Oct 9 HK WRAP HSI -74pts T/O +28% DoD Shorts ease to 17%


13 Oct
Oct 9 HK WRAP HSI -74pts T/O +28% DoD  Shorts ease to 17%

HSI -74pts (-0.3%) 24,119  HSCEI -7pts (-0.1%) 9,618  T/O HK$112.54bn (+28% DoD)  

As at 8pm HK time
EUROPE Markets opened slightly higher despite the large amount of UK data out pre market (Balance of Trade, GDP 3 mth Ave, GDP, Goods Trade Balance, Construction Output, Industrial & Manufacturing Production, (later NIESR Monthly GDP Tracker) and French Industrial Production which was largely weaker than forecast. There are also concerns about the rise in covid cases which combined with Influenza could be very dangerous but investors are watching earnings and still hoping for positive news from the US on a new stimulus plan. Rolls Royce continues to rebound (good piece in Market Thinking about how the traders have planed this stock in the third and fourth paragraphs https://market-thinking.com/2020/10/friday-market-thinking-3/?utm_source=mailpoet&utm_medium=email&utm_campaign=market-thinking-latest-updates_1 )
US Futures opened flat and then rose to Dow +135pts +0.5%, S&P +0.5% and NDX +0.3% before easing back hopes of a stimulus agreement.  Currently +Dow is +100pts with S&P and NDX slightly +VE.  I think most people know a package will come;  it's about the size and timing and more importantly how much downside the economy/recovery has suffered before it is implemented; especially with regard to new layoffs and business closures. Data due today Wholesale Inventories, WASDE report, Baker Hughes Total Oil Rig Count.

Summary
CHINA CSI 300 Closed +94pts (+2%) @ 4,681 

Markets re-opened strongly playing catch-up after the Golden Week holiday. The CSI 300 Opened at the 4,664 level vs 4,587 previous close, and tracked slightly higher seeing initial resistance at 4,680 level but then ground higher to 4,695 at lunchtime. PM saw initial selling down to 4,680 and trading sideways into the close. CNY and CNH both hitting new highs. The PMI data out after the open was slightly better than forecast (see below for the detail) and the outlook sentiment remained positive.
Shanghai Composite Index +54pts +1.7% @ 3,272. T/O RMB264.2 billion
Shenzhen Component Index +381pts, +3%, @ 13,289. T/O RMB447.1 billion.
ChiNext Index +98 pts +3.8% @2,672, T/O RMB211.0 billion.

HSI Pre Market opened @ 24,343 +150pts vs +120pts ADR’s with E commerce names strong and Chinese Insurance names +VE too as Ping An announced its Lufax had filed for a US listing. But the market them sold down to 24,115 below yesterday’s close on concerns over when the US would announce a stimulus package and the increase in local covid 19 cases and concerns of tightening of social distancing rules. It then bounced back to 24,240 and trade sideway’s around that level into lunch. PM saw the market trend lower with increased selling around 1:50pm on news that Ant had not passed the listing interview prompted selling at Alibaba. Market sold down to 24k level before finding support and then worked higher to 24,150 around 3:30pm and then drifted lower into the close.

PICK 
Techtronics (669 HK -0.5%) Opened lower and tested HK$106 support before rallying to HK$108:30 in the morning. From there it basically worked lower to retest HK$106 support at the close. Next key driver will be US earnings and housing data.

SHORT SALES Friday 16.9% vs 20.1 Thursday
Top Shorts Wharf REIC (1997) 44%, Power Assets (6) 43%, Ping An (2318) 41%,, CLP (2) 37%, HK & China Gas (3) 33%, Hang Lung (101) 31%, CNOOC (883) 30%, Bank of China (3988) 30%, China Res Land (1109) 29%, Shenzhou (2313) 29%, Sunny Optical (2382) 29%, AIA (1299) 27%, ICBC (1398) 26%, HSBC (5) 25%.

AFTER MARKET NEWS 
SUNNY OPTICAL (02382.HK) announced that handset lens sets shipment amounted to 167 million units in September 2020, +15.5% YoY and +3.2% MoM. During the month, the vehicle lens sets shipment amounted to 6.372 million units, +32% YoY and +17.7% MoM.
RONSHINECHINA (03301.HK) nine months ended 30 September 2020, the aggregate contracted sales of the Group amounted to approximately RMB100.121 billion, +6.5% yearly.
SHIMAO GROUP (00813.HK) announced that the aggregated contracted sales for the nine months ended 30 September 2020 amounted to approximately RMB201.22 billion, +16% YoY
China's mobile gaming revenue growth in September 2020 outran the level in September 2019, although it was weaker than that in July-August 2020, according to Gamma Data's report. China's mobile gaming market tracked actual sales revenue of RMB15.995 billion in September, -10.06% MoM but +20.59% YoY.
IPO WEIHAI BANK (09677.HK), to be listed next Monday, opened at $3.35 in grey market, flattish with the listing price, and closed at $3.28 in grey market, down 7 cents or -2.1% against the listing price of $3.35, on volume of 2.38 million shares and turnover of $7.83 million, PhillipMart data showed.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 728,000 shares of CK ASSET (01113.HK) , at the average price of HK$38.234, HK$38.2406, HK$38.991 and HK$38.4464 per share on 5 October, 6 October, 7 October and 8 October 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK ASSET increased from 35.62% to 35.64%, and from 35.68% to 35.7%, respectively.
GREATWALL MOTOR (02333.HK) announced that sales volume amounted to 680,700 vehicles during the first nine months of 2020, down 6% yearly.
HK Express announced that starting at HKD388, tickets for the three #UOFlycation flights on 1, 7 and 8 November 2020 have just gone up for sale today (9 October) at 5 pm.
Centa-City Leading Index (CCL) last posted at 178.05, up 0.74% weekly with a two-week rally. Centaline Property, saw signs of the end of home price trough-seeking. While standing firmly at 176 for five weeks, CCL managed to surpass 178 this week. They anticipated home prices to pick up before and after Mid-Autumn Festival.
The Pavilia Farm I, the residential project on top of Tai Wai Station under NEW WORLD DEV (00017.HK), has its first price list released, involving 180 flats. With saleable area of 322-835 sq.ft., the unit prices range $7.862-24.922 million, i.e. $20,773-29,847 per sq.ft.. Based on the maximum discount of 20%, the discounted selling prices range $6.289-19.937 million, i.e. $18,921 per sq.ft.. Subscription and showroom will be available from tomorrow (10 October). If the subscription is well-received, NEW WORLD DEV will discuss with MTR CORPORATION (00066.HK) for the selling time.

Regional Markets
JAPAN 
Market opened higher taking the index to a 7.5mth high but trended lower as pre market data was weak and concerns remain about the timing and size of a new US stimulus package.Nikkei 225 trended lower through the morning and into the start of the PM session, with support at 23,550 which it tested a couple of times between 1pm and 2pm before a small uptrend in the last hour to close -0.1% @ 23,620. Monday pre market we get Machinery Orders, Bank Lending and PPI data.Data out FridayAve Cash Earnings Aug -1.3% YoY vs -1.3% Jul (F/cast was -0.9%)
Household Spending Aug +1.7% MoM vs -6.5% Jul (F/cast was +3%)
Household Spending Aug -6.9% YoY vs -7.6% Jul (F/cast was -6.5%)
S KOREA. Market closed for Hangul Day re-opens Monday
TAIWAN Market closed for National Day re-opens Monday

CONNECT FLOWS 
Shanghai
Northbound Rmb 44,109m Buy 20,978m vs 23,132m Sell
Southbound Rmb 13,925m Buy 6,287m vs 7,647m Sell
Shenzhen
Northbound Rmb 27,713m Buy 27,713m vs 36,836m Sell
Southbound Rmb 14,744m Buy 6,390m vs 7,842m Sell

CHINA DATA Caixin Data
Sevices PMI Sept 54.8 vs 54 Aug (F/cast was 53)
Composite PMI Sept 54.5 vs 55.1 Aug (F/cast was 54)
Services Detail
Fifth straight month of growth and the steepest since June, as the recovery continues.
New orders expanded faster, mainly led by domestic demand; and employment grew for the second month in a row.
But new export orders remained in contractionary territory for seven of the last eight months. At the same time, backlogs of work have risen in three of the past four months.
Prices, input cost inflation dipped to a three-month low, while prices charged rose for the second straight month, but at a softer rate.
Confidence remained strongly positive.
Composite Detail
The latest reading extended the current period of rising business activity to five months, with a softer rise in manufacturing production which more than offset a faster expansion of services activity.
The gauges for new orders, purchases, and inventories all remained strong. Meantime, employment continued to improve, with its index staying in expansionary territory for the second straight month.
Prices, input cost inflation eased to a three-month low, while prices charged rose slightly.
Sentiment remained positive.
"In the near term, there will still be uncertainties from COVID-19 overseas and the US election, and the development of “dual circulation” in the domestic and international markets will continue to face challenges," said Wang Zhe, senior economist at Caixin

HONG KONG DATA
Centre for Health Protection said there were 8 additional COVID-19 cases in Hong Kong today (vs 18 Thursday) 3 from Royal Garden Hotel and 1 of unknown origin,
Active Heavyweights
HKEX (388.HK) -1.5%
MEITUAN (3690.HK) +1.2%
BABA (9988.HK) -1.2%
TENCENT (700.HK) +0.8%
PING AN (2318.HK) +0.6%
AIA (1299.HK) -0.4%
CCB (939.HK) unch

HSI & HSCEI Constituents on the move
PSBC (01658.HK) -3.1%

HSMI & HSSI Constituents on the move
FIRST CAP GP (01269.HK) +36.8%
C TRANSMISSION (00658.HK) -22.6%
TCL ELECTRONICS (01070.HK) -17.2%
XINYI ENERGY (03868.HK) -14.8%
XINYI SOLAR (00968.HK) -10.1%
RAZER (01337.HK) +7.4%, hitting new high
KINGDEE INT'L (00268.HK) +4.3%, hitting new high
CHINA LIT (00772.HK) +2.1%, hitting new high
CIMC (02039.HK) +1%, hitting new high

Market Commentary 
*E-COMMERCE FIRM Media reports shows online payment through UnionPay totaled 2.16t yuan during the first week of October, +6.3% YoY. Transactions on the National Day grew 15.5% to over 330b yuan +VE
ALIBABA (9988 HK -0.8%) but off lows; sold down after lunch as Bloomberg reports Ant didn’t pass the listing committee.
Meanwhile, a U.S. federal judge granted a preliminary injunction against the ban on new downloads of TikTok on Sept. 27, saying it was likely the Trump administration had exceeded its legal authority. The government began the process of appealing on Thursday, filing a notice of appeal in court in Washington. JD (9618 HK +1%) TENCENT (700 HK +0.9%) NTES (9999 HK +3%) MEITUAN (3690 HK +1.3%).
*HK PROPERTY MIXED as local Covid cases means new launch viewings are likely to be restricted. HK Lands Department issued presale consent for five residential developments in September; involving 2,412 units, the highest monthly total in nearly two years. Among the projects is the Pavilia Farm atop Tai Wai Station, developed by New World Dev (17 HK -1.7%), will provide a total of 2,198 units. SHKP (16 HK -1%) SINO (83 HK +0.5%) CKA (1113 HK -0.4%).
*CHINA PROPERTY FIRM on good sales data in Sept. CH OVERSEAS LAND (688 HK +0.6%) contract sales for Sept +20.5% YoY to 34.89b yuan. Jan-Sept contract sales +4.3% YoY to 257.2b yuan. POLY PROP (119 HK +0.9%) Sept contract sales +18.4% YoY to 34.1b yuan. GEMDALLE (535 HK +0.8%) Sept contract sales +24.17% to 9.49b yuan.
*AUTOS MAKERS WEAK most saw profit-taking after recent rally after the Beijing Auto Show and the pick up in car sales. GEELY (175 HK +1.3%) Sept vehicle sales +11% YoY to 126,35 units. GREATWALL (2333 HK -1.6%) BYD (1211 HK -4.7%) BRILLIANCE CHINA (1114 HK -2.4%).
*MACAU WEAK as tourist arrivals to Macau -85.7% YoY to only 139,200 during the first seven days of October, with those from the mainland -83.9%. Market analyst estimates that Macau's gaming revenue between Oct 1-7 on an average daily rate was about 279m patacas, -76% YoY.But judging from the general rebound in domestic tourism I would expect Macau’s rebound to be quick when wider travel is allowed or China carrying out mass vaccinations; which considering they are already vaccinating front line staff can’t be far away. SANDS (1928 HK -2.2%) WYNN (1128 HK -1.5%), GALAXY (27 HK -1.3%) SJM (880 HK -1.5%).
*CHINA RETAIL WEAK following the holiday, despite China’s retail sales and restaurant receipts during the week-long National Day holiday period were 1.52t yuan, up 8.5% YoY. Sales at Hainan Duty Free reportely surged 1.4 times YoY to 530mn yuan during the first five days this month. LI NING (2331 HK -1.9%) XTEP (1368 HK -4.9%) HAIDILAO (6862 HK -3.6%).
*TOURISM/AIRLINES WEAK after the long holiday, despite Chinese tourists made 782m domestic trips during the holiday between October 1-7, +7.8% YoY as foreign travel effectively curtailed. It is reported that domestic tourism income during the 8-day holiday was 466.6b yuan, -28.2% from the last year's 7-day holiday, said to the Ministry of Culture & Tourism. CEA (670 HK -3.1%) CSA (1055 HK -2.7%) AIR CH (753 HK -2.3%) TRAVELSKY (696 HK -5%).
*PHARMA FIRM after China joins WHO's vaccine program to provide a coronavirus vaccine to developing nations. FOSUN PHARMA (2196 HK +2.2%) units gets FDA nod for Covid drug's clinical trial. CANSINO (6185 HK +0.7%) INNOVENT (1801 HK +1.3%).


MARKET HOURS NEWS 
The American Chamber of Commerce in Hong Kong (AmCham) has recently sold in grey market the middle-floor units of Bank of America Tower in Central, local media citing sources. The units measure roughly 5,968 sq.ft., with a consideration of around $140 million. The average floor price was about $24,000, around 20% below the market price.
XIAOMI-W (01810.HK) announced that Lin Shiwei assumed the roles of Vice President and Chief Financial Officer, who is responsible for the organization and management of financial work of the company.
Qualcomm plans to introduce the first e-sports smartphone model under its own brand name by the end of 2020, the semi-finished products on which will be developed and designed by ASUS, as Taiwanese media learnt from insiders. The two tech giants refused to comment on the news. ASUS scouted a new battlefield of e-sports smartphone with ROG e-sports brand, the report said. In the past, RAZER (01337.HK) was deemed as the biggest rival of ASUS but its sales missed due to unfamiliarity in smartphone market and supply chains. Meanwhile, ASUS' ROG Phone opened up China's market harnessing ally with TENCENT (00700.HK), yet the overall market sales also fell short of estimate.
BABA-SW (09988.HK) sold off heavily after peaking at a record high $293; on news its Ant Group has not yet cleared the listing hearing in Hong Kong which was originally scheduled in the last week, Bloomberg reported.
Macau Tourism Office announced that the number of tourist arrivals totaled 156,300 during the eight-day National Day Golden Week 2020. The daily average value was 19,500, down 86% yearly.
HK FINANCE INV (00007.HK) announced that trading in its shares has been halted at 11:45 a.m. today, pending the disclosure of a very substantial disposal The stock price last traded at $0.092, down 81.41%, before trading suspension.
Lenovo Japan will start producing some PC products in Japan from October, reported Nikkei. With plants set in China, it takes more than two weeks to deliver PCs after receiving orders. With factory opening in Yonezawa, Yamagata, the lead time will be shortened to as little as five days.
Fake news "Huawei may sell its Honor handset business, according to market analysis." Rumors have been spiraling over the past month that the Chinese firm will dispose of its Honor brand. However, the above rumors are fake news, Chinese media citing multiple insiders. Honor's President George Zhao had even denied the disposal in mid-September, claimed a person close to Zhao.
China AMC announced that the subscription for its innovative closed-operation hybrid securities investment fund for the next 18 months for Ant Group’s IPO was cut off in advance. So far, five funds that are eligible to participate in the strategic placing of Ant Group starting from 25 September ended subscription earlier.
The Royal Garden announced that all room guests are to be evacuated by noon on 9 October, upon a request received yesterday from the Centre of Health Protection. In light of the latest COVID-19 situation, the hotelier, together with its restaurants, will suspend operation on 9-22 October. Some staff at the Royal Garden's Vietnamese eatery had earlier been diagnosed before certain Thai patients were found to have stayed in the hotel.
Meituan Dianping's total order volume and sales value for National Day holiday were above those for Labor Day holiday this year, according to the app's report. Meituan also mentioned a notable YoY growth in orders and sales for this year's National Day holiday.
TENCENT (00700.HK) In September took top place with revenue of approx US$22 million, beating NTES-S (09999.HK) with revenue of approx US$13 million. Sensor Tower released the rankings of Chinese mobile game developers in terms of revenue in September. On the chart, 30 developers yielded a total revenue of US$1.92 billion during the month, making up 28.8% of the total global mobile game revenue.
By games, TENCENT's Honor of Kings topped the Chinese App Store's revenue in September, followed by the company's Game for Peace. BABA-SW (09988.HK)'s Three Kingdoms: Strategy came as third.
USD/CNH, once topping 6.71, peaked at 6.7034, a new high since 22 April 2019; USD/CNY, once breaching 6.72, up over 800 pts, touched a new high since 24 April 2019.As Hurricane Delta is raking across the Gulf of Mexico, most of the region's oil capacity has been halted, reported foreign media. 92% offshore crude capacity and 62% natural gas output have been suspended in the region. Shell, BP, Chevron and Occidental Petroleum have withdrawn workers from offshore drilling platforms.

PRE MARKET NEWS Not in this mornings report
China Foreign Exchange Trade System announced on Friday (9 October) that the central parity of USD/ RMB surged 305 bps to 6.7796 from the last trading day (30 September), hitting nearly three-week low.

London Stock Exchange is nearing the disposal of Borsa Italiana to Euronext and two Italian firms for nearly EUR4.5 billion, which will soon be announced, as foreign media learnt from people familiar with the deal.

WEIHAI BANK (09677.HK), to be listed next Monday, was priced at $3.35, the lower limit of the offer price range $3.35-3.51. Only 61% subscription was recorded in the public offering.

Dida Chuxing has lodged a listing application at the Stock Exchange, local media reported. Rumors had it earlier that the Chinese ride-hailing platform plans to raise US$300-500 million.

China received 637 million domestic tourists during the National Day and Mid-Autumn Festival holiday, +79% YoY on a comparable basis, according to Ministry of Culture and Tourism's Weibo.  Domestic tourism revenue reached RMB466.56 billion, up 69.9% YoY on a comparable basis.

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