Oct 7HK WRAP HSI +262pts, Shorts drop to 16%

12 Oct

Oct 7HK WRAP HSI +262pts,  Shorts drop to 16%

HSI +262pts (+1.1%) 24,243  HSCEI +93pts (+1%) 9,628 T/O HK$92.17bn (+6.2% DoD) 

As at 5:30pm HK time
Expect open around flat with caution over Trump’s action to halt the next  stimulus package until after the election,  rising covid cases and good earnings.Tesco +3% after an upbeat earnings report, Covestro +3.8% and Ambu +3.8% to lead the Stoxx 600. But Nexi -5% after major shareholder Mercury discounted a 13.4% stake in the company, just a day after Nexi announced a tie-up with rival SIA.Data German Industrial Production fell and missed F/cast badly,  French Trade Balance and Current Account missed but UK Halifax House Price Index better than F/cast.

US Futures opened Dow -130pts S&P and NDX -0.5% but gradually rebounded and turned positive during Asian trading and are now Dow +126pts and the S&P and NDX also positive.
FAANG’s may see some pressure today after the House Antitrust Subcommittee determined Facebook wields monopoly powers in social network and has maintained its position by acquiring, copying or killing its competitors. It also addresses antitrust concerns regarding Amazon, Apple, Alphabet, recommends that Congress review a series of potential remedies. This includes “structural separation,” which could require the companies to split parts of their businesses. -VE
Data due today MBA Mortgage Applications & 30yr Mortgage Rate, EIA Oil report, FOMC minutes, Fed Speakers Barkin, Williams twice, Kashkari and Evans.

CHINA Markets close until Friday

HSI Pre Market Market opened at 24,000 +19pts vs -24pts ADR’s @ 23,956 with E commerce names and Financials +VE. HSI initially sold down to 23,905 before bouncing back to 24,190 but unable to break higher; retrenched to 24,100 and traded sideways. At lunch +0.5% @ 24,092. Pre market HK PMI shows signs of improvement but missed forecasts (more detail below). PM saw the market tick slightly higher but then trade sideways around the 24,200 level with an uptick into the close. Main driver was Alibaba on the interest in ANT’s IPO along with Tencent and AIA. Chinese Developers and handset makers +VE but Chinese Financials weak; talk of them tightening up on lending too the developers.

IPO JHBP-B (06998.HK), debut closed +16% vs listing price of $24. Stock spiked initially to 31.90 but has trended lower since to lower than the grey price.

Techtronics (669 HK -0.2%) 
Opened at HK$104 and traded just below yesterday’s level all day. Difficult to suggest chasing here. But certainly accumulate below HK$100.

SHORT SALES Wednesday 15.9% vs 21.3% Tuesday
Top Shorts
CKI (1038) 45%, Shenzhou Int (2313) 35%, Country Garden (2007) 31%, CITIC (267) 28%, Bank of China (3988) 27%, Mengniu Dairy (2319) 25%, HSBC (5) 25%

BRIGHT SMART (01428.HK) Positive Profit Alert
that the Group’s unaudited consolidated profit before tax for the six-month period from 1 April 2020 to 30 September 2020 was HK$402 million, a new high for the same period after listing of the Company. As compared with the unaudited consolidated profit before tax for the corresponding period last year, it represented a substantial increase of approximately 70%.
NEW WORLD DEV (00017.HK) announced that the price list of the Pavilia Farm I will be issued on Thursday or Friday, when show flats will be available. There will be further talks with MTR CORPORATION (00066.HK) about the sales schedule of the residential project atop Tai Wai Station, which may be completed this month.
EVERGRANDE (03333.HK) Following months of reducing wagers, hedge funds and other short-sellers mounted short attacks on Evergrande last week, nearly doubling their short interest in the Chinese developer last Tuesday (29 September), reported Bloomberg. However, EVERGRANDE's share price jumped 19% the day after, given abating market concerns over a cash crunch.

Regional Markets
Nikkei opened lower in line with the futures but worked higher in the morning session, rising to 23,400 (just short of Tuesday’s closing level (23,433)), which was tested a couple of times before easing back into lunch. PM opened flat and traded sideways but rallied in the last 30 mins but saw resistance at yesterday’s closing price; Closed -0.1% @ 23,423
Japan Data out pre market Foreign Exchange Reserves Sept $1389.8b vs 1398.5b Aug
Data due out @ 1pm HK time Prelims
Coincident Index Aug 79.4 vs 78.3 Jul (F/cast was 79)
Leading Economic Index Aug 88.8 vs 86.7 Jul (F/cast was 88)
Tokyo today confirmed 142 new covid cases, a slight decrease from yesterday's 177.
Kospi opened lower following the US markets, initial ticked slightly higher but sold down to the opening level but then worked higher from around 9:40am to 2,374 level. Then traded sideways before retesting yesterday’s closing level but then worked higher for the rest of the PM session to close +0.9% @ 2,387
Kosdaq opened lower but quickly gapped back above yesterday’s closing level and worked higher to 869 level. Then sold down to test the support at yesterday’s closing level before working better for the afternoon to close +0.8% @ 870
S Korean Data out pre market Foreign Exchange Reserves Sept $420.55b vs 418.95b Aug
TAIWAN Opened at the lows but worked back to yesterday’s closing level by 10:15am and then traded sideways around that level for an hour and now working higher to 12,774 level before easing back to close +0.3% @ 12,746
After market Balance of Trade Sept $7.14b vs 6.47b Aug (F/cast was +5.6b)
Exports Sept +9.4% vs +8.3% Aug (Consensus was +6.6%)
Imports Sept -5.4% vs +8.5% Aug (Consensus was +3%)
Foreign Exchange Reserves Sept $499.6b vs 498.17b Aug (F/cast was 499n)

End-Sep Forex Reserves Dive to US$3.1425T, vs Forecast US$3.157T

HK Data Pre Market PMI Sept 47.7 vs 44.0 Aug (F/cast was 49)
The highest reading since June, with output dropping the least in 3 months. New orders contracted at the softest pace since June, partially linked to a continued decline in export sales, including from mainland China. The decrease in input buying was much slower than in the previous two months and was modest. Employment grew the most in 6-1/2 years, amid a further depletion of backlogs. Supply chains remained under pressure as limited freight capacity reportedly contributed to delivery delays. On the price front, input prices stabilized, with paid prices for inputs and wage costs broadly unchanged. Output charges fell further, though at the slowest rate since July 2019. Sentiment remained negative, but the degree of pessimism was the least in over a year.

Centre for Health Protection said there were 11 additional COVID-19 cases in Hong Kong today (vs 8 Tuesday) 7 of unknown origin

Active Heavyweights
MEITUAN (3690.HK) +3.8%
BABA (9988.HK) +2.9%
TENCENT (700.HK) +1.4%
AIA (1299.HK) +1.4%
CCB (939.HK) +0.6
HKEX (388.HK) +0.5%
PING AN (2318.HK) -0.2%

HSI & HSCEI Constituents on the move
SUNNY OPTICAL (02382.HK) +5.1%
AAC TECH (02018.HK) +3.3%
COUNTRY GARDEN (02007.HK) +3.1%

HSMI & HSSI Constituents on the move
IDREAMSKY (01119.HK) -16.4%
GREENTOWN CHINA (03900.HK) +12.1%, hitting new high
XINYI ENERGY (03868.HK) +4.1%, hitting new high
HOPSON DEV HOLD (00754.HK) +4%, hitting new high
C TRANSMISSION (00658.HK) +0.3%, hitting new high

Market Commentary
despite initial weakness on the Trump news. Helped by the advancing Hurricane Delta, (Cat 4) headed toward oil and gas platforms in the U.S. Gulf. China's oil imports rose by 347,000 barrels a day to 11.5 million in September, OilX said. It also noted that the number of loadings heading to China is now back in line with historical levels. CNOOC (883 HK +1.7%) PETROCHINA (857 HK +0.44%) SINOPEC (386 HK +0.6%).
*E-COMMERCE FIRM ahead of ANT and JD HEALTH listing plans. Singapore's GIC plans to invest more than US$1b in ALIBABA's (9988 HK +2.9%) affiliate ANT GROUP's mega IPO; JD (9618 HK +2.3%) TENCENT (700 HK +1.2%).
MEITUAN (3690 HK +3.7%) as demand for food deliveries at tourist hot spots picked up strong during the week-long holiday.
*TECH & COMPONENTS FIRM on news that APPLE scheduled a media event for Oct 13 where it is expected to unveil one or more new iPhones which use the ultrafast 5G wireless technology. The event comes a month after Apple disappointed some fans with
a September event which unveiled new service bundles but no new smartphone.
AAC TECH (2018 HK +3.2%) SUNNY (2382 HK +4.9%) TONGDA (698 HK +4.7%) TRULY (732 HK +3.2%).
*HK PROPERTY FIRM as the number of HK residential home deals rose more than 15% in September with a total worth of HK$43.4b, said the Land Registry showed. The number of agreements was +15.3% MoM, or +45.7% YoY. The value of the agreements +8% compared to a previous month and 41% compared to a previous year.
CK ASSET (1113 HK +1.4%) will launch the 5th batch of flats at Sea to Sky in Tseung Kwan O this Saturday, offering 285 units at an average price of HK$17,441 per sq ft after discounts.
HENDERSON LAND (12 HK +0.8%) to offer 16 luxury houses at The Hampstead Reach as soon as this month.
NWD (17 HK +2.7%) SHKP (16 HK +0.9%) SINO (83 HK +1.7%).
*CHINA PROPERTY FIRM on Sept sales data.
TIMES CHINA (1233 HK +1.6%) Sept contracted sales +37.51% YoY to 10.34b yuan.
GREENTOWN CHINA (3900 HK +11%) Sept contracted sales +69% YoY to 20.1b yuan.
SHIMAO GROUP's (813 HK +0.3%) property mgmt arm Shimao Services, will conduct a global offering comprising the HK public offering and the international offering (including the preferential offering), as part of the company’s spinoff plan.
KWG (1813 HK -7%) on this ex-net day for the proposed spin-off of KWG LIVING.
*PHARMA MIXED as JHBP (CY) (6998.HK), also know as Genor Biopharm, saw its shares +16% on debut but below the opening level and grey price.
Vaccine names traded in different directions amid intensifying competition among global vaccine makers. CASINO (6185 HK -1.4%) INNOVENT(1801 HK -1.9%) SINOPHARM (1099 HK +1%) FOSUN PHARM (2196 HK +2.2%).
*MACAU WEAK after data showed Macau's Golden Week visitors from China -77.2% from Oct 1 to Oct 6. The stocks are trading at lows and analysts are increasingly bearish which makes me think its time to take a closer look.
SJM (880 HK -0.8%) SANDS CH (1928 HK -0.5%) GALAXY ENT (27 HK +1.6%) WYNN (1128 HK -0.3%).

USD/ CNH once surged 236 bps to surpass 6.73, peaking at an over 16-month high of 6.7227.
S&P Global Ratings put SMIC (00981.HK)'s long-term issuer credit rating (BBB-) on its Negative Watch List, saying it will revisit its decision after better understanding the possible repercussion from the US ban on the company. SMIC was under escalating supply chain risks as it was stroke by the US Export Administration Regulations, whilst the scope of restrictions and the magnitude of the impact also remained uncertain, the report said.
CHINA OVERSEAS (00688.HK)'s The Regent in Tai Po has sold 1,473 flats so far, representing over 90% of the portfolio, cashing in over $12.4 billion. The Regent consists of 17 towers, offering 1,620 units. The club and the greenery measure about 240,000 sq.ft.
Deliveroo during the peak of coronavirus pandemic in April-June, created roughly 48,000 posts in the local delivery industry, said Deliveroo citing Capital Economics' research report. Based on the turnover of its restaurant partners, the delivery service generated $8 billion in revenue.
KWG GROUP (01813.HK) announced that in relation to the proposed spin-off and separate listing of KWG Living Group on the Main Board, the basis of the Assured Entitlement in the Preferential Offering is one Reserved Share for every integral multiple of 45 Shares held by the Qualifying Shareholders.
Macau registered the total visitor arrivals of 120,170 for the first six days of Chinese National Day holiday, -86.6% YoY; among which Mainland tourists accounted for 112,400, -84.8%.
MEITUAN-W (03690.HK)'s food delivery orders shot up 200% YoY in tourist hot spots during 1-5 October, according to Meituan Waimai's data.
The UK reported 14,542 additional COVID-19 cases in one day, taking the tally to 530,113. France confirmed 10,489 new cases, with a caseload of 634,763. Germany saw 2,828 more infections, brining the total to 306,086. Additionally, many European countries are facing remdesivir shortages.
Games on console were expected to manifest revenues of US$45.2 billion this year, as Newzoo said in its survey report. In September, the best performer went to Fortnite, taking the victory royale on PlayStation and Xbox. During the month, the number of Fortnite players hit 29.7 million, 86% of which were from PlayStation. Call of Duty: Modern Warfare came as second with 19.9 million monthly active users, 44% of which were from Xbox.
Trump earlier ordered to halt talks with Democrats regarding the epidemic bailout, he tweeted to the House Speaker Nancy Pelosi, arguing if he sends a Stand Alone Bill for Stimulus Checks, each American will then get US$1,200 immediately. He doubted Pelosi of not listening his proposal
S&P Global expected the coronavirus crisis to double company default rates across the U.S. and Europe over the coming nine months, Reuters reported. The ratings agency projected the U.S. corporate default rate to rise from 6.2% to 12.5%, and Europe’s from 3.8% to 8.5%.

Not in this mornings report
U.S. District Judge Carl Nichols in Washington who issued the preliminary injunction to deter the Trump administration from ordering TikTok's removal from app stores. Nichols will hold a 4th November hearing on the case, meaning the short video app will not be deshelved before the U.S. presidential election.
CKH HOLDINGS (00001.HK)'s PARKnSHOP announced that it had already delivered the Cash Food Coupons to 27 NGO Partners yesterday and all food coupons valued at over HK$40.9 million will be distributed to 204,500 beneficiaries starting from later this week till end-October, in a bid to help the underprivileged including the low-income families, elderly and disabled persons. The 27 NGO partners expect to contact their active and eligible service users and distribute the coupons to them, and there is no need to register or line up for the programme. NGO partners evaluate and select beneficiaries based on the criteria of : families receiving School Textbook Assistance/Student Travel Subsidy, Comprehensive Social Security Assistance, recipients of Disability Allowance and Old Age Living Allowance.
HKTV (01137.HK) announced that the GMV on order intake in September rallied 105.2% YoY but was - 10.8% MoM, to $478 million. The average GMV on order intake surged 103.8% yearly, or reduced 8.1% monthly, to $15.9 million.
ASIA ORIENT (00214.HK), ASIA STANDARD (00129.HK) and ASIA STD HOTEL (00292.HK)  jointly announced that they had acquired EVERGRANDE (03333.HK)   notes in an aggregate notional amount of US$41 million on the open market at an aggregate consideration of US$36.97 million (equivalent to approximately HK$288 million) between 30 September and 5 October.

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