Nov 11 HK WRAP -75pts with T/O HK$267bn NPC says Lam can oust opposition lawmakersCHINA CSI 300 Closed -49pts (-1%) @ 4,905
HSI -75pts (-0.3%) 26,227 HSCEI -46pts (-0.4%) 10,541 T/O HK$267.45bn (+14.3% DoD)
Investors continue to re-align their portfolio’s for a world that has a vaccine to combat covid 19, value investing that was dead two weeks ago is back in the agenda. But there are still a lot of covid issues that are still emerging not least firms for whom the recovery will come too late.HK saw record volumes today as did S Korea (with foreigners big buyers) and Taiwan. Hong Kong was weak as the E-commerce drivers have been halted by new regulation in China. The market may also see pressure tomorrow as all the Non-establishment LegCo members resign in protest as the disqualification of LegCo members deemed by Beijing as not being patriotic enough. Beijing may have quelled the public displays of resentment at its impositions on Hong Kong but they have not gone away.
China was weak with political risk to the markets suddenly becoming a big issue. The weaker than normal new loans data will also raise concerns about the economy and with a covid vaccine soon to be available there will be concerns about the exporters who have risen to prominence with medical exports.In the US Trump is still refusing to concede defeat and causing mischief in the meantime.
EUROPE opened higher, tested yesterdays closing levels and now working higher. No data due today but several ECB speeches. Utilities rising but the Banks remain weak.Corporate earnings a key driver; German IT house Bechtle up strong in early trade on strong Q3 results. ABN Amro weak despite beating profit expectations, but it missed net interest income projections and gave cautious forward guidance.
Nordea Bank weak as Sampo cut its stake. Prosus weak on concerns about stronger Chinese antitrust regulation.
US Futures opened opened Dow +40pts and has inched higher in Asian time currently +103pts with S&P and NDX positive too. Veterans days so bond market closed.
Data MBA 30 yr Mortgage Rate and Mortgage Applications. Veterans Day Bond Market Closed.
Earnings Include : Air Products, DouYu, Lemonade, Reynolds Consumer, Vroom, Fossil
CSI 300 opened lower but traded higher to flat initially before selling down to 4,925 and then rebounding into lunch. PM saw the market trend lower to close around the day low.ChiNext stocks plunged 3.3% and STAR Board Index dropped 3.2%, as regulators step up antitrust pressure against the country's financial technology sector to curb online platforms' monopolies. Sector rotation out of tech names into procyclical stocks including commodities/resources, construction materials, and liquor names. Semiconductors and new energy vehicle-related sectors led the underperformers.
Shanghai Composite Index -18pts (-0.5%) @ 3,342
Shenzhen Component Index -273pts (-2%) @ 13,720
ChiNext Index -92pts (-3.3%) @ 2,682CHINA Data After Market
Vehicle Sales Oct 12.5% vs 12.8% Sept (F/cast was 10.5%)
New Yuan Loans Oct CNY 689.8b vs 1900b Sept (F/cast was 850b)
Outstanding Loan Growth Oct 12.9% YoY vs 13% Sept (F/cast was 12.9%)
Total Social Financing Oct CNY 1420b vs 3480b Sept (F/cast was 1450b)
M2 Money Supply Oct 10.5% YoY vs 10.9% Sept (F/cast was 10.8%)
New loans are usually lower in Oct due to National Holidays and the fact that most banks have used up their quota’s but this was weaker than usual. Household loans (mostly mortgages) dropped to CNY433.1b from 960.7b in Sept and Corporate Loans dropped too. Total Social Financing dropped sharply but was in line with expectations.HSI Pre Market Opened @ 26,226 -73pts vs +78pts ADR’s at 26,379
E-commerce names weak again; Alibaba -7.4% and Tencent -5.7%, Meituan -6%. Market then rallied to the day high 26,432 before selling down to flat and then dipping to 26,250 and trading sideways into lunch. PM opened higher and tested 26,400 a couple of times in the afternoon but unable to break above and then sold down to the day low 26,170 level at 3:55pm before a small bounce into the close and a 30pt uptick in the closing auction.Telcos saw good interest along with HK Financials and Petrochems.IPO
BRIGHT FUTURE (01351.HK), on debut, settled the day at $1.45, up 35 cents or 32% against the listing price $1.1, on volume nearly 144 million shares and turnover of $215 million. Excluding the handling fees, a book gain of $700 was reported per board lot of 2,000 shares.HONG KONG DATACentre for Health Protection said there were 18 new COVID-19 cases
in Hong Kong today (vs 9 Tuesday) 3 local infections from unknown sources.SHORT SELLING Wednesday 11.6% vs 13.6% TuesdayTop Shorts
CCB (939) 28%, Ping An (2318) 28%, Hang Seng Bank (11) 26%, BoC (3988) 26%.
AFTER MARKET NEWSNon-establishment Legislative Councilors met the press in the evening, during which Democratic Party Chair Wu Chi-wai announced that non-establishment Legislative Councilors will submit resignation letters collectively tomorrow (12 November), indicating their responsibility at the Council will come to an end, as a gesture of protest against Chief Executive Carrie Lam's disqualification decision.
At the request of Chief Executive Carrie Lam, the NPC Standing Committee approved the decision on the qualification issue of Legislative Councilors of HKSAR. Alvin Yeung, Dennis Kwok, Kwok Ka-ki and Kenneth Leung will immediately be disqualified as Legislative Councilors.miHoYo's Genshin Impact overtook TENCENT (00700.HK)'s Honor of Kings and PUBG Mobile
to top the world's mobile game revenue chart in October, reported Sensor Tower. Genshin Impact garnered US$239 million in user spending in the period, 31% of which generated from China.HUA HONG SEMI (01347.HK)'s 3Q20 results conference call,
CFO Daniel Wang disclosed that the group has set a new high in sales revenue, on the ride of reviving consumption in China and gradually unleashed demands. 2H20 results were expected to outshine 1H20’s. With respect to the group's target on the Wuxi plant to strike a breakeven in 2H21, Wang stated that the goal is hardly attainable given the high investment and depreciation, although the factory will hopefully get close to the target by end-21.Hong Kong Productivity Council unveiled the Standard Chartered Hong Kong SME Leading Business Index report for 4Q20.
The overall index hit 37.5 in the quarter, rising 7.7 from 3Q20's 29.8. The index increased for the second straight quarter. However, both the overall index and sub-indices stood below 50, reflecting operating challenges faced by SMEs amid the pandemic and the new normal.Centa-Salesman Index (CSI) last stood at 54.08 this week, +1.18 pts weekly,
said Centaline Property. Failing to test 55, the index still managed to defend to critical line 50.
MARKET COMMENT*HK FINANCIALS STRONG
except HKEX (388 HK -3.2%), profit-taking after reported 3Q net income jumped 52% YoY HK$3.35b, while revenue, including investment income, expanded to HK$5.31b from HK$3.99b.
HK BANKS extended recent gains amid economic recovery hopes; HSBC (5 HK +4%) STAN CHART (2888 HK +3.6%) HANG SENG (11 HK +2%) BANK OF EAST ASIA (23 HK +2.8%) .*CHINESE BANKS FIRM
That was before the October's lending data which came out after the market close; but showed a bigger than expected drop in lending with both mortgages and commercial lending down. Expect some weakness tomorrow.CCB (939 HK +3.2%) ICBC (1398 HK +3.2%) ABC (1288 HK +2.4%) BOC (3988 HK +3.7%).*PETROCHEMS STRONG
as WTI +2.7% BRENT +2.9% oil continue to advance as vaccine hopes countered current global lockdown gloom. IEA said demand hasn't peaked and could rise above pre-Covid levels if economies recover quickly. SINOPEC (386 HK +3%) CNOOC (883 HK +4.3%) PETROCHINA (857 HK +1.2%) CH OILFIELD (2883 HK +0.8%).*RESOURCES & CONSTRUCTION MATERAILS STRONG
as the recovery/expansion of economic activities in China has exceeded expectations. CNBM (3323 HK +10%) CONCH CEMENT (914 HK +4%) ANGANG (347 HK +4.7%) MAANSHAN (323 HK +3.8%).*E-COMMERCE WEAK
as ALIBABA (9988 HK-9%) as China’s antitrust watchdog is seeking feedback on a raft of regulations that establish a framework for curbing anti-competitive monopoly behavior to eliminate competitors. They may also require companies that operate a so-called Variable Interest Entity -- a vehicle through which virtually every major Chinese internet company attracts foreign investment and lists overseas -- to apply for specific operating approval. MEITUAN (3690 HK -9%) TENCENT (700 HK -6.8%) JD (9618 HK -9%) ALI HEALTH (241 HK -12%) PA GD (1833 HK -4.4%).* TECH & COMPONENTS WEAK
as investors rotate out from tech names. HUA HONG SEMI (1347 HK -14%) 3Q net profit -61% YoY to US$17.69m +0.7% QoQ.SMIC (981 HK -8%) ahead of earnings. AAC (2018 HK -3%) XIAOMI (1810 HK -8%).*SPORTSWEAR/APPAREL WEAK
after SHENZHOU INTL's (2313 HK -7%) shareholders sold 37.6m shares at HK$133.10 each in an accelerated placement, represents a discount of 7.25% to Tuesday’s closing price of HK$143.50. ADIDAS forecast fourth-quarter operating profit between 100m and 200m euros, that missed analysts' forecast, and the company warned renewed lockdowns will weigh on earnings, although it does expect good earnings from China. LI NING (2331 HK -11%) ANTA SPORTS (2020 HK -5.8%) CH DONGXIANG (3818 HK -3.4%).*PHARMA MIXED
around vaccine development news. CANSINO (6185 HK- 6%) INNOVENT (1801 HK -3%) SINOPHARM (1099 HK +3%) 3SBIO (1530 HK +2%). FOSUN PHARM (2196 HK -3.7%) phase-1 human trial vaccine inoculation for coronavirus vaccine candidate BNT162b1 developed with partner BioNTech is completed.*AUTO MAKERS WEAK
recent rallies have been related to positive policies speculation.
DONGFENG MOTOR (489 HK -1.6%) Oct vehicle sales +9.86% YoY at 288,429 units, Jan-Oct vehicle sales -5.8% YoY to 2.22m units.
GREATWALL (2333 HK -12%) BRILLIANCE (1114 HK -3.5%) GEELY (175 HK -6%) BYD (1211 HK -15%) GAC (2238 HK -7.5%).*HK PROPERTY FIRM
on recovery hopes and low interest rates, and as HIBOR remains low. Li Ka Shing Foundation bought 625,500 CK ASSET (1113 HK+41%) shares between Nov 4 to Nov 9, at an avg px of HK$37.2809/shr. SHKP (16 HK +3.2%) HENDERSON (12 HK +2.4%) NWD (17 HK +3%).