Dec 22 HK/CHINA WRAP HSI -187pts , CSI 300 -82pts T/O drops. Europe Rebounds


22 Dec

HSI -187pts (-0.7%) 26,119 HSCEI -18pts (-0.2%) 10,384  T/O HK$123.72bn (-14%)

EUROPE 
Markets DAX and CAC opened higher, FTSE lower but all initially traded higher ands are currently in the green. Covid still in focus but revelation that the strain had been around since September and that the current vaccines would be effective easing concerns. Brexit negotiations on going but UK offering concessions; stick point still seems to be fishing. Sterling continues to weaken. Bank leading the gains. Supermarkets weak on shortage worries.
Data 
GERMANY
Consumer Confidence Jan -7.3 vs -6.8 Dec revised (F/cast was -9.2)
UK
Business Investment Final Q3 +9.4% QoQ vs -25.4% Q2 revised (F/cast was +8.8%)
Business Investment Final Q3 -19.2% YoYvs -25.2% Q2 revised (F/cast was -20.7%)
Current Account Q3 GBP -15.7b vs -11.9b Q2 revised (F/cast was -10.7b)
GDP Growth Rate Final Q3 -8.6% YoY vs -20.8% Q2 revised (F/cast was -9.6%)
GDP Growth Rate Final Q3 +16% QoQ vs -18.8% Q2 revised (F/cast was +15.5%)
Public Sector Borrowing Nov GBP -31.6b vs -21.7b revised (F/cast was -28.6b)
US Futures 
Opened flat in Asian time but have eased lower; Dow -50pts, S&P lower and NDX slight +VE.  With the stimulus package now agreed thoughts will focus on what Biden will do when he takes over and how much trouble Trump can cause in the meantime.

Data
GDP Price Index, Corporate Profits, PCE Prices, Core PCE Prices, Redbook, Existing Home Sales, Consumer Confidence, Richmond Fed Manufacturing Index, 5 Yr TIPS Auction, API Crude Oil Stock Change.

CHINA CSI 300 Closed  -82pts (-1.6%) @ 4,965
CSI 300 opened lower -12pts and tested lower to 5,024 with concerns over more Trump action against Chinese companies. Then worked higher into lunch. PM saw the market trend initially sell down to 5,020 and traded sideways for about 45 minutes before trending lower to close just off the day low.
Indexes

Shanghai Comp -63pts (-1.9%) @ 3,356 T/O Rmb 432.2bn
Shenzhen Comp -252pts (-1.8%) @ 13,882 T/O Rmb 525.4bn
ChiNext Index -70pts (-2.5%) @ 2,811
CHINA DATA  None 

HSI Pre Market Opened  26,261 -46pts vs -129pts ADR’s
Macau Names weak on news the quarantine period would be extended to 21 days. Choppy trading in the first hour (in part I think margin call selling) but trended higher and spiked higher around 10:50 to 26,350 but then sold back down to 26,280 level and traded sideways into lunch. PM saw a sharp sell off down first to 26,200, then 26,100 and then to 26,000 in the first hour. It then traded sideways for testing the support before working higher in the last hour. General weakness seen throughout Asia.
Stockswith specific news stood out;
Anta sports (02020 HK. +3.6%) on selling of Precor.
Guangdong Inv (000270 HK +11.7%) on new Dongjiang water deal.
TCL(1070 HK -15%) on US investigation Macau names weak from the open on extending the quarantine period to 21 days.
PICKs Techtronics (669 HK) closed -1.5% @ HK$105.50. I would wait and look to accumulate below HK$100.

HONG KONG DATA
After Market Current Account Q3 HK$96.5b vs 60.52b Q2 (F/cast was -5b)
Centre for Health Protection said there were 63 new COVID-19 cases in Hong Kong today (vs 85 Monday) 13 cases with unknown origin.

SHORT SELLING Tuesday 14.2% vs 12.9% Monday 
Top Shorts  Bud Apac (1876) 48%, Wharf REIC (1997) 45%,  Country Garden (2007) 40%, Hengan (1044) 39%, Bank of China (3988) 37%, Bank of China (3988) 37%, Sands China (1928) 32%, CKI (1038) 31%, Ping An (2318) 30%, AAC Tech (2018) 29%, CCB (939) 29%, AIA (2018) 28%, HK & China Gas (3) 27%, Power Assets (6) 27%, BankComm (3328) 26%, CLP (2) 25%,  MTRC (66) 24%,  

AFTER MARKET NEWS 

AEON CREDIT (00900.HK) announced results for the first three quarters ended November 2020. Net profit amounted to $230 million, down 17.4% yearly. EPS equaled 55.01 cents.

After MTR CORPORATION (00066.HK) announced that 37 EOIs had been received for the Wong Chuk Hang Station Phase 5 project,  CK Asset (01113 HK) said it had submitted a bid.  James Cheung, a surveyor at Centaline, commented that the market response was in-line with the consensus.

K. WAH INT'L (00173.HK) assumed Hong Kong property market to be on track of recovery next year, when property prices may go up roughly 5%, after the pandemic comes under control and effective vaccines hit the market.


Regional Markets
All saw PM selling said to be on concerns about the new covid virus mutation leading to more lockdowns, curbs on travel and hinder the global recovery.
JAPAN 
Nikkei 225 opened lower but initially traded higher but resistance around 26,625 level and sold down to 26,455 before fining support and working back to 26,625 level at lunch. PM trended lower to 26,362 before a small bounce to close -278pts (-1%) @ 26,436
Topix traded in a similar pattern 1,777/1765 in the morning but trended lower in the PM with a bounce into the close finished -28pts (-1.6%) @ 1,761
S KOREA  
Kospi Opened lower having close at a new high on Monday and initially trended lower in choppy trading to support at 2,758. Then a rebound and effectively traded sideways until around 2pm when it sold down to 2,734 small bounce but then sold down to finish -45pts (-1.6%) @ 2,734.
Kosdaq opened flat and trended lower to 942 around 11:30am and then started to rebound and work higher to 950. But again selling pressure around 2:15pm to close -25pts (-2.6%) @ 929 Data pre market PPI Nov 0.0% MoM vs -0.5% Oct (F/cast was +0.1%)PPI Nov -0.3% YoY vs -0.6% Oct (F/cast was -0.8%)
TAIWAN 
Opened lower but rallied back to flat after the strong Export Data out after market Monday. But unable to hold traded around Monday’s closing lower until midday when it started to trend lower, with the selling accelerating after 1pm. Closed -208pts (-1.4%) @ 14,178

CONNECT FLOWS 

Shanghai 
Northbound Rmb 45,619m Buy 22,970m vs 22,649m Sell
Southbound HK$ 12,577m Buy 6,241m vs 6,336m Sell
Shenzhen 
Northbound Rmb 54,832m Buy 29,048m vs 25,784m Sell
Southbound HK$ 14,366m          Buy    6,888m  vs     7,478m  Sell


Active Heavyweights
AIA (01299.HK) -1.9%
PING AN (02318.HK) -1.9%
HKEX (00388.HK) -1.5%
MEITUAN (03690.HK) -0.8%
BABA (09988.HK) -0.5%
TENCENT (00700.HK) +0.1%

HSI & HSCEI Constituents on Move:
GUANGDONG INV (00270.HK) +11.7%
GEELY AUTO (00175.HK) -5.4%
ANTA SPORTS (02020.HK) +3.6%
SANDS CHINA LTD (01928.HK) -3.5%
ALI HEALTH (00241.HK) -3.4%
GALAXY ENT (00027.HK) -3.1%
WUXI BIO (02269.HK) +1.7%, hitting new high

HSMI & HSSI Constituents on Move:
TCL ELECTRONICS (01070.HK) -14.9%
GLORY SUN FIN (01282.HK) -12.9%
GCL-POLY ENERGY (03800.HK) -12.1%
MMG (01208.HK) -11.8%
WUXI APPTEC (02359.HK) +1.4%, hitting new high

MARKET HOURS NEWS
iPhone 12 become the best-selling 5G handset in October, while iPhone 12 Pro was ranked second in the bestseller chart, according to Counterpoint's report. The two devices had made up of nearly a quarter of the monthly 5G smartphone sales.
MTR CORPORATION (00066.HK) announced that 37 EOIs had been received for the Wong Chuk Hang Station Phase 5 project as of the close today (22nd). EOIs from developers, including EMPEROR INT'L (00163.HK), COUNTRY GARDEN (02007.HK), CIFI HOLD GP (00884.HK), Chinachem, CHINA JINMAO (00817.HK), SEA HOLDINGS (00251.HK) and CHEVALIER INT'L (00025.HK)
Taiwan's Central Epidemic Command Centre reported four additional cases of novel coronavirus, of which one was local infection, snapping its 253-day nil-local-case record.
CKH HOLDINGS (00001.HK) has noted media reports claiming that the U.S. Commerce Department published a “Military End User” list which includes a company called Hutchison Optel Telecom Technology.  The Hong Kong-based conglomerate clarified in a statement that it had sold all its shares in Hutchison Optel in 2015. As a result, the group no longer has any ownership or relation with the stated company.
ByteDance is in talks to buy into CMGE (00302.HK) in hopes of strengthening its next pillar of growth, Reuters learnt from people with direct knowledge of the matter. Subsequently, CMGE rallied on the news.
BioNTech and Pfizer (PFE.US) announced that the European Commission (EC) granted a conditional marketing authorization (CMA) to both companies for COMIRNATY (also known as BNT162b2), for active immunization to prevent COVID-19 caused by SARS-CoV-2 virus. The CMA is valid in all 27 member states of the European Union (EU). Pfizer and BioNTech had previously announced an agreement with the EC to supply 200 million vaccine doses to EU member states; the EU also has an option to purchase an additional 100 million doses in 2021. The vaccine has now been granted a CMA, emergency use authorization or temporary authorization in more than 40 countries worldwide.
Canadian mining startup TMAC Resources announced that the government has issued an order directing SD GOLD (01787.HK)  not to implement the proposal to acquire TMAC.   As a result, the Transaction between TMAC and SD GOLD will not proceed. The two parties are in talks to terminate the Transaction.
The India government may reduce its oversight of transactions by Hong Kong-based investors as long as Chinese firms are not involved in the deals, people with knowledge of the matter were quoted as saying by Bloomberg.
CEO of Pfizer’s partner BioNTech, is pursuing various means to make more COVID-19 vaccine shots than the 1.3-billion doses as promised for 2021, reported Bloomberg.
The US slapped additional visa restrictions on Chinese officials who are allegedly infringing human rights, Reuters reported. Meanwhile, the Department of Homeland Security chief Chad Wolf said it is looking at further curbs around China, and is investigating into the business activities of TCL ELECTRONICS (01070.HK) Wolf said the authority had discovered this year that TCL ELECTRONICS had incorporated backdoors into all its TV sets, exposing users to cyber attacks and data leaks.
DONGFENG GROUP (00489.HK) forecast FY20 sales volume to reach 172,000 vehicles, up 8% yearly and beyond its full-year guidance, Sina Finance reported.
TENCENT (00700.HK) announced that its Tencent Comics and CHINA LIT (00772.HK)'s comics arm have launched a program for comic adaptations of online literature.   Accordingly, 300 novels on the CHINA LIT platform will be adapted into comics.
XIAOMI-W (01810.HK) Chairman Lei Jun wrote on Weibo that the company's smartphone Mi 11 will debut on 28 December, marking another breakthrough of high-end flagship models.
Sinovac Biotech's Covid-19 vaccine has passed the 50% efficacy threshold in phase III clinical trials in Brazil, meaning local regulators could sign off on the use, WSJ citing insiders.
There is no evidence proving the new coronavirus variant strain reported in Britain is graver or deadlier than other common strains, despite being more transmissible, said WHO Director-General. The Technical Lead for WHO Health Emergencies Programme, said the vaccines under development are still effective right now.
TENCENT (00700.HK)'s Fusion Bank announced full public launch of its banking services in Hong Kong today, unveiling a collaboration with WeChat Pay HK, the mobile payment solution under Tencent, making Fusion Bank the first virtual bank. in Hong Kong to connect with WeChat Pay HK.  During the promotion period, Fusion Bank customers will enjoy an interest rate of 5% p.a. for the first three-month HKD time deposit, capped at HKD38,000.
CKH HOLDINGS (00001.HK)  is closing a deal with Qatar’s Ooredoo QPSC over combination of their telecommunications operations in Indonesia, people with knowledge of the matter were quoted as saying by Bloomberg.  The Hong Kong-based conglomerate is now in advanced talks that will merge its telecom business in Southeast Asia’s most populous country with Ooredoo’s PT Indosat, said the insiders.
GUANGDONG INV (00270.HK) announced a special arrangement of the Guangdong Provincial Government to ease the financial burden of Hong Kong arisen from the COVID-19 pandemic. The actual water price for 2021 is to be frozen at the 2020 level (i.e. HK$4.821 billion)

PRE MARKET NEWS
Shenzhen Stock Exchange announced that with effect from today (22 December), JD HEALTH (06618.HK) is included into the Southbound Trading list, in light of adjustments to the constituents of Hang Seng LargeCap Index.
BioNTech CEO Ugur Sahin was highly confident about the COVID-19 vaccine co-developed by the company, finding it effective against the coronavirus mutant strain emerged in the UK.
The WTO announced on its website that Australia has requested WTO dispute consultations with China concerning duties imposed by China on imports of Australian barley and that the request had been circulated to WTO members.
Under caution principle in fighting pandemic in Macau, anyone who had been to Mainland China and countries or regions outside Taiwan (including Hong Kong and Britain) within 14 days are subject to 21-day concentrated quarantine and medical observation, compared to the previous 14-day arrangement, said Macau Novel Coronavirus Response and Coordination Centre last night.  Such move responded to diagnosed cases reported in Beijing, Chengdu and Taiwan which had more than 14 days of incubation.
ANTA SPORTS (02020.HK) announced that Amer Sports Oy, a wing under AS Holding, a joint venture held as to 52.7% by the Company, sold Amer Sports Financial Services Oy, ASP Fitness Limited, and Precor Incorporated to Peloton Interactive, for an aggregate consideration of US$420 million (equivalent to HK$3.269 billion). The Precor Group is principally engaged in the manufacturing, distributing, providing, servicing and selling of cardiovascular and strength-building exercise machines, fitness equipment, fitness structures, fitness accessories and associated technical and digital services, which includes Precor-, Queenax-, Icarianand CardioTheater-branded products, Preva-branded services, and products under the “Spinning”, “Assault” and other brands.
The European Union has set about two probes into Chinese exporters to assess whether their steel screws are being sold in the bloc at an excessively low price level and whether their optical fibre cables are enjoying unfair subsidies, Reuters reported.
US-listed Chinese online retailer Pinduoduo announced planned new share placement to an international institutional investor to raise nearly US$500 million (roughly HK$3.876 billion). The share placement, with a 6-month lock-up period, is expected to be completed around 24 December.
JD HEALTH (06618.HK) announced that the Joint Representatives fully exercised the Over-allotment Option in respect of an aggregate of 57.285 million Shares, representing 15% of the Offer Shares initially available under the Global Offering before any exercise of the Over-allotment Option.  The Company will allot and issue the Over-allotment Shares at HK$70.58 per Share, and will receive additional net proceeds of HK$3.982 billion for the issue of the Over-allotment Shares. Listing of and dealings in the Over-allotment Shares are expected to commence on December 24, 2020.
WUXI BIO (02269.HK) announced that it will purchase from Bayer the Facility Assets of the biologics drug substance Manufacturing Plant located in Wuppertal, Germany, so as to continue the Group’s global capacity expansion.  The total consideration is EUR110 million (equivalent to approximately HK$1.041 billion).
CASH FIN SER GP (00510.HK) announced that on 21 December, the Group disposed 80,000 BYD COMPANY (01211.HK) Shares on the open market at an aggregate consideration of HK$15.2 million. The Group will realise a book gain of approximately HK$400,000.
IH RETAIL (01373.HK) announced results for the six months ended October 2020. Net profit reached $169 million, up 252% yearly. EPS equaled 23.7 cents. Interim DPS was 9 cents.w

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