Jan 13 HK/CHINA WRAP Markets lower concerns over China credit growth T/O -20% DoD


13 Jan

HSI -41pts (-0.2%) 28,236  HSCEI -33pts (-0.3%) 11,185  T/O HK$202.13bn (-20.5% DoD )

EUROPE Opened flat and trading sideways slightly higher following the majority of Asia, with sentiment encouraged by the rollout of vaccination programmes world wide; despite new lock down extensions in Germany and Holland. Petrochems and Telcos leading but Banks weak Investors watching for the trading updates from Sainsbury’s, Persimmon and ASOS.
Telefonica strong having announced a $9.4 billion sale of phone masts to American Towers.
Orsted weak after issuing a profit warning.
Data
EUROZONE 
Industrial Production Nov +2.5% MoM vs +2.3% Oct revised (F/cast was +0.3%)
Industrial Production Nov -0.6% YoY vs -3.5% Oct revised (F/cast was -3.2%)
GERMANY
Wholesale Prices Dec +0.6% MoM vs +0.1% Nov (F/cast was +0.3%)
Wholesale Prices Dec -1.2% YoY vs -1.7% Nov (F/cast was -1.4%)
FRANCE  No data due
UK  No data due

US Futures
Opened flat in Asian time; Dow -20pts, S&P and NDX -0.1% rose slightly throughout the day but pulled back as Europe opened Dow +11pts S&P and NDX slightly +VE. Concerns about the political turmoil continue.
Data
MBA Mortgage Applications and 30 year Mortgage Rate, Inflation Rate, Core Inflation Rate, EIA Oil Report, Monthly Budget Statement, Beige Book.
Earnings: IHS Markit, Infosys, Wipro

CHINA CSI 300 Closed -18pts (-0.3%) @ 5,578
CSI 300 opened higher after the mixed loans data and work higher to 5,645 but then sold down to flat and traded sideways into lunch. PM saw the market sell down to 5,535 before a small bounce and then effectively traded sideways into the close.
Indexes
Shanghai Comp -10pts (-0.3%) @ 3,598
Shenzhen Comp -95pts (-0.6%) @ 15,365
ChiNext Index -50pts (-1.6%) @ 3,130
CHINA DATA 
China Association of Automobile Manufacturers announced that in December 2020, the sales volume of passenger vehicles reached 2.375 million units, up 7.2% yearly; the production volume was 2.331 million units, up 6.5%.  China's NEV sales volume totaled 248,000 units in December 2020, up 49.5% yearly. The full-year NEV sales volume reached 1.367 million units, up 10.9% annually. They predicted China's auto sales volume will exceed 26 million units in 2021, up 4% year-on-year.

HSI Pre Market Opened  at 28,309 +33pts vs +90pts ADR’s E-commerce was mixed, Tech weak but CNOOC strong on US oil inventory declines.
Market initially rallied to 28,400 on some initial shooter covering before trending lower through the morning to flat at lunchtime. PM saw a volatile open before selling off down to 28,137 and then bounced back to flat. Then traded sideways into the close.
Petrochems firm as US inventories drop more than expected but Chinese financials and E Commerce names mixed; Ping An hit a new high. Foxconn +18.4% on Car JV news. Chinese machinery names seeing interest with Zoomlion hitting a new high.

HONG KONG DATA
Centre for Health Protection said there were 42 new COVID-19 cases in Hong Kong today (vs 60 Tuesday)  all local cases and 20 initially diagnosed cases.

IPO 
DEYUN HOLDING (01440.HK), on debut, settled the trade at $0.415, up 1.5 cents or 3.8% against the listing price $0.4, on volume of 95.86 million shares and turnover of $41.47 million. Excluding the handling fees, a book gain of $75 was reported per board lot of 5,000 shares.

SHORT SELLING Tuesday 11.1% vs 12.1% Tuesday 
Top Shorts: NWD (17) 33%, Bank of China (3988) 33%, Ping An (2318) 30%, WH Group (288) 28%, Anta (2020) 27%, Bud APAC (1876) 27%, Hang Seng Bank (11) 27%, HK & China Gas (3) 26%, BankComm (3328) 25%,  Wharf REIC (1997) 25%, Hengan (1044) 25%, AIA (1299) 25%.

AFTER MARKET NEWS 
Vaccine launches and economic stimulus unrolled by central banks will be conducive to global economy, opined Mary Huen Wai-yi, chief executive officer for Standard Chartered Bank (Hong Kong), at a conference call.  She expected the world economy to hike 4.5%-5% this year, with China continuing acting as the locomotive. Coupled with low rate environment, Hong Kong's economy was forecast to hail a 4% growth this year.
Invesco Chief Economist John Greenwood projected global economic weakness for the first half of 2021 under the shadow of Covid pandemic. He foresaw a robust economic revival in the second half of year, providing the broad use of vaccine in Spring and Summer.  On another note, the linked exchange rate system is still running effectively and smoothly under the proper management of the HKMA. As the USD stays as the main trading and reserve currency in the world, the linked exchange rate system was believed not in need for change.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 390,000 shares in CK ASSET (01113.HK) at the average price of HK$39.9428, HK$39.85 and HK$39.8423 per share on 7 January, 8 January and 11 January 2021 respectively.  As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK ASSET have respectively increased from 35.9% to 35.91% and from 35.97% to 35.98%.
Ricky Hoi, Deputy Director at Macao Government Tourism Office, foresaw fewer-than-expected visitations to Macao during Lunar New Year, reported Radio Macau.  As Mainland China discourages the flow of people amid reignited pandemic, Macao is now focusing on anti-epidemic works, he added.
CHANJET (01588.HK) announced that the Board had today passed a resolution in respect of the preliminary proposal for the Proposed A Share Offering. The number of shares to be issued under the Proposed A Share Offering will be no more than 38.3261 million A Shares.
PICC P&C (02328.HK) announced that the original insurance premium income of the Company for the year ended 31 December 2020 was RMB432.019 billion, rising at a largely flattish rate of 0.09% yearly.
CHINA LIFE (02628.HK) announced that the accumulated premium income for the period from 1 January 2020 to 31 December 2020 was RMB612.9 billion, up 7.83% yearly.
Inland Revenue Department's Stamp Office announced that 32 residential transactions involved Buyer's Stamp Duty (BSD) in December 2020, down 44 cases or nearly 58% monthly.  Hong Kong Economic Times cited Inland Revenue Department's statistics that for the year of  2020, 16,000 residential and non-residential transactions involved the three spicy duties (Special Stamp Duty (SSD), BSD and Double Stamp Duty (DSD)), down 28.5% yearly. The taxation amounted to $13.036 billion, down 37.7% yearly, being the least in six years.
Geely and Foxconn have entered into strategic cooperation to form a joint venture held as to 50% by each of them.  The new company will offer contract manufacturing and tailor-made consulting services to carmakers.

MARKET COMMENT 
*PETROCHEMS STRONG as traders buy into CNOOC (883 HK +4%) which has seen forced sellers due to being included in the U.S. restriction list. US inventories declined more than expected overnight and demand in China is expected to increase on freezing temperatures and supply constraints. PETROCHINA (857 HK +4.5%) SINOPEC (386 HK +4.5%) CH OILFIELD (2883 HK +12%).
*CHINESE BANKS MIXED after China's mixed loans data; aggregate new lending missed estimates for December, suggesting the recent PBOC moves are having an impact.  The gain in aggregate financing fell to 1.72t yuan in  Dec vs 2.19t consensus. New yuan loans 1.26t yuan was roughly in line. Concerns remain over defaults tooCCB (939 HK +0.3%) ABC (1288 HK +0.7%) ICBC (1398 HK -0.8%) CMB (3968 HK -1.1%).
*CHINESE  DEVELOPERS WEAK on credit concerns as lending data weak. Chinese regulators may approve the country's first few REITs and get them listed as soon as the first quarter under a trial that began in August. CR LAND (1109 HK -1.7%) Dec contracted sales +146.7% YoY to 39.05b yuan. SUNAC (1918 HK -1%) SHIMAO (813 HK -2.5%) VANKE (2202 HK +4.2%).
*E-COMMERCE MIXED still seeing rotation within the sector. US digital money transfer  platform PayPal has become China's first foreign-owned third-party payment platform after acquiring the mainland GoPay, news reported. The question still remains about whether it can make significant inroads against the incumbents, ALIBABA (9988 HK +1.7%) and TENCENT (700 HK +1%) which also saw news that Tencent Music Entertainment,  is poised for a secondary listing in HK to raise about US$2b. It is possible it will be the first company with the corporate weighted voting rights structure to sell shares in HK, news said.JD.COM (9618 HK -1.7%) NTES (9999 HK -3%).
*TECH & COMPONENTS FIRM as LENOVO GROUP (992 HK +10%), on news it will issue Chinese Depository Receipts representing up to 10% of the total number of shares for listing on the STAR board in Shanghai to raise approx US1.5b. Also support on speculation TSMC will report a +40% rise in 2020 net income tomorrow, showing a speediest rate of expansion since 2010; a major driver being smartphones.
TONGDA (698 HK +4.8%) HUA HONG (1347 HK +1.8%).
FIT HON TENG's (6088 HK +11%) as Belkin announces key changes to its leadership. FIH MOBILE (2038 HK+18%) surged on the news Zhejiang Geely and Foxconn will will soon sign formal agreement on establishing a joint venture for automobile OEM.
*CH PHARMA & HEALTHCARE WEAK after reports that Sinovac's Covid-19 vaccines show different protection rate numbers in four different countries that have conducted local trial; leading to questions about the data being released by Chinese Pharma companies.SINO BIOPHARM (1177 HK -3.1%) FOSUN PHARM (2196 HK -4%) WUXI APPTEC (2359 HK- 3.6%).
SINOPHARM (1099 HK -1%) said Peru spent US$26m for the initial batch of its Covid-19 vaccine. HYGEIA HEALTHCARE (6078 HK -1.3%) after a shareholder raises US$103 selling 15m shs at HK$53 apiece, a 5.3% discount to last close, and ~2.4% of Hygeia’s existing issued share capital.

Regional Markets
JAPAN 
Nikkei 225 opened slightly lower but has traded higher through the morning. Machine Orders Data at lunchtime was up MoM but missed forecasts but the market has kept moving higher but hit resistance at 28,500. Currently +293pts (+1%) @ 28,457. At a new 30 year high.
Topix has followed a similar pattern, resistance at 1,870 currently +7pts (+0.4%) @ 1865
Data
Machine Tool Orders Dec +8.7% YoY vs +8.6% Nov (revised from +8%) (F/cast was +12.5%)
S KOREA 
Pre market Unemployment Rate Dec 4.6% vs 4.1% Nov (F/cast was 4.1%). Institutional caution ahead of options expiry this week
Kospi opened flat and spiked to 3,160 before trending lower, saw some support at yesterday’ s close but the traded down to 3,109 before trending higher with resistance around 3,165 level, then sold down to 3,140 before a slight bounce. Closed +22pts (+0.7%) @ 3,148
Kosdaq opened flat and traded sideways 978/972 until 11:30am after which it worked better to 983 before easing lower; currently +5pts (+0.6%) @ 979
TAIWAN 
Opened higher and worked higher to 15,779 around 11:20am before trading sideways to close +269pts (+1.7%) @ 15,770

CONNECT FLOWS 
Shanghai 
Northbound Rmb 67,137m Buy 33,747m vs 33,390m Sell
Southbound HK$ 28,431m Buy 11,151m vs 17,281m Sell
Shenzhen 
Northbound Rmb 83,991m Buy 40,461m vs 43,530m Sell
Southbound HK$ 27,178m Buy 10,701m vs 16,478m Sell

Active Heavyweights
MEITUAN (03690.HK) -1.9%
BABA (09988.HK) +1.7%
PING AN (02318.HK) +1.4%, hitting new high
AIA (01299.HK) -1.3%
TENCENT (00700.HK) +1%
HKEX (00388.HK) +0.7%

HSI & HSCEI Constituents on Move:
CNOOC (00883.HK) + 5.5%
SINOPEC CORP (00386.HK) +5%
PETROCHINA (00857.HK) +4.4%
HANSOH PHARMA (03692.HK) +3.9%, hitting new high
GUANGDONG INV (00270.HK) -3.7%
SINO BIOPHARM (01177.HK) -3.1%
ENN ENERGY (02688.HK) +1.3%, hitting new high
CONCH VENTURE (00586.HK) +0.1%, hitting new high

HSMI & HSSI Constituents on Move:
FIH (02038.HK) +18.4%
CRRC TIMES ELEC (03898.HK) +14%, hitting new high
CRRC (01766.HK) +13.6%
JS GLOBAL LIFE (01691.HK) +12.8%
FRONTAGE (01521.HK) +12.4%
CHINA OILFIELD (02883.HK) +11.5%
GOME RETAIL (00493.HK) +11.5%
FIT HON TENG (06088.HK) +10.8%

MARKET HOURS NEWS
U.S. President-elect Joe Biden is ready to nominate a veteran foreign policy expert, Kurt Campbell, to assume the new role of "Asia tsar", Financial Times citing sources
LP10", co-developed by Nan Fung Group and MTR CORPORATION (00066.HK), unveiled the first price list of 179 units, measuring 484-1,205 sq.ft. each.  The selling prices ranged $8.792-25.509 million. Based on the maximum discount of 20.5%, the prices would be $6.99-20.28 million, with an average discounted price per sq.ft. of $15,888.
Google (GOOGL.US) has frozen U.S. President Donald Trump's YouTube account. The video-sharing site gave the President a one-strike for uploading content in breach of its policies. Accordingly, Trump was banned from uploading new content for at least seven days. Videos violating Google's policies were also removed.
Canada is joining Britain to announce a ban against good imports associated with Uighurs forced labor in China's Xinjiang region.
Zhejiang Geely Holding Group and Foxconn will establish a third-party car OEM joint venture, and will soon ink a formal agreement, reported Cailian Press.
The US House passed a non-binding resolution by a final vote of 223 to 205, imploring Vice President Mike Pence to declare President Donald Trump incapable of executing the duties of his office by the 25th Amendment.  Pence had earlier rejected the call, saying he did not believe that such a course of action is in the best interest of the nation or consistent with its Constitution.
IH RETAIL (01373.HK), owner of Japan Home Centre, is set to revise staff salary every January, said Chairman and CEO Ngai Lai Ha.  Employees will basically see a pay rise this year, subject to market conditions. The group will certainly give out bonuses to express gratitude to employees for their hardwork over the past year.  Separately, IH RETAIL plans to open 10 to 15 new stores this year.
The Legislative Council Secretariat's market research found that HKEX (00388.HK) is charging market data suppliers generally higher than other regions, said the functional constituency (financial services) lawmaker Christopher Cheung, hence calling on the Government and the exchange to ponder over revocation or reduction of relevant charges. In response, HKEX stated that the demand on market data is changing dynamically along with the local financial market development and that its revenue generated from market data only grew two times in two decades from 1999's $229 million, during which the exchange had never ginned up charges on market data.
Overnight HIBOR last posted at 0.06982%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.12321%, marking a 1-month low.
The Biden administration, on assuming office, will prioritize confronting China over trade practices and enforcing the U.S.-Mexico-Canada Agreement, the Wall Street Journal citing U.S. President-elect Joe Biden’s Trade Representative nominee Katherine Tai.
Worldwide spending of the wearable device market will total US$81.5 billion in 2021, an 18.1% increase from 2020's, Gartner wrote in its latest forecast. This is attributable to remote work and increased interest in health monitoring during the COVID-19 pandemic.
TENCENT (00700.HK)'s Honor of Kings and PUBG Mobile were the top grossing mobile games worldwide, in December 2020, which garnered US$258 million and US$177 million in player spending, up 58% and 7.5% yearly, Sensor Tower wrote in a report.
MIIT mentioned in its Industrial Internet Innovation and Development Action Plan (2021-2023) that the industrial internet network infrastructure across all sectors in every region in China will be preliminarily completed by 2023. 30 5G fully connected factories will be created in ten key industries.
HSBC HOLDINGS (00005.HK)'s  Chief Executive for Asia-Pacific Peter Wong is grooming David Liao and Mark Wang, heads of Asia Pacific global banking and Chinese operations, to reinforce their acquaintance with Chinese business, so that they take the helm after he steps down, Bloomberg learnt from inside sources.
Vanguard announced that it has unloaded all shareholdings in Chinese companies sanctioned by Washington.
Apple (AAPL.US) is set to make a "big announcement" today about a "major new initiative" that will be "bigger and better than" new product introduction, CEO Tim Cook told CBS' Gayle King. The U.S. tech giant had delivered 4Q20 sales volume as high as 18 million units in China, according to DigiTimes.

PRE MARKET NEWS
Apple (AAPL.US) topped the Hurun Global 500 list, being the world's most valuable company with a wealth of RMB14 trillion. It was followed by Microsoft (MSFT.US) and Amazon (AMZN.US), each with an estimated value of over RMB10 trillion. TENCENT (00700.HK) and BABA-SW (09988.HK) came in sixth and seventh on the list, respectively.
State Street-managed TRACKER FUND (02800.HK) has tracking deviation with the HSI performance after announcing to halt further purchase of US-sanctioned entities. In response to inquiries, Hang Seng Indexes Company said it understood that the restrictions its clients may encounter when they invest or manage Hong Kong's equity products in compliance with relative regulations. The company will keep in touch with clients, while exploring and providing custom-made index solutions to deal with the related circumstances so that clients can follow compliance regulations.
TENCENT (00700.HK)'s Tencent Music (TME.US)  is purportedly considering a secondary listing in Hong Kong this year. In addition, China-concept names Vipshop (VIPS.US) and JOYY (YY.US), are planning for secondary listings in the city as well to raise US$2.5 billion and US$1.25 billion, Nikkei citing insiders.  +VE HKEX
TRACKER FUND (02800.HK) tracked capital net outflow in the largest scale ever last Friday (8 January), amounting to $3.62 billion, Ming Pao cited Bloomberg data. On Monday (11 January), the fund also recorded net outflow of $2.415 billion since the new arrangement upon US ban.
Macao casinos turned downbeat on performances during the Lunar New Year holiday and assumed a bleak scenario for 1H21 in a way similar with 4Q20's, citing some clients' feedback that the Chinese government has suspended granting of Individual Visit Scheme (IVS) amid resurgence of pandemic outbreak across provinces, Macao Daily reported.  New confirmed cases were reported in Hebei, Beijing and such other provinces or municipalities, said the gambling industry players. It is necessary to sour measures in the short term, but the problem is no big deal in the long run.
U.S. NGO Citizen Power Initiatives for China and six WeChat users filed a complaint against WeChat's owner TENCENT (00700.HK) in a California state court, reported foreign media. They accused the messaging app for allegedly surveilling their conversations, leading to account suspension. Consequently, they were cut off from clients as well as friends and relatives.
CHINA RES LAND (01109.HK) announced that the total contracted sales for 2020 amounted to RMB285.035 billion, up 17.5% yearly.  Also that it had in December 2020 acquired seven land parcels in Nanjing, Changchun, Jiaxing, Shenzhen, Wuhan, Yantai and Nanning. The attributable land premium payable by the Group of the land acquisition amounted to RMB5.43 billion.
EASYKNIT INT'L (01218.HK)  announced that it had disposed on-market a total of 183,960 PING AN (02318.HK)  shares in a series of transactions conducted during the period from 7 January to 8 January, for an aggregate gross sale proceeds of HK$17.526 million.  After the Disposals, the Group no longer owns any PING AN shares.
SINO-OCEAN GP (03377.HK)  January 2020 to December 2020, the accumulated contracted sales amounted to RMB131.04 billion, representing year-on-year increase of 1%

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