Dec 2 HK WRAP HSI -35pts T/O +19% DoD and rising covid cases

03 Dec

HSI -35pts (-0.1%) 26,533 HSCEI -86pts (-0.8%) 10,574  T/O HK$181.73bn (+18.7% DoD) 

EUROPE Markets opened lower but are working higher, data was slightly better than expected but covid remains a concern despite the UK approving  Pfizer’s vaccine for emergency use. News that Biden will not roll back tariffs or phase 1 of the trade deal but look at a co-ordinated strategy with allies seem as -VE for China.
Unemployment Rate Oct 8.4% vs 8.3% Sept (F/cast was 8.5%)
PPI Oct +0.4 vs +0.3 Sept (F/cast was +0.3)
PPI Oct -2 vs -2.4 Sept (F/cast was -2)
Retail Sales Oct +2.6% MoM vs -2.2% Sept revised (F/cast was +0.8%)
Retail Sales Oct +8.2% YoY vs +7% Sept revised (F/cast was +6%)

US Futures opened lower and worked lower in Asian trading but have recovered slightly and currently indicate Dow -85pts S&P and NDX also lower.Close attention on the ADP data todayData Due
MBA Mortgage Rate & Applications, ADP Employment Change, ISM New York Index, EIA Oil Report, Beige Book, Fed’s Powell’s Testimony continues.
Speeches from Williams, Quarles, Harker and Williams

CHINA CSI 300 Closed flat @ 5,067Opened higher at 5,072 inched higher initially button sold down to 5,043 before rebounding to 5,080 level.  Tested a couple of times but failed to break above and sold down before bouncing into lunch.  PM opened lower but working higher but effectively traded sideways to close flat.  Sentiment -VE as President Elect says he will not roll back the tariffs or the phase 1 trade deal but will conduct a full review of policies against Beijing in consultation with key allies so that "a coherent strategy" can be developed.  Likely to put more pressure on Beijing.  On the positive side investors are hopeful of more +VE news on vaccines. The Shenzhen Comp hit a 34 month high. Optics/optoelectronics led the gainers, semicon and components, degradable plastics, and OLED outperformed. Laggards include organic silicon, shared bicycles, liquor concept, auto parts, and rare earth permanent magnets.
Shanghai Comp -3pts (-0.1%) @ 3,449
Shenzhen Comp +31pts (+0.2%) @ 13,962
ChiNext Index -16pts (-0.6%) @ 2,683

CHINA Data None

HSI Pre Market opened @ 26,670 +102pts vs +5pts ADR’s @ 26,572 with HSBC strong but Longfor -9% as controlling shareholder placed $2.3b worth of shares.  Xiaomi was suspended believed to be for top-up placement other E Commerce names weak on the news.  Market sold down to 26,400 before finding support and then worked back to flat going into lunch. PM opened lower  but worked back to flat around 3:15pm but then drifted lower into the close and ticks lower in the closing auction. Increased turnover on a down day slightly -VE for sentiment. Concerns over the US/China relations as Biden saw he will not roll back tariffs and will develop a coherent strategy with key allies. Additionally the increasing number in HK covid cases remains a worry.

IPO EVERG SERVICES (06666.HK), on debut, finished the day at $8.78, down 2 cents against the listing price $8.8, on volume of 230 million shares andturnover of $2.026 billion.

PICKs Techtroncis closed -0.2% @ HK$99.00; looks like HK$100 is now a resistance having been a recent support.  I would accumulate sub HK$100 as I think US and global recovery will involve a lot more construction work and DIY.

HONG KONG DATACentre for Health Protection said there were 103 new COVID-19 cases in Hong Kong today (vs 82 Tuesday)  15 cases with unknown origin.  It also reported roughly 70 initially confirmed cases.

SHORT SELLING Wednesday 12.5 vs 18.2% Tuesday 
Top Shorts   Hang Seng Bank (11) 45%, MTRC (66) 42%, Swire Pac (19) 41%, Bank of China (3988) 37%,  Ping An (2318) 36%, CCB 9939) 34%, NWD (17) 34%, Country Garden (2007) 31%, CLP (2) 31%, HK & China gas (3) 29%,  ICBC (1398) 29%, SHKP (16) 28%, Wharf REIC (1997) 26%.

DAFA PPT (06111.HK)  announced that for the eleven months ended 30 November 2020, the aggregate contracted sales of the Group was approximately RMB26.303 billion.
Henderson Land  (12 HK) Since the launch of the Royale project series on 1 August, a total of 959 units of Seacoast Royale (Phase I) and Starfront Royale (Phase II) were sold, involving over $4.6 billion, said Thomas Lam, General Manager of Sales Department of Henderson Property Agency Limited.
CHINA AOYUAN (03883.HK)  announced that, in November 2020, the Group achieved unaudited property contracted sales of approximately RMB15.25 billion, +21% YoY.
The PBoC is in talks with Hong Kong parties over the framework solution of southbound trading of bonds, said China's Financial Times. The northbound trading of "Bond Connect" had commenced in July 2017.
In response to the US' legislation bill that may bar Chinese firms from going public on US exchange, Chinese Foreign Ministry spokesperson Hua Chuying stated that this is a political crackdown on Chinese firms, cited People's Daily. While Beijing opposes Washington's politicalisation of securities scrutiny, Hua called on Washington to provide a level and fair investment and business landscape for foreign enterprises.
RONSHINECHINA (03301.HK) announced that during the month ended November 2020, the total contracted sales amounted to RMB18.836 billion, up 10.09% yearly. For the eleven months ended 30 November 2020, the aggregate contracted sales amounted to RMB133.668 billion, up about 6% annually.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 787,500 shares in CK ASSET (01113.HK) at the average price of HK$43.1911, HK$43.4954, HK$43.1191 and HK$42.5455 per share on 26 November, 27 November, 30 November and 1 December 2020 respectively.
As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.79% to 35.81%, and increased from 35.85% to 35.87%, respectively.
MODERN LAND (01107.HK)  November 2020, contracted sales amounted to RMB5.007 billion, up 42.29% yearly.
Macau Expects More Tourists in New Year's Eve, Lunar New Year
Staying watchful of changes in GGR,
the Macau government anticipates a higher tourist footfall in the coming New Year's Eve and Lunar New Year holidays, Secretary for Economy and Finance Lei Wai Nong told Radio Macau.
XIAOMI-W (01810.HK) plans to gin up its component booking order next year while staying in talks with suppliers to book components for making up to 240 million cellphones, Chines media learnt from insiders.  The Chinese tech giant hopes to seize a larger market share than its peers, said the insiders.
India's Tata Group is in advanced talks to acquire up to 80% stake in BigBasket, India's largest grocery e-commerce platform, Bloomberg cited people with the knowledge of the matter. With BigBasket having valuation of approximately US$1.6 billion, acquiring 80% stake would take nearly US$1.3 billion. At present, BABA-SW (09988.HK) holds about 26% shares in BigBasket. According to earlier report, BABA-SW may dispose all of its shareholding in the Indian retailer in the deal.
China's IP-adapted mobile games generated revenue of RMB124.32 billion this year, exceeding RMB100 billion for the first time, according to Gamma Data's report. This showed that IP-adapted titles were an essential growth driver for China's mobile game market.  TENCENT (00700.HK)'s Game for Peace topped the revenue chart, followed by BABA-SW (09988.HK)'s Three Kingdoms: Strategy.

*PETROCHEMS STABLE  after the recent weakness and despite oil price weakness as US inventories unexpectedly rose and OPEC indecision over output increase. CNOOC (883 HK unch) CH OILFIELD (2883 HK +0.7%) PETROCHINA (857 HK +1.2%) SINOPEC (386 HK +1.7%).
*E-COMMERCE WEAK as XIAOMI (1810 HK -7%) in the pm session having halted trading in the morning; it sold 1billion shares in a top-up placement and $855m in seven-year zero-coupon convertible bonds, raising US$4b. The shares were priced at HK$23.70/shr,  a 9.4% discount to yesterday's closing price. Sector also under pressure amid regulatory concerns and the threat of more US action from a bill in the House of Representatives over accounting standards.JD.COM (9618 HK -2.5%), its JD HEALTH INTL (6618 HK) raised HK$27b after pricing Asia's biggest healthcare IPO at the top end of a marketed range, HK$70.58/shr.BABA (9988 HK -0.5%) MEITUAN (3690 HK -3.8%) NTES (9999 HK -2.4%) TENCENT(700 HK -0.7%).
*HK BANKS STRONG on attractive valuations, potential dividend resumption,  and recovery hopes as investors look to rotate out of the big tech names. HSBC (5 HK +3.6%) hit an 8-month high intraday high. HANG SENG (11 HK +1.6%) BEA  (23 HK +1.6%) STAN CHARTERED (2888 HK +3.3%).
*CHINA PROPERTY WEAK  as LONGFOR GROUP (960 HK -12%) and a shareholder sold 100m shares in a top-up placement and a concurrent secondary offering. Longfor is selling 50m shares, Charm Talent Investment Ltd. is selling 50m shs, at 7.5% discount. EVERGRANDE (3333 HK -2.4%) despite buying back 3.3m shares for HK$54.5m Dec. 1. R&F PROP's (2777 HK -0.6%) total attributable contracted sales amount to 14.60b yuan in November, +7% YoY with 1,219,000 sq.m. of GFA -5% YoY.
*AUTOS WEAK as BYD (1211 HK -7.8%) received CSRC’s administrative approval for the issuance of additional H-shs on Nov. 30, but issuance is still subject to permission and/or approval. The number of H shares to be issued won’t exceed 20% of total number of H shares in issue on June 23,  when shareholders approved the plan in an annual general meeting. Money to be used for general working capital replenishment, repayment of interest-bearing debt, investment in research and development and general corporate purposes. But concerns after the Brilliance default.GEELY (175 HK -4%) GAC (2238 HK -2.3%) GREAT WALL (2333 HK -4%). EVERGRANDE EV (708 HK +11%) bucked the trend after its first real car Hengchi One was displayed  to the public.
*HK RETAILERS FIRM after the value of retail sales in October was only  -8.8% YoY to HK$27.4b, better than market expectations of a 10.3% drop. For the first 10 months, the value of retail  sales dropped by 27% compared with the same period last year.  But the Hong Kong Retail Management Association (HKRMA), said they expected local retailers to be even more pessimistic about the upcoming traditional peak season in Christmas since the government had unrolled tighter gathering ban in wake of fourth wave of epidemic.SASA INTL (178 HK +0.8%) CHOW TAI FOOK (1929 HK +1.2%) GIORDANO (709 HK +2.5%).  
*COAL MINERS STRONG as Chinese thermal coal futures soared to the highest close on record as safety checks at mines limit supply and the embargo on Australian coal. CH COAL (1898 HK +5.3%) YANZHOU COAL (1171 HK +1.8%) SHENHUA (1088 HK +1.3%).
*OTHER MOVERS: TCL (1070 HK +6%) on speculation it's gaining share of the overseas TV market. It ranked 3rd in TV sales volume globally in the first three quarters.XIABUXIABU (520 HK +10%) on positive outlook as the firm aggressively expands with margin improvements at its Xiabu brand.

Regional Markets
Nikkei 225 opened higher at 26,885 but trended lower through the morning in choppy trading to 26,700 in the red before finding support and then trended slightly higher into lunch, still in the red. PM opened higher in the green and working higher to 26,850 but then sold down 60pts at the end to close +13pts (+0.05%) @ 26,801 as Tokyo reported 500 new covid cases up from 372 on Tuesday.
Topix Followed a similar pattern but found support at 1,770 still above yesterday’s close. PM opened higher and trended higher to 1,780 but then sold off to close +6pts (+0.3%) @ 1,774
Data out at 1pm HK time
Consumer Confidence Nov 33.7 vs 33.6 Oct (F/cast was 33)
Pre market data showed inflation weaker than expected
Kospi opened higher and rallied to 2,670 level and then between 2,660/75 and closed at the high +42pts (+1.6%) @ 2,676
Kosdaq opened higher at 895 and has traded in the range 896/892 until about 1.45pm after which it worked higher to close at the day high +8pts (+0.9%) @ 899
Inflation Rate Nov +0.6% YoY vs +0.1% Oct (F/cast was +1%)
Inflation Rate Nov -0.1% MoM vs -0.6% Oct (F/cast was +0.3%)
opened higher @ 13,970, initial trended lower to 13,900 where it found support and worked back to 13,995 but resistance increases at it approaches 14,000.  Closed +104pts (+0.8%) @ 13,989

CONNECT FLOWS (down small DoD)
Northbound Rmb 45,002m Buy 22,925m vs 22,077m Sell
Southbound HK$ 16,164m Buy 6,675m vs 9,489m Sell
Northbound Rmb 56,540m Buy 29,859m vs 26,682m Sell
Southbound HK$ 15,493m Buy 6,958m vs 8,536m Sell

Active Heavyweights
MEITUAN-W (03690.HK) -3.9%
HKEX (00388.HK) -1.7%
PING AN (02318.HK) +0.8%
BABA (09988.HK) -0.8%
TENCENT (00700.HK) -0.7%
CCB (00939.HK) -0.3%
AIA (01299.HK) +0.1%

HSI & HSCEI Constituents on Move:
LONGFOR (00960.HK) -11.8%
XIAOMI-W (01810.HK) -7.1%
GEELY AUTO (00175.HK) -4.2%
HSBC HOLDINGS (00005.HK) +3.7%
SINO BIOPHARM (01177.HK) -3.3%

HSMI & HSSI Constituents on Move:
PEIJIA (09996.HK) +11.7%
BEIGENE (06160.HK) -10.2%
XIABUXIABU (00520.HK) +10.1%, hitting new high
HUA HONG SEMI (01347.HK) +6.4%, hitting new high
YADEA (01585.HK) +4%, hitting new high
ZOOMLION (01157.HK) +3%, hitting new high
JIANGXI COPPER (00358.HK) +1.3%, hitting new high

The Land Registry announced that the number of sale and purchase agreements for all building units received for registration in November was 7,241 (+8.1% YoY). Among the sale and purchase agreements, 6,070 were for residential units (+5.5% YoY); the total consideration for sale and purchase agreements in respect of residential units was $58.1 billion (+21.6% YoY).
Hong Kong Government is initially pondering over a universal vaccination programme free of charge and has reserved money to book vaccines twice the amount of total population, said Sophia Chan, Secretary for Food and Health. At the beginning stage, high-risk clusters, including medical personnel, senior citizens and patients with underlying illness, will receive the vaccine in advance, which may involve 3 million individuals. The Government is taking a dual-pronged approach to acquire vaccines for the public, underscored Chan.
US President-elect Joe Biden told the New York Times that no actions will be taken immediately after he takes office to scupper the phase one trade agreement and tariffs that President Donald Trump had reached with China. Instead, Biden said he will conduct a full review of policies against Beijing in consultation with key allies so that "a coherent strategy" can be developed.
RAZER (01337.HK) announced that it reaped stellar sales during "Turkey 5," the online shopping craze of Amazon stretching for five days from Thanksgiving to Cyber Monday. Sales of the company's mouse, keyboard, headset and game controller topped the chart. The average price of the hot-cake items was over 90% above that of other brands.
PING AN (02318.HK) and China Merchants Group announced the commissioning of the complex port of Guangdong-Hong Kong-Macau Greater Bay Area, striving to boost the cross-boundary trade facilitation in the area. The complex port will employ leading technologies, such as blockchain, big data, artificial intelligence and cloud computing, to support trade between the five major customs jurisdictions of the Greater Bay Area through four service solutions - smart ports, smart supervision, smart trade and smart finance.
XIAOMI-W (01810.HK)'s trading halt this morning pending the  issue of convertible bonds and placing of existing shares and top-up subscription of shares under general mandate. At lunch it announced that the Issuer Xiaomi Best Time International Limited, a wholly-owned subsidiary of the Company, and the Company entered into the CB Subscription Agreement with the Managers. Accordingly, the Issuer agreed to issue bonds in the aggregate principal amount of US$855 million.  Meanwhile, the Seller Smart Mobile Holdings Limited, a controlling shareholder of the Company, and the Company entered into the Placing and Subscription Agreement with the Managers. Accordingly, the Seller agreed to procure placees to purchase the Placing Shares at the Placing Price of HK$23.7 each, representing roughly 9.4% discount to the closing price yesterday.
Mobile Game miHoYo's "Genshin Impact" generated US$393 million in revenue during the first two months of official launch, Sensor Tower wrote in a research report. The game's ranking zoomed to the second on global chart, merely preceded by TENCENT (00700.HK)'s Honor of Kings.
Overnight HIBOR last posted at 0.04554%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.17804%, up for 6 days.
Geely Holding Group Chairman Li Shufu stated at a summit that ASEAN has taken over the spot of the EU as China's biggest trade partner for the first three quarters of this year, hence the Group will extend its presence across ASEAN market, China Youth Daily reported. China is now at a peachy position where the epidemic is effectively contained and the economy is in full recovery, from the perspective of domestic economic circulation, Li opined.
US Shopper Count Falls During Thanksgiving Holiday to 186.4 million consumers shopped in-store and online, as compared with 189.6 million last year, according to the National Retail Federation.  During the holiday, shoppers spent US$311.75 on average, down from 2019’s US$361.9.  Slight -VE for Asian exporters
The Executive Council agreed that the fixed penalties on any violations against gathering ban, mandatory mask order and quarantine initiatives will increase to $10,000 from $2,000, as local media cited sources.
US House of Representatives will possibly pass legislation this week that will bar a foreign company from going public on any US exchange should it fail to comply with US Public Accounting Oversight Board’s audits for three straight years. The bill also requires listed companies to disclose if they are owned or controlled by a foreign government. BABA-SW (09988.HK), CHINA TELECOM (00728.HK), CHINA MOBILE (00941.HK) and such other Chinese firms will be given three years to comply with US rules, or they will be ousted from US markets.
US-China Economic and Security Review Commission (USCC) warned in its annual report that on top of risking investors, U.S. enterprises may also finance China’s militarisation and thus cause direct threats to the country by investing in Chinese firms. Therefore, the bipartisan advisory body to the Congress vowed stricter scrutiny over US investments in Chinese firms.
MACAU Some casino operators told Bloomberg that the Gaming Inspection and Coordination Bureau (DICJ) had been in talks with them over the feasibility of using digital yuan to buy casino chips, although such discussions are still at an initial stage.
The Hong Kong Special Administrative Region (HKSAR) Government vehemently refutes the report issued by the United States-China Economic and Security Review Commission (USCC) (Report) and firmly opposes the sweeping attacks and unfounded accusations in the Chapter on Hong Kong. A Government spokesman said the Report is another vivid example of the blatant interference by the US in Hong Kong's affairs, following the US Congress' successive passage of a host of laws against the HKSAR. It is hypocritical for the US to introduce measures to attack China by creating issues in the HKSAR using the excuse of human rights, democracy and autonomy. Such groundless and unjust political manoeuvres will achieve nothing but undermining Hong Kong–US relations and hurting US' own interests.
AIA Hong Kong, HKT-SS (06823.HK) and Gleneagles Hospital Hong Kong (Gleneagles) are joining hands to announce the launch of the first telemedicine service supported by a hospital in the insurance industry. In the comfort of their homes, users will be able to book appointments and receive video consultation services provided by Gleneagles via HKT’s one-stop telemedicine platform DrGo, while prescribed medicine will be delivered to the users’ designated addresses, usually within four hours.   The service will be initially made available to AIA Hong Kong employees and financial planners, and extended to AIA Hong Kong customers next year.
Global smartphone sales slipped 5.7% yearly to 366 million units for the third quarter of 2020, showing a recovery after two quarters of decline, reported Gartner.  By brands, XIAOMI-W (01810.HK) 's sales +34.9% annually to 44.405 million units in the period, taking the third position.

Not in this mornings report
BYD COMPANY (01211.HK) announced it has recently submitted the application materials in relation to the issuance of additional H shares of the Company and the listing of such shares on the Main Board of Hong Kong Stock Exchange to the China Securities Regulatory Commission (CSRC). The number of the H shares to be issued in the H Share Issuance will not exceed 20% of the total number of the H shares in issue on the date of the AGM (i.e. 23 June 2020). The entire net proceeds will be used for working capital replenishment, repayment of interest-bearing debt, investment in research and development and general corporate purposes.
LONGFOR GROUP (00960.HK) announced top-up placing of 50 million shares at $47 each. The estimated net proceeds from the placement are $2.331 billion.  Its controlling shareholder Charm Talent also placed 50 million shares at $47 each, whose shareholding will decrease from 43.91% to 42.72% immediately after the Placing Completion, said the announcement.
FW HOLDINGS (00572.HK) announced that Sky Faith International Investment Limited, a wholly-owned subsidiary of the Company has been, on an exclusive basis, authorised and appointed as the Hong Kong Exclusive Authorisation Distributor (excluding Mainland China) of Wenzhou OJA Biotechnology Co., Ltd. (also known as OJABIO) for COVID-19 Antigen Test Kits; and Real-time PCR Test Kits for COVID-19 for a term of three years. Relevant certifications have also been obtained for the Test Kits.

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