Oct 14 WRAP HSI +17pts +VE China data after market

18 Oct
Oct 14 WRAP HSI +17pts +VE China data after market

HSI +17pts (+0.1%) 24,667  HSCEI +42pts (+0.4%) 9,921  T/O HK$154.34bn (+10% DoD)  

As at 6pm HK time
Markets opened around flat trended higher in early trades and now trading sideways. Good China new loans data +VE for the recovery and in line Eurozone Industrial production data. Covid vaccine trail suspensions and earnings will remain in focus.
EUROZONE Industrial Production Aug -7.2% YoY vs -7.1% Jul revised (F/cast was -7.2%)Industrial Production Aug +0.7% YoY vs +5% Jul revised (F/cast was +0.5%)
GERMANY No data due
UK No data due

US Futures opened up small but rose through the day to Dow +100pts, with S&P and NDX also up.  Good China loans data +VE but Earnings remain in focus.  Less expectation of news on a new stimulus package but investors will be watching to news of the vaccine trials.  Worth nothing that it is common for trials to be suspended whilst individual case exceptions are investigated.
Earning tonight included United Airlines, Wells Fargo, United Health and Goldman Sachs.
Data due MBA 30 yr Mortgage Rate and Mortgage Applications, PPI, Core PPI, API Crude Oil Stock Change.

CHINA CSI 300 Closed -32pts (-0.7%) 4,807
Markets opened lower with caution ahead of the President Xi’s speech on the Shenzhen anniversary event. Also overhanging the market was tomorrow’s inflation and PPI data plus the New Loans data.
Shanghai opened lower and trended lower sold down in choppy trading to 3,332 just after lunch ask saw a small up tick in the PM.
Shenzhen opened lower and also trended lower to day low 13, 665, Saw a small uptick from the lows in the PM session.
Shanghai Composite Index -19pts (-0.6%) @ 3,341
Shenzhen Component Index -108pts (-0.8%) @ 13,691
ChiNext Index -21pts (-0.7%) @ 2,764
New Yuan Loans Sept CNY 1900b vs 1280b Aug (F/cast was 1700b)
Outstanding Loan Growth Sept +13% YoY vs +13% Aug (F/cast was +12.7%)
Total Social Financing Sept CNY 3480b vs 3580b Aug (F/cast was 3200b)
M2 Money Supply Sept +10.9% vs +10.4% Aug (F/cast is 10.3%)
New Loans strongest in 6 months, and an indication that the economy is recovering strongly. Total Social Financing; broad measure of liquidity in the economy eased but still higher than forecast. M2 rose faster than expected.

CHINA DATA due tomorrow 
Sept Inflation Rate (Aug was +2.4% YoY F/cast is 2%) [Aug was +0.4% MoM F/cast is +0.2%]
PPI Sept. Aug was -2%, F/cast is -1.8%.
President Xi Jinping delivered a speech at the 40th anniversary celebration of Shenzhen Special Economic Zone, saying China's economy has entered the stage of high-quality development from the stage of rapid growth. While major contradictions within China's society are changing, people have higher expectation for good life. Paired with long-term well-oriented economy, extensive market space and resilient development, a domestic circulation is formed in China as the main economic theme, in combination of foreign circulation.
He stated that Shenzhen's GDP grew from RMB270 million in 1980 to RMB2.7 trillion in 2019, representing per annum growth of 20.7%. Leveraging on both international and domestic markets, the economic zone expanded its trade imports and exports from USD18 million in 1980 to USD431.5 billion in 2019, added Xi. China has to push the construction of Guangdong-Hong Kong-Macau Greater Bay Area actively and thoroughly.
China must seize the historic opportunity in GBA buildout to facilitate the connection of rules and mechanisms for economic operation across the three regions, the President furthered.
Little new in the speech more a call to arms for people to get on and seize the opportunities; in line with the comments he has been making during his southern tour this week.

HSI Pre Market Opened at 24,809 +159pts vs -28pts @ 24,621 ADR’s with E Commerce names strong including Alibaba despite the CSRC saying it would delay the IPO. But Evergrande weak on proposed share placement plan. Autos +VE on good sales data and outlook. Chinese Financials positive but SMIC continues to see weakness along with the Macau names. Market then sold off down to 24,500 level before bouncing back to 24,680 (above Monday’s closing level) and then dipped slightly into lunch to close -0.3% @ 24,583 PM saw the market work slightly higher but in choppy trading. Would have closed -VE but for a 25pts spike in the closing auction.

Centre for Health Protection said there were no new COVID-19 cases in Hong Kong today (vs 7 Tuesday) Although they are investigating a case relate to the HK Philharmonic Orchestra.

SHORT SALES Wednesday 17.4% vs 17.7% Monday
Top Shorts Hang Seng Bank (11) 50%, Henderson Land (12) 37%, CKI (1038) 36%, Bank of China (3988) 36%, China Res Land (1109) 35%, HSBC (5) 34%, Ping An (2318) 30%, CCB (939) 29%, AIA (1299) 28%, BankComm (3328) 26%, Xiaomi (1810) 25%.

CHANNEL MICRON (02115.HK), to be listed tomorrow, opened at $0.6 in gray market, +66.7% against the listing price $0.36, and last stood at $0.88, up 1.4 times against the listing price, on volume of 770,000 shares, PhillipMart data showed.
CN LOGISTICS (02130.HK), to be listed tomorrow, opened at $3.01 in gray market, +13% against the listing price $2.66, and last stood at $2.66, flattish with the listing price, on volume of 300,000 shares, PhillipMart data showed.
HSBC HOLDINGS (00005.HK) announced a meeting of a committee of the Board of Directors will be held on 27 October 2020 to consider the announcement of the Earnings Release for the Third Quarter 2020.
CHI MER LAND (00978.HK) announced that for the period from 1 July 2020 to 30 September 2020, the aggregate contracted sales amounted to RMB13.344 billion +29% YoY.
Centa-Salesman Index (CSI) last stood at 54.24, up 0.96 pts weekly, said Centaline Property. The index amassed 3.02 pts of growth in two weeks. As the Government is progressively relaxing anti-plague measures, the property market sentiment is getting more positive.
SoftBank had resumed share repurchase in September by buying back 6.17 million shares at JPY40.1 billion (roughly USD380 million), Bloomberg reported.

Regional Markets
Market opened lower following the weakness in the US overnight but worked higher through the morning to close at lunchtime just below Tuesday’s closing level @ 23,595. PM saw the market open higher @ 23,650 but sold down as the Industrial Production data missed forecasts, but then saw a small rally in the last 20 mins but a small sell off at the end to close +25pts (+0.1%) @ 23,627
Market Data at 12:30pm
Industrial Production Aug +1% MoM vs +8.7% July (F/cast was +1.7%)
Industrial Production Aug -13.8% YoY vs -15.5% July F/cast was -13.3%)
Capacity Utilisation Aug +2.9% MoM vs +9.6% July (F/cast was +6%)

S KOREA Market opened flat but came under selling pressure are investors remain cautious with no US stimulus plan, concerns over the vaccine trials and the muted reaction to the US earnings. BoK left rates unchanged as expected. News of 84 new Covid cases including 53 local infections up from 69 Tuesday -VE for sentiment.
Tech names +VE with Naver, Samsung Electronics and SK Hynix higher, along with Hyundai Motor and Posco on good news but Pharm names weak along with LG Chem and Samsung SDI.
Kospi opened at 2,403 but trended lower for the first two hours before finding support at the 2,380 level (slightly lower than Tuesday’s support). It then traded sideways around the 2,385 level for an hour before trending higher to 2,393 but then trended lower for the final 90 minutes to close -23pts (-0.9%) @ 2,381
Kosdaq also opened higher at 873. Saw some initial choppy trading but having hit 875 at 9:25am then sold down to 865 level and has traded sideways from there. But saw increased selling from 1pm and sold down to 860 level and traded sideways to close -10pts (-1.2%) @ 862

TAIWAN Market opened lower and tested 12,920 but then bounced to 12,960 before selling down to 12,910 level. Then traded sideways until 12 noon after which it trended lower again to close -28pts (-0.2%) @ 12,919 Tech mixed after the Apple iPhone release.

CONNECT FLOWS Shenzhen flow increases again 
Northbound Rmb 45,453m Buy 22,624m vs 22,829m Sell
Southbound Rmb 13,642m Buy 5,172m vs 8,470m Sell
Northbound Rmb 71,586m Buy 36,673m vs 34,913m Sell
Southbound Rmb 15,526m Buy 5,943m vs 9,583m Sell

Active Heavyweights
TENCENT (700.HK) +3% hitting new high
BABA (9988.HK) +1.9% hitting new high
AIA (1299.HK) +1.2%
MEITUAN (3690.HK) +1.2%
HKEX (388.HK) -1%
PING AN (2318) +0.5%
CCB (939.HK) unch

HSI & HSCEI Constituents on the move
WUXI BIO (02269.HK) -4.7%
CHINA GAS HOLD (00384.HK) +4.3%
HENGAN INT'L (01044.HK) +3.7%
CONCH VENTURE (00586.HK) +3.6%
SANDS CHINA LTD (01928.HK) -3.5%
CITIC (00267.HK) -3.2%
CNOOC (00883.HK) -3.1%
HSBC HOLDINGS (00005.HK) -3%

HSMI & HSSI Constituents on the move
GOLDWIND (02208.HK) +22.1%
FIT HON TENG (06088.HK) +14%
FIRST CAP GP (01269.HK) -12.7%
GREATWALL MOTOR (02333.HK) +10.2%, hitting new high
ZHOU HEI YA (01458.HK) +8.1%, hitting new high
YADEA (01585.HK) +6.3%, hitting new high

Market Commentary 
*CHINA PROPERTY WEAK as CH EVERGRANDE (3333 HK -16%) raised HK$4.3b ($555m) in a downsized share placement. Company sold 260m shares @ HK$16.50 a 14.7% discount.SUNAC (1918 HK -2.8%) CIFI (884 HK -3.4%) CHINA AOYUAN (3883 HK -3.5%) CR LAND (1109 HK -3%). The news outweighed other news of contracted sales.
*CHINESE BANKS FIRM after China's banking regulator is easing requirements on banks to report lower profits, delivering a reprieve for the US$45t sector that has been under pressure to sacrifice earnings to support the economy. The CBIRC has given major lenders discretion to report earnings declines of about 10 percent or less below the more than 20% drop seen in 2Q. ICBC (1398 HK +0.9%) CCB (939 HK +0.8%) BK OF CHINA (3988 HK +0.8%)
*E-COMMERCE STRONG on speculation of more positive policies for the tech sector. ANT GROUP says it is making progress on regulatory approvals for its IPOs in Shanghai and HK after news reported on potential delays. ALIBABA (9988 HK +2%) TENCENT (700 HK +3.2%) JD (9618 HK +2.3%).
*TECH & MOBILE COMPONENTS WEAK on news mainland sales of handsets -35% YoY in September ahead of the launch of more 5G new phones. Shipments of handsets totaled 23.33m units last month, with 5G phones taking up 60%, said the China Academy of Information and Communications Technology. AAC TECH (2018 HK -1%) SUNNY OPTICAL (2382 HK +1.9%) TONGDA (698 HK-2.2%). Chipmakers weak on worries of more US restrictions, HUA HONG (1347 HK -4.8%) SMIC (981 HK -3.1%).
*MACAU WEAK China plans to target overseas gambling. Beijing proposed to amend its criminal law to target the promotion of overseas gambling. I think that is more to do with real off-shore gambling like to Philippines, Cambodia, etc rather than Macau. China is looking clamp down on money going off-shore where it can’t touch or tax it.
MELCO (200 HK -5.1%) SANDS (1928 HK -3.5%) WYNN (1128 HK -5.9%) SJM (880 HK -3.5%).
KEY for the recovery of Macau will be easing of travel restrictions; whilst in theory you can travel around China in many cases you have to get a pre covid test test done, which you have to pay for and then arrange your travel. Some areas still require a test when you arrive and a quarantine period and then often the same process when you go home!
*PHARMA WEAK on news that Johnson & Johnson and Eli Lilly have halted Covid vaccine testing due to unknown illness in patients. Also news that China’s public health insurance agency says it can’t afford to provide Covid-19 vaccine for free.
SINOPHARM (1099 HK -1.5%) INNOVENT BIO (1801 HK -2.9%) 3SBIO (1530 HK -3.9%). CANSINO (6185 HK -2.5%) says Mexico is weeks away from receiving first Covid-19 vaccines, which only require a single dose.
*WIND POWER STRONG At the Beijing Intl Wind Energy Conference, it was proposed to include wind power in the "14th Five-Year Plan", which triggered speculation of positive polices for the sector. GOLDWIND (2208 HK +22%) LONGYUAN (916 HK +6.2%).

ZTE (00763.HK)'s Vice President Wang Quan, at the PT Expo China today (14 October), said "5G news" has entered the critical window period for commercial use, in need of cooperation and partnership among industrial chains and co-creation of industrial ecology.
The overall size of livestreaming e-commerce will possibly reach $1.05 trillion, with the penetration as high as 8.6%, this year, according to a joint report from KPMG China and AliResearch. The market is set to remain in explosive growth next year, whose size may near $2 trillion and penetration may hit 14.3%, said the report.
Yuanzhong Group released the first price list for Eight Kwai Fong Happy Valley, involving 50 flats with saleable area of 258-428 sq.ft.. Prices on the list range $8.977-17.156 million. Deducting a maximum discount of 6%, the selling prices range $8.438-16.127 million, i.e. about $31,129 per sq.ft. on average.
BYD COMPANY (01211.HK) delivered a batch of 5,612 flagship Han NEVs in September 2020, +40.3% MoM, according to Chinese reports. Of which, 3,624 units of Han EVs were delivered in the month, +51% MoM.
Huawei is in talks with DC HOLDINGS (00861.HK) and other potential buyers over its planned sale of HONOR, as Reuters learnt from people with knowledge of the plan. The smartphone unit disposal may fetch up to RMB25 billion, while TCL and XIAOMI-W (01810.HK) are among the potential buyers.
TENCENT (00700.HK) 's League of Legends (LoL) will be available at iOS, Android and console platforms by the end of this year.
Westpac announced a plan to exit operations in China and other Asian markets as the Australian lender seeks to focus on the domestic and New Zealand businesses, after reviewing its international portfolio. Westpac said it will pull out of Beijing, Shanghai, Hong Kong, Mumbai and Jakarta and integrate its international businesses into branches in Singapore, London and New York.
Google (GOOG.US) was the mobile app developer with the most downloads in September, recording 294 million installs (+20% YoY), reported Sensor Tower. ByteDance came in fifth in the chart, overtaking Microsoft at sixth.
Singapore's Ministry of Health said that as the epidemic in Hong Kong has improved, it has added the city to the "low risk countries/regions" list. Starting from Thursday (15 October), the quarantine period for Hong Kong travellers entering Singapore will be changed to 7 days at their place of residence from 14 days at dedicated facilities.
Hong Kong registered 42 residential transactions involving Buyer's Stamp Duty (BSD) in September, flattish monthly, involving $657 million of duty amount, reported Inland Revenue Department's Stamp Office. 193 deals involving Double Stamp Duty (DSD) were tracked in September, up 18 cases or 10.3% monthly, involving almost $963 million of duty amount. Both of the above two duty amounts set 11-month highs.
EVERGRANDE (03333.HK) has just announced the share placement totaling $4.3 billion. Top international investment institutions have actively subscribed for the placement, according to market sources. They include Vanguard, Norges Bank, Snow Lake, Key Square, LMR and Legal & General.
TENCENT (00700.HK) plans to ramp up its shareholdings in Universal Music by 10% before its share options expire in January, as Bloomberg learnt from people with knowledge of the plan. A consortium led by the Chinese tech giant had last year acquired 10% stakes of Universal Music from Vivendi SA (VIVEF.US)

Not in this mornings report
Hang Seng Indexes Company announced that with the launch of Pre-Opening Session (POS) Enhancements by HKEX (00388.HK) the opening index for indexes comprising only Hong Kong-listed companies - including the Hang Seng Index, Hang Seng China Enterprises Index and Hang Seng TECH Index - will be compiled and disseminated as soon as opening prices are determined after the close of the random-matching period between 9:20 am to 9:22 am. This change will come into effect on 19 October 2020.

CH ENERGY ENG (03996.HK)'s trading in shares has been halted this morning, pending the release of an announcement containing the inside information of the Company regarding the contemplated issue of shares by the Company, which may constitute significant asset reorganization of China Gezhouba Group, one of the Company’s subsidiaries.

China's handset shipment totaled 226 mn units for first nine months of 2020, -21.5% YoY, according to data from China Academy of Information & Communications Technology (CAICT). Domestic handset shipment -35.6% annually to 23.334 million units for September.

PICC P&C (02328.HK) announced that the original insurance premium income of the Company for the period from 1 January 2020 to 30 September 2020 +3.7% yearly to RMB344.173 billion.

CHINA SOUTH AIR (01055.HK) announced that in September 2020, passenger capacity (measured by available seat kilometres (ASK)) of the Group -23.67% YoY In terms of cargo operations, in September 2020, cargo capacity (measured by available tonne kilometers (ATK) - Cargo and Mail) +0.97% yearly.

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