Dec 21 HK/CHINA WRAP HSI -192pts, but China closed higher

21 Dec

HSI -192pts (-0.7%) 26,307 HSCEI -82pts (-0.8%) 10,402  T/O HK$143.88bn (-13.6%)

EUROPE Markets opened lower with a new 70% more transmissible covid strain discovered in the UK resulting in a travel ban of people and goods from the UK. Travel & Leisure leading the declines. It has also been identified in Denmark, the Netherlands and Australia. Also news that the EU/China traded agreement has hit a sticking point over labour standards. -VE
EUROZONE Consumer Confidence
UK CDI Distributive Trades

US Futures 
Opened Dow +100pts, S&P and NDX higher on news a deal has been reached over the $900bn covid relief bill +VE But eased back to flat in Asian time and now indicate Dow -100pts, S&P flat and NDX slightly +VE. I would still expect markets to move higher through the day on the stimulus deal and news after market Friday allowing US Banks to resume share buybacks.
US Chicago Fed National Activity Index

CHINA CSI 300 Closed  +47pts (+0.9%) @ 5,047
CSI 300 opened lower in reaction to more companies being placed on the US entity list and sold down to 4,970 in the first 10 minutes. Loan Prime Rates were kept unchanged. Index then rebounded and worked back to 5,041 before easing back into lunch. PM opened flat but worked slightly higher to close at the day high. Investors focused on the stocks likely to benefit from the Central Economic Working Conference's eight key missions for 2021 (see list below). Property weak on the new policies are likely to see home prices kept under control with little hope of any easing in the near future.
Shanghai Comp +26pts (+0.8%) @ 3,421
Shenzhen Comp +281pts (+2%) @ 14,135
ChiNext Index +102pts (+3.7%) @ 2,882

CHINA DATA On market open
Loan Prime Rate 1 year Dec 3.85% vs 3.85% Nov (F/cast was 3.85%)
Loan Prime Rate 5 year Dec 4.65% vs 4.65% Nov (F/cast was 4.65%)

HSI Pre Market Opened 26,422 -75pt  vs +125pts ADR’s
Ecommerce names flat, SMIC saw further weakness but its competitors saw interest. Market sold down to 26,275 before finding support. Then rebounded to the opening level and trended slightly higher into lunch.
PM opened higher and testing Friday’s closing level but failed to break above and trended lower. Selling accelerated around 3pm as Europe came in an reacted to new covid strain in the UK; with HSBC and Standard Chart both seeing heavy selling.
Market saw a 25pt down tick in the closing action.

Ecommerce weak after comments from former finance minister Lou Jiwei suggesting that China could restrict the number of banks a single fintech platform can partner with, to prevent any platform from gaining too much market share.  Renewable Energy +VE as China released a White Paper on Energy use. Autos seeing interest with several broker upgrades on the basis of new energy business. Property Management companies seeing good interest.  Second down day so expect same margin call selling on the open Tuesday.

JACOBIO-B (01167.HK), on debut, settled the trade at $14.42, up 42 cents or +3% vs  the listing price $14, on volume of 63.74 mn shares and turnover of $1.023 bn. Excluding the handling fees, a book gain of $126 was reported per board lot of 300 shares.

PICKs Techtronics (669 HK) closed -0.4% @ HK$107.00 day low. Good news from US house builders likely to continue to drive the stock.  I would wait and look to accumulate below HK$100.

Inflation Rate Nov -0.2% YoY vs -0.2% Oct (F/cast was +0.5%)
Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation rate) in November 2020 was 0.3%, marginally smaller than that in October 2020 (0.4%). The smaller increase in November was mainly due to the decreases in private housing rentals and the smaller increases in the prices of fresh vegetables.

Centre for Health Protection said there were 85 new COVID-19 cases in Hong Kong today (vs 74 Sunday) 27 cases with unknown origin.

SHORT SELLING Monday 12.9% vs 15.6% Friday 
Top Shorts  Wharf REIC (1997) 45%, Country Garden (2007) 39%, Hang Seng Bank (11) 37%, CKI (1038) 35%, Ping An (2318) 34%, MTRC (66) 33%, Sands China (1928) 32%, Bud Apac (1876) 29%, Bank of China (3988) 28%, Power Assets (6) 25%.

CHINA UNICOM (00762.HK)  announced that the Net Addition of 4G Subscribers for November slowed to 481,000.  But that the 5G Package Subscribers Net Increase accelerated to 7.62 million in November.

CHINA LIFE (02628.HK) (601628.SH)  announced that the accumulated premium income of the Company for the period from 1 January 2020 to 20 December 2020 has exceeded RMB600 billion for the first time.
As the Hong Kong-Guangdong Dongjiang water supply agreement under a "package deal lump sum" principle is falling expired at end-20, Development Bureau wrote to the Legislative Council that adjustments should be made.  Instead, a "reduction to package deal lump sum" principle shall be adopted, meaning that reduction will be applied to the water tariff based on the actual withdrawal from Dongjiang water.

Regional Markets

JAPAN Increased covid cases as concern and heavy snow falls another slight -VE for sentiment.Opened higher but sold down to 26,534 in the first 2 hours. After lunch has started to work higher Closed -49pts (-0.2%) @ 26,714
Topix traded in a similar pattern closed -4pts (-0.2%) @ 17,89
Record covid cases and a shortage of hospital beds -VE for sentiment.
Kospi opened flat and sold down to 2,750 in the first 40 minutes but then bounced but only to 2,765. Drifted lower before selling done to retest 2,750 support which held and then the market worked higher to close at the day high +7pts (+0.2%) @ 2,779
Kosdaq opened higher, sold down to 940 but then worked higher closed at the high +6pts (+0.7%) @ 954
Opened higher and tested 14,300 in early trades but then sold down to 14,200 and traded sideways for 30 minutes around that level. Then worked higher with resistance atround 14,380 level. Closed +135pts (+1%) @ 14,385

CONNECT FLOWS (Increased southbound flows)
Northbound Rmb 42,277m Buy 19,784m vs 22,493m Sell
Southbound HK$ 14,890m Buy 8,219m vs 6,670m Sell
Northbound Rmb 53,147m          Buy  23,998m  vs   29,149m  Sell

Southbound HK$ 16,572m          Buy    6,827m  vs     9,745m  Sell

Active Heavyweights

HKEX (00388.HK)  +2.3%, hitting new high
BABA (09988.HK) -2.2%
TENCENT (00700.HK) -1.4%
PING AN (02318.HK) +0.1%
MEITUAN (03690.HK) unchanged

HSI & HSCEI Constituents on Move:
HSBC HOLDINGS (00005.HK) -4%
WUXI BIO-NEW (02269.HK) +3.7%, hitting new high
SMIC (00981.HK) -3.6%
CHINA TOWER (00788.HK) -3.3%
CHINA MOBILE (00941.HK) -3.1%

HSMI & HSSI Constituents on Move:
XINYI ENERGY (03868.HK) +16.1%
FRONTAGE (01521.HK) +14.5%
PAX GLOBAL (00327.HK) -14.1%
XINYI SOLAR (00968.HK) +13%, hitting new high
BYD COMPANY (01211.HK) +11.7%
GREATWALL MOTOR (02333.HK) +8%, hitting new high
GOLDWIND (02208.HK) +6.6%, hitting new high


HK tightening social distancing requirements; Flights from the UK banned from Midnight, UK travellers subject to 21day mandatory quarantine, urges families not to mixed with other families over Christmas, 2 person gathering ban and mask wearing order, Dine In Ban extended to 6 Jan.  Bars remain closed.
The State Council Information Office issued a white paper titled "Energy in China's New Era", reported Xinhua. China aims to accelerate the exploration and use of non-fossil energy like wind power, solar energy and biomass, said National Energy Administration (NEA) Director Zhang Jianhua. As of end-2019, China's total installed capacity of hydropower hit 356 million kW. The country's total installed capacity of wind power, solar PV power, and biomass power reached 210 million kW, 204 million kW, and 23.69 million kW, respectively. All of the metrics have topped the global chart.

TENCENT (00700.HK) As an exclusive official partner of NBA in digital platforms in China, it will live-broadcast the 2020-21 NBA season games. Both parities will also commence cooperation in NBA games, social media, basketball development, offline activities and so on.
The trending of local housing prices next year will be dependent on the epidemic situation, said Eric Tso, Chief Vice President at mReferral Mortgage, at an online meeting, who also noted buyers preferred to put their transactions on hold until cheaper prices were offered. In case of successful vaccine launches, property prices were estimated to surge more evidently in 2H21, compared to more shaky prices in 1H21.  The negative equity condition in Hong Kong is comparatively stable now, given the banks' help of principal payment holiday scheme for home buyers. Tso also observed buyers may offer sales of their properties in advance if they feel the pressure.
The Australian government expected local coal producers to have to start shrinking output if China maintains her curbs on imported coal, while seeing a substantial fall in this year's coal export revenue. According to the forecast, the revenue and sales volume of Australia's thermal coal exports will hit AUD15 billion and 199 million tons into June 2021E, down 29% and nearly 7%.
BABA-SW (09988.HK) founder Jack Ma had on 2 November, when Ant Group was supposed to go public soon, offered to hand over partial business of this financial-technology giant to the Chinese government in an attempt to salvage his relationship with the authority, people with knowledge of the matter told the Wall Street Journal.  Ma said Beijing can take any of the platforms Ant has, as long as the government needs it, according to the insiders.
Moody's predicted Chinese financial firms to stay exposed to economic and policy threats to a certain extent in 2021, citing unstable economic recovery, fading handout measures and rapid development of financial service digitalisation, although China may see economic green shoots with 7% GDP growth next year.
HK Weekend Property Sales saw no new projects being launched under tightened gathering ban. 43 new homes were transacted at the weekend, -34% weekly.
Nan Fung Group's LP6 tracked 11 deals.
HENDERSON LAND (00012.HK)'s Novum Point reported 4 deals.
Overall second-hand market deals slackened due to the upcoming Christmas Day and an intense holiday spirit, said Centaline Property.
The People's Bank of China (PBOC) will conduct seven-day RMB10 billion of
reverse repos, with interest rate staying flat at 2.2%. 
Another batch of 14-day RMB100-billion reverse repos will also be conducted, with interest rate staying flat at 2.35%.

The Central Economic Working Conference's eight key missions for 2021The first of which is to strengthen the country's strategic technological power.
Secondly, Beijing will heighten the independence and controllability of industrial and supply chains.
Thirdly, China will stick to the strategy of domestic consumption expansion.
Fourthly, it will promote reforms and opening-up comprehensively.
Fifthly, it will solve the seeds and arable land issues.
Sixthly, it will step up antitrust enforcement and prevent a disorderly capital expansion.
Seventhly, it will tackle the prominent housing problems for big cities.
Lastly, it will do well on reaching peak carbon dioxide emissions and carbon neutrality.
Before Macao gaming licenses falling expired in mid-2022, Chief Executive Ho Iat Seng told Macao Daily yesterday that the government is drafting new gambling regulations. Citing delays under the coronavirus pandemic, the CE expects public consultation to begin in 2H21. In future, the gambling hub may study how to synchronise gaming contract granting with tenders, added the city leader.
U.S. Congress lawmakers are set to give green light to a US$1.9-billion subsidy program to help telecom carriers replace network equipment that allegedly poses national security risks, Reuters learnt from sources briefed on the matter. The Federal Communications Commission (FCC) had in June designated Huawei and ZTE (00763.HK) as the said threats. +VE for Nokia, Ericsson and Samsung as potential beneficiaries.
Following Alipay, Du Xiaoman Financial and Tencent's LiCaitong, JD Finance has also made adjustments to the relevant businesses. So far, the majority of leading platforms have removed their internet deposit products.  JD Finance's app has adapted three measures, including halting the addition of online banking deposit products, as China Business Journal learnt from the insiders.
CHINA MOBILE (00941.HK) announced that the total mobile customers for November 2020 reached 944 million, with a net loss of 2.634 million users monthly.  For 5G package, there were 147 million customers in November, with a net addition of 18.589 million customers monthly, accelerating from the 15.2-million addition in October.

Bitcoin once surpassed US$24,000 to peak at US$24,273.04. The cryptocurrency rose 1.12% over the past 24 hours, last at US$23,612.17

HAIER SMARTHOME (06690.HK) and HAIER ELEC (01169.HK)  jointly announced that HAIER SMARTHOME's proposed privatisation of HAIER ELEC was sanctioned by the Court. The scheme was expected to take effect today, and the withdrawal of HAIER ELEC listing on Wednesday.

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