Nov 6 HK WRAP HSI +17pts T/O -5% DoD Trumps accusations worry the markets


11 Nov

Nov 6 HK WRAP HSI +17pts T/O -5% DoD Trumps accusations worry the markets

HSI +17pts (+0.1%) 25,713 HSCEI +19pts (+0.2%) 10,498  T/O HK$164.55bn (-4.8% DoD)

Overview 
Trumps impromptu White House press conference at which he falsely claimed victory and alleged voter fraud without giving anything by hearsay evidence plus the legal actions he has mounted are worrying markets that he will make it a protracted results process.

EUROPE open lower rallied but then sold down again on the prospect that the US results are going to take longer as Trump reverts to legal action. Data was mixed and there will be caution ahead of the US payrolls number. Earnings in focus along with covid as UK endures its second day of lockdown and Italy and Greece announce similar measures. Insurers rising lead by Alliance, Travel & Leisure falling. Richmond rallied on good earnings
Data
GERMANY Industrial Production Sept +1.6% vs +0.5% Aug revised (F/cast was +2.5%)
FRANCE Balance of Trade Sept Euro -5.8b vs -7.7 Aug (F/cast was -6.7b)Current Account Sept Euro -5.7bn vs -4.7bn Aug (F/cast was -3.6bn)Private Non Farm Payrolls Q3 +1.8% QoQ vs -0.9% Q2 revised (F/cast was +0.4%)
UK Halifax House Price Index Oct +0.3% MoM vs +1.5% Sept (F/cast was +0.8%)Halifax House Price Index Oct +7.5% YoY vs +7.3% Sept (F/cast was +8.3%)
US Futures opened -50pts in Asian time and eased to -115pts but have since recovered to -61pts with the S&P and NDX lower too. Trumps impromptu address from the White House raising the prospect that he will not be leaving easily. There is also a slim chance the Democrats win the Senate still.
Data due Non Farm Payrolls, Unemployment Rate, Ave Weekly Hours, Participation Rate, Wholesale Inventories, Baker Hughes Total Oil Rig Count
Earnings Allianz, Virtu Financial, Zimmer Biomet, Honda

CHINA CSI 300 Closed unchanged 4,885
opened higher but sold down initially to 4,870 level before bouncing back into the green but it was short lived and sold down to trade sideway 4,880/870 for most of the rest of the morning before selling down into lunch PM saw the market test lower before rallying only to retest the lows before working back to flat in the last hour. I would think ’Team China’ was busy supporting the market as retail investors looked to look in recent gains ahead of the China trade data and the uncertainty still over the US election result; Plus the US jobs report.
Star Board was -2.3% as investors locked in recent gains.
Gainers shipping, brokerage, gold, semiconductor
Losers healthcare, vaccines, charging piles, liquor, and autos
Indexes
Shanghai Composite Index -8pts (-0.2%) @ 3,312
Shenzhen Component Index -56pts (-0.4%) @ 13,838
ChiNext Index -55pts (-2%) @ 2,733

CHINA Data None but Saturday Balance of Trade, Exports, Imports, Foreign Exchange Reserves

HSI Pre Market opened @ 25,750 +54pts vs +238pts ADRs @ 25,933 with weakness in Alibaba and Ecommerce. Market initially sold down to 25,650 before bouncing back to the day high 25,800 only then to sell down to the day low 25,605. Then traded sideways 25,700/625 into lunch. PM saw the market test lower to 25,540 before working back to the green over the next 90 minutes, only to drop lower pre close. Then spiked +33pts in the closing auction.
Xiaomi seeing good interest as it continues to make inroads into European markets.

HONG KONG DATA
Foreign Exchanges Reserves Oct $475bn vs 473bn Sept revised (F/cast was 452bn)
Centre for Health Protection said there were 6 new COVID-19 cases in Hong Kong today (vs 7 Thursday) all imported cases.

SHORT SELLING Friday 14.4% vs 17.4% Thursday
Top Shorts
Ping An (2318) 43%, BoC (3988) 33%, Petrochina (857) 33%, CCB (939) 33%, Wharf REIC (1997) 32%, AAC Tech (2018) 30%, Country Garden (2007) 28%, BOC HK (2388) 27%, Hang Seng Bank (11) 27%, China Res Land (1109) 27%, Mengniu Dairy 26%, Galaxy Ent (27) 24%

AFTER MARKET NEWS
GEELY AUTO (00175.HK) total sales volume for October 2020
was 140,000 units, + 8% YoY and +11% MoM
Spot USD/CNY closed at 6.6215, up 185 bps and once hitting a 28-month high. As at 16:53, USD/CNY was 171 bps in the night session. USD/CNH stood at 6.6127, -18 bps.
NEW ORIENTAL-S (09901.HK), to be listed next Monday, opened at $1,320 in gray market, up about 11% against the listing price of $1,190, and last traded at $1,372, up 15%, on volume of 9,950 shares, PhillipMart data showed.
Centa-City Leading Index (CCL) last posted at 177.66, up 0.46% weekly.
CCL was significantly dented by choppy luxury home prices, seeing both rally and slide over the past four weeks, said Centaline Property. Particularly, the index was hovering around 176 to 177.

MARKET COMMENT
*PETROCHEMS WEAK
as oil dropped overnight. China is once again going to guarantee a minimum fuel price for its refineries to protect them from weak global demand. The NDRC said that it will help to hold processing margins at a fixed level of $40 a barrel. PETROCH (857 HK -0.4%) CNOOC (883 HK -0.7%) CH OILFIELD (2883 HK -1.9%) SINOPEC (386 HK +1.3%).
*E-COMMERCE WEAK after ALIBABA (9988 HK -3.7%) after mobile monthly active users missed, and revenue came in just above estimates and adjusted Ebitda topped. 2Q net income attributable to ordinary shareholders was 28.77b yuan -60% YoY, Net income of 26.52b yuan, -63% YoY, as it booked a one-time gain upon the receipt of the 33% equity interest in Ant Group last year. 2Q revenue 155.06b yuan vs est 154.84b yuan, 2Q adjusted Ebitda 47.53b yuan vs est 46.23b yuan, 2Q mobile monthly active users 881m vs est 899.0m.
CBIRC chief lawyer Fushou Liu said they will continue to improve the supervision and risk monitoring system for shadow banks, and plan to include all financial activities into the supervision according to the financial attributes of financial technology.
TENCENT (700 HK -1.5%) JD.COM (9618 HK -0.8%) NTES (9999 HK -2.8%).
*HK PROPERTY FIRM as the mortgage-linked HIBOR fell, with one-month Hibor down to 0.24667%, a two-month low, and govt data shows the completion of private homes in Sept dropped by 62.5% MoM. SHKP (16 HK +1.8%) to offer buyers new deal on luxury units. HENDERSON (12 HK +0.7%) names latest development. SINO (83 HK +1%).
*CHINA PROPERTY MIXED on month sales and after yesterday's rally.
SUNAC CHINA (1918 HK -2%) Oct contracted sales +9.2% YoY to 70.4b yuan. Its unit SUNAC SERVICES seeks up to US$1.1b in HK IPO.
CH OVERSEAS LAND (688 HK +0.8%) Oct contracted sales +21% YoY to 28.9b yuan,
CH OVERSEAS GRAND OCEAN's (81 HK +5.8%) +59.3% YoY to 7.97b yuan.
YUEXIU (123 HK+3.2%) Oct contracted sales +232% to 14.7b yuan.
CH JINMAO (817 HK -0.2%) Oct contract sales +16% MoM to 18.5b yuan.
*AUTO MIXED after CAAM data. DONGFENG (489 HK +27%) after analysts say it lags peers amid the ongoing sector rally. BUT GREAT WALL AUTO (2333 HK -2.7%) GEELY (175 HK -2.3%) BYD (1211 HK -1.6%) giving back some recent gains.
*PHARMA/MEDICAL WEAK on price cuts worries, following preliminary results of national procurement prices reductions. Prices of coronary stents was seen plunging 93% YoY.
INNOVENT (1801 HK -4.8%) CANSINO (6185 HK -3.8%) MICROPORT (853 HK -0.2%) BEIGENE (6160 HK -7%).
*MACAU MIXED after WYNN MACAU's (1128 HK +0.7%) reported US$280.6m in net losses during the third quarter of this year, with operating revenues -89.2% YoY to US$474.3m.
MELCO INTL (200 HK -1.6%) said its unit Melco Resorts (MLCO US) posted net loss attributable to the company $331.6m for 3Q vs net income last year. -VE

Regional Markets
JAPAN 
opened lower despite the futures being +120pts and pre market data +VE But market worked better to a day high at lunchtime (24,376). Opening lower in the PM but worked sideways to close +0.9% @ 24,325 a two year high.
DATA
Household Spending Sept -10.2% YoY vs -6.9% Aug (F/cast was -10.2%)Household Spending Sept +3.8% MoM vs +1.7% Aug (F/cast was +2.5%)Ave Cash Earnings Sept -0.9% YoY vs -1.3% Aug (F/cast was +0.2%)
S KOREA Markets opened higher initially spiked but then sold down into the red to a low around 10am before bouncing back
Kospi bounced back to flat and traded sideways until around 1:30pm when the market sold down to the day low 2,405 before working back into the green at the close +0.1% @ 2,417
Kosdaq bounced back to failed to regain the green and eased back to trade sideways around 840 level also soak down 1:30pm to 832 before working higher into the close to end -1% @ 837
TAIWAN opened higher and worked higher to test 13,00 but failed to break out and retrenched to 12,930 level before working higher to 12,960 and sideways into the close +0.4% @ 12,974

CONNECT FLOWS (up DoD)
Shanghai
Northbound Rmb 42,297m Buy 19,320m vs 22,977m Sell
Southbound HK$ 13,465m Buy 6,733m vs 6,732m Sell
Shenzhen
Northbound Rmb 60,222m Buy 29,949m vs 30,273m Sell
Southbound HK$ 14,569m Buy 7,453m vs 7,116m Sell

Active Heavyweights
BABA (09988.HK) -4.3%
TENCENT (00700.HK) -1.7%
CCB (00939.HK) +1%
MEITUAN-W (03690.HK) -0.8%
HKEX (00388.HK) -0.6%
PING AN (02318.HK) +0.5%
AIA (01299.HK) +0.2%

HSI & HSCEI Constituents on the move
CHINA TOWER (00788.HK) +5.5%
ANTA SPORTS (02020.HK) +4.5%, hitting new high
CHINA GAS HOLD (00384.HK) +3.9%
XIAOMI-W (01810.HK) +3.5%
LONGFOR (00960.HK) +1.2%, hitting new high
ENN ENERGY (02688.HK) +0.5%, hitting new high

HSMI & HSSI Constituents on the move
DONGFENG GROUP (00489.HK) +26.7%
FIRST CAP GP (01269.HK) +24.3%
TCL ELECTRONICS (01070.HK) +12.6%
UNITEDENERGY GP (00467.HK) +12.6%
GRAND BAOXIN (01293.HK) +11.1%
ZIJIN MINING (02899.HK) +6.7%, hitting new high
KERRY LOG NET (00636.HK) +4.7%, hitting new high

MARKET HOURS NEWS
PBoC Calibrates Monetary Policy, Warns Against 'Money-Money Begetting’ Games. At Chinese State Council's standing meeting, the PBoC Deputy Governor Liu Guoqiang stated that monetary policies should carry clear directions. Besides a fixed amount of capital without over-surplus and with clear expectations, capitals should be put to real economy, instead of going into "money-money begetting" games.
HSBC announced to put its best lending rate on hold at the current level of 5%. Meanwhile, the bank held its HKD savings deposit rate steady. The additional interest rate for Total Relationship Balance worth $1 million or above was kept at 0.001% p.a.
Nintendo Switch, introduced by TENCENT (00700.HK) in China, has debuted at the 3rd China International Import Expo (CIIE), reported Shanghai Securities News.
HSBC HOLDINGS (00005.HK) will restructure its British retail banking business, under which roughly 100 positions will be slashed, a source familiar with the plan told foreign reporters.
Ministry of Commerce (MOC) projected China's service import value to reach US$2.5 trillion in the coming five years, accounting for over 10% of the world's total.Overnight HIBOR last posted at 0.04027%, down for 5 days, logging a 1-month low, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.20881%, marking a 1-month low.
Apple is facing a class-action lawsuit filed by its shareholders, accusing Chief Executive Tim Cook of concealing shrinking iPhone demands in China, which may result in billions of USD of loss to investors.
BABA-SW (09988.HK) and Richemont Pump US$1.1B Into Farfetch; further to the news yesterday, the fact that Richemont is also putting money in +VE
JD-SW (09618.HK) announced that its JD Daojia and JD Convenience Store have teamed up with Walmart, Yonghui, BBK Electronics, Sam's Club, 7Fresh and Jianfu to launch the super partnership for supermarkets and convenience stores. Accordingly, they aim to help with brick-and-mortar stores' digital transformation.
In October, TENCENT (00700.HK) continued to be the top seed among 30 Chinese mobile game developers in terms of user spending, reported Sensor Tower. The mobile gaming revenue chart on Chinese App Stores was dominated by three TENCENT games, namely Honor of Kings, Game for Peace and Moonlight Blade in pecking order.
XIAOMI-W (01810.HK) was among the top-three smartphone market players in Western Europe for 3Q20 with doubling shipment growth, according to Canalys' data. It has taken the top spot in Spain's smartphone market share for three straight quarters. +VE

PRE MARKET NEWS
Not in this mornings report
China Foreign Exchange Trade System announced today (6 November) that the central parity of USD/ RMB climbed 605 bps from the last trading day to 6.6290, setting a new high since 11 July 2018.
ESPRIT HOLDINGS (00330.HK) annual results ended June 2020. Loss deepened to $3.992 billion from $2.144 billion in the previous year. LPS equaled $2.12. No dividend was declared. Gross profit To focus resources and recalibrate operations in order to cope with the challenges of the Pandemic most effectively, the Group decided on further restructuring measures in April 2020. It was decided to close all business in Singapore, Malaysia, Taiwan, Hong Kong and Macau as part of its restructuring initiatives.
WYNN MACAU (01128.HK) results prepared in accordance with IFRS for Q3 ended 30 September 2020. The loss amounted to US$281 million for the quarter, against net profit of US$104 million for the same period a year ago. In Macau, visitation restrictions have begun to gradually and thoughtfully ease, allowing the Group to achieve EBITDA break-even in October, said Matt Maddox, CEO of Wynn Resorts.
BYD COMPANY (01211.HK) (002594.SZ) announced that its holding subsidiary Golden Link Worldwide Limited has entered into the Subscription Agreement relating to Harmony Fund LP.
HKTV (01137.HK)  announced that the gross merchandise value (GMV) on order intake amounted to $513 million, up 85.9% yearly and 7.3% monthly, in October 2020.

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