Oct 20 HK WRAP HSI +27pts but T/O -19% DoD, Europe mixed, US stimulus hopes still

23 Oct

Oct 20 HK WRAP HSI +27pts but T/O -19% DoD, Europe mixed, US stimulus hopes still

HSI +27pts (+0.1%) 24,570  HSCEI +10pts (+0.1%) 9,988  T/O HK$99.31bn (-19.1% DoD)  

As at 6:45pm HK time
EUROPE Markets opened lower but initially bounced with FTSE and CAC trading positive but the DAX remained in the red. Markets now trending lower again. Covid cases expected to hit a record high. UBS strong on very good Q3 earnings along with Logitech also on good earnings. But Tele2 weak on inline earnings. Investors watching for any news of a US stimulus deal as today is the decline set by Pelosi for a deal pre election.
GERMAN PPI Sept +0.4% MoM vs 0% Aug (F/cast was +0.2%)
PPI Sept -1% YoY vs -1.2% Aug (F/cast was -1.1%)
EUROZONE Current Account Aug Euro 21.8b vs 25.5b Jul (F/cast was 26.8b)

US Futures opened Dow+100pts in Asian time, eased back to +80pts and now back to +100pts on hopes of a stimulus deal.  IBM was lower in extended trading Monday after reporting but this morning Intel higher on news SK Hynix to buy its NAND memory storage business for $9b.  Proctor & Gamble due to report before the bell. Snap and streaming video giant Netflix report after market closes.
Data due Housing Starts, Building Permits, Redbook, API Crude Stocks Change. Speech by Quarles and Evans.

CHINA CSI 300 Closed +38pts (+0.8%) 4,794
Opened lower following the sell off in the US tested the 4,740 support initially and then the resistance at 4,766 before easing back and trading sideways into lunch. PM the markets worked higher to close at the day high
Shanghai Composite Index +15pts (+0.5%) @ 3,328
Shenzhen Component Index +182pts (+1.4%) @ 13,604
ChiNext Index +51pts (+1.9%) @ 2,741
Data on the open
Prime Loan Rate 1 year Oct 3.85% vs 3.85% Sept (F/cast was 3.85%)
Prime Loan Rate 5 year Oct 4.65% vs 4.65% Sept (F/cast was 4.65%)
Housing Price Index Sept +4.6% YoY vs 4.8% Aug (F/cast was 4.7%)
Detail House Prices slowest gain since Feb 2016. Tier1cities still seeing good gains which means the weakness must be from the lower tier cities.
Shenzhen 5.3% vs 6.2% August, followed by Chongqing 5.3% vs 5.3%, Shanghai 4.5% vs 4.5%, Beijing 3.8% vs 3.4%, Guangzhou 2.1% vs 1.6%, and Tianjin 0.8% vs 0.9%. On a monthly basis, new home prices advanced Sept +0.4%; the least in six months, after +0.6% August.

HSI Pre Market Pre maket @ 24,572 +29pts vs -144pts @ 24,398 ADRs E Commerce names firm on news of Ant’s IPO approval. Financials were mixed. Market then sold down on the weak China housing data to 24,457 before rebounding to test 24,600 around 10:15am. Then traded in that range for the rest of the day. PM low was 24,470 around 1:40pm after that the market ground higher in choppy trading. Market closed around the PM high thanks to a 20pt uptick in the closing auction.

After Market
Unemployment Sept +6.4% vs 6/1% Aug (F/cast was 6%)
Highest since Jan 2005. As the overall economic situation remains weak and the global pandemic is still evolving, the labour market will remain under pressure in the near term. the Secretary for Labour and Welfare said.
Centre for Health Protection said there were 5 new COVID-19 cases in Hong Kong today (vs 15 Monday) 4 imported 1 unknown origin.

SHORT SALES Tuesday 20.6% vs 18.7% Monday
Top Shorts
ICBC (1398) 42%, MTRC (66) 39%, Wharf REIC (1997) 39%, Henderson Land (12) 38%, Bank of China (3988) 37%, Galaxy Ent (27) 36%, CCB (939) 35%, Ping An (2318) 34%, Swire Pac A(19) 34%, CKI (1038) 34%, SHKP (16) 27%, Petrochina (857) 26%, Hang Seng Bank (11) 25%.

CHINA MOBILE (00941.HK) announced the unaudited financial data of the Group
for the first three quarters of 2020. Operating revenue was RMB574.4 billion, up by 1.4% over the same period last year. EBITDA was RMB216.9 billion, down by 3.8% over the same period last year. Profit was RMB81.6 billion, down by 0.3% over the same period last year.
CATHAY PAC AIR (00293.HK) has agreed to scale down its planned worldwide job cuts by 25% to roughly 6,000, and to forgo its "Cathay Dragon" sister brand, as multiple sources told South China Morning Post. The local flagship airline, with around 33,000 workers globally at this moment, will purportedly announce the layoff after market close on 21 October.
LI NING (02331.HK) announced that for the third quarter ended 30 September 2020, in respect of LI-NING POS (excluding LI-NING YOUNG) which have been in operation since the beginning of the same quarter last year, the same-store-sales for the overall platform registered a low-single-digit increase on a year-on-year basis. In terms of channels, both retail (direct operation) and wholesale (franchised distributors) channels registered a mid-single-digit decrease; while the e-commerce virtual stores business registered a high-thirties growth on a year-on-year basis.
Deliveroo announced the opening of the Deliveroo Editions - Kowloon Bay, the first of its kind in Kowloon measuring around 3,000 sq.ft. With seven kitchens, the Deliveroo Editions will provide customers in Choi Hung, Kai Tak, Kowloon Bay, Kwun Tong and Ngau Tau Kok with dining options from Nha Trang Vietnamese Cuisine, Man Kee Cart Noodle, PizzaExpress, Cafe Siam, etc. The food delivery platform has invested over $10 million in the project. Applications for joining the Deliveroo Editions were three times higher over the past six months, revealed Brian Lo, General Manager of Deliveroo Hong Kong.

Regional Markets
Futures indicated a lower open even as the US futures opened higher. The market opened lower but initially traded higher but hit resistance @ 23,674 just short of yesterday’s close. It tested the resistance several times before selling back down to the opening level and trading sideways into lunch. PM saw the market open lower and traded down to 23,520 level before bouncing at the end to close -0.4% @ 23,567

S KOREA Market opened lower following the US sell off but rallied into the green in early trades hitting 2,358 in the first 35 minutes but then trended lower in choppy trading to 2,322 around midday and then trended higher into the close to finish +0.5% @ 2,358.
Kosdaq followed a similar pattern to close +0.3% @ 825
SK Hynix -1.7% but off its lows on news it will buy Intel’s NAND memory and storage business for $9 billion. Hyundai -0.3% & Kia +0.3% off initial lows after announcing more provisions
Tomorrow we get PPI pre market.

TAIWAN Opened lower 12,890 but rallied in early traded back above 12,900 but unable to hold and sold down to 12,865 but 10am then traded sideways in a tight band to close -0.3% @ 12,862
Data After Market Export Orders Sept +9.9% YoY vs +13.6% Aug (F/cast was +8.5%)
It is the biggest value on record as economic activity continued to rebound in several countries post the covid slowdown. The most sizable increases were reported on orders from China +31% vs +21% in August), US +11.1% vs 19.5% Aug and Japan +10.1% vs -3.8% Aug. Orders from Europe were -12.2% vs +21.2% August.

CONNECT FLOWS (lighter DoD, especially Southbound)
Northbound Rmb 31,201m Buy 16,650m vs 14,551m Sell
Southbound Rmb 8,3625m Buy 3,976m vs 4,385m Sell

Northbound Rmb 45,707m Buy 22,360m vs 23,347m Sell
Southbound Rmb 8,069m Buy 3,668m vs 4,401m Sell

Active Heavyweights
CCB (00939.HK) -1.1%
BABA (09988.HK) +0.7%, hitting new high
MEITUAN (03690.HK) +0.7%
TENCENT (00700.HK) +0.5%
AIA (01299.HK) +0.5%
PING AN (02318.HK) +0.4%
HKEX (00388.HK) -0.1%

HSI & HSCEI Constituents on the move
ANTA SPORTS (02020.HK) +4.4%
MENGNIU DAIRY (02319.HK) +4.4%
CHINA TOWER (00788.HK) -3.6%
MINSHENG BANK (01988.HK) -3.2%
GEELY AUTO (00175.HK) +3.1%

HSMI & HSSI Constituents on the move
YONGDA AUTO (03669.HK) +11.5%, hitting new high
RAZER (01337.HK) +9.1%, hitting new high
LI NING (02331.HK) +6.5%, hitting new high
GREATWALL MOTOR (02333.HK) +6.2%, hitting new high

Market Commentary
as Oil dropped after an OPEC+ meeting made no mention of any changes to a plan to further ease oil-output cuts from January. OPEC+ also warned of a precarious outlook as a resurgent pandemic hurts crude demand. CNOOC (883 HK -2%) PETROCHINA (857 HK -0.9%) ANTON OILFIELD (3337 HK -3%) SINOPEC (386 HK -1.3%).
*AUTO STRONG on increased increase last month. AUTO MAKERS STRONG after China Automotive Info Network said the industry saw sales +13% YoY in Sept, or +11.7% MoM. GREATWALL (2333 HK +10%) GEELY (175 HK +3.1%) BYD (1211 HK +9%) GAC (2238 HK +2%).
DEALERSHIPS were under the spot light; YONGDA (3669 HK +12%) jumped to a 3-year high, following reported 3Q net income +41% YoY.
ZHENGTONG (1728 HK +12%) before it halted trading, the company announced that its controlling shareholder sold 29.9% of its shares to Xiamen Cinda for 1.403b yuan or 1.74 yuan/shr, which is a 61.11% premium to its last closing price of 1.08 yuan.
*CHINESE BANKS WEAK as China kept loan prime rates unchanged in October. CCB (939 HK -0.7%) ICBC (1398 HK -0.2%) ABC (1288 HK -2.1%) BOC (3988 HK -1.5%).
*E-COMMERCE FIRM after ANT won a key approval from the CSRC for its listing in
Hong Kong yesterday, paving the way for what could be the world's biggest IPO, while. Reuters reported that Ant had passed the hearing with HKEX listing committee yesterday. Ant could raise about US$35b from the dual listing in HK and Shanghai at a valuation of at least US$280b.
ALIBABA (9988 HK +0.9%) tested HK$300 intraday; news of it buying into Drufy and its 11.11 shopping frenzy helping. JD (9618 HK +0.06%) TENCENT (700 HK +0.4%) NTES (9999 HK -0.6%).
*TECH & COMPONENTS FIRM on news that APPLE is estimated to have received between 7m and 9m pre-orders for its new 5G iPhone in the first week driven by the mainland market, beating expectations. SUNNY (2382 HK +2.2%) BYDE (285 HK +3%) HUA HONG (1347 HK +2.15).
XIAOMI (1810 HK -0.2%) despite new showing its seen a significant increase in its market share, rising to 11% in August from 8% in April, especially in markets where Huawei used to have a strong presence, such as Central Eastern Europe, a report said.
*CHINA PROPERTY WEAK after Sept. Home prices came in +0.34% MoM, growth slower than Aug. SUNAC (1918 HK -1%) EVERGRANDE (3333 HK -2.5%) AGILE (3383 HK -1.3%) TIMES CHINA (1233 HK -1.5%). Also news that banks in Shenzhen are tightening loans to SME’s as a number of such loans have been used in the real estate sector.
*SPORTSWEAR MAKERS STRONG as cold winter and double eleven shopping festival laid the foundation for strong performance in the Q4. LI NING (2331 HK +6.5%). ANTA (2020 HK +4.5%) 361 DEGREES (1361 HK +2%) CH DONGXIANG (3818 HK +4%).
CH TOWER (788 HK -3.6%) as tower-revenue growth of 3.4% YoY in 3Q disappointed investors. reported net income for the 9 month period of 4.56b yuan, +18% YoY
ZIJIN MINING (2899 HK +2.7%) reported net income for Q3 of 2.15b yuan, +87% YoY.

HSBC HOLDINGS (00005.HK) chairman Mark Tucker has recently participated in the 32th International Business Leaders' Advisory Council for the Mayor of Shanghai, according to the official WeChat account of HSBC. Answering the question about the vision of international financial institutions in setting foot in Shanghai, Tucker said HSBC is passionately anticipating further business expansion in Shanghai and broader China market while scouting new investment opportunities.
BABA-SW (09988.HK) will be taking a 6.1% stake in Dufry, the world's largest duty-free retailer from Switzerland, as part of the latter's CHF820-million fundraising plan.
The pre-order of iPhone 12 in China has exceeded 150,000 units as at 9:30 am today since the pre-order began last Friday, as revealed by the data of China's e-commerce website and Apple's dealers.
President of BABA-SW (09988.HK)'s Taobao and TMall, told Chinese press that "11.11 Shopping Frenzy" 2020 will kick off pre-sale on 21 October. The first round of shopping is dated 1-3 November, and the second round 11 November. While the shopping festival this year lasts three more days than last year's, the online retailer wrote on its official website that up to 800 million consumers may join the festival with as many as 250,000 brands and 5 million merchants joining it. Also announced that Ant Group's Alipay will open access to "11.11 Shopping Frenzy" event to its digital lifestyle platform for the first time. It is also pouring the largest size of funding for its "11.11 Shopping Frenzy", Chinese media reported. This year, the online retailer will distribute RMB4 billion of red pockets, 10 billion subsidy items and coupons for 20 billion brands, doubling the size of last year.
EVERGRANDE (03333.HK) has fully repaid the $4-billion mezzanine financing, which was deployed as partial re-financing for the collateralized debt under the acquisition of Wan Chai office in 2015, as Bloomberg learnt from insiders.
XIAOMI-W (01810.HK) declared on Weibo the successful development of 80W wireless charging technology. The 80W solution can fully charge a 4,000mAh battery in 19 minutes, compared with over 30 minutes using the 65W wired charger, claimed the giant.
TENCENT (00700.HK) in Sept it's Honor of Kings and PUBG Mobile came in the top two grossing mobile games worldwide, Sensor Tower reported. During the month, the two games respectively garnered US$240 million and US$198 million in user spending, up 87% and 13.3% yearly.
Prior to the ExCo meeting this morning, Chief Executive Carrie Lam told reporters that there have been 80,000 Hong Kong companies in Shenzhen so far, making up 85% of the total foreign investment in Shenzhen. The HKSAR Government has required related policy bureau to mount a research on the implementation of Shenzhen reform trial to deepen Hong Kong-Shenzhen cooperation, Lam said. She also told reporters that she sees no condition now for further relaxation of social distancing in Hong Kong although no source-unknown case has been reported for three days and the overall diagnosed number has decreased in the last week. She said related government officials will announce the latest anti-plague measures in the afternoon. Under the premise of no significant relaxation, the Government though viewed loosening some social activities possible, including wedding ceremonies or local tours. Also that her administration team remains unswerving in boosting land supply, which will not be diminished due to descending home prices. In the future, nearly 400 hectares of land will be recovered via Lands Resumption Ordinance.Regarding rumored land reclamation proposal by Beijing to Hong Kong, Lam said it is not a viable option, explaining local governments have to factor in their respective circumstances and options. In Hong Kong's case, that would be preservation of country parks and wetlands.
Ant Group's Alipay has recently launched a "Pay Later" function on Zhima Credit, allowing buyers to complete transactions first and pay tomorrow, reported ithome.com. Each Alipay user can make up to five transactions of not more than RMB200 each using "Pay Later".
The U.S. Government announced that it has blacklisted two Chinese men and six Chinese entities for their deals with an Iranian shipping company and help in evading U.S. sanctions.
Food and Health Bureau, in reply to media inquiry, said the authority is studying on formulation of legal framework for mandatory coronavirus screening in response to fluctuated local epidemic. This aims to monitor the situation effectively and identify carriers right away to cut off community transmission. The related legal framework and implementation of arrangement are subject to finalization, the Bureau said, adding the Government will make an announcement when appropriate.
China Foreign Exchange Trade System announced today (20 October) that the central parity of USD/ RMB rose 80 bps from the last trading day to 6.6930, surpassing 6.7 and setting a new high since 18 April 2019.

Not in this mornings report
ZHENGTONGAUTO (01728.HK) Trading halted with effect from 9:14 a.m. on Tuesday, 20 October 2020 pending the release of an announcement in relation to inside information of the Company.
Rumor had it that Ant Group initially plans for an IPO from next Tuesday to next Friday (27-30 October), and a simultaneous A+H share listing on 6 November. However, this is merely a preliminary timetable which is subject to final adjustment.
The Pavilia Farm I, a project on top of Tai Wai Station co-developed by NEW WORLD DEV (00017.HK) and MTR CORPORATION (00066.HK), unveiled the third price list for 378 units, measuring 278-835 sq.ft. The unit prices range $8.671-26.72 million, i.e. $22,645-34,983 per sq.ft. Based on the maximum discount of 20%, the selling prices range $6.936-21.376 million. The average discounted floor price is $21,560 per sq.ft., +7.8% from that in the previous price list.
President Xi during his visit at Military Museum of the Chinese People's Revolution yesterday, emphasized the importance to inherit the spirit of "anti-US, pro-North Korea", cited People's Daily. The Korean War is an invaluable spiritual treasure that will encourage Chinese people to conquer all hurdles and surmount formidable enemies, opined Xi.
Pakistan announced to lift its TikTok ban imposed 10 days ago, as the short video app vowed to review content in accordance with local laws and block all accounts spreading obscenity and immorality.
Israel shipping group ZIM announced that the company and Alibaba.com entered into a broad strategic cooperation agreement for the direct purchase of sea freight, improving logistic services to Alibaba.com sellers. The cooperation of both parties has been in force since earlier this year, ZIM said in its statement.
ZIJIN MINING (02899.HK) announced that in January - September 2020, net profit amounted to RMB4.572 billion, +52.1% yearly. EPS equaled 18 fen.
MIDLAND HOLDING (01200.HK) announced for the declaration of interim dividend by way of distribution in specie of shares in MIDLAND IC&I (00459.HK) on the basis of 1,700 IC&I Shares for every 2,000 Shares held, involving approximately 611 million shares. Upon completion, the Group will cease to hold any IC&I Share.
PING AN (02318.HK) announced that the accumulated gross premium incomes from four subsidiaries amounted to RMB626.308 billion, +1.8% yearly, for the period from January 1, 2020 to September 30, 2020.

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