Jan 26 HK CHINA WRAP HSI -768pts consolidation after failing at 30,000

26 Jan

HSI -768pts (-2.6%) 29,391  HSCEI -265pts (-2.2%) 11,695  T/O HK$278.92bn (-2.8% DoD)

EUROPE Opened higher after two days of declines and trading higher through the session.  Stocks encourages by record profits from UBS +137% YoY. All sectors +VE but lead by Financials and Chemicals.  Italy saw Prime Minister Conte resignEQT +21% by the afternoon after it beat full-year profit expectations and agreed to buy Exeter Property Group.
Naturgy +16% after the IFM Global Infrastructure Fund made a 5 billion euro ($6.06 billion) offer for a stake in the company.
AMS and Nokia both gained more than 7%
Unemployment Rate Nov 5% vs 4.9% Oct (F/cast was +5.1%)
Employment Change Oct -88k vs -144k Sept (F/cast was -160k)
CBI Distributive Trades Jan -50 vs -3 Dec (F/cast was -30)
Markets opening slight higher as earnings get underway.
FOMC meeting starts, IMF World Economic Outlook, Redbook Case Schiller Home Prices, House Price Index, CB Consumer Confidence, Richmond Fed Manufacturing Index, API Crude Oil Stock Change.
Earnings: Microsoft, 3M, Johnson & Johnson, American Express, Starbucks, Raytheon, Verizon, Texas Instruments, Lockheed Martin, UBS, D.R. Horton, General Electric, Novartis, UBS, Freeport-McMoRan, Paccar, Capital One, Advanced Micro Devices

CHINA CSI 300 Closed -113pts (-2%) @ 5,513
CSI 300 opened lower initial traded sideways around the 5,580 level for the first 30 minutes but then trended lower to 5,520 level before a small bounce into lunch. PM it retested 5,520 level and traded around that level for most of the afternoon, but dipped below the going into the close.Sentiment hurt by a jump in short-term rates prompting some profit taking. As investors try to asses the US/China relations as Biden's administration said it's approaching ties with Beijing with "patience" and will review Donald Trump's actions, including tariffs and company delistings.President Xi used a speech to Davos to warn against confrontation and a new Cold War, but signaled that China will continue to forge its own path.
Shanghai Comp -55pts (-1.5%) @ 3,569
Shenzhen Comp +358pts (-2.3%) @ 15,352
ChiNext Index -97pts (-2.9%) @ 3,258
HSI Pre Market Opened at 29,892 -266pts vs -153pts ADR’s Tencent & BABA weak on news of the ban in India, HSBC and HKEX also weak.
Market opened lower it initially rallied to 29,965 which it tested a couple of times but failed and then trended lower through the morning to a low of 29,400 level around 11.40am had a bounce and then eased back into lunch. PM saw the market initially sell down to the day low 29,370 but then rebounded to 29,575 and traded sideways for about half an hour and then trended lower to 29,360 level. Then a small rebound into the close but then ticked 43pts lower in the closing auction.
After Market 
Balance of Trade Dec HK$-45.7b vs HK$-25.6 (F/cast HK$-20b)
Exports Dec +11.7% vs +5.6% Nov
Imports Dec +14.1% vs +5.1% Nov
Centre for Health Protection said there were 64 new COVID-19 cases in Hong Kong today;  21 of unknown origin.
SHORT SELLING Tuesday 13.5% vs 20.2% Monday
Top Shorts: Hengan (1044) 45%, Wharf REIC (1997) 40%, Ping An (2318) 36%, Henderson Land (12) 35%, Country Garden (2007) 33%, Hang Seng Bank (11) 31%, Hang Lung Property (101) 26%, NWD (17) 25%, Bud APAC (1876) 25%,
Govt Locks down Partial Yau Ma Tei; Residents Inside Should Take Compulsory Testing; Starting around 7pm and to finish around 6am
SINO LAND (00083.HK) announced that Silversands had today updated sales arrangements. The first price list, involving 50 units, will be open for public sales this Saturday.  On the same date, eight seaview units will be open for tender.
Yi Gang on Ant Group's IPO Reboot: Positive Outcome Upon Law Compliance.  Asked whether Ant Group can revive its planned IPO, the PBoC Governor Yi Gang told Chinese reporters that cheerful news will be awaiting if the fintech firm abides by legal procedures.  According to a survey conducted by the Chinese central bank, users are generally pretty satisfied with their experience on the platform, said Yi.
Nan Fung: 'LP10' Receives Over 2,200 Subscription Registrations So Far, Over-subscribed by Over 9x. Geoffrey Lo, General Manager of Property Development Department & Sales Department at Nan Fung, said LP10, part of the LOHAS Park project, tracked subscription of all of the 146 two-room flats in three hours of launch last Saturday.  As at 3 pm today, the project has received over 2,200 subscription registrations, representing an over-subscription of more than nine times based on the sales units in the second round.
*US SANCTION NAMES: MSCI China All Shares Indexes and MSCI ACWI Indexes will drop  more Chinese securities following the U.S. executive order. MSCI will make a further announcement on January 26 to confirm any changes. List of securities to be removed include CGN POWER (1816 HK -7.6%) and INSPUR INTL (596 HK -3.1%).
*PETROCHEMS WEAK as Oil fluctuated amid hiccups in the Covid-19 vaccine rollout signaled a potential further hit to demand. CNOOC (883 HK -3%) PETROCHINA (857 HK -1.6%) CH OILFIELD (2883 HK -1.9%) SINOPEC (386 HK -2.3%).
*CHINESE BANKS WEAK as short-term rates jumped to pre-COVID levels on Tuesday, with some investors speculating that the central bank might adopt a tightening bias in its monetary   policy.  CCB (939 HK -1.1%) ABC (1288 HK -1.7%) BOC (3988 HK -1.5%)
*E-COMMERCE WEAK heavy profit-taking in TENCENT (700 HK -6.3%) after it hit a record yesterday, and also MEITUAN (3690 HK-5.3%). India’s ministry of electronics and information technology has filed notices to permanently ban TikTok and 58 other Chinese apps, according to news. The ministry first banned the apps in June 2020 before introducing a permanent ban. NETDRAGON (777 HK -4.8%) WEIMOB (2013 HK -7.1%) KINGDEE (268 HK -7.2%).
*AUTOS  WEAK profit-taking in BYD (1211 HK -6.1%). GREAT WALL (2333 HK-0.9%) reported preliminary net income for the full year of +19.9% to 5.39b yuan. South Korea's SK Holdings said it is in discussion with China’s GEELY AUTO (175 HK-1.2%) to jointly create a fund but size or direction of the business isn’t decided yet.
*HK RETAILERS WEAK as the Hong Kong Retail Management Assoc expects sales will remain in dire straits in the first half of the year, falling 20-30% compared with 2019 as social distancing measures continue to bite. And even if the pandemic eases later in 2021 they are forecast to remain flat compared with last year. SASA (178 HK -1.7%)  LUK FOOK (590 HK -1.9%) LIFESTYLE (1212 HK-0.9%).
*AIRLINES WEAK CATHAY PACIFIC (293 HK -3%) warned that new social distancing measures requiring a 2-week quarantine for pilots and cabin crew will increase its cash burn by about HK$300m to HK$400m per month, on top of current HK$1b to HK$1.5b levels. China allows free cancellation of Spring Festival flight tickets. AIR CHINA (753 HK -0.6%) CSA (1055 HK -0.7%) CEA (670 HK +0.3%).
CH SHENGMU MILK (1432 HK +4.9%) said it expects to record a consolidated profit attributable to equity owners for 2020 of not less than 380m yuan, up by more than 13 times of 2019. The measure may result in a reduction of around 60% to current passenger capacity and a reduction of around 25% to current cargo capacity.
BAIOO (2100.HK +41%) but off intraday +85% after it said Monday night that Tencent will buy 326m shs
Regional Markets
Nikkei 225 opened lower around 28,700 but trended lower through the morning down to 28,600. PM opened lower and traded around 28,600 before selling down at the end to close -276pts (-1%) @ 28,546
Topix traded in a similar pattern and closed -14pts (-0.8%) @ 1,848
Pre market GDP Growth was in lineKospi opened slightly lower and trended lower to 3,133 around 1:30pm before seeing a slight bounce into the close to finish -69pts (-2.1%) @ 3,140Kosdaq opened slightly higher and rallied to 1,007 in the first hour but then reversed and sold down to 995 first and saw bounce back to test 1,000 again but then sold down to 990 , then saw a small bounce and traded sideways to close -5pts (-0.5%) @ 994
GDP Growth Rate Advance Q4 +1.1% QoQ vs +2.1% Q3 (F/cast was +1.1%)
GDP Growth Rate Advance Q4 -1.4% YoY vs -1.1% Q3 (F/cast was -1.5%)
Opened flat; Consumer Confidence came out inline Taiex initially ticked up to 16,023 but then reversed and trended lower for the rest of the session to 15,600 before a small bounce and then traded sideways to close -288 pts (-1.8%) @ 15,659
Consumer Confidence Jan 70.9 vs 72.9 Dec (F/cast was 71)

Northbound Rmb 56,413m Buy 29,664m vs 26,748m Sell
Southbound HK$ 43,536m Buy 18,886m vs 24,650m Sell
Northbound Rmb 77,759m Buy 39,192m vs 38,567m Sell
Southbound HK$ 37,914m Buy 14,865m vs 23,048m Sell

Active Heavyweights
HKEX (00388.HK) -7.2%
TENCENT (00700.HK) -6.3%
MEITUAN (03690.HK) -5.3%
PING AN (02318.HK) -2.4%
BABA (09988.HK) -1.8%
AIA (01299.HK) -1.4%

HSI & HSCEI Constituents on Move:
LONGFOR (00960.HK) +4.5%
WUXI BIO (02269.HK) -4.5%
SHENZHOU INTL (02313.HK) -4.3%
ALI HEALTH (00241.HK) -3.7%
CHINA MOBILE (00941.HK) -3.5%
CPIC (02601.HK) -3.5%
CHINA FEIHE (06186.HK) -3.5%
SUNNY OPTICAL (02382.HK) -3.3%
CHINA UNICOM (00762.HK) -3.3%
EVERGRANDE (03333.HK) -3.1%
AAC TECH (02018.HK) -3%

HSMI & HSSI Constituents on Move:
SIHUAN PHARM (00460.HK) +28.8%
CHINA JINMAO (00817.HK) -16.5%
AVICHINA (02357.HK) -14.1%
ASCENTAGE (06855.HK) -11.6%
CAR INC (00699.HK) +11.5%
CHINA ZHONGWANG (01333.HK) +11.3%
CHINA LIT (00772.HK) +10.5%
BYD ELECTRONIC (00285.HK) + 4.5%, hitting new high
JIUMAOJIU (09922.HK) +4.2%, hitting new high
GCL-POLY ENERGY (03800.HK) +3.1%, hitting new high

UBS reported the fourth-quarter net income up by 137% to US$1.71 billion, beating the consensus, thanks to double-digit profit growth in its wealth management and asset management units.
China is seeking to purchase US soybeans for delivery in February and has made booking for August delivery, Bloomberg learnt from inside sources. Brazil's soybean harvest was distorted by rains, and sowing delayed by drought, said the report.
Skypoint Royale, jointly developed by Empire Group and HK FERRY (HOLD), has announced the first price list, involving 112 units with saleable area of 208-361 sq. ft..  Based on the maximum discount of 9%, the sale prices range $2.9993-5.3253 million, or $15,020/sq. ft. in average floor price.
Social distancing measures, such as the two-person gathering ban and dine-in ban after 6 pm, will be extended for another week, local media cited sources.
MTR CORPORATION (00066.HK) will close the tender at 2 pm Tuesday for "THE SOUTHSIDE", the phase 5  property development project atop Wong Chuk Hang Station. According to on-site information, the project has received at least six tenders, including CK ASSET (01113.HK), K. WAH INT'L (00173.HK),  NEW WORLD DEV (00017.HK) jointly with Empire Group, CSI PROPERTIES (00497.HK)  and LAI SUN DEV (00488.HK)
PBOC: Bubbles Forming in Some Areas; Monetary Policy Intact To Present Risk.  Bubbles have been forming in some fields of China's economy, especially the almost 30% upsurge in major stock indexes last year, 21st Century Business Herald cited Ma Jun, Member of the Monetary Policy Committee of the People's Bank of China (PBOC). Ma attributed the bull market amid economic slowdown to currencies.  Whether or not the related circumstance will aggravate hinges on any moderate alteration of monetary policy this year, Ma opined, who forewarned the problem will continue if no alteration is made, and will even spark bigger mid-to-long-term economic and financial risks.
KUAISHOU-W (01024.HK) will close subscription for international placing at 17:00 on 27 January, earlier than its schedule, after having recorded full subscription, said market rumours.
Chief Executive Carrie Lam said the COVID-19 pandemic has been deeply worrying, citing a 30% WoW case spike over the past seven days. Over half of yesterday's infections were of unknown origins.  Seeing viral tests as an integral part of plague containment, the Chief Executive aims to identify invisible transmitters in society more aggressively at the earliest to weather the storm. Particularly, Lam would ask her colleagues to take action prior to community outbreaks.   Citing the delayed supply of vaccines to the financial hub and, however, its desperate demands therefor, Lam disclosed that she recognised the need to seek help from Beijing and targeted some vaccines developed or manufactured in China.
Faraday Future, set up by LeTV founder Jia Yueting, plans to open a Chinese factory and invite Zhejiang Geely Holding Group to provide OEM services, Reuters citing insiders.  Faraday Future will purportedly establish a new base in a tier 1 Chinese city, with an initial production capacity of over 100,000 EVs.
While the U.S. is in a heated competition with China, President Joe Biden is looking to approach ties with Beijing with “patience,” said White House spokeswoman Jen Psaki.  Amid the Biden administration’s strategic patience towards Beijing, Washington would in the coming weeks engage with Republic and Democratic lawmakers, as well as international allies and partners, for better correspondence.
TSMC (TSM.US) and such other Taiwanese chipmakers are weighing price hikes on auto chips by as much as 15% from late-February the soonest as the worldwide chip shortage has distorted auto production, the Nikkei learnt from inside sources. TSMC and UMC have been in talks with the Netherlands' chip maker NXP and Japan's Renesas over the price increment issue, said the insiders.
China confirmed 82 additional COVID-19 cases yesterday (25th), including 69 local infections, reported by National Health Commission.
RD Wallet Technologies, founded by former HKMA chief executive Norman Chan, has applied with HKMA for a Stored Value Facility (SVF) license and pending for review and approval, reported Apple Daily.  If licensed, RD Wallet will specialize in providing cross-border trading firms with e-wallet payment solutions.
India's Ministry of Electronics and Information Technology issued new notices last week to slap a permanent ban on TikTok, BABA-SW (09988.HK) 's UC Browser, TENCENT (00700.HK)'s WeChat, and 56 other Chinese apps, reported Indian media.
FOSUN PHARMA (02196.HK)  and BioNTech announced that according to the Food and Health Bureau of the Hong Kong Special Administrative Region, the COVID-19 vaccine COMIRNATY (also known as BNT162b2) has received authorization for emergency use in Hong Kong.  The valid period of the Authorization is 12 months after the date of the Authorization, which could be further extended or revoked in accordance with the Prevention and Control of Disease (Use of Vaccines) Regulation of Hong Kong (Chapter 599K). The vaccine will be produced in BioNTech's manufacturing facilities in Germany, and supplied to Hong Kong for administration under the Hong Kong.  Food and Health Bureau (FHB) recognized the COVID-19 vaccine co-developed by Fosun Pharma and BioNTech for emergency use in Hong Kong.  FHB Secretary Sophia Chan told an RTHK program that the first batch of 1 million doses completed production as well as safety and quality check, and are expected to be delivered to Hong Kong from Germany in late February. The Government is now setting up centers for vaccination after quality check.SAR. Government's COVID-19 Vaccination Program.
MSCI announced to remove securities of CGN POWER (01816.HK), INSPUR INT'L (00596.HK), ChemChina, China Shipbuilding Industry and China National Nuclear Power from MSCI ACWI Indexes, relevant non-market capitalization weighted indexes as well as custom indexes after market close tomorrow (27 January).
US. Senate has voted overwhelmingly to confirm Janet Yellen as Secretary of the Treasury, who is set to work with the Congress on coronavirus relief, review of U.S. sanctions policy and enhancement of financial regulation.
FTSE Russell will unveil its semi-annual index review results on 19 February 2021 (local time). By then, all eligible shares in the Sci-tech Innovation Board (SSE STAR Mkt) will be added to FTSE Russell's global indexes with effect from the market opening on 22 March 2021.
JINKE SERVICES (09666.HK) Positive Profit Alert expecting to record an increase of more than 65% in profit attributable to owners of the Company for the year ended 31 December 2020 over a year ago.
CHINA JINMAO (00817.HK)  Profit Warning  expecting a decrease between 40% and 50% in the profit attributable to owners of the parent (excluding fair value gains on investment properties) for the year ended 31 December 2020 as compared to that for the year ended 31 December 2019.   The decrease is mainly attributable to the austerity measures of real estate sector which resulted in the selling prices of the projects of the Group and some of its associates and joint ventures being lower than expected. As a result, the Company is required to make impairment provision for its properties under development and properties held for sale.
SINOTRUK (03808.HK) Positive Profit Alert expecting to record a significant increase in the profit attributable to owners of the Company for the year ended 31 December 2020 by not less than 88% as compared to the profit of RMB3.48 billion for the year ended 31 December 2019.
Such expected increase in the profit was mainly attributable to the increase in the sales volume of heavy duty trucks by approximately 60% compared to that of last year, in particular, the increase in the sales volume of the premium heavy duty trucks which was more than expected; and the great results achieved in the management’s efforts in reducing procurement cost.
BAIOO (02100.HK)  announced that on 25 January, TENCENT (00700.HK)  had through its wholly-owned subsidiary, THL H, acquired an aggregate of 326 million shares of the Company from existing shareholders. Upon completion, TENCENT will be a substantial shareholder of the Company and be interested in approximately 12% of the Company’s share capital.
COSCO SHIP ENGY (01138.HK)   Positive Profit Alert expecting to record a net profit attributable to the equity holders of the Company for the year ended 31 December 2020 in the range of RMB2.25 billion to RMB2.45 billion, representing a year-on-year increase in the range of 443% to 492%.
GREATWALL MOTOR (02333.HK)  announced preliminary results for the year of 2020 prepared in accordance with the China Accounting Standards for Business Enterprises. Net profit amounted to RMB5.392 billion, up 19.9% yearly, mainly attributable to the increase in the sale of automobiles and gross profit.  EPS equaled 59 fen.  Also that it formulated the Profit Distribution Proposal for the first three quarters of 2020. The cash dividend of RMB0.28 per share for the first three quarters ended 30 September 2020 was proposed to be declared to its shareholders by the Company. The calculated proposed cash dividend in aggregate of the Company is approximately RMB2.569 billion.

* The email will not be published on the website.