close +25pts (+0.1%) @ 28,164
Topix traded in a similar pattern to close +3pts (+0.2%) @ 1,858
Data Pre Market
Current Account Nov Yen 1878.4b vs 2144.75 Oct (F/cast was 1610b)
Bank Lending Dec +6.2% YoY vs 6.3% Nov (F/cast was +6.1%)
Eco Watchers Survey Current Dec 35.5 vs 45.6 Nov (F/cast was 45)
Eco Watchers Survey Outlook Dec 37.1 vs 36.5 Nov (F/cast was37.2)
Kospi opened flat and initially sold down to 3,100 level and then traded sideways 3,100/3,150 until 1pm when to sold down to 3,050 before rallying back to close -29pts (-0.9%) @ 3,126. Retail have been strong buyers but institutions and foreigners are selling ahead of options expiry this week.
Kosdaq traded in a similar pattern to close -3pts (-0.3%) @ 974.
Opened slightly lower but initially rallied to 15,650 before selling down to 15,480 then worked back to 15,650 level only top sell down to 15,42o and then traded sideways to close -57pts (-0.4%) @ 15,500

Northbound Rmb 59,097m Buy 27,555m vs 31,542m Sell
Southbound HK$ 31,216m Buy 13,216m vs 17,460m Sell
Northbound Rmb 74,198m Buy 34,870m vs 39,328m Sell
Southbound HK$ 26,539m Buy 9,746m vs 16,793m Sell

Active Heavyweights
PING AN (02318.HK) +6%
AIA (01299.HK) +4.2%, hitting new high
MEITUAN (03690.HK) -2.5%
BABA (09988.HK) -0.5%
TENCENT (00700.HK) -0.2%
HKEX (00388.HK) unchanged

HSI & HSCEI Constituents on Move:
CHINA LIFE (02628.HK) +6.9%
SMIC (00981.HK) +6.7%
CHINA MOBILE (00941.HK) +6.6%
CHINA UNICOM (00762.HK) + 6%
CPIC (02601.HK) +5.4%, hitting new high
XIAOMI (01810.HK) +4.4%
HANSOH PHARMA (03692.HK) +3.8%, hitting new high
CHINA RES BEER (00291.HK) -3.2%
CHINA FEIHE (06186.HK) +3.2%, hitting new high
PSBC (01658.HK) +3.2%
NTES (09999.HK) -3.2%
CM BANK (03968.HK) +2.8%, hitting new high

HSMI & HSSI Constituents on Move:
CH MODERN D (01117.HK) +17.4%, hitting new high
CHINASOUTHCITY (01668.HK) -17.3%
BEIGENE (06160.HK) +12.9%
JOHNSON ELEC H (00179.HK) +12.4%, hitting new high
CANSINOBIO (06185.HK) +10.1%

CATHAY PAC AIR (00293.HK) announced that Cathay Pacific Cargo has developed a vaccine solution specifically for the fast and effective distribution of COVID-19 vaccines across the globe. Cathay Pacific Director Cargo Tom Owen said with their 20 dedicated freighters and cargo bellies of passenger aircraft supporting their extensive freighter network, they stand ready to assist with what will be the biggest humanitarian response to a situation involving civil aviation.  Cathay Pacific Cargo is also progressively rolling out Ultra Track as a key part of the vaccine solution. This gives shippers and forwarders near real time visibility, and ensures vaccines will remain within their transportation temperature ranges.
Whatsapp has asked users to agree to sharing data like phone numbers with its owner Facebook, triggering privacy and security concerns while boosting installs of Signal and Telegram. Signal saw roughly 7.5 million downloads globally on Apple App Store and Google Play Store from 6 January to 10 January, 43 times higher than that in the previous week, according to Sensor Tower's data.
China's Ministry of Industry and Information Technology (MIIT) released the Catalogue of Energy-saving and New Energy Vehicle Models Enjoying Vehicle and Vessel Tax Reduction and Exemption (23rd batch).  Nine models were selected under the plug-in hybrid PV catalog, including BYD COMPANY (01211.HK)'s Tang and Song PLUS, as well as GEELY AUTO (00175.HK)'s Lynk.
Stephen Roach, a U.S. Yale University senior fellow and ex-chairman of Morgan Stanley Asia, saw a 15%-20% downside to the US dollar for the rest of 2021 in a CNBC interview. This did not only reflect the current account deficit, but also the Euro strength and the zero interest rates held by the Fed.  Roach was not worried over inflation, while expecting the local demand to stay weak.
Huawei has seized permit from the US Commerce Department for nearly all of its supply of electronic components, equipment and technology in respect of 4G, Chinese media cited sources.  Yet people with the knowledge of the matter said 5G-related supplies have not seen relaxation.
As revealed by the survey report of AIA HK, 55% respondents had their income reduced under epidemic and 38% had mobilized their retirement savings to maintain daily expenses.  Besides, retirement saving shortfall set a new peak again at $2.23 million.
Overnight HIBOR last posted at 0.07107%, up for 5 days, logging a 1-month high, according to HKAB. Meanwhile, the 1-Month HIBOR related to  mortgage rate last stood at 0.12929%, marking a 1-month low.
The US, Europe and Japan have developed policies for 5G supply chain security, creating a possible US-EU "tech alliance", the Nikkei Asia citing Jim Lewis, a senior vice president and director of the US Strategic Technologies Program.  US President-to-be Joe Biden will likely tell allies to look beyond China and rely on Western supply chain when it comes to important technological infrastructure, predicted Lewis.
US President Donald Trump has approved an emergency declaration for Washington through January 24, said foreign media.
Addressing the US sanction on Americans' investment in certain Chinese companies, Hang Seng Indexes Company said it is exploring custom-made index solutions so as to help clients follow the related laws and regulations, Bloomberg reported.  The obvious way  would be to have 'US compliant' and 'rest of the world’ indexes.
The U.S. government announced that it would begin 15% additional duties collection on aircraft part imports from France and Germany, and 25% on certain wines, with effect from 12 January, after futile attempts to mends rifts over aircraft subsidies with the European Union.  Brussels disclosed that it will seek swift resolution of the issue with U.S. President-elect Joe Biden after he takes office on January 2020, for which the Biden team made no immediate comments.
Chinese supply chain sources revealed Apple's plan to launch a second-generation AirPods Pro and a third-generation iPhone SE in April, MacRumors citing Mac Otakara.  AirPods Pro will purportedly come with a redesigned charging case.
US Trade Representative Robert Lighthizer, in a WSJ interview, urged President-elect Joe Biden to maintain all duties on China as they have shifted the balance of power in the US side's favor.  The Trump administration has changed the way people think about Beijing, benefiting American workers, added Lighthizer.

Asked about the impact of National Security Law on Hong Kong's business environment, Secretary for Commerce and Economic Development Edward Yau told Reuters that international companies in Hong Kong look law and order one very important thing in their investment, and in fact there is more money flowing to the city than leaving, proving market confidence in the global financial hub.   Yau furthered that the novel coronavirus pandemic sparked uncertainty, yet there is "no silver  bullet" to solve it. He said the city planned to launch vaccines later this year.  Worth noting that money flowing into Hong Kong is less about confidence in the national security law and more about access to Chinese investments
PayPal announced to take over GoPay by boosting its stake in the latter from 70% to 100%, making it the first foreign third-party payment institution in Mainland China.
BlackRock, in a memo to customers, said its iShares ETF has matched the latest action of index companies, and will drop certain Chinese equities in order to live up to the Washington's ban on trading Chinese-military-tied stocks.
NEW WORLD DEV (00017.HK)  and NWS HOLDINGS (00659.HK)  jointly announced that NWS sold a 42% stake in SNL to SUEZ Group at a consideration of HK$4.173 billion. Meanwhile, NWS agreed to sell and SNL agreed to purchase the NWS HKI Sale Share, representing the entire issued share capital of NWS HKI, together with the inter-company balance payable by NWS HKI to NWS, at a consideration of HK$2.36 billion.
Hong Kong Privacy Commissioner for Personal Data (PCPD) advised WhatsApp user to exercise extra caution before accepting the updated terms and privacy settings. According high concerns to the sensitive information sharing involved in the instant messaging app's policy update, the commissioner advised users to check the types and purposes of sharing and called on parents to give as much guidance as possible to their children.
President Xi Jinping said at a seminar that China should focus on self-innovation and self-reliance in the new development landscape, Xinhua News Agency reported. It should beef up the deployment of technology innovation and integrate advantages and resources. Xi advocated the mechanism that "seats should go to the capable" in innovation, and stronger connection between innovation chain and industry chain.
BYD COMPANY (01211.HK) officially launched the DM-i super hybrid technology platform featuring ultra-low fuel consumption last night (11 January), at which three car models based on the platform debuted for pre-sales, namely BYD Qin PLUS DM-i, Song PLUS DM-i and Tang DM-i. For BYD Qin PLUS DM-i, the pre-sale price was set at RMB107,800-147,800.
PBOC in its report on accelerated development of domestic carbon financial market, wrote that it requires robust industry fundamentals and spot markets, as well as a well-construed market policy regime, to take forward the development. Meanwhile, the country shall moderately relax entry thresholds, encourage financial institutes and carbon asset managers to take part in market deals and product innovation, explore creation of an orderly self-discipline mechanism for the industry, said the Chinese central government.
CASH FIN SER GP (00510.HK) announced that on 11 January, the Group sold 53,500 TENCENT (00700.HK) shares, 86,000 MEITUAN-W (03690.HK) shares and 43,000 BYD COMPANY (01211.HK) shares through the open market at an aggregate consideration of HK$31.8 million, HK$26.6 million and HK$11.2 million, respectively. The book gain from disposal was estimated at HK$3 million.

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