Sept 11 HK WRAP HSI +189pts but T/O sub HK$100bn China Loan data out +VE


15 Sep

HK WRAP HSI +189pts but T/O sub HK$100bn China Loan data out +VE

HSI +189pts (+0.8%) 24,503  HSCEI +69pts (+0.7%) 9,753 T/O HK$96.08bn (-7.5% DoD)  

EUROPE markets opened flat and are trading around those levels. Concerns over UK Brexit plans -VE but UK data was generally better than forecast. German Inflation was inline and Wholesale prices slightly worse.
US Futures opened higher +76pts and rose through the morning to +131pts and continued to slowly rise now +160pts with S&P and NDX +VE too. Data due Inflation Rate, Core Inflation Rate, WASDE Report, Baker Hughes Total Oil Rig Count, Monthly Budget Statement.

INDEXES
CSI 300 Closed +45pts (+1%) @ 4,627 
Opened lowered traded sidewise in choppy trading, spent much of the morning in the green but sold down into lunch at around the opening level. PM opened higher and rallied to 4,600 but failed to bread above. Banks weak ahead of the New Yuan Loans data. But Tech and New Energy saw good interest. Volumes were lighter with investors generally cautious
Shanghai Composite Index +25pts (+0.8%) @ 3,260 T/O Rmb 254.5bn (vs 309.7bn Thursday)
Shenzhen Component Index +200pts, (+1.6%) @ 12,942 T/O Rmb 429.7bn (vs 563.5bn Thursday)
ChiNext Index +53pts (+2.2%) @ 2,536. T/O Rmb 215.6b (vs 302.2b Thursday and the record 402bn on Wednesday)

HSI Pre Market opened +39pts @ 24,352 vs -67pts ADR’s with E commerce names +VE along with Tech Components and worked higher in the first hour with resistance at 24,450. Eased back into lunch but good support from Tech Autos and Macau names. After lunch rallied back to retest the 24,480 resistance, broke through and the worked slowly higher to 24,565 which became resistance after a couple of attempts and then eased lower into the close. Interest in the E Commerce names but light volumes reflect investor caution, especially ahead of the weekend.

PICK
Techtronics (669 HK) 
A long time favourite of mine as readers will know. Today UBS raised its Target Price to HK$120. The stock has alread tested HK$100 and now consolidating but I expect it will retest the HK$100 level shortly and the potential for a break out I think it good.

IPO
MACAU E&M (1408.HK), closed at $2.86,
up $1.86 or 1.86 times against the listing price $1, on volume of 37.67 million shares and turnover of $102 million. Excluding the handling fees, a book gain of $3,720 was reported per board lot of 2,000 shares.
Yum China (9987 HK) listed yesterday closed +1.7% @ HK$397.00 thanks to 2 ramps in the PM session but still below the IPO price.
NongFu Spring (9633 HK) closed -2.5% @ HK$35.00 still well above its IPO price.


SHORT SALES Friday 20.9% vs 20.4% Thursday
Top Shorts
Ping An (2318) 35%, BABA (9988) 35%, Hengan (1044) 33%, HSBC (5) 31%, Petrochina (857) 30%, Sands China (1928) 30%, Bank of China (3988) 25%, ICBC (1398) 24%,

AFTER MARKET NEWS
Chinese and Indian Foreign Ministers declared that both sides should disengage their troops from Himalayan border immediately.
Chinese State Councilor and Foreign Minister Wang Yi, and Indian Foreign Minister Subrahmanyam Jaishankar, talked with each other during a Shanghai Cooperation Organisation (SCO) foreign ministers' meeting in Moscow with an attempt to melt down disputes.
JOY SPREADER (6988.HK), on the second day of IPO, recorded over $80.1 billion margins granted by ten brokers as at 6:30 pm. Based on the fundraising amount of $174 million from the public offering, the IPO was over-subscribed by approximately 459 times.
SHK PPT (16.HK) submitted an amendment proposal at the Town Planning Board for its project in Tung Shing Lane, Nam Sang Wai, Yuen Long for reduction in development plot ratio, according to a filing at the authority. As a result, the project would build 22% less flats to 1,518 flats from 1,955 flats with an aim to increase the approval odds.
SUNNY OPTICAL (2382.HK) announced that the shipment volume of handset lens sets in August +22.3% YoY and +19.4% MoM to 162 million units, which was mainly due to the reduced impact from overseas epidemic.
China boasts over 80 million 5G users with a firmer foundation for digital industrialization, said Li Ying from Ministry of Industry and Information Technology (MIIT) at the World Digital Economy Conference 2020.
CATHAY PAC AIR (293.HK) CEO Augustus Tang Kin Wing restated in an internal letter that measures optimizing business scale will be submitted to the board of directors soon, so as to align with Hong Kong's aviation sector demand. It will propose its business restructuring to the board as soon as next month, comprising of a manpower resources review, RTHK cited sources.
CHINA RES LAND (1109.HK) announced that the Group achieved gross contracted sales of RMB27.22 billion in August, +24.2% YoY. Also that that in August 2020, the Group acquired 6 land parcels in Changsha, Chongqing, Xiamen, Guangzhou and Haikou with total gross floor area of 1.3189 million square meters. The attributable land premium payable by the Group of the land acquisition amounted to RMB12.19 billion.
The total gross value of construction works performed by main contractors in the second quarter of 2020 decreased by 0.5% in nominal terms over a year earlier to $55.9 billion, according to the provisional results of the Quarterly Survey of Construction Output released today (September 11) by the Census and Statistics Department (C&SD). After discounting the effect of price changes, the provisional results showed that the total gross value of construction works performed by main contractors decreased by 0.6% in real terms over the same period.
PICC P&C (2328.HK) announced that the original insurance premium income reached RMB307.618 billion in the first eight months of 2020, +3.9% yearly.
PICC GROUP (1339.HK) announced that the aggregate premiums income as derived from PICC P&C, PICC Health and PICC Life for the period from 1 January 2020 to 31 August 2020 reached RMB410.38 billion, +3.76% yearly.
NCI (1336.HK) accumulated gross premium income for the period between 1 January 2020 and 31 August 2020 amounted to RMB116.6 billion, +28.2% yearly.
CHINA LIFE (2628.HK) accumulated premium income for the period from 1 January 2020 to 31 August 2020 amounted to RMB492.8 billion, +11.19% yearly.
MEITUAN-W (3690.HK) proposed simplification of the company name from “Meituan Dianping” to “Meituan”. The company considered that the simplification of its name will help build a unified brand image externally.
TENCENT (700.HK)'s Tencent Cloud launched Project Noah, which will recruit over 50 key partners for core development. More than 100 oriented training lessons will be offered each year to foster the domestic data bank ecological development.
Centa-City Leading Index (CCL) last printed at 177.85, +0.24% weekly.
CCL Mass added 0.29% weekly to 180.74;
CCL (small-and-medium units) went up 0.29% weekly to 178.30;
CCL (large units) faded 0.02% weekly to 175.57.
Three major indices rebounded this week, said Centaline Property, predicting home prices to bounce back soon, which may be around Mid-Autumn Festival.
GROUND INTL DEV (989.HK) announced that the SFC has recently completed an enquiry into the shareholding of the Company. Its findings suggested that as at 17 August 2020, 22 shareholders held an aggregate of approximately 1.032 billion Shares, representing 17.28% of the issued Shares. Such shareholding, together with the 72.86% of the issued Shares held by the controlling shareholder and a substantial shareholder of the Company, represented 90.14% of the issued Shares as at 17 August 2020. Therefore, only 9.86% of the issued Shares were held by other shareholders. The SFC said in view of the high concentration of shareholding in a small number of shareholders, shareholders and prospective investors should be aware that the price of the Shares could fluctuate substantially even with a small number of shares traded.


Regional Markets
JAPAN
opened lower but the pre Market data BSI Large Manufacturing and PPI data beat forecasts. The market worked higher through the day peaking around 23,400 shortly before the close +0.7%.
S KOREA Kosdaq opened lower but initial rallied into the green only to sell down into the red and day low/support (878) before trading sideways in a tight range. The around 1pm started to rally with bargain hunting and closed +0.5% Kospi followed a similar pattern and closed flat.
TAIWAN opened higher but failed to hold above yesterday close in choppy trading. Around 10:45am tried to break above again but failed and sold down to 12,620 level before finding support, then traded sideways for an hour having retested the support worked slightly higher to close -0.1% Good earnings limiting the downside.

CONNECT FLOWS (down DoD)
Shanghai
Northbound Rmb 34,871m Sell 17,977m : 16,895m Buy
Southbound HK$ 8,167m Sell 3,803m : 4,364m Buy

Shenzhen
Northbound Rmb 49,884m Sell 23,756m : 26,129m Buy
Southbound HK$ 8,288m Sell 3,241m : 5,047m Buy

DATA
CHINA After HK close

New Yuan loans Aug CNY 1289b vs 992.7b Jul (Consensus 1220b, F/cast was 1100b)
Outstanding Loan Growth Aug 13% YoY vs 13% Jul (F/cast was 12.9%
Total Social Financing Aug CNY 3580b vs 1690b Jul (F/cast was 2600b)
M2 Money Supply Aug 10.4% YoY vs 10.7% Jul (F/cast was 10.7%)
FDI (YTD) Aug +2.6% vs +0.5% Jul (F/cast was +1.2%)
New loans show that the economy continues to recover.
Household loans (mainly mortgages) rose to CNY 841.5 billion from CNY 757.8 billion in July and corporate loans surged to CNY 579.7 billion from CNY 264.5 billion.
Outstanding yuan loans grew 13 percent from a year earlier, the same as in July and in line with forecasts.
Total social financing, a broad measure of credit and liquidity in the economy, jumped to CNY 3.58 trillion, the highest since March.
But the broad M2 money supply went up at a slower 10.4 percent year-on-year, below 10.7 percent in July and forecasts of 10.7 percent.

The PBOC announced that RMB deposits increased RMB1.94 tn in August, and foreign currency deposits rose USD25.8 billion. Also that RMB settlement of cross-border trade transactions reached RMB538.5 billion in August. Plus that RMB settlement of direct investments reached RMB293.8 billion.

HONG KONG
Centre for Health Protection said there were 12 additional COVID-19 cases
in Hong Kong today; (vs 12 Thursday). 2 have unknown origin.

Active Heavyweights
MEITUAN (3690.HK) +4.2%
TENCENT (700.HK) +2%
HKEX (388.HK) +1.5%
BABA (9988.HK) +1.3%
AIA (1299.HK) +0.6%
CCB (939.HK) -0.6%
PING AN (2318.HK) +0.4%

HSI & HSCEI Constituents on the move
SANDS CHINA LTD (1928.HK) +4.5%
XIAOMI-W (1810.HK) +3.6%
WUXI BIO (2269.HK) +3.5%
SHENZHOU INTL (2313.HK) +3.3%
TECHTRONIC IND (669.HK) +3.2%
GALAXY ENT (27.HK) +.2%

HSMI & HSSI Constituents on the move
HENGTEN NET (136.HK) +47.6%
SHENGYE CAP-500 (6069.HK) -22.8%
YADEA (1585.HK) +11.4%, hitting new high
JS GLOBAL LIFE (1691.HK) +9.2%, hitting new high
HUADIAN FUXIN (816.HK) +0.4%, hitting new high

Market Commentary
*CHINESE BANKS WEAK
ahead of lending data which came out after market and was better than F/castsICBC (1398 HK -0.5%), CCB (939 HK -0.4%) CMB (3968 HK -0.5%) ABC (1288 HK -0.8%).
*E-COMMERCE PLATFORMS FIRM AFTER recent consolidation. Reported that TikTok unlikely to make the Sept 20th deadline set by the US.for the sale of its US operations. Also said TikTok plans to spend billions in Singapore to make the country a major Asia hub as part of its global expansion. TENCENT (700 HK +1.9%) to invest 10b yuan in software services and has launched an embedded search function for the mainland version of WeChat, a month after it revealed plans to privatize mainland web search firm Sogou. BABA (9988 HK +1.3%) MEITUAN (3690 HK +3.9%) CH LIT (772 HK +1.1%).
*SEMICONDUCTOR FIRM Important R&D achievement in semiconductor technology in China is expected to be released at the Zhonguancun Forum during Sept 17- 20. HUA HONG SEMI (1347 HK +5.4%) SMIC (981 HK +6.8%).
*HK PROPERTY FLAT after SHKP (16 HK unch) reported FY underlying profit -9.4% YoY to HK$29.37b, and net profit -47.63% for the year to HK$23.52b. A final dividend of HK$3.7 per share has been proposed. CKA (1113 HK -0.5%) HENDERSON LAND (12 HK +0.3%) NWD (17 HK -0.1%) KERRY(683 HK +0.7%).
*TELCOS FIRM after CH TEL(728 HK unch) and CH UNICOM (762 HK +1%) said they saved more than 60b yuan after jointly building a 5G network a year ago, said chairman of China Unicom. The two companies together opened 150,000 5G base stations in the first half of this year, CH MOBILE (941 HK.+0.6%).
*SPORTWEAR MAKERS MIXED after Aug operating data. YUE YUEN's (551 HK +0.8%) Aug consolidated operating income -25.5% YoY to 626m yuan. POU SHENG's (3813 HK unch) net consolidated operating income -7.2% YoY to 2.07b yuan. 361 DEGREES (1361 HK -1.9%) LI NING (2331 HK +2.2%) ANTA (2020 HK +1.5%).
*PHARMA FIRM on vaccine optimism. Mainland news reported that SINOPHARM's (1099 HK+0.9%) two COVID-19 vaccine have been put into emergency use and over 100k people have taken shots, among which many have travelled abroad to high risky countries, and not one case of infection or side effects has been reported. CANSINO (6185 HK +6%) INNOVENT (1801 HK +2.9%) FOSUN PHARM (2196 HK +1.1%) GENSCRIPT (1548 HK +2.5%).

MARKET HOURS NEWS
The 67th Macau Grand Prix will be held between 19-22 November,
with tickets available from 21 September. The ticket price is MOP50 for the first two practice days, and MOP400-1,000 for the latter two race days. There are 17 ticket outlets across Macau, Hong Kong and Mainland China.
DIT GROUP (726.HK) announced that on 9 September, its parent company Drawin Group inked a strategic cooperation deal with JD-SW (9618.HK) Both parties will explore business partnership in smart procurement, smart logistics, big data and JD Cloud & AI.
HENGTEN NET (136.HK) has noted the fluctuations in the price of its shares. The Company announced that it is in preliminary discussion regarding a potential acquisition. If the Potential Acquisition materialises, it may constitute a Chapter 14 transaction of the Company under the Listing Rules.
Taiwan Cooperative Financial Holding Co,. Ltd. (TCFHC) Chairman Paul Lei told Taiwan media that the company is going to cease its wealth management branch in Hong Kong and relocate related personnel back to Taiwan, with an aim to alleviate exposure to Hong Kong and China and scale back the business scope in both places. Lei said it is quite worrying as to how National Security Law is going to affect the financial position of Hong Kong in future.
Hackers from Russia, China and Iran are mounting cyber attacks against organizations tied to the US presidential election, according to Microsoft. Russian government hackers have attacked at least 200 bodies linked to the US election in recent weeks, including political consultants for both Republicans and Democrats as well as think tanks.
HSBC announced that normal services will be available again at all retail banking branches and HSBC Business Centres, effective 14 September. Services at HSBC Premier Centre (Hong Kong International Airport) and International Banking Centre will remain suspended until further notice.
ByteDance plans to invest billions of US dollars in Singapore in the coming three years and establish a local data center, for the operation of TikTok and Lark, reported Chinese media.
Haier Smart Home (600690.SH) proposed privatization of HAIER ELEC (1169.HK) at premium, expecting to list the H-shares of Haier Smart Home on Main Board by way of introduction. Affected by the pandemic, Haier Smart Home reported revenue and profit of RMB95.7 billion and RMB3.6 billion for the six months ended 30 June 2020, down 1.6% and 41.6% year-on-year.
The Singapore Airlines (SIA) Group plans to slash a total of 4,300 positions from its three airlines (Singapore Airlines, SilkAir and Scoot) amid a long road to recovery across the worldwide aviation sector. After taking into account a recruitment freeze, natural attrition and the take-up of voluntary departure schemes, the potential number of staff impacted will be reduced to about 2,400 in Singapore and in overseas stations, the Straits Times cited the airline's statement.
WH GROUP (288.HK)'s Smithfield Foods was fined US$13,500 by American regulators for a COVID-19 outbreak, reported Bloomberg. The company found almost 1,300 workers at Smithfield’s Sioux Falls, South Dakota, plant were tested positive to the coronavirus, with 43 hospitalized and four dead. The US authority said the fine was the maximum allowed by law.
MEITUAN-W (03690.HK) In response to the reported squeezing algorithm for food takeaway riders,
it said on its WeChat account that the company should be accountable for the problem, and thus raised five initiatives to improve the delivery system. The company said the system will be optimized to allow eight minutes of flexible delivery time to deliverymen, while maintaining balance with on-time delivery. Under extreme weather condition, the system will allow more delivery time for takeaway riders, or even cut off orders.
CHINA COMM CONS (1800.HK) announced that it had entered into a shareholder agreement with China Urban and Rural (being a subsidiary of its parent CCCG) and Other Project Partners for the formation of a project company. The registered capital of the project company is RMB2.361 billion, of which RMB1.602 billion will be contributed by the Company.
LOGAN GROUP (3380.HK)'s property unit has been recently closely in touch with investment banks for planning of Hong Kong listing, according to mainland media.
CHINA JINMAO (817.HK)'s privatization of JINMAO HOTEL-SS (6139.HK) was approved by the latter's unitholders. Shares of JINMAO HOTEL-SS are expected to be delisted on 5 October.
Sinopharm Doses Chinese People with COVID-19 Vaccines, No Reported Infection
Hundreds of thousands of people have been dosed with two of Sinopharm Group's inactivated COVID-19 vaccines under emergency use, said the group's general counsel Zhou Song. None of the subjects showed significant adverse effects or infection, Zhou furthered.
Chinese Foreign Minister Wang Yi and Indian External Affairs Minister Subrahmanyam Jaishankar held a bilateral meeting in Moscow yesterday (10th), reported Xinhua. Both sides reached consensus on five points, including not allowing divides to escalate to disputes.
At a seminar held in Moscow yesterday, Chinese Foreign Minister Wang Yi said the U.S. is the worst violator of the current international order, and the world should put concerted efforts to prevent super powers from dragging the world back to the "era of jungle".

PRE MARKET NEWS
Not in this mornings report
MACAU E&M (1408.HK) on debut, opened at $2.1, 1.1 times higher against the listing price of $1, on volume of 8.4 million shares in pre-market orders.
Fraser Institute, a Canadian think tank, rated Hong Kong as the freest economy in its Economic Freedom of the World: 2020 Annual Report. Yet, it warned the Chinese interference will affect the ranking of Hong Kong in future. The report cited concerns on Chinese interference, including suppression on protests which sabotaged Hong Kong's rule of law and escalated the insecurity of citizens to their property right. As the Annual Report was based on 2018's data, the lagging factor was expected to drag down Hong Kong's rating in future.
MTR CORPORATION (66.HK) announced that train services will be provided during normal service hours amid Mid-Autumn Festival (1 October 2020). No overnight train services will be available.
Nine of CATHAY PAC AIR (293.HK)'s major business units will not apply for the second round of Employment Support Scheme, implying a possible sacking during the epidemic, SCMP citing sources. The layoff is expected to take place as soon as next month. Staff cost accounted for a quarter of the airline's operating expenses in the first half of year.
STANCHART (2888.HK) announced that it will update its organisation structure as part of the ongoing execution of its refreshed strategy effective 1 January 2021. The changes are designed to grow the Group’s affluent and retail customer-facing businesses and more effectively deliver its unique international network. This will create a leaner organisation. The business reshuffle will lead to massive layoff, mainly involving positions related to emerging markets, as Bloomberg learnt from inside sources.
ByteDance is unlikely to sell its TikTok US unit before the 15 September's deadline because the deal has become complicated since China soured the restriction of technology export, Bloomberg cited people with the knowledge of the matter. Yet, US President Donald Trump refused to extend the deadline. Trump told reporters Thursday before boarding the presidential aircraft for a campaign trip to Michigan that the US government will either close up TikTok in the country for security reasons, or it will be sold, and there will be no extension of the TikTok deadline.
Chinese Vice Premier Liu He held a China-Europe high-level digital dialogue with European Commission Executive Vice-President Margrethe Vestager through video-conference, reported Xinhua. Both sides aimed to bolster cooperation in the digital area.
BONJOUR HOLD (653.HK) announced that, in order to capitalise on the opportunities from the rapid growth of e-commerce in Asia market, the Group has invested in Evolut Holdings Pte. Ltd., a social business software start-up incorporated in Singapore.
SH ELECTRIC (2727.HK) announced that it had on 10 September repurchased 16.348 million shares, involving roughly $37.33 million.
ZTE (763.HK) announced to acquire, through its wholly-owned subsidiary Renxing Technology, 24% equity interests in ZTE Microelectronics held by IC Fund. The estimated transaction price is RMB3.315 billion.
KWAN ON HLDGS (1559.HK) announced that substantial shareholder Sino Coronet Group acquired 22.22% stakes in the Company from Splendid Horizon and Fortune Elite at a total consideration of HK$74.8 million. After completion, shareholding of Sino Coronet Group and parties acting in concert with it rose from 15.66% to 37.88%, incurring an obligation to make a mandatory general offer. The Company applied for a trading resumption with effect from Friday (11 September).
CARNIVAL GROUP (996.HK) entered into the MOU with a wholly-owned subsidiary of a state-owned enterprise under the State-owned Assets Supervision and Administration Commission of the State Council. Pursuant to which, the SOE may subscribe for the Company's shares, representing no more than 25% of the issued share capital of the Company. It is intended that the net proceeds from the Proposed Subscription shall be used for general working capital of the Group.
YUE YUEN IND (551.HK) announced that the net consolidated operating revenue of the Company for August was USD626 million, -25.5% yearly.

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