Nov 24 HK WRAP HSI +102pts but Shorts 19.6%, US Futures +260pts


27 Nov

HSI +102pts (+0.4%) 26,588 HSCEI -54pts (-0.5%) 10,613  T/O HK$143.24bn (-5.8% DoD)

EUROPE 
opened higher with vaccine hopes and notice of progress in US with Biden transition starting and his appointees and nominations with most +VE on Janet Yellen. Initial data from Germany +VE whilst from France was less so. DAX index to be overhauled for first time since and increased in size to 40 members (other requirements for future members: 2yrs of profitability, Quarterly & Annual audited statements, A staffed audit committee)
Data
EUROZONE ECB speakers Schnabel, Lagarde and Lane
GERMANY GDP Growth Rate Final Q3 -4% YoY vs -11.3% Q2 (F/cast was -4.3%) GDP Growth Rate Final Q3 +8.5% QoQ vs -9.8% Q2 (F/cast was +8.2%)Ifo Data Business Climate Nov 90.7 vs 92.7 Oct (F/cast was 90.1)Current Condition Nov 90.0 vs 95.0 Oct (F/cast was 94)Expectations Nov 91.5 vs 90.3 Oct (F/cast was 87.5)Bundesbank speaker Mauderer
FRANCE Business Confidence Nov 92 vs 94 Oct revised (F/cast was 91)Business Climate Indicator Nov 79 vs 90 Oct (F/cast was 86)
UK CDI Distributive Trades, BoE’s Haskel speaks

US Futures opened higher (Dow +160pts) and rose as Biden was recognised by the GSA as the potential winner of the election allowing the transition period to start.  Currently Dow Futures +260pts; S&P and NDX slightly higher.
Expect more rotation into the recovery names.
Data due Redbook, Case-Swiller home Price, House Price Index, CB Consumer Confidence, Richmond Fed Manufacturing Index, API Crude Oil Stock Change. Fed Speakers Bullard and Williams.

CHINA CSI 300 Closed -31pts (-0.6%) @ 4,974
Opened lower and sold down to 4,960 level before working higher into lunch. PM opened lower and traded down to 4,960 level before seeing a bounce and then drifted into the close. Market sentiment weak on credit market concerns and the threat of more Trump sanctions on 89 more Chinese companies hurting investor confidence. Declines lead by household appliances, non-bank financials, construction materials and brewery sectors. The out performers were leisure services, non-ferrous metals, oil and steel sectors on hopes of the economic recovery.
Indexes
Shanghai Comp -12pts (-0.3%) @ 3,403
Shenzhen Comp -53pts (-0.4%) @ 13,903
ChiNext Index -12pts (-0.4%) @ 2,675

CHINA Data None
Next data will be Industrial profits on Friday.

HSI Pre Market opened @ 26,630 +144pts vs -2pts ADR’s 26,484. Initially sold down to 26,450 level but then saw further selling to 26,410 day low. It then working slightly higher to 26,500 and traded around that level into lunch. PM saw the market open higher and test 26,550 but sold down to 26,490 level in the first 30 minutes. Then worked higher through the afternoon in choppy trading. Ecommerce names rebounded, green energy still popular (COMTEC SOLAR (00712.HK +170%) and SFCE (01165.HK +73%). Autos opened strong but selling down. Carrie Lam outlines more social distancing measures in PM briefing. Investors remain encouraged by the vaccine news and news about the Biden transition period starting in the US. But there are also rising covid cases globally and in Hong Kong and still the threat of more sanctions from Trump.
Tomorrow we get the policy address where Carrie Lam is reported to outline 200 new measures which have been agreed with Beijing for the good of Hong Kong.

HONG KONG DATA
After Market

Balance of Trade Oct HK$-36.8b vs -12.7b Sept (F/cast was -11b)
Exports Oct +1.1% YoY vs +9.1% Sept
Imports Oct +0.6% YoY vs +3.4% Sept
Centre for Health Protection said there were 80 new COVID-19 cases in Hong Kong today (vs 73 Monday) 10 of unknown origin. There were also 50 initially positive cases as a result of about 2,800 people taking COVID-19 tests in accordance with the Government's compulsory testing notice over the past few days. The Government will continue to run compulsory tests on groups with high-risks (e.g. staff members of elderly homes and taxi drivers), while adding five more community testing centers this week.

SHORT SELLING Tuesday 19.6% vs 17.4% Monday
Top Shorts 
Ping An (2318) 64%, BoC HK (2388) 41%, CCB (939) 38%, Sinopec (386) 37%, Swire Pac A (19) 36%, Country Garden (2007) 36%, Bank of China (3988) 34%, Galaxy Ent (27) 32%, Hang Seng Bank (11) 31%, Citic (267) 29%, MTRC (66) 28%, HSBC (5) 26%, WHARF REIC (1997) 25%, CLP (2) 25%, Hengan (1044) 25%.

AFTER MARKET NEWS
XIAOMI-W 3Q Adjusted Net Profit +18.9% to RMB4.128B, Topping Forecast. 3Q Profit Soars 93.1% to RMB4.864B
Phase X of LOHAS Park, co-developed by MTR CORPORATION (00066.HK) and Nan Fung Group, was named as "LP10". Providing 893 flats, the project is comprised of two blocks with standard flat types ranging from two to four rooms.
HKEX (00388.HK) declared the launch of HKEX Synapse, a new settlement acceleration platform using DAML smart contracts in combination of API and SWIFT, said Head of Post Trade Glenda So at a virtual press conference. She hoped to lower the participating threshold for the sake of trading convenience of global investors. Synapse is expected to debut 15 months later and be put into use as early as 1Q22.
MEITUAN-W (03690.HK) Vice President and Chief Scientist Xia Huaxia said at a forum that almost each of the 200 business arms of the company are operating with AI, facilitating merchants with intelligent decisions, for example the unmanned delivery works are being done by drones and self-driving vehicles, which could help boost efficiency of delivery men.
CHOW TAI FOOK (01929.HK) interim result ended September 2020. The net profit amounted to HK$2.232 billion, up 45.6% yearly. EPS. was HK22.3 cents. An interim dividend of HK16 cents was declared, against HK12 cents in the corresponding period of the previous year.
New social distancing measures include Bars, pubs, party rooms, public bathhouses and nightclubs must be closed from 12am on Thursday (26th) till next Wednesday. Live performance or dance activities will hence be forbidden in the above premises, she added. Total diners at banquets in catering premises, hotels and clubhouses will be capped at 40 people, or four persons per table (up to ten tables). All Catering & Scheduled Establishments Opening Biz Should Apply for & Display LeaveHomeSafe QR Code.
Huawei market share was expected to hit 4% next year; having announced on 17 November that it would dispose of its subsidiary Honor in order to protect Honor’s brand equity and the livelihood of its employees, in wake of the shipment ban by the US government, according to TrendForce’s investigations.  Despite the control change, "new Honor" has to face the shortage of foundry capacity in 2021. As a result, the related market share was forecast to be 2%, whereas Huawei’s market share was expected to hit 4%.
Hong Kong Institute for Monetary and Financial Research under Hong Kong Academy of Finance published an applied research report titled "The Green Bond Market in Hong Kong: Developing a Robust Ecosystem for Sustainable Growth".
Given rapidly evolving green bond market in Hong Kong, the city arranged and issued green bonds in a total amount of USD26 billion by the end of 2019, representing less than 1% of the total bond market. Hence, Darryl Chan, Executive Director (External) at HKMA, said the market demand for green bonds remained tremendous, and that the HKMA's Exchange Fund Investment has also heightened its attention to the green element in its investment items since 2015.

MARKET COMMENT
*PETROCHEMS FIRM 
as Oil price hit its highest level since early September in New York with vaccine hopes bolstering demand outlook. China’s shipments of diesel and gasoline surged to a six-month high as state-run refiners sought to maintain high processing rates and use up export quotas. ANTON OILFIELD (3337 HK +1.1%) PETROCHINA (857 HK +0.8%) CH OILFIELD (2883 HK +1.8%).
*TECH & COMPONENTS FIRM on hopes that demand for China-made components will increase as 5G applications rise. ZTE (763 HK +6.5%) HUA HONG SEMI (1347 HK +5.9%) ASM (522 HK +5.4%).
XIAOMI's (1810 HK -1.6%) ahead of quarterly results, and after HKC (1910 HK +4%) disclosed it sold 6.37m Xiaomi shares between Nov 4 to 23, raising HK$167m.
*INTERNET/E-COMMERCE PLATFORMS MIXED after a report that HK was planning to expand the scope of its trading link to Chinese mainland bourses. Such a move may allow mainland investors to directly buy shares in the firms for the first time. ALIBABA (9988 HK +2.3%) NTES (9999 HK +1.5%).
CMGE (302 HK -12%) the Game developer and operator to raise net HK$536.8m in up sized top-up placement, 155m shs at HK$3.02 each, represents a 9.9% discount to last closing price of HK$3.35.
JD's (9618 HK +1%) various news items; poised to ring-fence its logistics wing for overseas listing next year with a valuation of approximately US$40 billion. Also JD HEALTH INTL is reported to open the institutional book tomorrow for its US$4b IPO tomorrow, lifting its targeted valuation to US$29b. The Standard reported that JD Health will introduce Hillhouse Capital and Singapore's GIC as its cornerstone investors, who will subscribe US$1 billion worth stocks.
*PHARMA WEAK as CSPC PHARM (1093 HK -3%) following yesterday's earnings. There is concern that the NBP patent for the treatment of stroke will expire in 2022 and its innovation channels are weak. Sector continued volatility on vaccine speculations. CANSINO (6185 HK -4.4%) SINOPHARM (1099 HK -2.7%) INNOVENT (1801 HK -3%) 3SBIO (1530 HK -3.4%).
*HK PROPERTY FIRM talk of new measures on LTV ratio’s in Carrie Lams address tomorrow. Also NWD (17 HK +1.9%) named its HK$20b mixed-use development project at the HK Intl Airport development Skycity as 11 Skies. 11 Skies will open in phases between 2022 and 2025.
CKA (1113 HK +0.9%) SHKP (16 HK +1.4%) SINO LAND (83 HK +2.8%).
*CHINA PROPERTY WEAK as credit concerns about the developers remain unanswered. CR LAND(1109 HK -0.6%) announced that China Resources Land proposed to spin off its property mgmt arm, CR MIXC LIFESTYLE, to be listed on the main board. Qualified CR Land shareholders can subscribe for 1 share of CR MIXC LIFESTYLE for every 130 shares they hold as at 4:30pm on Nov 18, 2020, being the Record Date.
EVERGRANDE's (3333 HK -1%) property mgmt arm EVERGRANDE PROP SERVICES HK IPO reported as being covered on the first day of institutional bookbuilding and 0.7x oversubscribed on the retail tranche. SHIMAO (813 HK -3.8%) KWG (1813 HK-1.1%).

Regional Markets
JAPAN 
opened higher as the Japan played catch up on the positive vaccine theme. Nikkei seeing resistance at 26,260 level. Market drifted slightly lower in the last hour to close +638pts (+2.5%) @ 26,166
Topix again saw an early rally and saw resistance at 1,770. Market eased back to 1,767 level and traded sideways. Sold down around 2pm but found support at 1,760 and saw a small bounce and closed +35pts (+2%) @ 1,762.
Japan Airline +4.9% rallied as Adviser to PM Suga; Mr Takenaka says the airline would be recapitalised and restructured and the that ANA -1.9% should be combined.
S KOREA opened higher with good consumer confidence data and continued foreign buying.
Kospi opened higher @ 2,616 saw an initial dip but then reversed and worked higher first to around the 2,625 level and traded sideways testing the 2,620 support then rallied to the day high of 2,628 but unable to break out as eased back to 2,612 level before a small bounce to closed +15pts (+0.6%) @ 2,618
Kosdaq opened higher at 877 but sold down to 869 in initial traded bounce retested the low and then worked higher to trade around and slightly higher than flat before selling down to test 870 which held and index bounced to 872 and traded sideways to close -1.2pts (-0.1%) @ 872
Data pre market
Consumer Confidence Nov 97.9 vs 91.6 Oct (F/cast was 82)
TAIWAN opened higher after the good after market data Monday (Industrial Production weaker MoM but better than expected and Govt warned demand may have peaked although companies optimistic. Unemployment and Retail sales +VE) It ticked up to 13,951 before selling down to 13,833. Worked back to flat but then drifted lower but then saw accelerated selling around 12:40pm down to 13,800. Traded there before a small uptick in the last 10 minutes to close -71pts (-0.5%) @ 13,807
After market today M2 Money supply Oct +7.05% YoY vs 7.15% Sept (F/cast was +6.9%)

CONNECT FLOWS (significantly lower DoD)
Shanghai
Northbound Rmb 38,829m Buy 19,876m vs 18,952m Sell
Southbound HK$ 11,551m Buy 5,107m vs 6,444m Sell
Shenzhen
Northbound Rmb 52,308m Buy 25,761m vs 26,547m Sell
Southbound HK$ 12,489m Buy 5,765m vs 6,724m Sell

Active Heavyweights
HKEX (00388.HK) +4%
BABA (09988.HK) +2.3%
MEITUAN-W (03690.HK) -1.5%
AIA (01299.HK) +1.4%
PING AN (02318.HK) -1.2%
CCB (00939.HK) -1%
TENCENT (00700.HK) -0.3%

HSI & HSCEI Constituents on Move:
GALAXY ENT (00027.HK) +3.9%
SHIMAO GROUP (00813.HK) -3.6%
CSPC PHARMA (01093.HK) -3.6%
GEELY AUTO (00175.HK) + 2.4%, hitting new high
ENN ENERGY (02688.HK) +2.2%, hitting new high

HSMI & HSSI Constituents on Move:
CMGE (00302.HK) -11.9%
BJ ENERGY INTL (00686.HK) +11.8%
TIANNENG POWER (00819.HK) +10.2%
VSTECS (00856.HK) +10%, hitting new high
GCL-POLY ENERGY (03800.HK) +9.4%, hitting new high
LEE & MAN PAPER (02314.HK) +6%, hitting new high

MARKET HOURS NEWS
Full Truck Alliance, dubbed as "China's Uber for trucks", is valued as much as US$12 billion following a fresh round of US$1.7-billion financing, Reuters' cited people familiar with the matter. The company was expected to carry out IPO next year in New York. Full Truck Alliance announced the completion of the fundraising, which was led by SoftBank’s Vision Fund, Sequoia Capital, Permira and Fidelity. Existing investors, including Hillhouse Capital and TENCENT (00700.HK) also joined the funding.
The mortgage loan-to-value (LTV) ratio will purportedly be eased to $10.01-15 million in tomorrow's policy address. Knight Frank Executive Director Thomas Lam did not foresee a speculation supposing the LTV ratio relaxation. Instead, he believed the move will be conducive to flat replacement and unlocking second-hand supply. Equally, nano flats will be less appealing to the market going ahead, he added.
China contributed a new contract and investment amount of US$23.5 billion into countries participating in the Belt and Road Initiative (BRI) in 1H20, Moody's said in a report, which also expected the full-year investment to fall short of last year’s US$104.7 billion. The report analyzed that the pandemic put countries of Belt and Road Initiative under financial pressure with shrinking financing capability. This may spark financial losses at Chinese entities which were more susceptible to the BRI, yet Moody's regarded the losses as manageable.
Chinachem's property unit accumulated revenue of over $32 billion in the past five years, said CEO Donald Choi at a press conference. The group will rebrand its hotel business next year, aiming to uplift service quality. Chinachem is actively gearing up for the Anderson Road project, anticipating for a launch by the end of year, said Dennis Au, Managing Director for Real Estate.
HKEX (00388.HK) announced introduction of HKEX Synapse, a new settlement acceleration platform for its landmark Stock Connect programme. Using DAML smart contracts, HKEX Synapse will standardise and streamline the post-trade workflows of Northbound Stock Connect, maximising efficiencies for market participants in a transparent, secure and reliable manner. Asset managers, brokers, global custodians, local custodians, and clearing participants will all benefit from the improved connectivity and enhanced capacity to handle the growing volume of trades flowing through Stock Connect.
The Urban Renewal Authority (URA) announced that it receives more than 4,906 applications for its 43 remaining units in eResidence which are designated as “Starter Homes” units upon the close of application submission at 7pm yesterday (23 November).
Allianz Global Investors and Manulife formed strategic alliance on MPF business in Hong Kong. Calvin Chiu, Senior Managing Director, Head of Asia Retirement, Manulife Investment Management, said both parties had previously rolled out funds, thus they had basic understanding of one another. He deemed the local MPF growth to have much stronger potential to explore.
The US Securities and Exchange Commission is pressing Chinese companies listed in the United States to fully disclose their risks to investors, as American watchdog is unable to run a complete review of their books.
Before switching on its planned IPO, JD Health will introduce Hillhouse Capital and Singapore's GIC as its cornerstone investors, who will subscribe US$1 billion worth stocks, The Standard learnt from insiders.
Overnight HIBOR last posted at 0.03661%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.10179%, marking a 1-month low.
Carrie Lam: To announce more social distancing measures thought to include closing Indoor, Non-masking Wearing Leisure Establishment with Gathering, Physical Contact; Details Coming Later. She also said the Return2hk scheme will be not be put off despite the new wave of plague in Hong Kong as she perceived the epidemic in China and Macau are relatively contained. While over 1,000 diagnosed cases were reported from those who returned to Hong Kong from foreign countries, none of those were from China or Macau. Hence, the CE regarded both places were safe based on evidence. Secretary of Food and Health will later issue an order, requesting restaurants and other designated premises to post the QR code of "LeaveHomeSafe", added Lam, although the scheme will be carried out at a voluntary basis at this moment.
Chief Executive Carrie Lam had held off the latest policy address till 25 November to strive for Hong Kong-bolstering moves from Beijing. Press reprots she is to unroll 200 new measure. One of the moves that the Chinese central government support is the expansion of mutual market access scheme, said Sing Tao Daily. Under the stretched regime, Chinese investors may buy shares in biotech firms and secondary listed companies in Hong Kong. By then, the Southbound Trading will include BABA-SW (09988.HK), JD-SW (09618.HK), NTES-S (09999.HK) and such other heavyweight techs.
JD-SW (09618.HK) is poised to ring-fence its logistics wing for overseas listing next year with a valuation of approximately US$40 billion, Reuters' IFR quoted people with the knowledge of the matter. In response to the rumour, the related personnel of JD Logistics refused to give any comment. Also reported that JD Health will introduce Hillhouse Capital and Singapore's GIC as its cornerstone investors, who will subscribe US$1 billion worth stocks, The Standard learnt from insiders.
Post shareholding reshuffle in AlipayHK, which was previously held 50% as to CKH HOLDINGS (00001.HK) and BABA-SW (09988.HK) respectively, CKH’s stakes were reduced from 50% to 40%, meaning that it lost its final decision making power in the mobile payment app, Apple Daily reported. Only one CKH HOLDINGS representative was left in the board upon the resignation of Canning Fok and such other directors.  AlipayHK told the press that the restructure was made to boost operation efficiency.
BABA-SW (09988.HK), Shi Miao, former Vice President of Cainiao Network, was detained by Chinese police officers for allegedly receiving several millions in bribes using his position, reported Chinese media.
Australian Prime Minister Scott Morrison stated while the intensifying US-China rivalry is pressing other countries to choose sides, the two superpowers should give other governments “more room to move.”
EVERG SERVICES (06666.HK), a spin-off of EVERGRANDE (03333.HK), recorded over $2.7 billion in margin yesterday, representing roughly 0.7x of over-subscription in the public offering based on the fundraising amount of about $1.581 billion, according to brokers. The property manager was fully subscribed in its international placing, Bloomberg learnt from insiders.

PRE MARKET NEWS
Not in this mornings report
TENCENT (00700.HK) announced that on 23 November 2020, a total of 150,700 options to subscribe for shares are granted under the 2017 Option Scheme. The exercise price is HK$586 per share. The options are valid for seven years.
HENDERSON LAND (00012.HK) launched the second price list for its Tsim Sha Tsui project, Arbour, involving 36 units. Pricing in a maximum discount of 1%, the selling prices would range $6.2667-21.357 million, with an average floor price of $21,887-29,343 per sq.ft. The developer will simultaneously unveil the sales arrangements, about to make 68 flats available this Friday (27th).
China confirmed 22 additional COVID-19 cases yesterday (23rd), including one local infection in Tianjin and one in Shanghai, reported by National Health Commission.
TENCENT (00700.HK) is investing roughly US$150 million in Waterdrop Inc., a Chinese insurance tech startup, Bloomberg citing insiders. Waterdrop will expand its online platform and upgrade its technology using the funds to vie with the BABA-SW-backed Ant Group in insurance tech field.
In relation to the talks between Macao and Mainland to revive online reservation for travel pass granting to the gambling hub, the Director of Macau Government Tourism Office, told Macao Daily that Mainland China has from 12 Aug resumed such travel pass granting for Zhuhai residents, according to Mainland immigration watchdog. In order to better coordinate with pandemic precaution, the Chinese immigration regulators remained yet to reboot self-service travel pass granting machines, added the director. The office will stay in touch with Beijing under the coordinated precaution regime so that local residents, overseas workers and tourists can enjoy greater flexibility even amid normalising precaution.
CMGE (00302.HK) announced top-up placing of 180 million shares at $3.02 each, representing a 9.85% discount to the closing price yesterday. The net proceeds to be received by the Company from the Subscription are estimated to be approximately $537 million.
The Trump administration is pushing for new hardline measures against China to form an informal alliance of Western countries that would jointly retaliate when China coerces other nations using her trading position, reported WSJ. The White House also considers adding more companies, including SMIC (00981.HK), to the US Commerce Department blacklist.
ZA ONLINE (06060.HK) announced that in relation to its application to the Listing Committee of the Stock Exchange for approval of the listing of and for permission to deal in 950 million Converted H Shares, the Listing Approval was granted on November 23. The listing of the Converted H Shares on the Stock Exchange will commence at 9:00 a.m. on December 11. Upon completion, Ant Group will hold 13.54% of the issued share capital in ZA ONLINE, and 10.21% to TENCENT (00700.HK) and PING AN (02318.HK)
China Banking and Insurance Regulatory Commission (CBIRC) announced that it agreed in principle Baoshang Bank entered into bankruptcy procedure. The bank had disclosed earlier on chinamoney.com.cn that it would book a total write-off for its 2015 Tier 2 Capital Bond of Baoshang Bank due to incident that disrupted the continuity of the company, and it would not repay the accumulated interest payable.
YUEXIU PROPERTY (00123.HK) announced it is to acquire 67% of the equity interest in GZMEE and 67% of the equity interest in GZMPM, which are both property management service companies, from Guangzhou Metro Group, a substantial shareholder of the Company, at a total consideration of RMB282 million. The Company is considering a possible spin-off and separate listing of the property management business on the Main Board of the Stock Exchange.
HKC (HOLDINGS) announced that between 4 to 23 November, the Group disposed of a total of 6.366 million XIAOMI-W (01810.HK) Shares on the open market, for an aggregate consideration of $167 million. The Group is expected to recognise a gain of approximately $35.1 million.
HKET HOLDINGS (00423.HK) results for the six months ended September 2020. Net profit reached $28.73 million, up 160.2% yearly. EPS equaled 6.66 cents. Interim DPS stayed at 2 cents.

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