Nov 2 HK WRAP HSI +353pts but T/O -23% DoD, US Futures rally as Europe works higher


04 Nov

Nov 2 HK WRAP  HSI +353pts but T/O -23% DoD, US Futures rally as Europe works higher

HSI +353pts (+1.5%) 24,460 HSCEI +176pts (+1.8%) 9,937  T/O HK$116.19bn (-23.4% DoD)  

EUROPE 
Mixed open initially traded lower then worked higher as PMI data was better than F/cast in Europe and Asia off-setting the covid and US election concerns. Banks and insurance stocks leading the gains while the travel and leisure sector weak. Ocado rallied on the news of a new lockdown in the UK.
US Futures opened flat in Asian time but sold down 200pts in early trading before working better through the day. Currently +350pts with S&P and NDX higher too.
Data due Manufacturing PMI. ISM Manufacturing Data (New Orders, Prices, Employment, PMI) Construction Spending
Earnings Clorox, PayPal, Mondelez International, Estee Lauder, Marathon Petroleum, Wingstop, Waste Management, Skyworks Solutions, Transocean, Rambus, Trivago, Loews Insurance, Ingersoll Rand, Rambus, FirstEnergy, AMC Network, Assurant

CHINA CSI 300 Closed +26pts (+0.5%) 4,721  Having opened higher after good weekend PMI data and news that China was introducing new rules to improve international access to its markets.  Sentiment also helped by this morning's PMI number, which was strong too.  Market then traded sideways in choppy trading for the first 30 mins before selling down to test Friday’s close, small rebound before testing again with a bounce into lunch.  PM saw Friday’s closed tested around 1:30pm before a rally to around the opening highs before easing back into the close. ChiNext names strong.  Gains lead by Home Appliances, Liquor, and Autos; as TMall 11.11 shopping craze starts.
Indexes
Shanghai Composite Index flat @ 3,225
Shenzhen Component Index -184pts (+1.4%) @ 13,421
ChiNext Index +53pts (+2%) @ 2,708

CHINA DATA
Caixin Manufacturing PMI Oct 53.6 vs 53.0 Sept (F/cast was 52.9)
Sixth month of growth and strongest since Jan 2011; +VE output and new orders. Buying levels expanded. Export orders rose for a third month but at a softer rate. Employment grew cautiously. Input costs rose slower but output prices quicke. Confidence at highest since Aug 2014.

HSI Pre Market opened 24,274 +167pts vs +217pts ADR’s @ 24,324 with E Commerce firm ahead of Ant IPO. Market traded sideways around the 24,300 level, in the morning session. Chinese Financials saw a rebound post results, Brokers and Auto’s +VE. PM saw the market work higher to close just off the day high with a tick lower in the closing auction. Having regained around 75% of Friday sell off.

HONG KONG DATA
After market

Retail Sales Sept -13.4% YoY vs -13.4% Aug (F/cast was -5%)
20 th month of falling retail activity. Sales declined mostly for food, alcoholic drinks and tobacco (-13.4% vs -19% August); jewellery, watches and clocks, and valuable gifts (-28.9% vs -41.4%); electrical goods and other consumer durable goods (-36.8% vs +14.6%); wearing apparel (-15.3% vs -23.4%); medicines and cosmetics (-45.6% vs -40.6%); clothing, footwear and allied products (-14% vs -25.6%); Chinese drugs and herbs (-5.6% vs -26.1%) and optical shops (-24.7% vs -33.2%). Considering the first nine months of the year, retail sales plummeted 30 percent compared with the same period of 2019.

Centre for Health Protection said there were 6 new COVID-19 cases in Hong Kong today (vs 7 Sunday) three of them were related to a Silver Mine Bay hotel in Mui Wo, local media citing sources. There is another initially confirmed case tied to this cluster and 1 case of unknown source.

SHORT SALES Monday 19.4 vs 18.7% Friday
Top Shorts 
MTRC (66) 42%, Country Garden (2007) 36%, Bank of China (3988) 36%, PetroChina (857) 35%, Ping An (2318) 33%, Hang Lung Ppty (101) 31%, HSBC (5) 31%, ICBC (1398) 31%, CKI (1038) 30%, CLP (2) 30%, CCB (939) 30%, Hengan (1044) 29%, Hang Seng Bank (11) 28%, AIA (1299) 28%, Wharf REIC (1997) 27%, BoC HK (2388) 26%, CNOOC (883) 26%, HK & China Gas (3) 26%, Henderson (12) 25%, Sunny Optical (2382) 25%.

AFTER MARKET NEWS
AAC TECH (02018.HK) starting from 2 November 2020, the current Senior Vice President, Group Finance, Guo Dan, will serve as Chief Financial Officer.
China's New Energy Vehicle Industry Development Plan (2021-2035) has been approved, announced by the State Council.
NEV buildout is the road China must follow in order to evolve from a car superpower to a car hyperpower. Accordingly, the top-four basic principles of the plan are the quality of being market-oriented and innovation-driven, as well as coordination facilitation and open development.
The Hong Kong Mortgage Corporation (HKMC) announced that the application period for the Fixed-rate Mortgage Pilot Scheme will be extended for one year to 30 October 2021. In response to the change in market interest rates, mortgage interest rates will be adjusted to 1.99%, 2.09% and 2.19% for 10-year, 15-year and 20-year period, and the scheme will start receiving applications from today.
People's Bank of China (PBoC) announced that it had commenced the one-year Medium-term Lending Facility (MLF) of RMB500 billion in October 2020, with an interest rate of 2.95%.
JW THERAP-B (02126.HK), to be listed tomorrow, opened at $24 in gray market
, up 0.8% against the listing price $23.8, and last stood at $24.1, up 1.3% against the listing price, on volume of 510,000 shares, PhillipMart data showed.

MARKET COMMENT
*E-COMMERCE FIRM 
ahead of the ANT IPO, and as the online shopping festival continues. ALIBABA (9988 HK +1.4%) JD.COM (9618 HK +1.5%), TENCENT (700 HK +1.7%).
GDS HOLDINGS (9698 HK +2.6%), a leading developer and operator of data centers, closed up 2.6% at HK$83 vs IPO price HK$80.88.
*TECH & COMPONENTS MIXED on iPhone 12 demand hopes,as APPLE shares weak on Friday but I think on warnings about the threats to its App Store revenues rather than iPhone sales. SUNNY OPT (2382 HK +2.2%) AAC TECH (2018 HK +0.3%) FIT HON TENG (6088 HK -2.6%) TONGDA (698 HK unch).
CHIP MAKERS saw support as China pledges to strengthen homegrown tech products and Huawei looks to build its own chip making factory. SMIC (981 HK +0.7%) HUA HONG SEMI (1347 HK +0.2%).
*CH BANKS STRONG post earnings, as investors hope the worst for the industry maybe over.
ICBC (1398 HK +4%) 3Q net income -4.65% YoY to 79.9b yuan.
BOC (3988 HK +3.7%) 3Q net profit ticked down 1.6% YoY to 44.79b yuan,
ABC (1288 HK +6.8%) 3Q net income -4.6% YoY to 56.5b yuan.
*MACAU FIRM after Macau's gross gaming revenue -72.5% YoY to 7.27b in October from 12 months earlier, better than the estimated a 74-percent drop. Revenue in the 10 months to the end of October has fallen 81.4% to 45.9b patacas, according to the data. MELCO (200 HK +4.3%) GALAXY (27 HK +3%) SJM (880 HK +2.5%) but MGM (2282 HK -5%) slumped after its 3Q net earnings fell 94% YoY to US$47m.
*CHINA PROPERTY FIRM as the yuan remain firm.
CH EVERGRANDE (3333 HK +1%) is selling a 41% stake in conglomerate Xinjiang Guanghui Industry Investment to Shenergy Group for about 14.9b yuan.
SUNAC CHINA's (1918 HK +1%) property mgmt arm SUNAC SERVICES seeks at least US$1b in IPO.
CIFI (884 HK +1.1%) TIMES CH (1233 HK +3.7%) AGILE (3383 HK +2%).
*HOME APPLIANCE STRONG amid earnings recovery, after Midea and Gree both reported strong 3Q net profit that beat estimates. GOME (493 HK +3.5%) HISENSE HOME (921 HK +2.9%) TCL (1070 HK +2.8%).
*AUTO MAKERS STRONG on optimistic outlook, led higher by GEELY (175 HK +13.6%) after its parent company's electric car brand Polestar raises USD900m. BYD (1211 HK +12.7%) following recent quarterly results beat. GREAT WALL (2333 HK +5.4%) GAC (2238 HK +5.3%).

Regional Markets
JAPAN
opened higher with good PMI number and worked higher through the morning to 23,370, recovering most of Friday’s losses before easing back to 23,300 at lunchtime. PM traded sideways around the lunchtime level to close; +1.4% @ 23,296
Data
Manufacturing PMI Oct 48.7 vs 47.7 vs Sept (F/cast was 48.0)
S KOREA Markets opened higher and worked higher
Kospi hit 2,298 mid morning but failed to break above and eased back to trade around the 2,290 level but after 1pm working higher again and closed +1.5% @ 2,300.
Kosdaq followed a similar trading patten but dipped initially to test Friday’s closing level. After failing to break out above 806 traded sideways and closed +1.3% @ 802.95
Data
Manufacturing PMI Oct 51.2 vs 49.8 Sept (F/cast was 49)
TAIWAN opened higher and rallied to 12,594 but then reversed and traded into the red, to around 12,500 and traded sideways with a low of 12,480. Around 12:15pm the market worked higher and closed +0.4% @ 12,591
Data
Manufacturing PMI Oct 55.1 vs 55.2 Sept (F/cast was 52)

CONNECT FLOWS (lower DoD)
Shanghai
Northbound Rmb 42,789m Buy 21,079m vs 21,710m Sell
Southbound HK$ 14,700m Buy 4,753m vs 9,947m Sell
Shenzhen
Northbound Rmb 54,236m Buy 25,893m vs 28,343m Sell
Southbound HK$ 12,155m Buy 5,157m vs 6,998m Sell

Active Heavyweights
CCB (00939.HK) +3.6%
MEITUAN-W (03690.HK) +2.2%
TENCENT (00700.HK) +1.8%
BABA (09988.HK) +1.6%
HKEX (00388.HK) +1.1%
AIA (01299.HK) +0.4%
PING AN (02318.HK) -0.3%

HSI & HSCEI Constituents on the move
GEELY AUTO (00175.HK) +13.6%
PSBC (01658.HK) +8.9%
ABC (01288.HK) +6.5%
TECHTRONIC IND (00669.HK) +4.9%
CM BANK (03968.HK) +4.8%
GUANGDONG INV (00270.HK) +4.5%
ICBC (01398.HK) +3.9%
MENGNIU DAIRY (02319.HK) +3.8%
CITIC BANK (00998.HK) +3.8%
ENN ENERGY (02688.HK) -3.3%
BANK OF CHINA (03988.HK) +3.3%
CHINA RES BEER (00291.HK) -3.2%
GALAXY ENT (00027.HK) + 3%

HSMI & HSSI Constituents on the move
SUNCITY GROUP (01383.HK) -14.5%
BYD COMPANY (01211.HK) +12.7%, hitting new high
CIMC (02039.HK) +10.5%, hitting new high
ZIJIN MINING (02899.HK) +7.8%, hitting new high


MARKET HOURS NEWS
The Hong Kong Housing Authority (HA) announced that, under the current time-limited arrangement, banks and financial institutions participating in the provision of mortgage loans for the Subsidised Sale Flats Scheme (SSFS) (participating financial institutions) may offer a mortgage principal moratorium plan (moratorium plan) to SSFS flat mortgagors. HA has extended the time-limited arrangement for six months. The commencement of the moratorium period under the moratorium plan should not be later than June 30, 2021.
The smartphone accessory market will scale over 500 million units in 2021, when over 200 million wearable bands and 350 million TWS devices may be shipped, Canalys wrote in a report. Wearable bands and TWS devices tend to be more resilient against the pandemic, opined the researcher.
TENCENT (00700.HK) announced that the daily active user count of "Honor of Kings" has reached 100 million, making it the first game worldwide with 100 million daily active users. It also disclosed that the game has reached in-depth cooperation with Burberry (BURBY.US), under which the two parties will coordinate physical stores with online games.
HKEX (00388.HK) announced that it will offer investors more options on ANT GROUP (06688.HK) shares on the debut date (5 November 2020), including Ant
futures, options and derivative warrants. Ant shares will also be included in HKEX’s designated securities eligible for short selling on 5 November 2020, subject to the listing of the Ant shares at HKEX on that date.
XIAOMI-W (01810.HK) that as of 24:00 on 1 November, the sales turnover
across all channels surmounted RMB4 billion
.
PBOC Governor Yi Gang, showing up at Hong Kong Fintech Week, said the digital RMB had completed the structural design and entered the trial stage. With first batch of trials in pilot regions, the cryptocurrency was expected to also run trial during Winter Olympics in Beijing. As the testing is moving along well, 12,000 cases were trialed for the digital RMB with over 4 million transactions which involved over RMB2 billion.
Overnight HIBOR last posted at 0.18804%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.32339%, marking a 1-mth low.
HKMA: HK Econ Steadying with Stable HKD Index The global economy is exposed to three major risks from the coronavirus pandemic, a worldwide low-rate landscape and geopolitical threats, stated HKMA Chief Executive Eddie Yue at the Legislative Council meeting. While Hong Kong economy remains generally stable with ample liquidity, the authority will go on calming the market and bolstering SMEs, disclosed Yue. HKMA has pumped $400 billion into the market to date as HKD triggered the strong side convertibility undertaking for times, added the chief executive. The liquidity remains abundant with the banking balance led to over $450 billion.
Paul Chan: 7 Local Virtual Banks Lure Around 300K Clients with Deposits Up to US$1B. Hong Kong has in recent years made a series of steps to take fintech forward, ranging from FPS to Open API, meaning that the city is sparing no pain in fintech and remains well-positioned as a global financial hub, said Financial Secretary at Fintech Week. The HKMA has licensed eight virtual banks, added Chan. Seven of them have kicked off operation and attracted around 300,000 clients with deposits as much as US$1 billion.
China's third-quarter smartphone shipment -15% YoY, or -8% QoQ, to 83 mn units, according to Canalys' report. Huawei topped the shipment chart, with volume. dropping to 34.2 million units and market share falling to 41.2%. Bucking the market, XIAOMI-W (01810.HK)'s shipment ballooned 19% to 10.5 million units
The "Air Travel Bubble" with Singapore will hopefully come into effect by end-November, of which the detailed arrangements and ticket sales may be disclosed at mid-November, said Edward Yau, Secretary for Commerce and Economic Development. At the beginning stage, there will be at least one flight per day, subject to further upward revision based on the demands, added Yau.
Macau Sees FY21E Betting Duties Income Halved with GGR at MOP130B: In its earlier-exposed FY21 budget, the Macao government modeled betting duties at MOP50.005 billion, 49.1% below MOP98.21 billion in its early-2020 estimates, cited Macao Daily. As the globally spiraling coronavirus pandemic is taking a heavy toll on the gambling hub, the government expected FY21 economy to remain gloomy and assumed GGR to be MOP130 billion.


PRE MARKET NEWS
Not in this mornings report
XIAOMI-W (01810.HK) announced that the payment amount across all platforms exceeded RMB1 billion in less than 20 minutes after the launch of its online-to-offline Single's Day (11.11) sales campaign.
MSCI had earlier declared that the PING AN (02318.HK)-backed Lufax Holding will be included in the MSCI Global Standard Indices and the MSCI China All Shares Index, with effect from 13 November.
Paul Chan: Headwinds Persist in Labor Mkt Despite Bottoming-Out HK Economy.
After being stuck in negative growth for five straight quarters, Hong Kong economy displayed signs of bottoming out, where 3Q20 GDP snapped the five-quarter downturn and rebounded 3% quarterly, Financial Secretary Paul Chan wrote on his blog. Along with gradually relaxed social-distancing guidance, the footfall in restaurants and shopping arcades have been springing back. Yet, the
unemployment rate has surged from around 3% to 6.4% to date, and the underemployment rate from 1% to 3.8%, where certain directly-pandemic-hit sectors were particularly smothered, added Chan. Despite an overall improving economy, the labor market remains gloomy.
ESPRIT HOLDINGS (00330.HK) creditors’ assemblies have been convened as scheduled on 29 and 30 October 2020 (Central European Time) at the insolvency court of Dusseldorf in Germany. In the creditors’ assemblies, a vast majority of the creditors voted for and approved all of the insolvency plans of the Subject Subsidiaries. By court resolutions passed at 4:00 p.m., 30 October 2020, the Insolvency Court confirmed the Restructuring Plans.
EVERGRANDE (03333.HK) sold the 40.964% equity interests it held in Guanghui Industrial to Shenergy Group, a wholly State-owned enterprise funded and supervised by the Shanghai State-owed Assets Supervision and Administration Commission, for a total consideration of RMB14.85 billion. The Vendor will no longer hold any interest in Guanghui Industrial.
As at 6:33 am on 1 November, 10 million import orders made on Tmall's 11.11 Shopping Craze cleared the custom, according to Chinese media. The clearance was 25% faster than the same event in 2019.
Xi Jinping: Sticks to CN Consumption Expansion Strategy; Optimizes, Stabilizes Industrial, Supply Chain. China must adhere to rolling out strategies of domestic consumption expansion, stressed Chinese President Xi Jinping in a Qiushi article. While scaling up strategic fundamentals of domestic consumption, Beijing may create a benign and smooth circle by depending more on its home market regarding production, allocation, circulation and spending. On another note, China has to optimize and stabilize its industrial and supply chains, Xi added.
HSBC HOLDINGS (00005.HK) following a review of the trading volumes, costs and administrative requirements related to its Euronext Paris listing, it intends to submit an application for the delisting of its ordinary shares from Euronext Paris.
Any delisting of its ordinary shares from Euronext Paris is subject to the approval of Euronext Paris and would have no impact on HSBC’s day-to-day operations in France or in Continental Europe, according to the announcement.
CEB BANK (06818.HK) results for 1-3Q20. It reported a net profit of RMB29.605 billion, down 5.7% yearly, with an EPS of 52 fen.
CHINA SOUTH AIR (01055.HK) results for 1-3Q20. It reported a loss of RMB7.463 billion, versus a profit of RMB4.078 billion over a year ago. LPS was 55 fen.
CHINA EAST AIR (00670.HK) results for 1-3Q20. It reported a loss of RMB9.105 billion, versus a profit of RMB4.367 billion over a year ago. LPS was 56.08 fen.

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