Jan 5 HK/CHINA WRAP HSI +177pts as NYSE doesn't delist Chinese Telco's

05 Jan

HSI +177pts (+0.6%) 27,650  HSCEI +51pts (+0.5%) 10,774  T/O HK$215.02bn (+17.7% DoD )

EUROPE Markets opened lower but initially ticked higher.  UK then traded sideways in the green ahead of going into Tier 4 lockdown. DAX and CAC then traded sideways in just below flat. Germany expected to announce extending its lockdown measures today too. The rising number of covid cases worrying investors as well as US Georgia Senate run-off election.  Petrochems leading with Utilities as a laggard.
NEXT strong on a good Christmas trading update.
Loans to Households Nov +3.1% YoY vs +3.2% Oct revised (F/cast was 3%)
Loans to Companies Nov +6.9% YoY vs +6.8% Oct (F/cast was +6.5%)
M3 Money Supply Nov 11% YoY vs 10.5% Oct (F/cast was 10.6% )
Retail Sales Nov +5.6% YoY vs +8.6% Oct revised (F/cast was +4.5%)
Retail Sales Nov +1.9% MoM vs +2.6% Oct (F/cast was -2%)
Unemployment Rate Dec +6.1% vs 6.8% Nov (F/cast was +6.5%)

US Futures Opened flat in Asian time but have worked better Dow now +70pts, S&P and NDX +0.3%.Congress due to ratify US election results but concerns as Trump still will not admit defeat and he is asking supporter to rally.  Georgia Senate run off’s voting today. Rising number of covid cases also overhang the markets
Data due
Redbook, ISM New York, ISM Manufacturing (New Orders, Prices, Employment, PMI), API Crude Oil Stock Changes.

CHINA CSI 300 Closed +101pts (+1.9%) @ 5,368 Highest since 2008
CSI 300 opened lower but worked back into the green in early trades, then traded sideways 5,267/5,313 in the morning. PM opened higher and worked higher. RMB strengthen past the 6.5/USD for the first time in 2 years on confidence the economy os continuing to rebound. Leaders were dairy, aquaculture, and food processing names. Laggards were coal, automobile, and mining services.The Global Times reported that American companies doing business in China may be required to disclose links to the US. military after the NYSE said it intended to delist three Chinese telcos.
Shanghai Comp +26pts (+0.7%) @ 3,529
Shenzhen Comp +320pts (+2.2%) @ 15,148
ChiNext Index +20pts (+0.7%) @ 3,098

The Global Times reported that American companies doing business in China may be required to disclose links to the US. military after the NYSE said it intended to delist three Chinese telcos.Wednesday we get Caixin Services and Composite PMI's

HSI Pre Market Opened  at 27,281 -191pts vs -377pts ADR's with Telco’s weak ahead of US delisting.  Wuxi Bio weak as shareholder sells 100m shares; interestingly  
Market then worked back to flat by mid morning but then eased back into lunch, helped by news that the NYSE would not delist the Chinese Telcos +VE also for other sectors like Petrochems that were rumoured as other possible delisting candidates. PM worked higher to test 27,600, initially failed to break above but on the second attempt broke up to 27,683 but then eased back into the close. Ticked up 90pts in the closing auction.
5G plays also seeing good interest. BABA remains weak but other ECommerce names +VE KB Laminates weak as shareholders places 72.21m shares at a 7% discount.
Centre for Health Protection said there were 32 new COVID-19 cases in Hong Kong today (vs 53 Monday)  9 local cases from unknown sources.

SHORT SELLING Tuesday 13.2% vs 14.4% Monday Top Shorts: Country Garden (2007) 46%, Sands China (1928) 43%, Wharf REIC (1997) 43%, Anta Sports (2020) 39%, Henderson Land (12) 33%, BUD APAC (1876) 31%, AIA (1299) 30%, Galaxy Ent (27) 29%, Hengan (1044) 29%, Sinopec (386) 28%, NWD (17) 27%, Hang Lung Property (101) 27%, MTRC (66) 26%,  Hang Seng Bank (11) 25%, China Life (2628) 25%, Ping An (2318) 25%.

YIDU TECH (02158.HK) has attracted  approximately $176.4 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 428 times.
NONGFU SPRING (09633.HK)  was +6.5% further today to close at HK$64.55. Thanks to share upsurge, the company's chairman Zhong Shanshan had wealth of US$91.9 billion, with ranking jumping to the sixth on the World's Billionaires List of Forbes, crossing Warren Buffet and Oracle chairman Larry Ellison.
Spokesperson of the Chinese Ministry of Foreign Affairs, said the US crackdown on Chinese companies poses very limited direct impact on the related companies, but its action is eroding its own national interest and image while jeopardizing the global position of the US in capital market.  China hopes the US would respect rule of law and free market, and protect global financial market order and investors' legal rights, the Spokesperson added.
OPEC+ is studying three scenarios of the February oil production plan, namely an output chop of 500,000 barrels per day, a solid production, or an output boost of 500,000 bpd, Reuters citing filings.
CHINA HUARONG (02799.HK) ex-chairman Lai Xiaomin has been sentenced to death for accepting bribes, corruption and committing bigamy, reported People's Daily.   Lai will be deprived of political rights for the rest of his life, with all individual wealth confiscated.
Hon Hai Precision announced revenue of TWD713.78 billion for December 2020, up by 32.3% YoY.  Annual revenue totaled TWD5.36 trillion, up by 0.31% from the previous year.
EVERGRANDE (03333.HK)  announced that in 2020, the Group achieved contracted sales of properties of RMB723.25 billion, representing an increase of 20.3% from the same period last year and achieving the full year sale target by 111%. The Group’s contracted sales target for 2021 has been set at RMB750 billion and target of reducing interest-bearing indebtedness by a further RMB150 billion.
DONGFENG GROUP (00489.HK) announced that for 2020, the group's production and sales volume sagged 3.47% and 2.17% yearly to 2.8351 million units and 2.8683 million units.
BYD COMPANY (01211.HK) announced that the total sales volume of the Company for the month of December 2020 +30.44% yearly to 56,322 units. Among which, new energy vehicles recorded sales of 28,841 units, an increase of 1.2 times year-on-year.  For the full year of 2020, the total sales volume -7.46% yearly to 427,000 units.
Invesco Sanguine about Asian EM Outlook; Expects S&P 500 to Attain Double-digit Returns This Year. The prospect of Asian emerging markets was particularly sanguine on the ride of strong economic recovery fueled by vaccine launches, and was foreseen to show leading advantages, predicted Kristina Hooper, Chief Global Market Strategist at Invesco. EM countries which brought their local epidemic relatively under control, such as China and South Korea, were painted bullish outlook.   Hooper furthered that S&P 500 Index may attain double-digit returns further this year. With distribution of vaccine having started, strong economic green shoots are in the horizon. The stock market was projected to keep the uptrend as last year, in spite of certain fluctuation or slowdown in the course.  

Market Comment
*PETROCHEMS MIXED oil weak overnight as OPEC+ production talks were unexpectedly suspended on Monday after a majority of members, including Saudi Arabia, opposed  Russia’s proposal for a February supply hike. But HK listed names +VE as NYSE reversed decision to delist Chinese CNOOC (883 HK +1%) rebound after NYSE scraps plan to delist Chinese telcos, as CNOOC was speculated to be the next target.CH OILFIELD (2883 HK +4.4%) PETROCHINA (857 HKv-1.2%) SINOPEC (386 HKv-0.6%).
*CHINESE BANKS MIXED continued weakness associated with the latest loan curbs on the real estate industry. Debt quality is also a concern as PBOC will continue allowing small and micro companies to extend principal and interest payment of loans under an inclusive financing program in the first quarter.  CCB (939 HK -0.35%)  ICBC (1398 HK -0.6%) ABC (1288 HK +0.7%) CMB (3968 HK +1.9%).
FT Article on PBoC trying to balance liquidity in the system without allowing leverage to get out of control.
*TELCOS STRONG  after NYSE said it will not delist the three Chinese telcos from the American exchange. CH MOBILE (941 HK +5.1%) CH TEL (728 HK +3.3%) CH UNICOM (762 HK +8.5%) CH TOWER (788 HK +5.5%).
*E-COMMERCE MIXED following recent selling on the back of regulatory concerns. ALIBABA (9988 HK -1.9%) said it will close its music  streaming platform Xiami Music next month, due to operational adjustments. Alibaba acquired the music service in 2013, and invested millions of yuan to compete in China'  online music market. JD.COM (9618 HK -1.1%) TENCENT (700 HK +1.5%), NTES (9999 HK +2%) MEITUAN (3690 HK +0.9%).
*HK PROPERTY FIRM  continue rebound and helped by a couple of broker upgrades as investors bet on the sector's recovery amid vaccine hopes. CK ASSET (1113 HK +1.8%) expects to launch sales 21 Borrett Road which has 115 units measuring between 2,075 square feet to 3,378 sq ft. SHKP (16 HK +3.2%) HENDERSON LAND (12 HK +2.8%) SINO LAND (83 HK +2.9%).
*CHINA PROPERTY  MIXED But rebounding slightly from yesterday's sell off but investors cautious about the impact of the new loan curbs.R&F (2777 HK +1.1%) has pledged equity of three companies with a net asset value of over US$10b to Guangzhou City Construction Investment in order to avoid falling foul of the 'three red lines' on debt AGILE's (3383 HK-1.9%) aggregated pre-sale value in Dec jumped 1.55 times YoY to 22.37b yuan. KWG (1813 HK+3%) announced that the gross pre-sales value of the group and its joint ventures and associates was 12.897b yuan in December 2020, +40.2% YoY. COUNTRY GARDEN (2007 HK -1.8%) Dec contracted sales 12.82b yuan, +3.7% YoY.
*PHARMA WEAK after WUXI BIO's (2269 HK -1.3%) parent sold 102m shares in the Chinese biotechnology company in a block trade raising up to HK$9.84b. Shares were offered at HK$96.5, represents a discount of 6.5% to Monday’s closing price of HK$103.20.  Interesting to note that the stock was 25% short sold on Monday.
SINO BIOPHARM (1177 HK -1.3%) 3SBIO BIO (1530 HK -1.2%) GENSCRIPT (1548 HK -1.3%).
*DAIRY STRONG news Mengniu and Yili raised prices on white milk products as much as 5% at year’s end. MENGNIU (2319 HK +7.3%) had been recently significantly shorted . CH SHENGMU (1432 HK +16%) AUSNUTRIA (1717 HK +2.5%).
*HK CONSUMERS MIXED after HK's retail sales fell for the 22nd straight month in Nov, but registered a smaller decline but the HKRMA said 60% of its members expected to shut down by end of Q1
BONJOUR (653 HK +2%) CHOW TAI FOO (1929 HK +4%) SASA (178 HK -0.82%) LUK FOOK (590 HK -1.2%) TAI HING (6811 HK -2%).

Regional Markets
No data but the expectation a State of Emergency will be announced from Thursday.Wednesday we get Services and Composite PMI’s and Consumer Confidence.
Nikkei 225 opened lower and worked back into the green mid morning in choppy trading but then eased back into lunch. PM sold down to 27,100 and then trade sideways to close -100pts (-0.4%) @ 27,159
Topix similar trading pattern closed -3pts (-0.2%) @ 1,791
No data but covid concerns remain but tech still seeing good demand.
Wednesday we get Foreign Exchange Reserves.
Kospi opened flat and traded sideways around yesterday’s close until 2:30pm, then it spiked above 2,980 and traded sideways to close +46pts (+1.6%) @ 2,991
Kosdaq opened slightly lower tested to 984 in early traded but failed to break out then down to 965 before rebounding and trading around yesterday closing levels and closed on an upswing; +8pts (+0.8%) @ 986
TAIWAN Opened higher with Tech in focus and tested to 15,000 but unable to break above and then tested support at 14,862 before rebounding to 14,950.  Tested 15,000 several times but unable to break above. Closed +98pts (+0.7%) @ 15,000
Wednesday after market we get Foreign Exchange Reserves.
Northbound Rmb 67,645m Buy 34,907m vs 32,738m Sell
Southbound HK$ 26,915m Buy 10,248m vs 16,667m Sell
Northbound Rmb 86,239m Buy 44,257m vs 41,982m Sell
Southbound HK$ 24,960m Buy 10,318m vs 14,642m Sell
Active Heavyweights
HKEX (00388.HK) +3.4%, hitting new high
BABA (09988.HK) -2%
TENCENT (00700.HK) +1.9%
MEITUAN (03690.HK) +1.4%
PING AN (02318.HK) -0.6%
AIA (01299.HK) +0.2%, hitting new high

HSI & HSCEI Constituents on Move:
SMIC (00981.HK) -9.6%
CHINA UNICOM (00762.HK) +8.5%
HANSOH PHARMA (03692.HK) +8%
MENGNIU DAIRY (02319.HK) +7.3%, hitting new high
WH GROUP (00288.HK) +6.7%
ALI HEALTH (00241.HK) +5.6%
CHINA TOWER (00788.HK) +5.5%
CHINA MOBILE (00941.HK) +5.1%
CHINA FEIHE (06186.HK) +5%, hitting new high
BUD APAC (01876.HK) +4.6%
CHINA OVERSEAS (00688.HK) -4.2%
HENGAN INT'L (01044.HK) +4%
SHK PPT (00016.HK) +3.2%ANTA SPORTS (02020.HK) +1.9%, hitting new high

HSMI & HSSI Constituents on Move:
MICROPORT (00853.HK) +18.6%, hitting new high
CHINA EAST EDU (00667.HK) -12%
VINDA INT'L (03331.HK) +11.9%
AK MEDICAL (01789.HK)  +10.9%

TENCENT (00700.HK)'s Tencent Culture and Tourism announced that the Weixin Mini Program "Explore Ireland" co-developed with Tourism Ireland had full-swing upgrade and official launch on 1 January. The Mini Program aims to provide Chinese tourists with all-rounded information, such as destination guide, flight information, visa knowledge, map navigation, translation, route recommendation and tax refund.
Fudi Industrial, a wholly-owned subsidiary of BYD COMPANY (01211.HK), established Chongqing Fudi Battery Research Institute at a registered capital of RMB100 million, according to Tianyancha's app.
SINOPHARM expected to produce more than 1 billion doses of COVID-19 vaccine each year, Now News reported. The vaccine instruction said there are 73 adverse reactions, most of which are rare side effects.
MEITUAN-W (03690.HK) will buy into a 20% stake in Dossen International Group, Chinese media citing sector sources. The Group's valuation is said to be roughly RMB5 billion.
TONGCHENG-ELONG (00780.HK) has purportedly invested hundreds of millions of yuan in Bolin Hotel recently.
Global smartphone production slipped 11% YoY to a mere 1.25 billion units last year, marking the steepest-ever decline, reported TrendForce. The global handset production is expected to reach 1.36 billion units, up 9% YoY. Huawei may be ranked 7th in the global smartphone market this year, down from the 3rd position last year.
Overnight HIBOR last posted at 0.03804%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.13482%, down for 6 days, marking a 1-month low
BABA-SW (09988.HK)'s Xiami Music announced to suspend music streaming services from 5 February. Instead, the platform will specialize in developing music scenarios for malls going ahead.
Chief Executive Carrie Lam said since the latest outbreak of novel coronavirus in late November, the intra-month caseload has astoundingly reached a new high at 2,532 in December. While the pandemic seems to be tapering off in late December and early January with less than 45 new cases per day, and cases with untraceable origins accounting for around 30%, the social distancing measures are proven effective to a certain extent, opined Lam. However, the city remains miles away from achieving the "nil-case" target and resuming normal living. Therefore, the Food and Health Bureau and the Education Bureau decided yesterday to keep the prevailing guidance for 14 days with prolonged suspension on campus teaching.
JXR (01951.HK)'s shareholder sold 98 million shares at $14.9 each, representing a 7.6% discount to the closing price on Monday (4th), Bloomberg citing trading document.  JXR once bottomed at $14.72 this morning.
HYGEIA HEALTH (06078.HK)  An undisclosed shareholder of sold 21.58 million shares at $48.5 each, representing a 6.6% discount to the closing price on Monday (4th), reported Bloomberg.
KB LAMINATES (01888.HK)'s shareholder placed 72.21 million shares at $11.81 each, representing a 7% discount to yesterday's closing price ($12.7) to pocket $110 million, Bloomberg citing the sales document.
MELCO INT'L DEV (00200.HK) announced a summary of recent developments in respect of Studio City Finance. Studio City Casino’s combined gross gaming revenues during October and November 2020 increased by approximately 146% compared to those in the third quarter of 2020.
China Foreign Exchange Trade System announced today (5 January) that the central parity of USD/RMB surged 648 bps from the last trading day to 6.4760, logging an over-2.5-year high.
CHINA JINMAO (00817.HK) announced that for the twelve months ended 31 December 2020, the Group recorded an accumulative contracted sales amount of RMB231.1 billion, up 43.7% yearly, with the accumulative contracted sales gross floor area of approximately 11.29 million square meters.
FTSE Russell said it will remove CHINA UNICOM, SMIC (00981.HK) and NANJING PANDA from FTSE Global Equity Index Series and FTSE Global China A Inclusion Indexes starting Thursday (7th) in accordance to the executive order by US President Donald Trump, CHINA EAST EDU (00667.HK)  announced that Wu Junbao, a non-executive director and the controlling shareholder of the Company; Wu Wei, the chairman and an executive director; and Xiao Guoqing, the vice-chairman and an executive director, placed an aggregate of 60 million shares, representing approximately 2.73% of the issued share capital of the Company.  The placing price was HK$16.4 per share, representing an 8.69% discount to yesterday's closing price. The Company pocketed HK$984 million.
WUXI BIO (02269.HK) announced that WuXi Biologics Holdings Limited (Biologics Holdings), one of the substantial shareholders of the Company, agreed to place 102 million existing shares of the Company (representing 2.5% of the total issued share capital of the Company) held by Biologics Holdings at a price of HK$96.5 each (representing a discount of 6.49% to the closing price as quoted yesterday). The placement cashed in HK$9.843 billion.
COUNTRY GARDEN (02007.HK)  for the twelve months ended 31 December 2020, the Group, together with its joint ventures and associates, achieved contracted sales attributable to the shareholders of the Company accounted to RMB570.66 billion, increased by 3.3% year on year, with contracted sales GFA attributable to the shareholders of the Company of 67.33 million square meters, increased by 8% year on year.

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