Oct 8 HSI -50pts, T/O -5% DoD Shorts rise to 20% China re-opens Friday

12 Oct

US Vice Presidential debate had very little impact on Asian trading

HSI -50pts (-0.2%) 24,193 HSCEI -4.8pts (-0.1%) 9,624 T/O HK$87.78bn (-4.8% DoD)

As at 6pm HK time
EUROPE  Market opened higher but saw initial selling as German Trade Balance missed on surging imports; the current account also missed. The rising number of covid cases also a concern with the potential for more social distancing measure -VE for sentiment.  Also caution ahead of the US initial claims data.  Markets trading sideways around yesterday’s closing levels.Data outGERMANY 
Balance of Trade Aug Euro 12.8b vs 19.2b Jul (F/cast was 17.4b) 
Exports sa Aug +2.4% vs +4.7% Jul (Consensus was +1.4%)
Imports sa Aug +5.8% vs +1.1% Jul (Consensus was +1.4%)
Current Account Aug Euro 16.5b vs 21.b Jul Revised (F/cast was 18.2b)

US Futures opened flat but have worked slightly better; Dow +140pts, S&P and NDX positive.  But market likely to open cautiously ahead of the Initial Jobless claims data. There are still hopes of some piecemeal stimulus. Data due today Initial Claims, 4 week Ave Claims, EIA Natural Gas Report, Fed speakers Barkin and Kaplan

CHINA Markets close re-opens Friday

HSI Pre Market Pre Market opened +21pts @ 24,263 vs +20pts ADRs. Handset equipment names were strong ahead of Apples new launch. E-commerce names were initially +VE But saw selling pressure on rumours of action against Tencent & Ant’s pay platforms from the US. Market sold down to 24,050 in the first 20 minutes. It saw small bounce but then sold down further to 24,020 level before trading sideways/ slightly higher into lunch. PM saw the market work slowly higher to finish the day down just 50pts. Casino’s weak on a JPM downgrade worried about a slow recovery rate. E-commerce names recovered after initial weakness. Handset components, Auto and Solar seeing some interest. HSBC and Standard Chartered saw broker downgrade.

PICK Techtronics (669 HK +1.8%) Opened at HK$106 and traded sideways in the morning. Pm saw some initial selling but then worked higher to close at the day high HK$106.80.

SHORT SALES Thursday 20.1 vs 15.9% Wednesday
Top Shorts Henderson Land (12) 39%, Galaxy Ent (27) 38%, China Res Land (1109) 37%, Bank of China (3988) 35%, Wharf REIC (1997) 34%, HK & China Gas (3) 30%, HSBC (5) 30%,Ping An (2318) 29%, CLP (2) 28%, Hang Lung Ppty (101) 28%, Country Garden (2007) 27%, CNOOC (883) 27%, CSPC Pharma (1093) 26%, Hang Seng Bank (11) 26%, Xiaomi -W(1810) 26%, Swire Pac A (19) 25%.

IPO EVEREST MED-B (01952.HK), to be listed tomorrow, opened at $65 in gray market, +18% vs the listing price $55, peaking at $80 once, PhillipMart data showed. The stock last stood at $73.05, up 33% against the listing price, on volume of 4.01 million shares.
GEELY AUTO (00175.HK Sept total sales volume was 126,400 vehicles, +11% YoY and +11% MoM
Sophia Chan, Secretary for Food and Health, saw ballooning local infections but no decline in cases of unknown origin, adding this could be the start of COVID-19 resurgence. Hence, the Government shall stay vigilant provided an invisible transmission chain in the community. The Government is also studying the legal framework of compulsory COVID-19 testing, she furthered.
Centa Valuation Index (Major Banks) (CVI) last printed at 48.05 this week, +2.08 pts weekly.
The index amassed 14.45 pts of increment in four weeks and stayed above the lower end of critical territory of 40 for three weeks, said Centaline Property.The Government plans to increase statutory holidays (commonly known as labor holidays) from 12 days to 17 days in a decade under a gradual and orderly progress, local media citing sources. Subsequently, the number of statutory holidays will be the same as that of public holidays (commonly known as bank holidays).

Regional Markets
Pre market data Current Account beat forecast and rumours that Japan would remove the overseas travel ban for 12 countries next month. The market opened at 23,503 and worked higher to 23,632 at lunch time. PM session opened slightly higher but basically traded sideways to close +1% @ 23,647
Pre market Data Current Account Aug Yen 2101.8b vs 1468.3b (F/cast was 1990b)
Stock Investment by Foreigners 3 Oct Yen 530.9b vs -274.4b revised
Bond Investment by Foreigners Oct Yen -341.1b vs -79.5b revised
Out midday Eco Watchers Survey
Current Sept 49.3 vs 43.9 Aug (F/cast was 45)
Outlook Sept 48.3 vs 42.4 Aug (F/cast was 41)
S KOREA Pre market the Current account beat forecasts and good preliminary Q3 results from Samsung with Operating profit +58% but there are also rising covid cases following last weeks holiday. Market will be closed tomorrow for Hangul Day Kospi opened higher but sold down to 2,384 level (yesterday’s closing level) before bouncing and worked back to close +0.2% @ 2,392
Kosdaq similar pattern opened higher but sold down to 868 around 10:30 am but having found support it then rebounded and traded between 872 and 870 for the rest of the session to close +0.2% @ 872.
TAIWAN Market opened higher following the good export data that came out after market on Wednesday and effective has traded sideways around the 12,850 level to close +1.1% @ 12,887
News in the morning that TSMC has elevated the monthly production capacity of 7nm and 5nm chips, suggesting earlier full-loaded capacity, according to the media. TSMC may lift its CAPEX budget for the third time with an estimated increment of around 5%, setting an all-time high again. It later announced revenue +29.9% YoY to TWD 977.722 bin during the first nine months of 2020. +VE
After market the data out
Inflation Rate Sept -0.58% YoY vs -0.33% Aug (F/cast was -0.2%)
Inflation Rate Sept +0.1% MoM vs +0.18% Aug (F/cast was -0.2%)
Wholesale Prices Sept -8.12% vs -9.09% Aug (F/cast was -8.5%)

After market Foreign Exchange Reserves Sept $453.3b vs 450b Aug (F/cast was 450.3b)
Centre for Health Protection said there were 18 additional COVID-19 cases in Hong Kong today (vs 11 Wednesday) 1 of unknown origin, 14 local infections.

Active Heavyweights
BABA (9988.HK) +0.5%
PING AN (2318.HK) +0.4%
MEITUAN (3690.HK) -0.4%
HKEX (388.HK) +0.2%
CCB (939.HK) +0.2%
AIA (1299.HK) +0.1%
TENCENT (700.HK) unch
HSI & HSCEI Constituents on the move
XIAOMI-W (01810.HK) -3.9%
WHARF REIC (01997.HK) -3.6%
HSMI & HSSI Constituents on the move
TCL ELECTRONICS (01070.HK) +20.6%, hitting new high
XINYI SOLAR (00968.HK) +14.8%, hitting new high
ZHENGTONGAUTO (01728.HK) +12.9%
TOWNGAS CHINA (01083.HK) +11%
GCL-POLY ENERGY (03800.HK) +11%, hitting new high
SHENGYE CAPITAL (06069.HK) +10.8%
BOSIDENG (03998.HK) +10.8%
C TRANSMISSION (00658.HK) +10.5%, hitting new high
PAX GLOBAL (00327.HK) +10.3%
KERRY LOG NET (00636.HK) +9.6%, hitting new high

Market Commentary
*E-COMMERCE SOFT Reported that U.S. officials have stepped up talks in recent weeks about possibly restricting the expansion of Ant Group’s Alipay and Tencent’s WeChat Pay over concerns that the digital payment platforms threaten national security. Whilst not a huge review earner it would affect a lot of merchants.ALIBABA (9988 HK +0.5%) TENCENT (700 HK unch) JD (9618 HK -0.06%) NTES (9999 HK -3%).
*TECH & COMPONENTS MIXED XIAOMI (1810 HK -3.9%) on talk Huawei may sell its Honor smartphone business. If Huawei sells Honor, -VE for Xiaomi as its brands have a similar price point to Xiaomi’s
SMIC (981 HK -1%) as S&P Global Ratings put it on negative credit watch list.
APPLE SUPPLIERS +VE on expectation that APPLE will announced the detail of the new iPhone 12 next week. AAC (2018 HK +2.1%) SUNNY OPT (2382 HK +2.9%) TRULY (732 HK +6.3%) Q TECH (1478 HK +6%).
*CHINA PROPERTY MIXED SHIMAO PROP's (813 HK -1%) Shimao Services and KWG GROUP's (1813 HK +4.4%) spinoff of KWG Living are seeking to pass listing hearings this week to raise US$1b and US$400m respectively, IFR reported.
SUNAC CHINA (1918 HK +0.3%) Sept contracted sales +9.6% YoY to 68.94b yuan.
GREENTOWN CH (3900 HK +8%) following strong Sept sales data.
*HK LANDLORDS WEAK as more Covid cases have been reported in HK, and news that vacant Grade A office space in HK hit a 21-year high of about 7.8m square feet in September, according to CBRE. The real estate consultant expects Grade A office rents in Hong Kong will fall 15% to 20% this year.
CKA (1113 -0.5%) HK SHKP (16 HK -0.8%) NWD (17 HK -0.8%) HENDERSON LAND (12 HK -1%).
*SPORTWEAR MAKERS traded higher amid optimism of sales recovery during the Golden Week Holiday. LI NING (2331 HK +2.1%) XTEP (1368 HK +3.9%) ANTA (2020 HK +2%).
CH DONGXIANG (3818 HK +1%) said it has granted to Shiffon co. Ltd as the licensee an exclusive right to utilize certain "Phenix" trademarks in connection with the design, manufacture, sales and marketing of certain products within Japan and other regions including certain European countries, Korea, Australia and the United States of America.
*ALTERNATIVE ENERGY PROVIDERS STRONG after China stated its carbon neutral goal, as President Xi outlined Tuesday; China aims to be carbon neutral by 2060. GCL-POLY (3800 HK +11%) GOLDWIND (2208 HK +4.9%) C TRANSMISSION (658 HK +10.5%) CH LONGYUAN (916 HK +4.7%) XINYI SOLAR (968 HK +14.8%).

During the first seven days (1-7 October) of National Day Golden Week 2020, Macau recorded 139,300 visitor arrivals, -85.7% YoY. In particular, Chinese visitors accounted for nearly 130,000, -83.6% YoY.
JOY SPREADER (06988.HK) announced unaudited interim results ended 30 June 2020. Total revenue amounted to RMB348 million, +66.2% YoY. Net profit +123.3% to RMB61.40 mn.
AstraZeneca expects to start making profit from its COVID-19 vaccine as early as July 2021, Financial Times citing a memo from the pharma and Brazil's Fiocruz. It said earlier it would not take profit from the vaccine during the epidemic. The memo also showed the drugmaker could declare when it considers the plague to have ended.
MCC unfolded the revised price list for L'AQUATIQUE, a boutique luxury mansion project in Tsuen Wan, involving 70 flats with a maximum discount of 12%. The Chinese property developer said the project has obtained the occupancy permit and certificate of compliance in early March and early September respectively.
BABA-SW (09988.HK)'s Fliggy announced that hotel bookings ballooned by over 50% yearly nationwide during the National Day holiday. Of which, high-star hotel bookings surged by 100%. Hotel bookings for local and surrounding tours grew 80% as well.
The TENCENT (00700.HK) backed Miniso filed for listing with the U.S. Securities and Exchange Commission. The Chinese household goods retailer will issue 30.4 million ADSs at US$16.5-18.5. It aims to raise up to US$502-562 million, with a maximum valuation of US$10.18 billion
State Theatre Building in North Point underwent a mandatory auction today, with an upset price of $4.7776 billion. NEW WORLD DEV (00017.HK), the applicant for the compulsory sale, won the auction at the upset price.
Global extreme poverty is expected to tick up in 2020 for the first time in over 20 years as the disruption of the COVID-19 pandemic compounds the forces of conflict and climate change, which were already slowing poverty reduction progress, the World Bank said in a report. The COVID-19 pandemic is estimated to push an additional 88 million to 115 million people into extreme poverty this year, with the total rising to as many as 150 million by 2021, depending on the severity of the economic contraction, according to the report.
While airlines are getting US$160 billion of government aids, IATA CEO Alexandre de Juniac believed additional long-term government support is necessary to prevent closures or layoffs in the coming months. Equally, IATA has proposed nucleic acid testing (NAT) prior to departure to various governments, WHO and ICAO.
Application for the new batch of flats under Home Ownership Scheme (HOS) 31.6x oversubscribed, was closed last night (7 October). The spokesman of Housing Department said they received about 41,000 paper applications for flats under HOS or HOS Secondary Market to White Form as of 17:00 yesterday and about 189,000 e-applications for HOS flats. The total applications amounted to approximately 230,000, representing an over-subscription of 31.6 times.
HENDERSON LAND (00012.HK)'s building at No. 27E-27F Robinson Road has been approved for a mandatory auction. According to the order granted by the Lands Tribunal, the auction will start at 17:00 on October 29 (Thursday), with an upset price $234 million, JLL announced.

Not in this mornings report

CK ASSET (01113.HK)'s British pub operator Greene King will shut down around 26 outlets due to the COVID-19 pandemic, likely affecting about 800 employees.

PING AN (02318.HK)'s Lufax has lodged a listing application at the New York Stock Exchange with the stock code "LU”. As of 30 June 2020, the online wealth management platform generated RMB7.27 billion in net profit, down 2.8% yearly, according to its prospectus.

HKMA announced that, as USD/HKD triggered the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook a US$355 million selling order to inject HK$2.751 billion into the market. The balance of the banking system of Hong Kong will increase to HK$273.483 billion tomorrow (9 October).

TSE SUI LUEN (00417.HK) PROFT WARNING The Group is expected to record a net loss of not less than HK$40 million for the six months ended 30 September 2020 as compared to the net profit of HK$1.6 million for the six months ended 30 September 2019. Such expected loss is mainly due to the adverse impacts of the COVID-19 pandemic on the Group’s sales performance in all operating regions during the Period.

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