Jan 8 HK/CHINA WRAP. HSI rallied on more US stimulus hopes China remains weak on delisting concerns.

08 Jan

HSI +330pts (+1.2%) 27,878  HSCEI +159pts (+1.5%) 10,956  T/O HK$270.29bn (+18.6% DoD )

Markets opened higher following the US and Asia. DAX and CAC traded sideways above yesterdays close. FTSE trading around flat Concerns over covid remain and investors are waiting to see the US payrolls data. European data was mixed.
Unemployment Rate Nov 8.3% vs 8.4% Oct (F/cast was 8.5%)
Balance of Trade Nov Euro 17.2b vs 19.4b Oct (F/cast was 17.6b)
Exports sa Nov +2.2% MoM vs +0.9% Oct revised (Consensus was +0.8%)
Imports sa Nov +4.7% MoM vs +0.4% Oct revised (Consensus was +0.4%)
Current Account Nov Euro 21.3b vs 22.9b Oct revised (F/cast was )
Industrial Production Nov vs Oct (F/cast was 21b)
Industrial Production Nov -0.9% MoM vs +1.9% Oct revised (F/cast was -1.6%)
Balance of Trade Nov Euro -3.6b vs -4.6b Oct revised (F/cast was -4.4b)
Current Account Nov Euro -1.4b vs -3.8b Oct revised (F/cast was -3.4b)
Household Consumption Nov -18.9% MoM vs +3.9% Oct (F/cast was -12.6%)
Halifax Price Index Dec +0.2% MoM vs +1% Nov revised (F/cast was +0.8%)
Halifax Price Index Dec +6% YoY vs +7.6% Nov (F/cast was +6.8%)

US Futures 
Opened flat but worked higher in Asian time but have eased back as Europe opens with investors waiting to see the payrolls data. Dow was +165pts earlier but now +90pts S&P and NDX now slightly higher. Trump admitting defeat in the election a positive but concerns remain. Payrolls data today and investors will increasingly be watching earnings to asses the impact of the covid pandemic.
Data due
Non Farm Payrolls, Unemployment Rate, Average Weekly Hours, Average Hourly Earnings, Participation Rate, Wholesale Inventories, Baker Hughes Total Rig Count, Consumer Credit Change.

CHINA CSI 300 Closed -18pts (-0.3%) @ 5,495 
Opened slightly higher but sold down through the morning to 5,460. Sentiment cautious after hitting a 13 year high on Thursday and concerns over Chinese stocks being delisted from US indexes. PM session opened lower and traded sideways for the first 90 mins before working higher in the close but failed to regain yesterday’s closing level.
Shanghai Comp -6pts (-0.2%) @ 3,570
Shenzhen Comp -37pts (-0.2%) @ 15,319
ChiNext Index -12pts (-0.4%) @ 3,151

Monday on the open we get Inflation and PPI data.

HSI Pre Market opened @ 27,630 +82pts vs -207pts ADR’s.
Market trended higher through the morning to test 27,900 before lunch, sentiment buoyed by the expectation that as the Democrats now control both houses in the US that there will be more stimulus. PM saw the market rested 27,900 but failed to break above and consolidated to 27,750 before working higher again but again hit resistance each time it approached 27,900.
ECommerce names rebounding, Autos +VE Geely +17% on broker upgrades. HSBC seeing interest +VE LEX comment. But Telcos still weak with MSCI and FTSE to remove them from their indexes

City University of Hong Kong's Consumer Confidence Index (CCI) of the cross-strait region, Hong Kong and Macau for the fourth quarter of 2020, the overall CCI for Hong Kong is 64.1, -6.7% QoQ, but +11.7% YoY
All the six sub-indices rose during this quarter, with the largest increase of about 35% in the sub-index of Property Purchases. However, all the figures are lower than 75, showing that Hong Kong consumers have not recovered their confidence regarding these aspects.
Centre for Health Protection said there were 45 new COVID-19 cases in Hong Kong today (vs 33 Thursday)  22 local cases from unknown sources.

SHORT SELLING Friday 9.2% vs 13.8% Thursday Top Shorts: Hang Lung Property (101) 40%, Hengan (1044) 40%, MTRC (66) 40%, Hang Seng Bank (11) 40%,  Wharf REIC (1997) 37%, Ping An (2318) 35%, CLP 92) 32%, HK & China Gas (3) 32%, Henderson Land (12) 32%, Bud APAC (1876) 30%,Sunny Optical (2382) 27%.

CH OUTFITTERS (01146.HK) announced that it was informed by Orchid Asia, a shareholder of the Company, that on 7 January 2021, Orchid Asia disposed of 130 million shares of the Company, representing approximately 3.77% of the issued share capital of the Company to Huang Xiaoyun, an executive director of the Company, for a consideration of HK$15.6 million.
Pruden's Executive Director & Corporate Development Director (Valuation & Property Management) Leo Cheung commented that the residential site at No. 9 and 11, Mansfield Road, to close tender on 5 February, enjoys ideal landscape and location.   The land premium was modeled at roughly $6.8 billion, and floor price at $47,000/ sq. ft..
Some venues in Shanghai's Lujiazui have switched on trials for digital RMB, said Chinese media.  Ant Group replied that there is no more information available as the trial is still at the initial stage.
China Banking and Insurance Regulatory Commission (CBIRC) announced that it will solemnly mount investigation on a series of law violations, and will impose administrative penalty on multiple financial institutions and related responsible personnel, including China Development Bank (CDB), China Development Bank Leasing, ICBC and PSBC. The penalty aggregated RMB199.5 million.
Stewart C K Leung, Chairman of Wheelock Properties, forecast 5-10% increment in local housing prices this year, contingent on the overall economic environment in Hong Kong. As long as the economy revives, the housing prices will advance. In Leung's view, the situation will get better if it can make trough the Chinese New Year.  The group had earlier won a land parcel at Mansfield Road. As to another site at the same road to be launched by the government, Leung said the company will consider the tender, opining the two parcels can be merged for development.
SUNNY OPTICAL (02382.HK) announced that the shipment volume of handset lens sets and vehicle lens sets in December 2020 was 130 million and 5.736 million units, up 2.5% and 37.3% yearly.
CCL last printed at 178.13, +1.08% WoW to a 19-week peak, said Centaline Property.  CCL Mass last posted at 180.48, +0.66% weekly; CCL (small-to-medium flats) last reported at 177.99, +0.74% weekly; CCL (large units) last stood at 178.83, +2.89% weekly.

Market Comment
*HKEX (388 HK +2%) to record high amid the potential that actions like the NYSE delisting China’s three big telecom companies will help accelerate listings of mainland firms on the company’s platform.
*TELCOS WEAK  MSCI will remove CH MOBILE (941 HK -4.6%), CH TEL (728 HK -4%), and CH UNICOM (762 HK -0.9%) from the MSCI ACWI Indexes and from relevant non-market cap weighted indexes and custom indexes as of the close of business on Friday. S&P Dow Jones Indices said it will remove the three Chinese telcos from indices effective prior to the open on Jan. 12.  FTSE will also remove the stocks from its indexes.
*E-COMMERCE MIXED.  News reported that ALIBABA's (9988 HK +1.4%) Ant Group is looking to restructure its consumer credit operations so the company can continue lending nationwide under new regulations. It  is also planning to fold its financial operations into a holding company that could be regulated more like a bank. NTES (9999 HK +5%) continue with recent strength; its mobile game "Ave Racing" is among th 89 games that was announced a version number in December. BAIDU's plan for second listing in HK as soon as in 1H to raise at least HK$27.3b support sector's sentiment. MEITUAN (3690 HK +3.2%) TENCENT (700 HK +0.8%).
*AUTO FIRM after GEELY's (175 HK +19.6%), on BAIDU's plan to form a smart EV company, manufacturing to be carried out at plants owned by GEELY. Some of Geely’s existing manufacturing facilities will be revamped to make the vehicles, according to news.
GAC (2238 HK +3%) despite rumored chip supply shortage, said that certain companies under the group received warning notice regarding supply disruption of some car parts from suppliers in wake of widespread pandemic.
BYD (1211 HK +2.1%) GREAT WALL (2333 HK +5%).
AUTO PARTS maker MINTH (425 HK +8.5%) on speculation on component upgrade in the auto industry.
*MACAU CASINO MIXED  SANDS CHINA (1928 HK -1.8%) said chairman Sheldon Adelson will take medical leave for lymphoma treatment. He will be replaced by Robert Goldstein,  while Grant Chum Kwan Lock was appointed executive director.
Snow Lake Capital suggested MGM CHINA (2282 HK +1%) to after it raised its stake in MGM China to 7.51% as the largest public shareholder, but MGM later said there is no plan for restructuring.
*PHARMA/BIOTECH FIRM names continue to be dominated by news on drug and vaccines development. SINO BIOPHARM's (1177 HK +1.2%) anti-infectious drug "Linezolid and Glucose Injection" has obtained the notice of approval of supplemental applications in China, and has passed the Consistency of Quality and Efficacy Evaluation for Generic Drugs.  More than 4m doses of SINOPHARM's (1099 HK -1.4%) Covid vaccine had been administered in China’s emergency use as of Jan. 4, Sinopharm said. Chinese Covid vaccine shots developed by Sinovac, is confirmed by Brazil officials to be 78% effective in preventing mild Covid cases and 100% effective against severe and moderate infections. CASINO (6185 HK +11%) GENESCRIPT (1548 HK +4%).
*HK PROPERTY FIRM The one-month Hong Kong interbank offered rate, which is linked to the mortgage rate, -0.133% yesterday, while HK existing home price +1.1% WoW.
Li Ka Shing Foundation bought a total of 210,000 CK ASSET (1113 HK +0.5%) shares during Dec 31 and Jan 6. V
ANKE PROP (HK) released 47 units in the 5th price list of The Campton with an average price of HK$19,511 psf after discounts, 18.88% higher than the first price list. SHKP (16 HK +0.6%) NWD (17 HK +0.14%) KERRY (683 HK +1.1%).
*CHINA PROPERTY MGMT FIRM. EVERGRANDE SERVICES (6666 HK +26%) sees net profit and the profit attributable to shareholders at 2.6b yuan are both expected to be approx 2.8 times of that of last year.
EVER SUNSHINE (1995 HK +15%) jumped on optimism about a its plan to acquire a 65% stake in Guangxi property management service provider Zhangtai Service Group for approx. 434m yuan.

Regional Markets
Nikkei 225 opened higher following the US rally and on good pre market data and worked gradually higher through the morning session. PM opened slightly higher from the morning close and quickly tested 28,000 but then sold down to 27,900 before working higher and breaking above 28,000 and trading sideways to close +649pts (+2.4%) @ 28,139 A new 30 year plus high.
Topix traded in a similar pattern and closed +29pts (+1.6%) @ 1,855
Pre market
Household Spending Nov +1.1% YoY vs +1.9% Oct (F/cast was -1.2%)
Household Spending Nov -1.8% MoM vs +2.1% Oct (F/cast was -1%)
Foreign Exchange Reserves Dec $1394.7b vs 1384.6b Nov
During market hours
Coincident Index Prelim Nov 89.1 vs 89.4 Oct (F/cast was 92.5)
Leading Economic Index Prelim Nov 96.6 vs 94.3 Oct (F/cast was 93.2)
Hyundai +19.4% reported to be in talks with Apple over electric car tie up.Samsung Electronics forecast Q4 operating profit +26% to KRW9 trillion (around USD8.24 billion) as the street expected.
Kospi opened higher and rolled strongly in the first 25 minutes to 3,090 it then eased slightly before working better through he rest of the day with an acceleration around 3pm. Currently +121pts (+4%) @ 3,152
Kosdaq opened higher and tested 995 but then sold down to 978 before working back flat at around 1pm but unable to break above and eased back; closed -1pts (-0.1%) @ 988
Data pre market
Current Account Nov $8.97b vs 11.66b Oct (F/cast was 9.5b)
Opened higher and traded sideways for more to the day but rallied around 1pmand worked higher to close +250pts (+1.6%) @ 15,464 After Market TSMC reported delivered FY20 operating revenue of roughly TWD1.34 trillion, +25.2% YoY to a new record, according to Bloomberg' estimates.
Data after market
Balance of Trade Dec $5.76b vs 5.27b Nov (F/cast was 5.1b)Exports Dec +12% YoY vs 12% Nov (Consensus was 9.2%)Imports Dec +0.9% YoY vs 10% Nov (Consensus was 4.1%)
Northbound Rmb 72,657m Buy 31,036m vs 41,621m Sell
Southbound HK$ 39,557m Buy 16,231m vs 23,326m Sell
Northbound Rmb 87,205m Buy 39,588m vs 48,617m Sell
Southbound HK$ 27,127m Buy 10,380m vs 16,747m Sell

Active Heavyweights
MEITUAN (03690.HK) +3.2%
HKEX (00388.HK) +2%
AIA (01299.HK) +1.9%, hitting new high
BABA (09988.HK) +1.4%
PING AN (02318.HK) +0.9%
CCB (00939.HK) +0.9%
TENCENT (00700.HK) +0.8%

HSI & HSCEI Constituents on Move:
GEELY AUTO (00175.HK) +19.6%, hitting new high
SMIC (00981.HK) +10.6%
JD HEALTH (06618.HK) +6.5%
NTES (09999.HK) +5.1%, hitting new high
TECHTRONIC IND (00669.HK) +4.8%, hitting new high
CHINA RES BEER (00291.HK) +4.7%
HANSOH PHARMA (03692.HK) -4.6%
CHINA MOBILE (00941.HK) -4.2%
SUNNY OPTICAL (02382.HK) +4.1%, hitting new high
CHINA TOWER (00788.HK) -3.6%
BUD APAC (01876.HK) +3.3%
WHARF REIC (01997.HK) +3.3%GUANGDONG INV (00270.HK) +3.1%
CONCH CEMENT (00914.HK) + 3%

HSMI & HSSI Constituents on Move:
CHINA RISUN GP (01907.HK) +30.3%, hitting new high
SH ELECTRIC (02727.HK) +19.9%, hitting new high
EVERSUNSHINE LS (01995.HK) +14.8%, hitting new high
YADEA (01585.HK) +11.4%, hitting new high
GUOTAI JUNAN I (01788.HK) +11.3%
CHINAHONGQIAO (01378.HK) -10.7%
CANSINOBIO (06185.HK) +10.6%
TRAVELSKY TECH (00696.HK) +10.3%, hitting new high

GAC GROUP (02238.HK) In respect of rumored chip supply shortage, said that certain companies under the group received warning notice regarding supply disruption of some car parts from suppliers in wake of widespread pandemic, Cailian Press reported. The related circumstance is still pending confirmation.
TENCENT (00700.HK) raised the investment in Xingsheng Youxuan, a Chinese online commodity start-up platform, by a scale of US$100 million, with a valuation of US$5 billion, Bloomberg reported.  The company is discussing with other investors as well including Kuaishou to raise more funds, people with the knowledge of the matter said.
Lei Wai Nong, Macau's Secretary for Economy and Finance, predicted a stable uptrend of the city's economy in 2021. He maintained the GGR tax revenue forecast at MOP130 billion this year. Visitor flow to Macau has been brisk since the IVS scheme resumption from 23 September 2020, he added.
Pfizer  said the COVID-19 vaccine co-developed with BioNTech is effective against new variants discovered in the UK and South Africa, according to its laboratory study.International Data Corporation (IDC) expects the worldwide used smartphone shipment to reach 352 million units in 2024, equivalent 11.2% in 2019-24 CAGR, with a market value up to US$65 billion.
Tuhu, a Chinese online car-services platform backed by TENCENT (00700.HK)   and Goldman Sachs , is pursuing a new round of financing with a valuation of US$4 billion, Bloomberg reported.  The company is reportedly in cooperation with advisors, possibly raising at least US$200 million. People with the knowledge of the matter said the company is mulling a flotation in Hong Kong or the US as soon as this year.
CHINA RAIL CONS (01186.HK)  announced that in relation to the proposed spin-off and listing of China Railway Construction Heavy Industry (CRCHI) on the Science and Technology Innovation Board of the Shanghai Stock Exchange (SSE), the result of the review is that the conditions of issuance, conditions of listing and requirements of information disclosure are met, pursuant to the Announcement on the Results of the Second Review Meeting of the Listing Committee of the Science and Technology Innovation Board in 2021 issued by the SSE on 7 January.
FTSE Russell said it will remove CHINA MOBILE (00941.HK), CHINA UNICOM (00762.HK) and CHINA TELECOM (00728.HK) from its indexes, including FTSE Global Equity Index Series and FTSE Global China A Inclusion Indexes, effective next Monday (11 January) pursuant to the US executive order.
MSCI announced to pull CHINA MOBILE (00941.HK) , CHINA UNICOM (00762.HK)  and CHINA TELECOM (00728.HK)  from its benchmark indexes.  CHINA MOBILE is one of the biggest constituents in the MSCI China Index, with a weighting of around 1.1%.

Baidu (BIDU.US) plans to set up a smart electric vehicle maker, with manufacturing to be carried out by Geely's factories, Reuters citing insiders. The Chinese search engine company will reportedly take a majority stake as well as absolute voting power in the new firm.
HKEX (00388.HK) announced that the average daily turnover in 2020 securities market was $129.5 billion, an increase of 49 per cent when compared with 2019. Funds raised through IPOs in 2020 was $397.5 billion, an increase of 27 per cent when compared with $314.2 billion in 2019.
BABA-SW (09988.HK)'s Alibaba Cloud (Aliyun) won the bid of National Healthcare Security Administration (NHSA) for cloud platform resource expansion project in core business area, according to Chinese media.  The bidding announcement said the project had a budget of RMB20 million while the the amount of money of winning the bid was RMB19.66 million.
U.S. major off-exchange trading platform operator OTC Market will prohibit trading in 12 Chinese stocks following Washington's ban on investment in PLA-related Chinese firms.  OTC will bar the quoting of nine Chinese names, including CHINA RAIL CONS (01186.HK), NANJING PANDA (00553.HK) and SMIC (00981.HK), from Thursday. Three more Chinese securities will be curbed on the platform next Monday.
BABA-SW (009988.HK)'s Ant Group plans to restructure most consumer loans currently sit within its lending units, Huabei and Jiebei, to form a new company,  so that it can continue its lending business which would otherwise be pending licensing from Chinese watchdogs, people familiar with the matter were quoted as saying by Bloomberg.
Trump administration officials are discussing an executive order expansion to bar U.S. investment in Chinese firms allegedly tied to the People's Liberation Army, Reuters citing insiders. American investors may be asked to fully divest their positions in the blacklisted firms before 11 November 2021. There are 35 companies on the list so far, including SMIC (00981.HK) and the owner of CNOOC (00883.HK). Washington is also purportedly considering adding BABA-SW (09988.HK) and TENCENT (00700.HK) to the list.
MGM CHINA (02282.HK) announced that the board of directors is aware of an open letter issued by Snow Lake Capital, an institutional investor and a shareholder of the Company, to the board of directors of MGM Resorts International, the Company’s controlling shareholder, making recommendations on the shareholding structure and future development of the Company. The Board confirmed that the Company has no plans of restructuring for now.
Brazil's Instituto Butantan announced that Sinovac Biotech's coronavirus vaccine was 78% effective in a local clinical trial, with detailed figures submitted to Brazilian health watchdog Anvisa for emergency use application.
SANDS CHINA LTD (01928.HK)  announced that Sheldon Gary Adelson will take a medical leave of absence from his positions as the Chairman, Chief Executive Officer and the Chairman of the Nomination Committee of the Company to receive further treatment for lymphoma, and is re-designated as a Non-Executive Director, in each case, with immediate effect.  Robert Glen Goldstein is appointed as the Acting Chairman, Acting Chief Executive Officer, Acting Chairman of the Nomination Committee, and re-designated as an Executive Director.
GUOTAI JUNAN I (01788.HK)  Positive Profit Alert  Expecting the net profit for the year ended 31 December 2020 to increase significantly by more than 50% as compared with that of the previous year (HK$900 million), mainly attributable to the increase in the revenue generated from wealth management, financial products and other core businesses.

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