Oct 6 HK WRAP HSI +213pts but T/O -6.2% as China remains closed.

08 Oct
Oct 6 HK WRAP HSI +213pts but T/O -6.2% as China remains closed.

HSI +213pts (+0.9%) 23,980  HSCEI +89pts (+0.94%) 9,537 T/O HK$86.81bn (-6.2% DoD)  

As at 5:15pm HK time
EUROPE  Expect markets to open flat but with limited upside.  Construction PMI data missed for the Eurozone although the UK’s beat.  German Factory orders beat forecasts. Covid remains a concern.  Investors will be watching to see if Pelosi and Mnuchin can agree a stimulus package.  Any positve news there, will prompt the markets to move higher.
Puma -3% on news Kering deposed of its 5.9% stake.

US Futures opened flat Dow +20pts, NDX +0.1%, S&P flat as Trump returns to the White House but eased back ti Dow -21pts, with NDX and S&P -VE. Expect a flat open as investors watch for news of a stimulus package deal as Pelosi and Mnuchin agree to continue talks.
Data due: Balance of Trade, Exports, Imports, Redbook, JOLT’s Job Openings and API Crude Oil Stock Change. Fed Speakers Powell, Harker and Kaplan.

CHINA Markets close until Friday

HSI Pre Market opened at 23,895 +127pts vs +189pts ADR’s
with most E Commerce names +VE but BABA-SW was weaker and Tech Component names +VE following the good monthly numbers from Largen yesterday in Taiwan and expectations for the Apple launch on 15 Oct; Sunny Optical strong having been shorted yesterday. Autos also interest. HSI then worked higher to test 24,000 in the first hour but failed to break above and consolidated back to 23,880. It then rebounded into lunch at 23.947. PM saw in trade in a tight range 23,910 to 23,995. Ticked up 15pts in the closing auction. T/O dropped again mainly due to the lack of China connect trading.Sentiment on China improved on news that internal travel over Golden week whilst down YoY was better than expected; with Hotel bookings up but than was seen as -VE for ride-hailing/delivery apps.

PICK Techtronics (669 HK) Opened at HK$103.90 and climbed through the day to 105.50 before easing back into the close. Difficult to suggest chasing here. But certainly accumulate below HK$100.

SHORT SALES Tuesday 21.3% vs 23.5% Monday
Top Shorts BABA-SW (9988) 37%, Country Garden (2007) 36%, China Res Land (1109) 31%, Bank of China (3988) 34%, Galaxy Ent (27) 33%, NWD (17) 33%, Ping An (2318) 32%, HSBC (5) 29%, CCB (939) 27%, Hang Seng Bank (11) 25%.

The Singaporean Government's sovereign wealth fund GIC plans to subscribe for Ant Group’s public offering shares in an over US$1-billion deal, Bloomberg citing inside sources. Temasek is also interested in the subscription.

Regional Markets
JAPAN Opened higher following the Nikkei futures in Chicago @ 23,445 and Osaka @ 23,410. But saw initial selling down to 23,331 before rebounding back to the opening levels. PM traded sideway’s with a slight uptick at the end to close +0.52% @ 23,434

S KOREA Kospi opened higher on hopes of a US stimulus deal but then traded sideway’s in a tight range (2,366 - 2,378) for most of the day but sold off around 1:30pm down to 2,355 ( just below yesterday’s close) before rebounding to 2,365 +0.3% at the close.
Kosdaq opened higher and followed a similar pattern selling down to 856 before rebounding to close at 863 +0.49%
Trading volumes were moderate; Foreigners net buyers, Retail and Institutional net sellers
Data out pre market Inflation Rate Sept +1% YoY vs +0.7% Aug (F/cast was +0.7%)
Inflation Rate Sept +0.7% MoM vs +0.6% Aug (F/cast was +0.4%)
Highest rate since March; with rising food costs (+5.2% YoY) but falling non food product prices (-1.5%).

Opened higher worked higher to 12,700 which it tested a few times before easing back slightly and trading sideways to close +1.24% @ 12,704


HONG KONG DATA Centre for Health Protection said there were 8 additional COVID-19 cases in Hong Kong today (vs 11 Monday) 3 of unknown origin and 5 local infections

Active Heavyweights
MEITUAN (3690.HK) +5%
HKEX (388.HK) +2.5%
BABA (9988.HK) -0.7%
TENCENT (700.HK) +0.5%
AIA (1299.HK) +0.2%
PING AN (2318.HK) +0.1%
CCB (939.HK) unch

HSI & HSCEI Constituents on the move
GEELY AUTO (00175.HK) +6.1%
WUXI BIO (02269.HK) +4.9%
AAC TECH (02018.HK) +4.6%
COUNTRY GARDEN (02007.HK) +3.5%
SUNNY OPTICAL (02382.HK) +3.5%
MENGNIU DAIRY (02319.HK) +3.3%
CHINA RES LAND (01109.HK) +3.3%
CNOOC (00883.HK) +3.3%
CSPC PHARMA (01093.HK) +3.2%

HSMI & HSSI Constituents on the move
CHINASOFT INT'L (00354.HK) +11.3%
GREATWALL MOTOR (02333.HK) +8.9%, hitting new high
BEIGENE (06160.HK) +8%, hitting new high
C TRANSMISSION (00658.HK) +6.5%, hitting new high
VENUS MEDTECH (02500.HK) +5.1%, hitting new high
YADEA (01585.HK) +4.8%, hitting new high

Market Commentary
*PETROCHEMS STRONG overnight oil spiked the most since May in New York, on optimism over the potential for more U.S. fiscal relief and news that Norway had shut down production due to covid cases.
CH OILFIELD (2883 HK +3.3%) CNOOC (883 HK +3.1%) SINOPEC (386 HK +2%).
CS has a +VE note out on the sector.
*E-COMMERCE MIXED with uncertainty on TikTok and WeChat cases in the U.S. Also news that China told a closed-door WTO meeting that U.S. restrictions on TikTok and WeChat are in violation of the organization's rules, Reuters reported. The Trump administration defended its actions, saying they're intended to mitigate national security risks. Tik Tok’s case not helped by news an Ex Govt official was responsible for the International expansion.
The Swiss duty-free store operator Dufry announced a JV with ALIBABA (9988 HK -0.7%). Alibaba agreed to buy as much as a 9.99% stake in Dufry AG.
JD (9618 HK +0.3%) NETEASE (9999 HK -0.3%) TENCENT (700 HK+0.2%).
MEITUAN (3690 HK +4.5%) news reported that its daily average orders for the first three days of the Golden Week increased by 1.5 times.
*TECH & COMPONENTS FIRM on bargain-hunting following recent sell off related to US restrictions and hopes that some licences will be granted to allow supplies to SMIC (981 HK +7%) ZTE (763 HK +6.3%) CH SOFT (354 HK +11.3%).
*CHINA PROPERTY FIRM on Sept sales data.
COUNTRY GARDEN (2007 HK +3.1%) reported Sept contracted sales +25.3% to 64.63b yuan.
MODERN LAND (1107 HK +0%) Sept contracted sales +46.4% YoY to 4.55b yuan. JINGRUI (1862 HK -0.5%) Sept contracted sales +31.1% YoY tto 2.46b yuan. GREENTOWN MGMT (9979 HK +1%) said in Sept, the total saleable area under project management business of the Group reached 0.45 million sq.m., and the total contracted sales amount reached 6.8b yuan.
*CHINA CONSUMERS MIXED, but mostly stronger, after data from the Ministry of Commerce showed mainland shopping centers saw 305m visitors during the first three days of the Golden Week holiday, with an average of 22,966 visiting on October 1. Traffic in shopping centres in major tourist cities have recovered to over 90% of last years levels, while those for tier-one cities including Shanghai and Beijing also recovered by 85%.
XTEP (1368 HK +3.3%) 361 DEGREES (1361 HK +2%) HAIDILAO (6862 HK +2.5%) BUDWEISER (1876 HK +7%) TSINGTAO (168 HK +2%).
*AIRLINES/TOURISM FIRM on the news that hotel prices jumped, tickets to tourist sites sold out, and almost half a billion Chinese people are taking a vacation during the Golden Week holiday. CEA (670 HK +3%) CSA (1055 HK +3.9%) AIR CHINA (753 HK +3.1%) CHINA TRAVEL (308 HK +2.78%) TONGCHENGELONG (780 HK +3%).
BUT CATHAY PAC (293 HK +0.4%) under performed on rumours of large scale layoffs to be announced shortly.
*AUTO MAKERS STRONG News that 530,000 visitors have reportedly visit the 10-day 2020 Beijing Auto Show, pointing to a recovery of the China's auto market. GREATWALL (2333 HK +8.9%), BRILLIANCE (1114 HK +4.3%) GEELY (175 HK +6.1%) DONGFENG (489 HK +4.3%) BAIC MOTOR (1958 HK +7.4%) GAC (2238 HK +3.3%).

CK ASSET (01113.HK) As of yesterday, has sold 874 units under SEA TO SKY and cashed in around $9.27 billion, said William Kwok, Director of Cheung Kong Real Estate. 285 more units will be launched under the Tseung Kwan O residential project and open for sales from Saturday (10 October), added Kwok.
Sophia Chan, Secretary for Food and Health, announced that the prevailing social distancing measures will be stretched through next Thursday (15 October), including the four-person gathering ban, mandatory mask order and restrictions on caterers.
The Land Registry announced that the number of sale and purchase agreements for all building units received for registration in September was 6,581 (+22.1% MoM and +60.9% YoY). The total consideration for sale and purchase agreements in September was $51.3 billion (+12.6% MoM and +41.0% YoY).
China's daily food delivery orders secured by errand runners burgeoned by 151% YoY on average during 1-3 October, Changsha Evening News citing Meituan Waimai's data. Of which, takeaway orders secured by hired queuers ballooned by 419% YoY.
HENDERSON LAND (00012.HK)'s low-density project in Yuen Long South was named "The Hampstead Reach", which will possibly be launched for sale as early as this month, said Thomas Lam, General Manager of Sales (1) Department at Henderson Property Agency. The sales brochure could be made available this week. The project involves 16 three-story houses, measuring 1,772-1,826 sq.ft. each, revealed Lam.
Macau as of 11am today (6 October), reported over 90,000 inbound and outbound passengers across all ports for the National Day Golden Week, cited Radio Macau.
Excellence Commercial Property & Facilities Management Group is soon to unveil its IPO plan. As Reuters' IFR cited people with the knowledge of the matter, the company will introduce nine cornerstone investors, including TENCENT (00700.HK) and JD-SW (09618.HK), with an aggregate investment of US$150 million. The report furthered the Chinese commercial property manager will issue 300 million shares in Hong Kong at offer prices of $9.3-10.68. Raising a maximum amount of $3.204 billion, the company is expected to list on 19 October.
The fourth strategic placing fund for Ant Group - China Universal's closed hybrid fund for the next 18 months - has been sold out as at the night on 5 October, following the sold-out of E Fund, Penghua Fund and Zhong Ou AMC, reported 21st Century Business Herald. The China Universal's fund for Ant Group recorded purchases from over 3 million people, sources with the knowledge of the matter disclosed. Based on the fundraising size of RMB12 billion, each customer ordered RMB4,000 on average, representing the most universal new fund.
China has stepped into the peak home sales season in "Golden September, Silver October" with new project launches, reported CCTV-2. Among over 50 new home projects in Beijing, at least 25 have offered a minimum discount of 22% off during the National Day holiday.
WHO’s Mike Ryan, Executive Director of WHO Health Emergencies Programme, estimated that roughly 10% of the world's population are infected with novel coronavirus. Based on a world population of nearly 7.7 billion, the projection points to around 770 million COVID-19 patients, over 20 times the global caseload of over 35 million right now.
Chief Executive Carrie Lam said this morning (6 October) that the prevailing social distancing measures will be kept for a longer while and thus no further relaxation will be allowed at this juncture. She furthered the HKSAR Government is speeding up the preparation for the return of residents in China to Hong Kong without the need to undergo quarantine.
3 UK intends to dispose of MBNL, Telegraph reported, with Spain-based Towerco Cellnex being a potential purchaser.
TikTok For non-gaming apps, tracked US$130 million of user spending in September, 7.9 times its revenue in the same period last year and topping the global chart, reported Sensor Tower. 89% of its revenue came from China, followed by 6% and 1% from the United States and Turkey.

Not in this mornings report
On the first four days (1-4 October 2020) of the National Day and Mid-autumn Festival holiday, Hong Kong recorded only 928 tourist arrivals, -99.8% yearly, according to the statistics from the Immigration Department.

Six casinos in Macao have established nucleic acid test stations designated for the non-locals, Macao Daily reported. The stations were created around 1 October, where Companhia de Higiene Exame Kuok Kim (Macau) Limitada (國檢(澳門)衛生檢測公司) is responsible for carrying out the tests and results will be uploaded to the health code system, to facilitate services for gamblers. The maximum daily screening capacity of the gambling hub is 29,000 samples, according to Centro Hospitalar Conde de Sao Januario. From 2 October on, roughly 7,000 individuals took the test each day, and the five screening centers are living up to the demands.

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