HK WRAP HSI -431pts @ 23,538, T/) +19% DoD , Shorts @ 21%


28 Sep

HK WRAP HSI -431pts @ 23,538, T/) +19% DoD , Shorts @ 21%

HSI -431pts (-1.8%) 23,538  HSCEI -188pts (-2%) 9,371 T/O HK$117.16bn (+19% DoD)  
EUROPE markets opened lower as rising covid cases overhang the market but are trending higher. French Business data beat but German Ifo data was mixed.
US Futures opened lower but initially rose to +40pts, S&P was slightly +VE but NDX was slightly -VE. After significant loses on Wednesday I would expect markets to look to consolidate but today we get Initial an continuing claims and that could put further pressure on the markets and hopefully Congress to sort out a stimulus package. Other data due today New Home Sales, Fed Chair Powell Testimony, EIA Gas Report, Kansas Fed Manufacturing Index.


INDEXES
CSI 300 Closed -89pts (-1.9%) @ 4,563
opened lower and trended lower through the morning to 4,570 level at lunch. PM opened flat and traded sideways into the close.
Talk that investors are starting to de-risk ahead of the Golden Week holiday at the beginning of November. News that SOE's profits -24.2% in the first eight months of the year to 1.81t yuan also weighted on market sentiment.

Shanghai Composite Index -57pts (-1.7%) @ 3,223
Shenzhen Component Index -294pts, (-2.2%) @ 12,817
ChiNext Index -64pts (-2.5%) @ 2,536

HSI Pre Market Opened -205pts @ 23,538 vs -248pts ADR’s @ 23,494 with E commerce, Tech Components and financials leading the declines. Initially sold down to 23,340 level and then drift lower with support around 23,310 level. PM opened lower at day low 23,225 and traded sideways with a slight uptick into the close but then sold down 50pts in the closing auction. Sentiment is weak due to weakness in US market and a resurgence of covid cases in Europe.
Expect margin forced selling on the open on Friday.


IPO MING YUAN CLOUD (00909.HK), whose shares will be listed tomorrow, opened at $18.5 in gray market, up 12% against the listing price of $16.5, and last stood at $22.5, up 36% against the listing price, on volume of 990,000 shares, PhillipMart data showed.


PICK
Techtronics (669 HK) Tested HK$100 on the open
but failed and trended lower though the day to close at HK$98.00 I would continue to accumulate slowly below HK$100; I still think the outlook is +VE Interesting to see the short interest rise which will make it prone to a squeeze on good news.

SHORT SALES Thursday 20.9% vs 19.6% Wednesday
Top Shorts 
Hang Seng Bank (11) 49%, BoC HK(2388) 44%, Bank of China (3988) 40%, CCB (939) 35%, Country Garden (2007) 35%, CITIC (267) 34%, Petrochina (857) 33%, MTRC (66) 32%, Sands China (1928) 32%, China Res Land (1109) 30%, Wharf REIC (1997) 28%, Techtronics (669) 28%, Hang Lung PPT (101) 27%, Power Assets (6) 26%, Ping An (2318) 26%, AIA (1299) 26%, HK EX (388) 25%.

AFTER MARKET NEWS
Pinduoduo (PDD.US) At the Chinese farmers' harvest festival event announced to launch a new training program 
to nurture 100,000 new farmers, who have growing importance in the upward movement of farm products, according to news.cnstock.com. As of end-June 2020, Pinduoduo had prompted over 100,000 new farmers nationwide to return to their roots and start businesses.
Spot USD/CNY closed at 6.8240, down 320 bps to a new low since 11 September. As at 16:46, USD/CNY shed 179 bps in the night session. USD/CNH stood at 6.8339, down 92 bps.
Li Ka-shing and Victor Li, through Li Ka Shing Foundation Limited, acquired a total of 1.4 million shares in CK ASSET (01113.HK) at the average price of HK$40.2188, HK$39.3403, HK$38.5437 and HK$38.5412 per share on 18 September, 21 September, 22 September and 23 September 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor Li in CK ASSET increased from 35.56% to 35.59%, and from 35.62% to 35.66%.
Centa Valuation Index (Major Banks) (CVI) last printed at 43.23 this week, up 4.69 pts weekly. The index amassed 9.64 pts of increment for two straight weeks, and shot up above the lower end of critical territory of 40. Centaline Property, said property transactions kept increasing with active revival of second-hand market. Banks' mortgage valuation became more ambitious in Wong's view. As the Government took gradual steps to relax the anti-epidemic measures, housing market activity normalized, Wong observed, who also predicted the CVI to ascend continuously. Looking ahead, the index may even test 50, which hinted at market uptick.


Regional Markets
JAPAN
opened lower and initially sold down to 23,100 before working back to flat at lunch. PM opened lower and has drifted lower finding support at 23,060 level and then traded sideways to close -1.1% No surprises in the BoJ meeting notes that were released this morning, covid remains a concern.
S KOREA Sentiment weak on news that North Korea had killed a missing South Korean official earlier this week. It marked the first time since July 2008 that a South Korean civilian has been shot dead in North Korea
Kosdaq opened lower traded sideway’s for the first hour then trended gently lower with support around the 804 level to close -4.3%
Kospi followed a similar patten and closed -2.6%.
TAIWAN opened lower and has trended lower, some support at 12,300 around 11am then traded around that level for the rest of the day, drifted lower from 12:30pm to closed -2.5%
After Market; M2 Money Supply Aug 6.69% YoY vs 5.89% Jul (F/cast was 5.8%)

CONNECT FLOWS (up DoD)
Shanghai
Northbound Rmb 36,067m Sell 20,978m : 15,089m Buy
Southbound HK$ 9,817m Sell 5,215m : 4,602m Buy

Shenzhen
Northbound Rmb 47,590m Sell 26,935m : 20,655m Buy
Southbound HK$ 8,284m Sell 3,902m : 4,382m Buy

DATA
CHINA No data.

HONG KONG
Centre for Health Protection said there were 7 additional COVID-19 cases
in Hong Kong today (vs 3 Wednesday) Four had a travel history during the incubation period. The remaining cases were epidemiologically linked with local cases
After Market
Balance of Trade Aug HK$-14.6b vs -29.8b Jul (F/cast was -25b)
Exports Aug -2.3% vs -3% Jul
Imports Aug -5.7% vs -3.4% Jul

Exports -2.3% YoY to HKD 344.5 billion, mainly sales of apparel and clothing (-33.6%); jewellery, goldsmiths' and silversmiths' wares (-13.2%); telecommunications and sound recording and reproducing apparatus and equipment (-3.1%); photographic apparatus, equipment and supplies, optical goods, watches and clocks (-17.5%) and power generating machinery and equipment (-21.4%).
Shipments were down mainly to Japan (-19.4%), Singapore (-14.6%), Thailand (-12.5%), South Korea (-9.1%) and China (-1.4 percent).
Imports -5.7% to HKD 359.1 billion, with purchases falling mostly for jewellery, goldsmiths' and silversmiths' wares (-16.8%); apparel and clothing accessories (-34.5%) and non-metallic mineral manufactures (-18.7%). Purchases were down mainly to the US (-22%), China (-11.9%) and Japan (-7.3%).

Active Heavyweights
MEITUAN (3690.HK) -4.6%
HKEX (388.HK) -2.9%
CCB (939.HK) -2.3%
BABA (9988.HK) -2.2%
TENCENT (700.HK) -1.8%
AIA (1299.HK) -1.7%
PING AN (2318.HK) -1.3%

HSI & HSCEI Constituents on the move
WUXI BIO (02269.HK) -5%
XIAOMI-W (01810.HK) -4.8%
CHINA TOWER (00788.HK) -3.6%
CNOOC (00883.HK) -3.6%
AAC TECH (02018.HK) -3.4%
CHINA LIFE (02628.HK) -3.2%

HSMI & HSSI Constituents on the move
GREAT EAGLE H (00041.HK) -11.3%
XINYI ENERGY (03868.HK) +3.2%, hitting new high

Market Commentary
*PETROCHEMS WEAK
as traders worry after increases by OPEC+ whilst demand seems weaker than expected. CH OILFIELD (2883 HK -4%) CNOOC (883 HK -3.6%) PETROCHINA (857 HK-2.5%).
*E-COMMERCE WEAK on uncertainties over the TikTok deal as its is set to become the precedent for how U.S. deals with China's tech firms. TikTok is asking for a preliminary injunction against President Trump's ban on the video-sharing app, while China threatens to kill TikTokdeal over "dirty" Trump tactics.
ANT aims to raise $17.5b in its HK share sale and will not seek cornerstone investors, confident there will be plenty of demand for one of the largest equity deals in HK. ALIBABA (9988 HK -2.2%) JD (9618 HK -1.2%) MEITUAN (3690 HK -4.7%) KINSOFT (3888 H K-3.4%) TENCENT (700 HK -1.8%).
*AUTOs WEAK as GEELY (175 HK -2.1%) plans to offer a new electric model coming next year, Zero Concept developed for the Lynk & Co. to other car makers. The company is in talks to license the technology to several other manufacturers, including Daimler AG. BRILLIANCE (1114 HK +4.9%) jumped as much as 12% intraday on market chatter that it maybe taken private; the parent company responded that was not true.
*HK PROPERTY MIXED with support seen in selective names as more developers are launching new projects amid a drop in recent virus cases. Also a good response in terms of number of tenders for the MTRC’s Lohus Park Phase 13, although no indication of pricing levels yet.
SHKP (16 HK +0.5%) HENDERSON (12 HK +1.2%) SINO (83 HK +0.6%) NWD (17 HK -1.9%) KERRY (683 HK -1.6%).
*CHINA PROPERTY WEAK on debt concerns as CH EVERGRANDE (3333 HK -5.6%) had a number of it's bonds also weakened simultaneously. There have been concerns on developers debt in the past and there is the expectation that it could lead to more consolidation in the sector.SUNAC (1918 HK -1.5%) TIMES CHINA (1233 HK -2.9%) CH JINMAO (817 HK -2.5%).
*MACAU WEAK on fears of China broadening a crackdown on offshore gambling. News reported that customers have been withdrawing money from junkets after Beijing identified the cross-border flow of funds for gambling as a national security risk in July. The withdrawals come as the mainland government fully resumed Macau tourist visas and executives warned that more arrivals could mean more cash being pulled out.
MELCO (200 HK -3.8%) SANDS (1928 HK -2%) WYNN (1128 HK -2.2%) SJM (880 HK -2.5%).
*AIRLINES WEAK. CATHAY PACIFIC's (293 HK -2%) management team estimated the flagship carrier is overstaffed by around 6,800, and is considering announcing a new round of headcount adjustments next month, news reported. CHINA AIRLINES saw profit-taking after their recent rebound and as the yuan consolidated vs the USD after its recent surge. CEA (670 HK -4.2%) CSA (1055 HK -5.1%) AIR CHINA (753 HK -4.4%).
*OTHER
BEA (23 HK -11.7%) the most in 12 years on brokers downgrade.
5G names dropped as traders took profit from the sector; CH TOWER (788 HK -3.6%) ZTE (763 HK -4.6%) COMBA (2342 HK -4%).

MARKET HOURS NEWS
China's "Unreliable Entity List Regulation" is not picking on any specific countries or companies
, said Gao Feng, spokesman of Ministry of Commerce. Whichever companies will be blacklisted hinges on the behavior of the companies themselves.
Japanese Prime Minister Yoshihide Suga spoke with his South Korean counterpart Moon Jae-in on phone, hoping to repair damaged relations between the countries. Both sides pledged to tackle the Japanese abduction issue, while teaming up for the pandemic.
HSBC today officially launched HSBC VisionGo, a business-to-business (B2B) digital community platform for all SMEs, startups and prospective entrepreneurs, scaling up its digital capabilities to offer more than banking support for the Hong Kong business community.
Beijing Municipal Bureau of Commerce has received the technology export application submitted by Beijing Bytedance said Gao Feng, spokesman of Ministry of Commerce .The application will be processed in compliance with law and regulation under relevant rules and procedure.
BRILLIANCE CHI (01114.HK)'s parent, Huachen Automotive Group, said the Group transferred 400 million shares of BRILLIANCE CHINA  as held by it to the state-controlled Liaoning Provincial Transportation Investment Group, in accordance with the unification arrangement of provincial government, Huachen Automotive Group was quoted as saying by Chinese media. Regarding the issue of Liaoning Provincial Transportation Investment Group is mulling to lead the privatization plan of BRILLIANCE CHI, the company replied it has not had any related information and reminded people of not to be misled by untrue information.
The phase II of The LOHAS will see an opening in early November, revealed MTRC (00066.HK)'s Property Director David Tang Chi-fai. The mall will measure 250,000 sq.ft. with over 50 shops in that phase.
The People's Bank of China today successfully issued the RMB10-billion six-month RMB Bills in Hong Kong, with a bidding rate of 2.68%.
MTR has closed the acceptance of EOIs for Lohas Park Phase 13 at noon today (24 Sept). It received 35 EOIs from property developers. The project can offer up to 2,550 flats, with an estimated saleable area of roughly 500 sq.ft. per unit on average.
Known applicants include EMPEROR INT'L (163.HK), FE CONSORT INTL (35.HK), COUNTRY GARDEN (2007.HK), CHINA OVERSEAS (688.HK), NEW WORLD DEV (17.HK), Chinachem, Nan Fung, CIFI HOLD GP (884.HK), LONGFOR GROUP (960.HK), Empire Group, SEA HOLDINGS (251.HK) and CHEVALIER INT'L(25.HK), according to on-site information.
Overnight HIBOR last posted at 0.05321%, logging a 1-month low, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.50696%.
PBoC Deputy Governor Fan Yifei said Digital Currency Electronic Payment (DCEP) is of huge importance for supply-side structural reform in the financial sector. It represents the M0 digitalization based on new technology to offer a universal technical currency for digital economic development. China has seen phased achievements for DCEP, with internal closed beta testing underway, Fan added.
Netflix was the most downloaded streaming app worldwide in August with over 19.2 million installs, according to Sensor Tower. YouTube came as second with 17.7 million installs. No. 3-5 apps in pecking order went to Amazon Prime Video, YouTube Kids and Tencent Video.
Ant Group will unveil the Trusple platform based on the AntChain technology at the INCLUSION Fintech Conference tomorrow (25th), CEO Simon Hu was quoted as saying by Chinese media. Also Eric Jing, Executive Chairman said the Group has been adhering to its position as a technology platform and upholding open and win-win principles, according to Chinese media. Since Ant Group proposed an internet booster project in 2015, Alipay has stroke deep cooperation with over 2,000 financial institutions so far. He also mentioned that the "cloud bank chain", featuring cloud computing, distributed database and blockchain, will become a bolster to the core technology of new finance,
The Hong Kong government will declare to add Britain to its list of high-risk countries as soon as today, local media citing sources. Starting from next Thursday (October 1), travelers from the UK will have to present their negative coronavirus test results before boarding a plane to Hong Kong.
Amazon (AMZN.US) holds the biggest market share in the Asia-Pacific cloud service market for Q2, followed by Alibaba Cloud, according to Synergy Research's report. By regions, Alibaba Cloud dominated the China market, but Amazon was the frontrunner in Japan and Southeast Asia.
MACAU As to rumor that big-spenders at Macau casinos are unable to exchange their winning chips into cash or face restrictions, Gaming Inspection and Coordination Bureau (DICJ) responded that gaming companies and junket promotors are having their own anti-money laundering regulations in compliance with the government's policies, and have been enforcing prevailing measures, Macao Daily News reported. DICJ has not implemented any new initiatives to reinforce such regulations, the report added.
IMF said The coronavirus shock may last longer than expected, meaning some countries could take years to revive their economic growth, opined IMF First Deputy Managing Director Geoffrey Okamoto. He expected a lot of countries to need assistance when returning to economic growth.

PRE MARKET NEWS
Not in this mornings report
CATHAY PAC AIR (00293.HK) said it will raise proposals to the board of directors in 4Q20 regarding the operating scale and models of the airline company in future to address global aviation and travel demand and maintain the company's financial position at healthy level, local media reported.
BMO Global Asset Management is planning to quit the Hong Kong ETF market by transferring its seven locally-listed ETFs to China Asset Management, Financial Times citing sources. BMO is now finalizing the transfer. The size of the said ETFs will amount to $2.86 billion, similar to that of Vanguard, which will be exiting from the city's ETF market.
CK ASSET (01113.HK) said Hutchison Whampoa Properties (Chengdu) Limited had been sold to YUZHOU GROUP (01628.HK) and Chengdu Ruizhuo Real Estate in July, with an announcement on HKEX, cited local media. The relevant company is no longer a subsidiary of CK ASSET.
BYD COMPANY (01211.HK) revealed that since the Han model launch on 12 July, lots of customers have been waiting in line to pick up their vehicles, reported Securities Times. Currently, the number of Han EVs delivered is insufficient to meet the demand of both existing and new customers. BYD is striving to boost its Han model production capacity and speed up deliveries, while ensuring product quality.
STO (002468.SZ) (ZTO Express) announced that Alibaba.com entered into a separation agreement with two Shanghai companies on 21 September, under which Alibaba.com will hold 58.6% equity interest in the part 1 of the newly established company and 100% in the part 2 of the newly established company. The newly established company holds 383 million unlimited circulating shares of STO, representing 25% of the total share capital of STO.
ByteDance said it had submitted an application for a technology export permit at the Ministry of Commerce in Beijing, and is awaiting the application to be accepted by the Ministry, pursuant to the Regulations of the PRC of Technology Import and Export, and Export Prohibited and Restricted Technology Catalogue of the PRC.

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