Dec 17 HK/China Wrap HSI +218pts Chip stocks +VE on Beijing's tax break

17 Dec

HSI +218pts (+0.8%) 26,678 HSCEI +84pts (+0.8%) 10,546  T/O HK$128.96bn 

Opened higher, FTSE drifting lower ahead of the BoE rate decision. DAX and CAC trading sideways; sentiment helped by news that a Brexit deal may happen, progress on the US stimulus package and comments from the Fed that it will continue to buy bonds until more progress has been made on achieving its employment and price stability goals.
EUROZONE New Car Registrations Nov -12% YoY vs -7.8% Oct (F/cast was -17.9%)
Core Inflation Rate Nov +0.2% vs +0.2% Oct (F/cast was +0.2%)
Inflation Rate Nov -0.3% YoY vs -0.3% Oct (F/cast was -0.3%)
Inflation Rate Nov -0.3% MoM vs +0.2% Oct (F/cast was-0.3%)
GERMANY No data due
Business Confidence Dec 93 vs 92 Nov (F/cast was 93)
Business Climate Indicator Dec 91.5 vs 79.4 Nov (revised) (F/cast was -0.3%)
BoE Interest Rate Decision

US Futures working higher, currently; Dow +140pts, S&P +0.6% and NDX +0.5%.  Focus will be on the initial claims data and hopes of an agreement on the Stimulus package.
Initial Claims, 4 week Ave Claims, Continuing Claims, EIA Natural Gas Report, Building Permits, Housing Starts, Philadelphia Fed Manufacturing Index, Kansas Fed Manufacturing Index.

CHINA CSI 300 Closed  +63pts (+1.3%) @ 5,018
CSI 300 opened higher and initially traded sideways about 10:30 the market worked higher to 5,014 before easing back into lunch @ 5,000. PM opened flat and traded sideways around 5,000 level
Shanghai Comp +37pts (+1.1%) @ 3,404 T/O Rmb364.7b
Shenzhen Comp +138pts (+1%) @ 13,889 T/O Rmb 427b
ChiNext Index +24pts (+0.9%) @ 2,785 T/O Rmb162.8bn

HSI Pre Market opened 26,608 +148pt  vs -68pts ADR's. E Commerce names strong but sold down in the first 30mins to the day low 26,390 which it tested a couple of times before working back to 26,550 before easing back into lunch.  PM opened higher but saw resistance at 25,650 until around 3pm when it eased above and then worked higher into the close and saw a 41pt uptick in the closing auction.  Chip names +VE on news that Beijing was to grant them a tax concession. Pharma names were also strong along with Resources but Chinese Financials and some retail names were seeing weakness.  

SINO-OCEAN SERV (06677.HK), spun off from SINO-OCEAN GP (03377.HK), finished the trade at $5.85, down 0.5% against the listing price $5.88, on volume of 57.093 million shares and turnover of nearly $328 million.  Excluding the handling fees, a book loss of $15 was reported per board lot.
NETJOY (02131.HK) closed at $8.12, +16.3% against the listing price of $6.98, on volume of nearly 267 million shares and turnover of over $2.06 billion. Excluding the handling fees, a book gain of $1,140 was reported per board lot.

VESYNC (02148.HK), to be listed tomorrow, opened at $9.3 in grey market, up 68.48% against the listing price $5.52, and last stood at $8.58, up 55.4%, on volume of 29.80 million shares and turnover of $251 million, PhillipMart data showed.

PICKs Techtronics (669 HK) closed +1.8% @ HK$106.80. I would wait a look to accumulate below HK$100.

After market Unemployment Rate Nov 6.3% vs 6.4% Oct   The numbers reflect are before the recent surge.  "Given the fourth wave of local epidemic of late, the pressure on the labour market is likely to increase again in the near term", the Secretary for Labour and Welfare said.

Centre for Health Protection said there were 96 new COVID-19 cases in Hong Kong today (vs 82 wednesdaday) 26 cases with unknown origin, 90 local infections. It also mentioned 70 initially confirmed cases

SHORT SELLING Thursday 15.2% vs 13.7% Wednesday 
Top Shorts  Bud Apac (1876) 42%,  Hang Seng Bank (11) 41%, Ping An (2318) 37%, Wharf REIC (1997) 34%, Sands China (1928) 29%, Henderson Land (12) 29%, CKI (1038) 27%,  Country Garden (2007) 27%, Bank of China (3988) 25%, CCB (939) 25%.  

Matthew Cheung, Chief Secretary for Administration, said the Government will file for injecting $6.4 billion of funds to the Anti-epidemic Fund.  The funds will cover 19 subsidy programs worth $5.5 billion, while the remaining $900 million will be reserved for emergency use. The LegCo Finance Committee will convene a special meeting next Monday to proceed with the relevant funding.
India's smartphone shipment registered a 42% YoY growth in October to 21 million units, reported IDC. By brands, XIAOMI-W (01810.HK) topped the chart with a 24.8% market share.
HKEX (00388.HK) says it is on track to record its best year in terms of IPO fundraising amount since 2010, with new economy companies accounting for close to 60 per cent of IPO funds raised in Hong Kong since the new listing rules took effect (as of 10 December 2020). Average daily turnover contribution from new economy companies listed since 2018 in the cash equities market rose, from 4.1 per cent in 2018 to 22.8 per cent in November 2020.  In a very short time frame, Hong Kong has now also become the world’s second largest biotech fundraising hub, ushering in 47 healthcare and biotech listings to the HKEX Main Board since the launch of the new listing regime.
CHINA UNICOM (00762.HK)  achieved the world's first commercial 5G network slicing in Beijing and Guangdong last month, revealed Miao Shouye, director of CHINA UNICOM's 5G Co-construction and Sharing Working Group.
BAUHAUS INT'L (00483.HK)  announced it has decided to close all offline retail stores under its non-Hong Kong & Macau operating segment by the year ending 31 March 2021.   The management teams in the respective regions will commence negotiations with the respective landlords of the stores promptly with a view to closing the stores in an orderly and timely manner but the exact timing for the closing of each individual store is subject to negotiations with individual landlords.
SHENZHEN INVEST (00604.HK) announced that for the first eleven months of 2020, the Group recorded total contracted sales of RMB11.682 bn, representing -13.2% YoY.
Chinese chipmakers strong today. HUA HONG SEMI (01347.HK)  +7.4% at the intraday high $44.5.  On news that Beijing has nailed down income tax break for the chip industry, whereby chipmakers could be exempted from income tax for ten years at maximum, effective 1 January 2020.
The Hong Kong General Chamber of Commerce (HKGCC) projected Hong Kong’sGDP to plunge by 6% this year, in addition to a 7% unemployment rate by end-2020.
Equally, HKGCC CEO George Leung expected a wave of layoffs and shutdowns looming before Lunar New Year. It said 40% of the surveyed Hong Kong companies were bearish on the city's business outlook in the coming 12 months, while only 25% were bullish on the business landscape in 2021.

Regional Markets
Sentiment cautious as civid cases continue to rise and Tokyo moves to highest alert
Nikkei 225 opened lower and tested to 26,700 before rebounding to flat and then testing slightly higher but easing back just into the red at lunchtime. PM opened higher and worked higher but saw resistance as it approached 26,840 and sold down at the end to close +50pts (+0.2%) @ 26,807
Topix traded in a similar fashion Closed +6pts (+0.3%)@ 1,793
Covid cases continue at high levels and authorities are considering moving to the highest level of social distancing; hurting local sentiment.
Kospi opened slightly lower but sold down to 2,742 during the morning. But it reversed from around 11:30am and worked back to 2770 but unable to break above yesterdays close and Closed -1pts (-0.1%) @ 2,770
Kosdaq opened lower but rallied to 948 in the first forty minutes but then reversed and sold down to flat over the next forty minutes. It then worked higher with resistance at 944 and traded sideways. Closed +4pts (+0.4%) @ 944
Opened slightly higher traded sideways around flat but then sold down through the morning to a low of 14,213 around 10:50am before working higher for the rest of the day; to close -46pts (-0.3%) @ 14,259

Northbound Rmb 43,060m Buy 19,329m vs 23,731m Sell
Southbound HK$ 11,742m Buy 6,030m vs 5,714m Sell
Northbound Rmb 49,705m Buy 23,024m vs 26,681m Sell
Southbound HK$ 12,384m Buy 5,826m vs 6,557m Sell

Active HeavyweightsBABA (09988.HK)  +2.8%
MEITUAN (03690.HK) +2.1%
TENCENT (00700.HK) +2%
HKEX (00388.HK) +1.5%
PING AN (02318.HK) +1.4%
CCB (00939.HK) -0.2%
AIA (01299.HK) -0.1%

HSI & HSCEI Constituents on Move:
SINO BIOPHARM (01177.HK) +7.8%
WUXI BIO-NEW (02269.HK) +6.5%, hitting new high
HENGAN INT'L (01044.HK) +4.7%
ANTA SPORTS (02020.HK) -4.5%
NTES (09999.HK) +4.4%
CSPC PHARMA (01093.HK) +4.1%
BUD APAC (01876.HK) -3.9%
SMIC (00981.HK) +3.7%
JD (09618.HK) +3.7%

HSMI & HSSI Constituents on Move:
KANGJI MEDICAL (09997.HK) +26.7%
ASCENTAGE (06855.HK) +13.4%
3SBIO (01530.HK) +11%
GCL-POLY ENERGY (03800.HK) +10.5%, hitting new high
MMG (01208.HK) +10.4%, hitting new high
CMOC (03993.HK) +6.8%, hitting new high
KINGDEE INT'L (00268.HK) +6.2%, hitting new high

Midland Global's sales director of international property, envisioned a continual global property price uptick next year at around 5% to 10%.  Property markets in Britain and Australia would be more prosperous, with home prices rising over 5% in some UK cities. As for certain 1st tier Australian cities, he foresaw an over 10% home price rally in Sydney, outstripping the world.
RIVERA (HOLD) (00281.HK) last traded at $0.48, up 20%, before trading in its shares was halted from 2:26 p.m., pending disclosures of reasons.
China's gaming market has achieved actual sales revenue of RMB278.687 billion this year, up 20.71% yearly and maintaining a rapid growth, according to Gamma Data's data.
ONE Championship and XIAOMI-W (01810.HK) struck a partnership to apply 5G technology in live sports streaming.  Both sides will work for the first time to live stream ONE: COLLISION COURSE, a kickboxing showdown slated for 18 December at the Singapore Indoor Stadium.
NEW WORLD DEV (00017.HK) announced the enthusiastic sales response for its grade A office project in 888 Lai Chi Kok Road, Cheung Sha Wan. The second log of 44 units was sold out immediately after launch today (17th), with an average selling price of $13,275 per sq.ft.
The Japanese government will raise the economic growth forecast for the next fiscal year from 3.4% to 4%, reported Nikkei.
Overnight HIBOR last posted at 0.04875%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.27929%, marking a 1-month high.
There are five mobile games, including TENCENT (00700.HK)'s PUBG Mobile and Honor of Kings, with turnover of more than US$1 billion this year so far, reported Sensor Tower.  PUBG Mobile, together with its Chinese version Game For Peace, topped the global revenue chart. It garnered US$2.6 billion of user spending, +64.3% YoY. Honor of Kings amassed US$2.5 billion in player spending, +42.8% YoY
TENCENT (00700.HK) is to start revising the regular annual pay increase mechanism for staff members this year, Chinese media citing insiders.  The new mechanism, named "Salary Review", will not follow the principle of pay rise every April.
NCI (01336.HK) has during January-November 2020 achieved a 17.2% business growth rate, the highest of the industry, said CEO Li Quan.  Looking into the future, the insurer will retain its focus on wealth management business and continue with the development of core life insurance and elderly care businesses.
China Foreign Exchange Trade System announced today (17 December) that the central parity of USD/RMB dropped 7 bps from the last trading day to 6.5362.
Bitcoin notched a new high, once peaking at US$21,845, up over 500% from its YTD trough US$3,600. The cryptocurrency surged nearly 12% later to US$21,677.
Luckin Coffee announced that it has reached a settlement with the US SEC over alleged financial fraud by some of its former staff and that it will go on cooperating with the regulator and put compliance at its top priority.

Shanghai Securities News reported the rapid development of "5G News" (5G消息), seen as the biggest competitor of WeChat.  CHINA TELECOM (00728.HK), CHINA MOBILE (00941.HK) and CHINA UNICOM (00762.HK)  have started the scale-up deployment of 5G News, which is poised to become one of the first 5G apps presented to individual users.
XINYI SOLAR (00968.HK) announced to place 300 million shares, representing 3.41% of the share capital of the Company as enlarged. The Placing Price would be HK$13 each, representing a discount of 6.7% to the closing price yesterday (16th).  The estimated net proceeds were HK$3.876 billion.
China Banking and Insurance Regulatory Commission announced at a standing press conference that the commission is weighing inclusion of certain medical charges outside the National Drug Reimbursement List into the critical illness insurance covered by commercial insurers.

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