Jan 4 HK/China Wrap HSI +242pts on increased T/O China higher with EV/Battery names +VE

04 Jan

HSI +242pts (+0.9%) 27,473  HSCEI -15pts (-0.1%) 10,723  T/O HK$182.64bn (+72.7% DoD but last Thursday was a half day)

Markets opened after a positive lead from the Asia and despite the first day of Brexit and the expectation of further lockdowns across Europe as covid cases spike.FTSE opened higher an rallied. DAX opened higher sold down but rebounded and trading sideways. CAC 40 -opened higher dipped but rebounded and move higher before trading sideways.
Manufacturing PMI Dec 55.2 vs 53.8 Nov (F/cast was 55.5)
Manufacturing PMI Dec 58.3 vs 57.8 Nov (F/cast was 58.6)
Manufacturing PMI Dec 51.1 vs 49.6Nov (F/cast was 51.1)
New Car Registrations Dec -11.8% vs -27 Nov (F/cast was -12.8%)
BoE Consumer Credit Nov GBP -1.539b vs -0.698b Oct (F/cast was -1.4b)
Mortgage Approvals Nov 105k vs 98.3k Oct revised (F/cast was 80.1k)
Mortgage Lending Nov GBP 5.7b vs 4.5b Oct revised (F/cast was 4.0b)
Manufacturing PMI Dec 57.5 vs 55.6 Nov (F/cast was 57.3)
Net Lending to individuals Nov GBP 4.1b MoM vs 3.8b Oct revised (F/cast was 3.6b)
US Futures 
Opened lower in Asian time but rebounded as Europe moved higher; Dow now +186pts (was -54pts in Asia) with S&P +0.5% and NDX +0.4%. There are still concerns over the spike in covid cases and Trump’s attempts to reverse the US election results -VE for sentiment. Also caution ahead of the Georgia run off voting which takes place tomorrow and could give Democratics control of the Senate.
Manufacturing PMI, Construction Spending. Total Vehicle Sales (after market).

CHINA CSI 300 Closed +56pts (+1.1%) @ 5,268
CSI 300 opened lower but worked better through the morning session despite the weak Manufacturing PMI data, with Chi Next leading the gains (EV/Battery Names) and Pharma.Laggards were Financials and Property after China announced new curbs. CSI closed at 5,274 at lunch. PM opened higher but sold down to 5,260 level and then traded sideways into the close.
Shanghai Comp +30pts (+0.9%) @ 3,503
Shenzhen Comp +357pts (+2.5%) @ 14,828
ChiNext Index +112pts (+3.8%) @ 3,078 (a new high)

CHINA DATA  Caixin Manufacturing PMI Dec 53.0 vs 54.9 Nov  (F/cast was 54.6)

HSI Pre Market Opened @ 27,087 -144pts vs -185pts ADR’s
Market opened lower with Telcos weak on delisting news along with Chinese Developers & Banks on news of more lending curbs. But worked better on the A share strength to 27,400 which was the morning resistance and pulled back to 27,300 before rallying again to 27,485 only to ease back a little into lunch.  PM opened flat but sold down to 27,350 before working better. Resistance again at 27,500 and eased back after testing with a small rally into the close but ticked lower in the closing auction.  E-Commerce and Financials mixed, Chinese Developers and Telcos weak. HK Developers  firm, Macau started +VE but later sold down; I think they will do well this year.

After Market 
Retail Sales Nov -4.7% vs -9.2% Oct revised (F/cast was -9%)
The smallest decline since May of 2019, primarily due to +22.3% in sales of consumer durable goods. Still, it is the 22nd straight month of falling retail sales as first social unrest and then the coronavirus pandemic kept tourists away. From January to November, retail sales -26.6% . Outlook poor with no inbound tourism remains and the fourth wave of the local epidemic impacting since November.
Hong Kong Retail Management Association (HKRMA), said the overall December's retail performance was not up to expectation owing to the gathering ban tightening in early December 2020, despite traditional peak season for the month. HKRMA's members are under pressure now, she said. 44% of interviewed members voiced that they will shut down their business to stop loss even with effective leasing contracts. The Chairman forecast there will be 60% members considering shutdown upon the end of leases in 1Q21. -VE PROPERTY; especially single unit owners.
Centre for Health Protection said there were 53 new COVID-19 cases in Hong Kong today (vs 41 Sunday)  6 local cases from unknown sources.
SHORT SELLING Monday 14.4% vs 14.9% Thursday 
Top Shorts: Country Garden (2007) 40%, BUD APAC (1876) 36%, Bank of China (3988) 36%, Wharf REIC (1997) 35%, Ping An (2318) 31%, Hang Kung Ppty (101) 31%, Anta Sports (2020) 30%, Mengniu Dairy (2319) 29%, Henderson Land (12) 25%, Galaxy Ent (27) 25%, Hang Seng Bank (11) 25%, Wuxi Bio (2269) 25%
YIDU TECH (02158.HK) has traced over $136.3 billion margin subscription as at around 6 pm today, according to local brokers. Based on the fundraising amount of approximately $411 million for public offering, the stock was over-subscribed by around 330 times.  YIDU TECH, to be listed on 15 January, had started IPO from last Thursday through 7 January. Entry fee is $2,656.5 per board lot of 100 shares. It has eight cornerstone investors, including TENCENT (00700.HK)
YTO EXP INTL (06123.HK) POSITIVE PROFIT ALERT  The net profit of the Group for the year ending 31 December 2020 is expected to increase by not less than 600% as compared to the net profit for the corresponding year in 2019.
NONGFU SPRING (09633.HK) +10.38% surge at close to HK$60.6, hitting a new high since debut. The total turnover of the stock was HK$774 million, shoring up the market cap to HK$305.101 billion.  Chairman Zhong Shanshan had a worth of US$86.5 billion, up 10.07%, ranking the eighth on Global Forbes Billionaire, only a notch lower than Warren Buffet, according to Forbes' real-time billionaire list.
KWG GROUP (01813.HK)  announced that for December 2020, the pre-sales value of the Group amounted to RMB12.897 billion, +40.2% YoY.
Foxconn is looking at investing US$200 million in Byton, a Chinese EV startup, in a bid to help the mass production of the latter's M-Byte car model in 1Q22, Bloomberg cited people with the knowledge of the matter.  Both parties are now at negotiation stage. Rumor also said Foxconn is also in talks with other Chinese EV makers for cooperation.
Spot USD/CNY closed at 6.4628, up 770 bps, notching an over-30-month high. USD/CNH also crossed 6.45 today, also logging an over-30-month high.  As at 16:46, USD/CNY surged 732 bps in the night session. USD/CNH stood at 6.4444, up 544 bps.
ALI HEALTH (00241.HK) will add on-site nucleic acid testing (NAT) services on top of the online reservation services for coronavirus testing, jointly with professional institutions, according to Chinese media.  At the initial stage, the services will cover nine Chinese cities, namely Beijing, Shanghai, Tianjin, Nanjing, Hangzhou, Chengdu, Shijiazhuang, Baoding and Yiwu.
Kevin Yeung: Halts Face-to-face Classes in Kindergartens, Primary & Secondary Schools Till CNY Holiday.  But Schools May Arrange 1/6 Pupils to Attend Half-day Face-to-face Class/ Exam
Sophia Chan said administration Unlikely to Relax Social Distancing before Chinese New Yr; Although the recent number of COVID-19 diagnoses and real-time reproduction rate ebbed, the downfall came slower than that in the last spike of plague. Hence, the government will put the nighttime dine-in service ban and two-people gathering ban etc. on hold for two more weeks till 20 January.  She believed it is unlikely for the authority to relax the prevailing social distancing before Chinese New Year, warning the measures may get sourer if the epidemic bounces back or deteriorates.
Market Comment
*TELCOS WEAK but off initial lows after the NYSE said it would delist the telecom operators to comply with a U.S. executive order imposing restrictions on companies identified as affiliated with the Chinese military. CH MOBILE (941 HK -1.2%), CH TEL (728 HK -3.2%) and CH UNICOM (762 HK +0.45%) would all be suspended from trading between Jan. 7 and Jan. 11. The CSRC said Sunday that given their small amount of U.S. traded shares the impact on the telecommunications companies would be limited and that
they are well-positioned to handle any fallout from the delisting.
*PETROCHEMS MIXED ahead of the OPEC+  meeting to consider another increase in production. Also overhanging the Chinese operators is the fact that they may be next in- line for delisting in the U.S following the telcos being removed. CNOOC (883 HK -2%) at  most risk as it’s on the Pentagon’s list of companies it says are owned or controlled by Chinese military. JUTAL OIL's (3303 HK +42%) board has resolved to declare and pay an interim special dividend of HK$0.15 per share of the Company.
*CHINA PROPERTY WEAK after regulators’ announced a plan to impose caps on bank lending to the real estate sector for the first time. Under the new mechanism loans to developers will be capped at 40% for the largest state-owned lenders while bank mortgage lending should be no more than 32.5% of their outstanding credit, the PBOC and CBIRC said in a joint statement on Thursday. Those exceeding the cap will have a grace period of up to four years to meet the requirements. SUNAC (1918 HK -5.4%) EVERGRANDE (3333 HK -5.1%) AGILE (3383 HK -3%) TIMES CHINA (1233 HK -5.4%) SHIMAO (813 HK -5.9%).
*CHINA BANKS WEAK as loan curbs to real estate add to the sector woes. ICBC (1398 HK -3.6%) CCB (939 HK -2%) CM BANK (3968 HK -4.1%) BOC (3988 HK -1.5%).
*HK PROPERTY FIRM speculation that vaccines will be available for HK residents as soon as February. SHKP (16 HK +3.3%) HENDERSON (12 HK +2.1%) NWD (17 HK +2%).
The Li Ka Shing Foundation bought 289,500 CK ASSET (1113 HK+1%) shares at an average price in the last 2 weeks of December, with prices between HK$39.1151-HK$39.6200/shr.
*E-COMMERCE FIRM except ALIBABA (9988 HK -2.1%) as Chinese regulators are reviewing the equity investments held by Ant Group in dozens of companies,  intensifying a crackdown on billionaire Jack Ma’ financial technology empire. Regulators are considering whether to instruct Ant to divest some of its investments, mainly in tech and fintech start-ups, if they violate any rules such as creating unfair competition in the market.  MEITUAN (3690 HK -0.7%) JD (9618 HK +0.4%) NTES (9999 HK +0.7%). TENCENT (700 HK +1.5%) KINGSOFT (3888 HK +9.9%) amid market's positive view on China's online gaming industry.
*AUTOS MIXED. BYD (1211 HK +9.8%) jumped after TESLA said it will start deliveries of its China-made Model Y SUV this month to customers in the country and set the vehicle at a price below some of its rivals to maintain a competitive edge. The Model Y starts from 339,900 yuan ($52,074), while the Model Y Performance car will be from 369,900 yuan.  ZHENTONG AUTO (1728 HK +8.1%).  BUT  BRILLIANCE CHINA (1114 HK -6.2%) on its parent company's debt concerns.
*MACAU CASINOS WEAK having opened strongly after good Dec GGR data but traded lower after the  Jan-Dec casino revenue was announced as -79.3% YoY.  MGM (2282 HK -9.1%) SANDS (1928 HK -0.3%) WYNN (1128 HK -0.5%) MELCO (200 HK -0.53%).I think the outlook for the casino names is improving.

Regional Markets
Nikkei 225 opened higher at 27,576 but initial sold down to 27,042 before seeing a rebound to 27,440 level at lunch. PM traded sideways to close -186pts (-0.7%) @ 27,258
Topix traded in a similar pattern currently -10pts (-0.6%) @ 1,795Data out after the open Manufacturing PMI Dec 50 vs 49 Nov (F/cast was 49.7).
Markets opened an hour later than normal for annual opening ceremony Kospi opened flat but rallied to 2,940 and then traded sideways after good trade data released Friday. Closed +71pts (+2.5%) @ 2,945Kosdaq Opened flat but sold down initially to 960 before rebounding to flat and around 12:45am rallied to 973 level and traded sideways; before rallying in the last 45 mins to close +9pts (+1%) @ 978 Data out Manufacturing PMI Dec 52.9 vs 52.9 Nov (F/cast was 51)
Opened slightly lower but worked better through the day to close at the day high; +170pts (+1.2%) @14,902 Data out pre market Manufacturing PMI Dec 59.4 vs 56.9 Nov (F/cast was 55)
Northbound Rmb 59,355m Buy 30,375m vs 28,980m Sell
Southbound HK$ 24,842m Buy 8,932m vs 15,911m Sell
Northbound Rmb 75,839m Buy 37,493m vs 38,346m Sell
Southbound HK$ 26,980m Buy 10,232m vs 16,748m Sell

Active Heavyweights
HKEX (00388.HK) +4%, hitting new high
BABA (09988.HK) -2.1%
CCB (00939.HK) -2%
TENCENT (00700.HK) +1.5%
PING AN (02318.HK) -0.7%
MEITUAN (03690.HK) -0.7%

HSI & HSCEI Constituents on Move:
HAIDILAO (06862.HK) +7.3%, hitting new high
XIAOMI (01810.HK) +6.2%, hitting new high
SHIMAO GROUP (00813.HK) -5.9%
ALI HEALTH (00241.HK) -5.7%
CPIC (02601.HK) +5.4%, hitting new high
SUNAC (01918.HK) -5.4%
EVERGRANDE (03333.HK) -5.1%
SUNNY OPTICAL (02382.HK) +4.3%, hitting new high
CM BANK (03968.HK) -4.1%
CHINA FEIHE (06186.HK) +3.9%
AIA (01299.HK) +3.7%, hitting new high
CHINA RES BEER (00291.HK) +3.6%, hitting new highICBC (01398.HK) -3.6%
CHINA TOWER (00788.HK) -3.5%
WH GROUP (00288.HK) + 3.4%
TECHTRONIC IND (00669.HK) +3.3%
ANTA SPORTS (02020.HK) +3.3%, hitting new high
SHK PPT (00016.HK) +3.3%
CHINA RES LAND (01109.HK) -3.1%

HSMI & HSSI Constituents on Move:
XD INC (02400.HK) +24.4%, hitting new high
AVICHINA (02357.HK) +23.8%, hitting new high
CH MODERN D (01117.HK) +11.8%, hitting new high
CHINA LONGYUAN (00916.HK) +10.7%, hitting new high
CMOC (03993.HK) +10.3%, hitting new high
GOLDWIND (02208.HK)  +10%, hitting new high

The overall rent of Hong Kong's Grade A office dipped 5.1% QoQ in the forth quarter of 2020 and 16.6% YoY for the year, marking the steepest YoY fall since 2009, reported Savills. The new office supply surged by only 255,000 sq.ft. in 2020, being a good news for property owners.
Nan Fung's property project LP 10 obtained the pre-sale consent prior to Christmas holidays, and was expected to kick start sales deployment within the month. The company forecast to launch sales before Chinese New Year.
Tencent Cloud inked an agreement with Qi An Xin for strategic partnership.  Both parties will commence close cooperation in information security market.
The PBOC, Shenzhen Branch had on 31 December 2020 issued a notice regarding administrative penalty, according to Chinese media. In violation of related regulations on payment business, ABC (01288.HK), Shenzhen Branch fined RMB2.3 million, CDB LEASING (01606.HK) fined RMB900,000, TFT Pay fined RMB6.14 million and TENCENT (00700.HK)'s Tenpay fined RMB8.77 million.
CK ASSET (01113.HK) uploaded the sales brochure for the Phase 1 of 21 BORRETT ROAD in Western Mid-Levels, expecting to launch the project in near term. The Phase 1 project involves three towers, offering 115 units measuring 2,075 sq.ft. to 3,378 sq.ft.
The government is said to unfold a new round of social distancing measures this afternoon. Local media cited sources that the government will extend the ban on dine-in services after 6 pm and maintain the suspension of face-to-face teaching at secondary and primary schools.
Hang Seng Indexes Company Limited said it will announce the results of the 2020Q4 review of the Hang Seng Family of Indexes on 26 February 2021. The constituent changes will be made to the Hang Seng Family of Indexes with effect from 15 March 2021.
HKEX rolled out ETF liquidity enhancement initiatives in June 2020, including the introduction of a new set of rules requiring market makers to provide continuous two-sided quotes at greater volumes and tighter spreads.  The second was a new spread table that reduced the tick size by at least 50%, which in turn greatly increased the scope for bid-ask spreads to tighten. In order to assess the impact of these measures, HKEX examined the change in trading spreads and order books of 201 Hong Kong-listed ETFs immediately before and after its new market making obligations and spread table took effect on 1 June 2020. It found the vast majority of Hong Kong-listed ETFs experienced marked reductions in spreads.  A negative for value players.
USD/ CNH shattered above 6.45 today, up over 400 bps within the day, resetting a new high since June 2018. It last printed at 6.4526.   USD/ CNY rose nearly 1% to cross 6.47.
BlackRock increased a total of 3.0376 million shares of GOLDWIND (02208.HK) on 24 December 2020, involving HK$45.8738 million, according to HKEX.
Overnight HIBOR last posted at 0.04027%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.15%, down for 5 days, marking a 1-month low.

Hong Kong's New housing market delivered 70 transactions during the three-day New Year's holidays. If only accounting the two-day weekends, there were 56 deals, up 16 deals or 40% weekly, bolstered by remaining unsold flats.  For the second-hand market, Centaline's ten major housing estates registered 20 deals at the past weekend, up 2 deals or 11.1% weekly.
Hong Kong's economy tracked negative growth for two consecutive years for the first time on record, Financial Secretary Paul Chan wrote on his blog. Entering 2021, Chan forecast tougher headwinds still in the first half, while stronger recovery impetus may emerge in the second half. The full-year economy was expected to resume to positive growth.
Based on the time of arrival of COVID-19 vaccines, citizens could start receiving shots in February, revealed Patrick Nip, Secretary for the Civil Service. There will be five types of injection sites, namely community vaccination centers, public hospitals, nursing homes, private hospitals and clinics.
HKTV (01137.HK)  announced that for FY2021, the Company has set its targeted annual GMV on Order Intake for the Group’s eCommerce business at HK$6.6 billion - HK$7.0 billion, representing a year-on-year growth of 11% - 18%, subject to the development of the current COVID-19 pandemic and global economic condition. Since the Group’s interim results announcement on 27 August 2020, the Group has set up Shoalter – a wholly owned subsidiary of the Group and a technology provider on eCommerce solution aiming to enable any traditional supermarkets or retailers locally and globally to enter into digital retailing successfully.
Japanese PM Suga told social critic Yoshiko Sakurai it would be hard for China to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) under China's current regime,
Bloomberg reported that multiple Chinese oil companies may be delisted from the New York Stock Exchange, following the retreat of the three Chinese telecoms upon the executive order signed by US President Donald Trump.   Bloomberg Intelligence analyst Henik Fung said CNOOC (00883.HK) will be at the highest risk of being delisted as it is on the Washington's list of companies allegedly owned or controlled by Chinese military. PETROCHINA (00857.HK) and SINOPEC CORP (00386.HK) may also be dropped from listing.
China National Petroleum Corporation (PETROCHINA) announced that domestic oil and gas production equivalent surpassed 200 million tons for the first time in 2020, and natural gas production equivalent exceeded 100 million tons for the first time as well.
XIAOMI-W (01810.HK)'s Founder cum Chairman Lei Jun yielded over RMB188 million of sales through New Year's live-streaming promotion, according to the company's official Weibo. Mi 11 smartphones with Lei Jun's signature were sold out in 5 seconds.
Tesla announced that the mid-size SUV Model Y and the brand-new Model 3 are officially available for sale, marking the debut of its "SEXY" portfolio in China.The Model Y Performance car will start at RMB339,900, down RMB148,100 from the previous price (RMB488,000).  The Model 3 Performance car will start at RMB369,900, down RMB165,100 from the previous price (RMB535,000).  The EV maker has received over 10,000 orders for the model, claimed a Shanghai staff.
NIO (NIO.US)   CEO William Li saw no impact from the Model Y launch, citing little change in NIO's order volume over the past two days.

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