Nov 17 HK WRAP HSI +33pts treads water ahead of US retail sales, Europe Flat


22 Nov
HSI +33pts (+0.1%) 26,415 HSCEI -29pts (-0.3%) 10,550  T/O HK$143.57bn (-1.2% DoD)

Overview 
Markets have rebounded from the March lows and are now testing new highs. Sentiment +VE on the vaccine news and the US election result with suggests a Democratic victory but with Republican’s controlling the Senate. Many talking about the rotation into value stocks, that only a few weeks ago were the pariah’s of the market. Still there are concerns short term stimulus and potential business failures along with the potential for inflation in the future. As we approach year end asset allocators will be trying to work out the next move.China has the added problem of a potentially vindictive Trump still able to make executive orders from the White House and the potential for more multilateral trade discussions ahead when Biden takes over and no guarantees that any tariffs or sanctions will be eased in the short term.

EUROPE Markets open flat initial dipped but now coming back to flat with covid still a concern. EU recovery under pressure as Hungary and Poland block the adoption of the budget and the recovery fund in rebellion to the clauses that access to recovery money is on the basis of respecting the rule of law. EasyJet initially sold down but now rebounding after reported revenue fell more than 50% Intermediate Capital rallied as 1H pre tax profit +29%
US Futures opened slightly higher but faded during Asian trading currently Dow -80pts, S&P lower but NDX edging higher.  I would expect a caution ahead of the Retail sales an Manufacturing data due.  Covid concerns remain along with the Election result.
Data Retail Sales, Export & Import Prices, Redbook, Industrial Production, Manufacturing Production, Capacity Utilisation, Business Inventories, NAHB Housing Market Index, Foreign Bond Investment, Overall Net Capital Flows, Net Long Term TIC flows API Crude Oil Stock Change.
Speeches from Feds Bostic, Daly and Williams
Earnings: Walmart, Home Depot, Kohl’s, La-Z-Boy, Aramark
CHINA CSI 300 Closed -9pts (-0.2%) @ 4,895
CSI 300 opened slightly lower and sold down to 4,875 before rebounding into lunch at 4,890 PM opened lower and trended lower initially findinG SUPPORT AT 4,872 then bounced briefly but sold down, bounced and then sold down to the 4,865 day low before bouncing back into the close. E-commerce weak on tightening regulation. Shipping and Ports seeing interest as global recovery plays. Concerns about the credit markets as Brilliance announced that the group lapsed into debt defaults of RMB6.5 billion with overdue interests of RMB144 million. Addition concerns about the potential for more sanctions/bans on Chinese companies from Trump.
Indexes
Shanghai Comp -7pts (-0.2%) @ 3,340
Shenzhen Comp -118pt (-0.9%) @ 13,733
ChiNext Index -54pts (-2%) @ 2,658

CHINA Data None

HSI Pre Market Opened 26,515 +133pts vs +174pts ADR’s with weakenss in Ecommerce after JD.Com’s conservative guidance. Tech also saw weakness but Petro and freight names seeing interest on global recovery hopes. After an initial squeeze higher the market effectively traded sideways around the 26,400 level (Monday’s close was 26,382). It dipped a couple of times into the red in the am but only briefly and a few times in the PM. Upside capped by the threat of more action from Trump against China and the tightening of E-Commerce plus concerns about the potential for more defaults within the SOE’s. Tonight's US Retail Sales data will be watched closely for impact on the outlook for Chinese exporters. Techtronics closed -3.5% today but watch for Home Depot results tonight to be a catalyst. Recent high was HK$115.00 so worth accumulating on weakness.
HONG KONG DATA 
After Market Unemployment Oct +6.4% vs 6.4% Sept (F/cast was 6.3%)
Centre for Health Protection said there were 4 new COVID-19 cases in Hong Kong today (vs 8 Monday) one local infection

SHORT SELLING Tuesday vs 17% Monday
Top Shorts
Ping An (2318) 40%, Galaxy Ent (27) 37%, Sands China (1928) 33%, CLP (2) 32%, BoC (3988) 32%, CITIC (267) 30%, CNOOC (883) 30%, Country Garden (2007) 30%, HK & China Gas (3) 28%, Wharf REIC (1997) 27%, Sunny Optical (2382) 27%, CCB (939) 27%, BoC HK (2388) 25%, HSBC (5) 25%, BankComm (3328) 25%.

AFTER MARKET NEWS
CKH HOLDINGS (00001.HK)-held Hutchison China MediTech Limited (Chi-Med) (HCM.US) announced
that it entered into a definitive agreement for the sale of US$100 million of shares at a price equivalent to US$30 per American Depositary Share via a private placement to Canada Pension Plan Investment Board (CPP Investments). Chi-Med will receive all proceeds from this private placement of the equivalent of 3.333 million ADSs, which will fund ongoing research and clinical development and support the further growth of its commercialization capabilities both in China and globally.Revenue +33.5% yearly to RMB1.397 billion. Net profit reached RMB667 million, +1749.3% yearly.
EPS equaled RMB0.49.
SF Holding (002352.SZ) was quoted as saying by Chinese media that the company did not plan for stock issuance and listing on the Stock Exchange, amid rumor about its planned secondary listing in Hong Kong.

MARKET COMMENT
*PETROCHEMS STRONG 
as crude rises on optimism that an uptick in demand may as vaccines become available in the forthcoming months. Helped also by a monthly rebound in China's crude processing. CNOOC (883 HK +2%) CH OILFIELD (2883 HK +7.5%) PETROCHN (857 HK +4%).
*E-COMMERCE WEAK as JD.COM (9618 HK -6.9%) on growth and margin concerns after conservative guidance outweighed the good earnings; reported net revenue +29% to 174.21bn yuan in 3Q; beat forecast. Net income 7.6b yuan, helped by one-time gains of more than 3.7b yuan from the value of investments and other items.
ALIBABA's (9988 HK -1.5%) unit offers to buy 5.26% in Mango Excellent Media (300413 CH) for over 6.2b yuan. Mango is a TV shopping and entertainment network based in Hunan.
TENCENT (700 HK -2.3%) NTES (9999 HK -1%) MEITUAN (3690 HK -4.9%).
*TECH & COMPONENTS WEAK signs of sector rotation; BYDE (285 HK -3.5%) AAC (2018 HK -2.6%) TRULY (732 HK -4.8%).
ZTE (763 HK -1.6%) is planning A-share private placement to raise up to 2.61b yuan, selling to approx 35 investors.
XIAOMI (1810 HK -4.3%) analysts say may face downside risk from Huawei's sale of its budget-smartphone brand Honor.
*AUTOS MIXED BRILLIANCE CHINA (1114 HK -2.7%) announced it that a creditor filed an application to the Court for restructuring of Huachen, Brilliance's controlling shareholder. Also said the group lapsed into debt defaults of RMB6.5 billion with overdue interests of RMB144 million.
DIDI CHUXING will begin rolling out an EV developed with BYD (1211 HK -5.2%) to its drivers within months. The D1, the first model to have been built with ride-hailing in mind, will ship to the startup's leasing partners across several Chinese cities.
GREATWALL (2333 HK +1.5%) GEELY (175 HK +1.2%) up on recovery hopes.
*INSURERS FIRM as investors continue to rotate into sectors poised to benefit from post-pandemic economic recovery. CHINA TAIPING (966 HK +2.2%) said the gross premium income of its subsidiaries +3.15% to 156.613b yuan for the first ten months of 2020.PING AN (2318 HK +1.3%) NCI (1336 HK +1.7%) PICC P&C (2328 HK +2.4%).
*HK PROPERTY FIRM on vaccine hopes. Li Ka Shing Foundation bought a total of 410,000 CK ASSET (1113 HK +3.1%) shares at avg price between HK$42.36 and HK$41.27 apiece on Nov. 10-13, according to filing.
SHKP (16 HK +2.2%) NWD (17 HK +2.1%) SINO LAND (83 HK +3%).
*PHARMA WEAK as foreign firms steal the lead in making Covid-19 vaccines. CANSINO (6185 HK -5.5%) INNOVENT (1801 HK -2.9%) FOSUN PHARM (2196 HK -7.7%).
*TOURISM BOUNCE on recovery hopes following positive news on vaccine development.
AIR CHINA (753 HK +4.1%) Oct. passenger traffic -35.3%,
CH EASTERN (670 HK +2%) Oct. passenger traffic -33.0%.
CH SOUTHERN (1055 HK +3.4%) CATHAY PAC (293 HK +7%) CH TRAVEL (308 HK +4.6%).
*PORTS & SHIPPING STRONG on the signing of RCEP free-trade agreement and vaccines +VE for the global recovery. CH MERCHANTS (144 HK +2.6%) COSCO PORT (1199 HK +3.5%) COSCO SHIP (1919 HK +7.4%) OOIL (316 HK +9.5%) SINGAMAS (716 HK +15%).

Regional Markets
JAPAN opened higher but sold down through the morning to just below yesterday’s close but bounce back to flat at lunchtime. PM opened higher and has worked higher to then trade sideways around the 26,000 level and closed +108pts (+0.4%) @ 26,015
Topix traded in a similar pattern to close +3pts (+0.16%) @ 1,735
Tomorrow pre market Balance of Trade, Exports and Imports
S KOREA Kospi opened slightly higher rallied to 2,553 which is tested a couple of times before selling down into the red briefly. Rallied back to 2,550 but selling down to test the day low in the last 30 mins but then bounce into the close, to end -4pts (-0.15%) @ 2,539
Kosdaq Opened lower and effective traded sideways having initially sold down to the 840 level. Closed -8pts (+1%) @ 840
TAIWAN opened higher but sold down initial support at 13,650, but after a small uptick sold down to 13,600 and then traded sideways in that range to close +41pts (+0.3%) @ 13,593

CONNECT FLOWS (up DoD)
Shanghai
Northbound Rmb 42,032m Buy 20,250m vs 21,781m Sell
Southbound HK$ 13,971m Buy 7,269m vs 6,702m Sell
Shenzhen
Northbound Rmb 58,353m Buy 29,916m vs 28,438m Sell
Southbound HK$ 12,349m Buy 6,135m vs 6,2149m Sell

Active Heavyweights
MEITUAN-W (03690.HK) -4.8%
TENCENT (00700.HK) -2.6%
AIA (01299.HK) +2%
BABA (09988.HK) -1.7%
CCB (00939.HK) +1.5%
PING AN (02318.HK) +1.3%

HSI & HSCEI Constituents on Move:
CKH HOLDINGS (00001.HK) +5.2%
PETROCHINA (00857.HK) +4.5%
XIAOMI-W (01810.HK) -4.4%
CHINA VANKE (02202.HK) +4%
SWIRE PACIFIC A (00019.HK) +3.9%
SUNNY OPTICAL (02382.HK) + 3.4%
TECHTRONIC IND (00669.HK) -3.3%
LINK REIT (00823.HK) +3.3%
CK ASSET (01113.HK) +3.1%

HSMI & HSSI Constituents on Move:
XTEP INT'L (01368.HK) +11.5%
SINOTRANS (00598.HK) +11.3%
MMG (01208.HK) +8.4%, hitting new high
COSCO SHIP HOLD (01919.HK) +7.4%, hitting new high
FE HORIZON (03360.HK) +0.6%, hitting new high


MARKET HOURS NEWS
SUN HUNG KAI CO (00086.HK)'s trading in shares and debt securities was halted after midday pending the release of an announcement relating to its major transaction which will constitute inside information.
Apple (AAPL.US) attracted fierce component demands for its iPhone 12 series, cited Taiwanese media. The overall demand was estimated to slightly bulge as compared with iPhone 11's last year. As relevant suppliers have already kicked off study about part manufacture models for 2023, they estimated four models will be launched under the iPhone 13 series as well.
The timing of ANT GROUP (06688.HK)'s listing would hinge on how the Chinese government will revise its regulatory framework and how the firm will respond to the ever-changing regulatory environment, foreign media quoting from CSRC Vice Chairman Fang Xinghai. Fang was also upbeat about the improvement in China-US relations four years later, supposing Joe Biden's presidency.
Chief Executive Carrie Lam said at an online conference that she had discussed with the Chinese central government on the support initiatives for Hong Kong's economy during her earlier visit in Beijing, but she could not reveal further details on that for the moment. She only said support measures for logistics industry will be announced in her Policy Address next Wednesday.
HP (HPQ.US) has outrun LENOVO GROUP (00992.HK) for the first time and seized leadership in the worldwide notebook PC shipment, said Strategy Analytics in a report. In Q3 2020, HP's shipment +43% YoY to 14.70 million units, and LENOVO GROUP's +25% to 14.60 million.
China's market watchdog SAMR had recently published an antitrust guideline, defining anti-competitive practices in the internet sector for the first time, reported Moody’s. The guidance may limit internet firm's revenue and earnings growth, hence casting a negative impact on their credit positions, opined the rating agency.
China Foreign Exchange Trade System announced on Tuesday (17 November) that the central parity of USD/ RMB hiked 286 bps from the last trading day to 6.5762, logging an over-two-year high.
PRE MARKET NEWS
Not in this mornings report
Regarding the listing of Evergrande Property spun off from EVERGRANDE (03333.HK), Reuters' IFR reported that Evergrande Property has mounted pre-listing introduction and will have book building exercise as soon as Thursday (19 November). The stock will be listed in early December, raising US$2 billion.
BOC HONG KONG (02388.HK) trimmed its mortgage rates for different amount of loans, as told by local media. For mortgage loans above $10 million, the interest rate was axed to H+1.3% from H+1.35% with a maximum cash rebate of 1%, subject to the withdrawal of loan in 1Q21. For loans between $4-10 million, some customers could also enjoy the H+1.3% rate. For those below $4 million, the rate was cut to H+1.4% from H+1.5%.
Baidu announced 3Q20 net profit amounted to RMB13.678 billion, as compared with RMB6.373 billion loss a year ago. Non-GAAP adjusted EPS equaled RMB20.35, beating RMB13.46 in the street forecast. It share price last traded at USD144.5 during U.S. extended trading hours, down 2.3%  It also said that it had entered into definitive agreements with JOYY Pursuant to the agreements, the Chinese search engine magnate will acquire JOYY's domestic video-based entertainment live streaming business in China (YY Live) for an aggregate purchase price of approximately US$3.6 billion. The closing of the transaction is expected to occur in the first half of 2021.
Brilliance Auto Group announced that the group lapsed into debt defaults in a amount of RMB6.5 billion with overdue interests of RMB144 million.
HARMONY AUTO (03836.HK) announced that on November 13, Chairman Feng Changge had on the open market acquired a total of 680,000 shares. Upon completion, the controlling shareholder Eagle Seeker (a corporation held by a trust whereas Feng is a founder) has held 706 million shares in the Company, representing 44.87% of the issued share capital.  Also said that in the face of malicious accusations by Bonitas Research LLC, which suspected its controlling shareholder Feng Changge to have an undisclosed share pledge, after verification with the depository institution which the controlling shareholder deposits all his shares, the Director or the Board proved that as of November 13, 2020, all the shares deposited by the controlling shareholder in the depository institution had no pledge at all.
CASH FIN SER GP (00510.HK) announced that on 16 November 2020, the Group had on the open market disposed 35,000 TENCENT (00700.HK)   shares, 66,000 MEITUAN-W (03690.HK) shares and 46,000 JD-SW (09618.HK)  shares. The estimated book gain from the disposal aggregated $4.1 million.

HKC (HOLDINGS) (00190.HK) announced that during the period from 11 June 2020 to 16 November 2020, the Group had acquired on the open market a total of 511,500 BABA-SW (09988.HK) shares at an average price of approximately HK$241.51 per share.

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