Nov 16 HK WRAP. HSI +225pts but E commerce names lag. Europe opens higher


18 Nov

HSI +225pts (+0.9%) 26,362 HSCEI +34pts (+0.3%) 10,579  T/O HK$145.3bn (-4% DoD)

Overview 
Markets all worked higher with improved sentiment due to the prospect of a vaccine and the RCEP deal being signed. Japan, S Korea and Taiwan seeing good moves in Tech, Autos and Exporters in general.China more mixed House Price and Retail Sales saw a slight miss which is a worry considering they are key drivers. Additionally the threat of more action against China in the next few weeks hurting sentiment as did news on the bond defaults last week and the news that Brilliance China may face a court restructuring.HK was muted by the news that E-commerce names may see more regulation in China; these have been big drivers for the HSI. Watch Techtronics (669 HK) this week with US Housing data and the DIY firms reporting.

EUROPE Markets opened higher following Asia but are easing back in early trading on the resurgence of covid cases and the new lockdown in Austria. Spanish financial group BBVA traded +15% on news it has agreed to sell its US business, BBVA USA Bancshares, to PNC Financial Services Group for $11.6 billion. Compatriot Banco de Sabadell +12%.Only data today is the Bundesbank monthly report and speeches by EU’s Guindos & Mersch.
US Futures opened strongly Dow +202pts (+0.7%), S&P +0.7% and NDX +0.9% and worked gradually higher in Asian time currently Dow +260pts with the S&P and NDX higher too. Covid and the election outcome still overhanging the market.
Data NY Empire State Manufacturing Index.
Fed speakers Clarida and Daly
Earnings Vodafone, CasperSleep, Aecom, Tyson Foods, Palo Alto Networks, Baidu, SmileDirectClub

CHINA CSI 300 Closed +47pts (+1%) @ 4,904
CSI 300 opened higher but sold down on mixed data Housing and Retail numbers missed but FAI, Industrial Production and Unemployment beat. Market then rallied back, initial resistance at the opening level but then worked higher into lunch with sentiment bolstered by the RCEP being signed and seen as +VE for China. PM saw an initial sell down but then rebounded and effectively traded sideways with a rally into the close. Investors showing some caution on news that Trump intends further actions against China in the final days of his administration; the expectation is that more companies may face sanctions or investment restrictions.
Beijing issued a yellow alert for heavy air pollution from today and has requested some northern provinces including Hebei, Shanxi and Shandong to take measures to reduce emissions to help curb air pollution through Nov. 17 likely to impact production in the monthly numbers.
Indexes
Shanghai Comp +37pts (+1.1%) @ 3,347
Shenzhen Comp +96pt (+0.7%) @ 13,850
ChiNext Index +6pts (+0.2%) @ 2,712

CHINA Data
House Price Index Oct +4.3% YoY vs +4.6% Sept (F/cast was +4.4%)Fixed Assert Investment (YTD) Oct +1.8% YoY vs +0.8% Sept (F/cast was +1.5%)Industrial Production Oct +6.9% YoY vs +6.9% Sept (F/cast was +6.3%)Retail Sales Oct +4.3% YoY vs +3.3% Sept (F/cast was +4.6%)Unemployment Oct +5.3 vs +5.4% Sept (F/cast was +5.5%)

HSI Pre Market Opened at 26,362 +205pts vs +61pts ADR’s with Hang Seng Index additions Meituan, Anta and Bud APAC strong but deletion Swire was weak. Other E-commerce names were weak. Market then sold down 130pts on the mixed China data before then working higher into lunch but trading has been choppy. PM saw market initial trade slightly higher to the 26,300 level and thensideways until the last 30 minutes when there was a rally into the close and a 28pt uptick in the closing auction. HK Financials saw good interest with HSBC and Standard Chartered both +VE

HONG KONG DATA
Centre for Health Protection said there were 8 new COVID-19 cases in Hong Kong today (vs 14 Sunday) no local infections

SHORT SELLING Monday 17% vs 15.3% Friday
Top Shorts 
Ping An (2318) 42%, Country Garden (2007) 40%, Swire Pac A (19) 40%, BoC (3988) 38%, CCB (939) 38%, BankComm (3328) 38%, Mengniu Dairy (2319) 34%, CITIC (267) 33%, CNOOC (883) 30%, BoC HK (2388) 29%, ICBC (1398) 29%, Hang Seng Bank (11) 27%, Galaxy Ent (27) 26%, AAC Tech (2018) 26%, Henderson Land (12) 25%.


AFTER MARKET NEWS
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 410,000 shares in CK ASSET 
(01113.HK) at the average price of HK$40.3542, HK$42.3600, HK$41.8909 and HK$41.2700 per share on 10 November, 11 November, 12 November and 13 November 2020 respectively.  As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.74% to 35.75%, and increased from 35.81% to 35.82%, respectively.
Spot USD/CNY closed at 6.5770, up 374 bps. As at 16:53, USD/CNY climbed 336 bps in the night session. USD/CNH stood at 6.5704, up 297 bps.
HKTB: HK Oct Preliminary Visitor Arrivals -99.8% YoY to 7,800 Actively gearing up the "Air Travel Bubble", Hong Kong will shower the first batch of Singaporean travelers arriving on Sunday (22nd) with gifts and over a thousand promotions.
HKGB IBOND 2311 (04239.HK) opened at $103.5 in gray market, +3.5% against the issue price of $100, according to Phillip Securities. The Government announced that a total of 456,400 valid iBond applications were received. The principal amount of the iBond applied reached $38.362 billion.
CATHAY PAC AIR (00293.HK)'s HK Express is going to tell its staff to sign new contracts, whereby pilots will have their pay cut by up to 40% and non-flying workers have to take 20 days of unpaid leave during the first half of 2021, after the flagship airline group had earlier winded up Cathay Dragon and slashed over 5,000 positions, South China Morning Post reported. At this moment, the budget carrier has around 200 pilots, and more than 1,000 employees in aggregate.


MARKET COMMENT
*HSI REBALANCE NOTIFICATION
stocks although the implementation doesn’t take effect until Monday 7 December.
Deletion SWIRE PACIFIC (19 HK-1.8%)
Addition MEITUAN (3690 HK +3.3%), BUDWEISER (1876 HK +5.3%) and ANTA SPORTS (2020 HK +5.8%)
*RESOURCES/BASE MATERIALS STRONG on good industrial production numbers. There was also news that authorities in some northern provinces including Hebei, Shanxi and Shandong are to take measures to reduce emissions to help curb air pollution through Nov. 17. After output in some sectors including iron ore and steel, coke and non-ferrous metals have exceeded levels seen during the same period in earlier years.
CH COAL (1898 HK +3.4%) Oct commercial coal sales volume +10% YoY. MAANSHAN IRON (323 HK +5.8%) ANGANG STEEL (347 HK +9.8%) JIANGXI COPPER (358 HK +9%)
ZIJIN MINING (2899 HK +9.4%) as gold rebounds.
*E-COMMERCE WEAK as China’s top banking regulator pledged to lower the risk of companies becoming “too big to fail” in financial innovation, suggesting the nation’s biggest technology companies will face increasing scrutiny on their influence in its financial system.
JD.COM (9618 HK +4.8%) ahead of earnings and on news its online health unit JD Health Intl has submitted the PHIP to the Hong Kong Stock Exchange for publication on the Hong Kong Stock Exchange’s website.
BABA (9988 HK -1.2%) news of a US class action against the company related to the pulled Ant IPO
TENCENT (700 HK -1%).
*CHINA PROPERTY WEAK after New Home Prices Oct +0.15% MoM vs +0.34% in Sept, while Property Investment grew at a faster pace in the first 10 months of the year, +8.2% YoY, (was +6.2% in 9 months to Sept).
CHINA OVERSEAS (688 HK -5.1%) on news its parent is facing US sanctions.
SHIMAO (813 HK -2.9%) CH JINMAO (817 HK -3.4%) TIMES CHINA (1233 HK -3.3%) VANKE (2202 HK -1.6%).
EVERGRANDE (3333 HK -0.2%) despite news of a 4.5m share buyback on Friday
*AUTO MIXED CAR INC (699 HK +11%) after it received a premium of nearly 18% from the private equity fund MBK for privatization.
GAC (2238 HK -4.4%) ahead of its A-shr (601238 CH) having 13.237bn yuan of locked up shares being released next week.
GREATWALL (2333 HK -2.4%) DONGFENG (489 HK +5.2%) GEELY (175 HK +0.7%) BYD (1211 HK -1%).
HARMONY (3836 HK +7.6%) rallied on share buyback news.
BRILLIANCE CH (1114 HK -4.5%) dropped after a creditor filed an application to seet a court-led restructuring against the company last week; following news that it would not be able to repay a bond.
*CHINA TELCOS WEAK extending Friday's drop on Trumps executive order banning US investment. CH MOBILE (941 HK -3.7%) CH UNICOM (762 HK -1.8%) CH TEL (728 HK -4%).
*PHARMA WEAK as U.S. vaccines manufacturers have taken the spotlight in the global vaccine race recently.
FOSUN PHARMA (2196 HK -0.7%) gets China approval for Covid vaccine Phase II trial. SINOPHARNM's (1099 HK+1.4%) Covid vaccine is expected to be used in Indonesia as the country plans to begin vaccination campaign this year. CANSINO (6185 H -1.7%) INNOVENT (1801 HK -0.8%) CSPC PHARM (1093 HK -1.6%).
*MACAU CASINOS STRONG Macau Chief Executive Ho says Macau will revise gambling law in 2021. MELCO (200 HK +6%) SANDS(1928 HK +3.5%) WYNN(1128 HK +3.2%) MGM (2282 HK +3%).
*TEXTILE/APPAREL MAKERS STRONG following the signing of RCEP regional free-trade agreement. SHENZHOU (2313 HK +4%) PAC TEXTILES (1382 HK +4.9%) YUE YUEN (551 HK +4%) saw broker upgrades.
*CEMENT MAKERS STRONG as economic activity in China continue to pick up, CR CEMENT (1313 HK +3%) WEST CHINA CEMENT (2233 HK +4%) BBMG (2009 HK +4.5%).

Regional Markets
JAPAN
opened higher and has worked gradually higher through the session. Pre market GDP data was generally better than forecast with only Capex missing. Industrial Production just out inline, Capacity Utilisation beat. Exporters +VE; Autos all strong, along with tech names like Tokyo Electron, Panasonic and Softbank.
Nikkei closed +521pts (+2.1%) @ 25,907
Topix traded in a similar fashion currently +29pts (+1.7%) @ 1,732
Data
GDP Data Preliminary
Growth rate Q3 +5% QoQ vs -8.2% Q2 Revised (F/cast was +4.5%)
Growth annualised Q3 +21.4% QoQ vs -28.8% Q2 Revised (F/cast was +19.5%)
Price Index Q3 +1.1% QoQ vs +1.4% Q2 Revised (F/cast was +0.7%)
Capex Q3 -3.4% QoQ vs -4.5% Q2 Revised (F/cast was -2.7%)
External Demand Q3 +2.9% QoQ vs -3.3% Q2 Revised (F/cast was +2.5%)
Private Consumption Q3 +4.7% QoQ vs -3.1% Q2 Revised (F/cast was +5.4%)
Industrial Production Sept +3.9% MoM vs +1% Aug (F/cast was +4%)
Industrial Production Sept -9% YoY vs -13.8% Aug (F/cast was -9%)
Capacity Utilisation Sept +6.4% MoM vs +2.9% Aug (F/cast was 1.3%)
S KOREA opened higher following with Chip and Autos leading the market and worked higher. But LG Chem weak on news of possible fire hazard from the batteries it has supplied to GM.
Kospi seeing resistance around the 2,545 level currently +49pts (+2%) @ 2,543.
Kosdaq opened higher dipped initially but then rallied to and worked higher with resistance as it approached the 850 level then sold down before working back in the last hour to close +8pts (+1%) @ 847
TAIWAN opened higher and quickly rose to 13,450 level where is saw some resistance and traded around there until 11am when it pushed higher, saw some resistance around 13,500 but broke through in the last hour to close +279pts (+2.1%) @ 13,552

CONNECT FLOWS (flat DoD)
Shanghai
Northbound Rmb 38,893m Buy 17,564m vs 21,330m Sell
Southbound HK$ 13,787m Buy 6,480m vs 7,307m Sell
Shenzhen
Northbound Rmb 53,591m Buy 27,384m vs 26,207m Sell
Southbound HK$ 14,120m Buy 6,392m vs 7,729m Sell

Active Heavyweights
MEITUAN-W (03690.HK) +4.1%
AIA (01299.HK) +3.2%
CCB (00939.HK) -1.2%
BABA (09988.HK) -1.2%
PING AN (02318.HK) +0.9%
TENCENT (00700.HK) -0.8%
HKEX (00388.HK) +0.8%

HSI & HSCEI Constituents on the move
ANTA SPORTS (02020.HK) +6.4%, hitting new high
CHINA OVERSEAS (00688.HK) -5.1%
GUANGDONG INV (00270.HK) +4.4%
CPIC (02601.HK) +4.4%
HSBC HOLDINGS (00005.HK) +4.2%
CHINA TELECOM (00728.HK) -4%
SHENZHOU INTL (02313.HK) +3.9%
XIAOMI-W (01810.HK) +3.9%
GALAXY ENT (00027.HK) +.9%
CHINA MOBILE (00941.HK) -3.7%
SANDS CHINA LTD (01928.HK) +3.5%
CHINA RES BEER (00291.HK) +3.5%
TECHTRONIC IND (00669.HK) +3.3%
WHARF REIC (01997.HK) +3.1%

HSMI & HSSI Constituents on the move
REALORD GROUP (01196.HK) +14.3%
MMG (01208.HK) +11.2%, hitting new high
KOOLEARN (01797.HK) +11.1%
CAR INC (00699.HK) +10.9%
ZIJIN MINING (02899.HK) +9.4%, hitting new high
HAITIAN INT'L (01882.HK) +7.1%, hitting new high
KINGDEE INT'L (00268.HK) +6.7%, hitting new high


MARKET HOURS NEWS
Macau Chief Executive Ho Iat Seng delivered his Policy Address for 2021, Radio Macau (TMD) reported. The cash handout scheme will remain in place next year where each permanent Macau resident is entitled to MOP10,000 and non-permanent one MOP6,000. Plus, a MOP600 medical coupon will be distributed to each permanent resident as well.
Chief Executive Carrie Lam is poised to deliver her policy address at the Legislative Council next Wednesday (25 November), as local media cited sources.
Wheelock Properties named its phase-one project at No.12 Muk Tai Street, Kai Tak as "MONACO", involving 399 units of 280-760 sq.ft. each, said Managing Director Ricky Wong. The pre-sale consent of MONACO is pending approval. Gearing up for sales brochure and show flats, Wheelock expected to launch the project by end-December.
HENDERSON LAND (00012.HK) has uploaded sales brochures for "Arbour", said Henderson Property Agency, and show flats will be available this week. It will soon issue the price list as the Tsim Sha Tsui residential project, involving 172 flats, and will kick off sales this month.
HKEX (00388.HK) today (16 November) published a Concept Paper seeking market feedback on its proposal to comprehensively modernize and digitalize Hong Kong’s IPO settlement process. The deadline for responding to the Concept Paper is 6:00 PM on 15 January 2021. Under the proposal, HKEX will introduce a new web-based service called FINI (Fast Interface for New Issuance) that enables IPO market participants, advisers and regulators to interact digitally and seamlessly on the many steps that comprise the end-to-end IPO settlement process, in hopes that the introduction of FINI will shorten the time gap between IPO pricing and trading from its current average of more than five business days to as little as one business day: reducing the settlement timeframe by as much as 80 per cent. This will give investors quicker access to new listings, reduce market risk and improve efficiency for all parties involved. If the proposed concept is supported by the market, the Exchange will build FINI as the settlement mechanism for every Hong Kong IPO, fully replacing the existing “T+5” process. An on-boarding program will be organized in due course, allowing market participants to prepare for a one-time transition to become FINI-ready.
ZA ONLINE (06060.HK)'s subsidiary ZA International having previously joined talks to acquire PrimeCredit, however, has has now quit the talks after considering the price and synergy effects, Apple Daily citing people familiar with the matter.
HANG SENG BANK (00011.HK) As part of its ongoing initiatives to support increased financial inclusion it announced waiver to 29 general banking fees and charges for services, ranging from deposits and remittances to securities trading and foreign exchange, with effect from 1 January 2021. Beginning 1 March 2021, customers will benefit from the removal of charges for additional services for outward remittance instructions and credit card replacement.
Overnight HIBOR last posted at 0.03673%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.10714%, down for 8 days, marking a 1-month low.
TENCENT (00700.HK) was ordered for a comprehensive rectification by Guangdong's working group against pornography and illegal publications, and the provincial Cyberspace Administration of China, according to Chinese media. Equally, the Nanshan District Culture, Radio, Television, Tourism and Sports Bureau slapped administrative penalties on Tencent Music Entertainment (Shenzhen) Co., Ltd., the operator of National K Song ("全民K歌”). Some karaoke broadcasters had engaged in sexually-explicit chats and interactions on National K Song's interactive section to lure the audience into sending gifts. Currently, TENCENT was required to complete a 30-day rectification of National K Song and wipe out the said interactive section.
Chinese Foreign Minister Wang Yi will attend the BRICS Summit tomorrow (17th), the APEC Summit on 20 November, and the G20 Summit between 21-22 November, Yonhap citing Beijing insiders. Following, Wang will purportedly visit South Korea and Japan for the final week of November.
U.S. President Donald Trump will enact a series of hardline policies against China during his last ten weeks of tenure to cement crackdown on the second largest economy even after he steps down, Axios learnt from officials with direct knowledge of the plans. Future U.S. presidents will find it barely possible to reverse Trump’s historic actions, unless Beijing reverses her behavior and becomes a responsible player in the international arena, cited the report.
CHINA MOBILE (00941.HK) has noted that an executive order had been signed by the President of the United States on 12 November to prohibit any transaction by any United States person in publicly traded securities, or any securities that are derivative of, or are designed to provide investment exposure to such securities, of certain Chinese companies. The Company preliminarily expects that the Executive Order may have an impact on the share price of the Company’s publicly traded securities. The Company is paying close attention to developments related to the Executive Order to develop a fuller understanding of its impact on the Group.
BABA-SW (09988.HK) Investors of US-traded stocks are accusing the giant of securities fraud at the court, citing its false statements on businesses, operations and growth prospects from 21 October to 3 November, and its failure to disclose major adverse facts concerning Ant Group, according to HAO Law Firm. Ant Group announced the dual-listing halt only two days before 5 November, i.e. the original listing date.
Roughly 450 new homes were transacted at the weekend, down 8% weekly according to market information. The 2nd lot of The Pavilia Farm II, a project atop Tai Wai Station jointly developed by NEW WORLD DEV (00017.HK) and MTR CORPORATION (00066.HK), were sold out after launching for around nine hours, cashing in over $3.9 billion. HENDERSON LAND (00012.HK)'s Novum Point registered two deals.


PRE MARKET NEWS
Not in this mornings report
HSBC appears to soften its stance on virtual banks by adopting a tiered scale charge model and collecting discounted charges as low as 0.1-0.2% for certain small-value payment transactions, roughly in-line with other major banks, post earlier rumors that the London-based bank has spurred grudges among virtual banks by slamming up to 2% charges thereon for eDDA payment services, local media learnt from insiders. Nevertheless, virtual banks are still looking forward to further downward revision from HSBC as the overall charge under the tiered model remains relatively high, whereby some transactions carry charge rates over 1%, and even up to 2% for certain large transactions.
In order to maintain adequate liquidity in the banking system, the People's Bank of China (PBoC) commenced the Medium-term Lending Facility (MLF) of RMB800 billion today, with a bidding interest rate of 2.95%.
EVERGRANDE (03333.HK) announced that it repurchased 4.5 million shares of the company through the Stock Exchange on 13 November for $76.1111 million.
BRILLIANCE CHINA (01114.HK) has been informed by its controlling shareholder Huachen Automotive that Huachen had recently received a written notice from Shenyang Intermediate People’s Court. According to the Notice, Gezhi Automobile Technology had filed an application to the Court for restructuring of Huachen. As at this moment, it remains uncertain as to whether the restructuring application will be accepted by the Court or whether Huachen will undergo the restructuring process.
BEIGENE (06160.HK) announced proposed issue of RMB shares and listing on the Science and Technology Innovation Board of the Shanghai Stock Exchange, which is expected to be completed in the first half of 2021.
JD-SW (09618.HK) announced that it was informed by JD Health that in connection with the Proposed Spin-off, JD Health has submitted the PHIP to the Hong Kong Stock Exchange for publication on the Hong Kong Stock Exchange’s website. Details in respect of the Proposed Spin-off have not yet been finalised. Further announcement(s) will be made by the Company in relation to the Proposed Spin-off as and when appropriate. JD Health posted net profit of RMB371 million for the first half of 2020, according to its updated prospectus.
CAR INC (00699.HK) announced that the Offeror Indigo Glamour, wholly-owned by MBK Partners Fund IV, proposed a voluntary general cash offer at HK$4 per share, representing a 17.99% premium to the closing price yesterday (13th).
LEGEND HOLDING (03396.HK) announced that it has made a voluntary general cash undertaking to CAR INC (00699.HK) regarding Indigo Glamour, wholly-owned by MBK Partners Fund IV. The Company will sell a 26.56% stake in CAR INC at the Share Offer Price.
CHINA TELECOM (00728.HK) announced that it is currently assessing the impact of the Executive Order issued by the President of the United States on the Group. The Company preliminarily estimates that the Executive Order might have impact on the trading prices of the shares and American depositary shares of the Company. It will closely monitor the development of the Executive Order.

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