Sept 29 HK WRAP -200pts T/O -8% DoD, Shorts 21%


02 Oct

Sept 29 HK WRAP -200pts T/O -8% DoD, Shorts 21%

HSI -201pts (-0.9%) 23,276  HSCEI -102pts (-1.1%) 9,282 T/O HK$85.88bn (-8% DoD)  

As at 5:45pm HK time
EUROPE markets opened lower, DAX and CAC traded sideways but the FTSE is falling on talk that a Brexit deal is still some way off. Covid cases a concern with over 1m deaths now and US stimulus negotiations.
DATA DUE EUROZONE Consumer Confidence, Sentiment data (Economic, Industrial and Services), Consumer Inflation Expectations. GERMANY Inflation Rate.
US Futures opened Dow +50pts with S&P +0.1% and NDX flat but fell back during the day to currently be indicating -44pts with S&P and NDX -VE too. Data due Goods Trade Balance, Wholesale Inventories, Redbook, Case Schiller Home Prices, Consumer Confidence, API Crude Oil Stock Change. First presidential debate.

INDEXES
CSI 300 Closed +10pts (+0.2%) @ 4,592 
Opened higher and traded in a tight range (4,617 - 4,586) and closed towards the lower end of the range. Tech companies rallied after a US federal judge blocked the Trump administration's proposed ban on TikTok, saying in an opinion unsealed Monday that owner ByteDance would succeed in proving the US Govt exceeded its legal authority under the emergency-powers law it invoked in announcing the ban. Leading the gains were military, chipmakers, 5G. Laggards were banks and real estates (As Govt tells banks to reduce property loans) and medicine plays.

Shanghai Composite Index +7pts (+0.2%) @ 3,224
Shenzhen Component Index +137pts, (1.1%) @ 12,901
ChiNext Index +43pts (+1.5%) @ 2,942


HSI Pre Market Opened +108pts @ 23,584 vs +2pts ADR’s @ 23,233 with E Commerce stocks strong. But trended lower though the morning to the 23,400 level. PM opened slightly higher, just below yesterday’s closing level but trended lower through the PM and closed just off the day lows having tick 24pts lower in the closing auction
Sentiment remains cautious ahead of China’s Golden Week as US lawmakers still cannot agree a new stimulus package. We also get the first US Presidential Debate as Asia opens tomorrow.
Futures expiry explains some of the spiky trading today. T/O light a Southbound Connect flows suspended.


IPO
ZTO EXPRESS-SW (02057.HK), debut closed at $238, up $20 or +9.2%
against the listing price of $218, on volume of 4.25 million shares and turnover of $1.01 billion.
Excluding the handling fees, a book gain of $1,000 was reported per board lot of 50 shares.

PICK
Techtronics (669 HK) opened above HK$100
and tested the support in early trades and then rallied to HK$101.50 as shorts were squeezed. Tested there a couple of times but became resistance and then trended lower back to support level at HK$100. +VE report out on how people are spending more on their homes during covid. Accumulate if it drops below HK$100.

SHORT SALES Tuesday 21.4% vs 19.1% Monday
Top Shorts 
NWD (17) 40%, Country Garden (2007) 39%, Hang Seng Bank (11) 39%, Bank of China (3988) 37%, CLP (2) 36%, HK & China Gas (3) 36%, Ping An (2318) 34%, HK EX (388) 33%, CCB (939) 32%, Sands China (1928) 32%, BoC HK(2388) 32%, China Res Land (1109) 30%, Swire Pac A (19) 29%, SHKP (16) 28%, Henderson Land (12) 27%, HSBC (5) 27%, Wharf (1997) 27%, Sunny Optical (2382) 25%, Petrochina (857) 25%, Tencent (700) 25%.

AFTER MARKET NEWS
Hong Kong Monetary Authority published the Half-yearly Report
on Monetary and Financial Stability, saying the Hong Kong foreign exchange and money markets continued to operate in a smooth and orderly manner. With the repeated triggering of the strong-side Convertibility Undertaking and growth in total deposits in the first seven months of 2020, no significant outflows from the Hong Kong dollar or the Hong Kong banking system were observed during the review period, according to HKMA.
HKEX (00388.HK): Calvin Tai to Act as Interim Chief Executive from 2021
In August 2020, China delivered international good and service trade revenue of RMB1.69 trillion and spending of RMB1.38 trillion, representing a trade surplus of RMB312.1 billion, according to the findings from State Administration of Foreign Exchange.
COUNTRY GARDEN (02007.HK) Co-Chairman Yang Huiyan added 10.85 million shares on 24 September, involving around $103 million, according to HKEX's disclosure of interests. Her stake in the firm increased from 57.38% to 57.43%.
Ping An OneConnect Bank (PAOB) announced its official launch. The virtual bank is currently serving 30% of Hong Kong's SME customers, while mainly focusing on the users of its trade partner TRADELINK (00536.HK), revealed PAOB Chief Executive Ryan Fung.


Regional Markets
JAPAN 
opened lower and traded sideways through the morning after Tokyo CPI data remained weak. But the market moved higher in the PM to 23,620 level but then sold back down to flat and closed +0.1%
S KOREA Pre market data was mixed, Business Confidence beat, other data was mixed
Kosdaq opened higher and traded sideways in a tight range before rallying at the end to close +1.5%
Kospi opened higher and traded in a tight range all day to close +0.9%
S Korea markets will be closed tomorrow for Chuseok Holiday
TAIWAN opened higher and ticked up to 12,571 in the first 10 mins but then trended lower to 12,430 level before working slightly higher to close flat +0.04%

CONNECT FLOWS
Shanghai
Northbound Rmb 27,361m Sell 15,073m : 12,289m Buy
Southbound

Shenzhen
Northbound Rmb 43,579m Sell 20,444m : 23,134m Buy
Southbound


DATA
CHINA No data.

HONG KONG
Centre for Health Protection said there were 4 additional COVID-19 cases
in Hong Kong today (vs 10 Monday) all imported


Active Heavyweights
CCB (939.HK) -1.2%
AIA (1299.HK) -1.1%
MEITUAN (3690.HK) -1%
PING AN (2318.HK) -0.8%
BABA (9988.HK) +0.8%
HKEX (388.HK) -0.4%
TENCENT (700.HK) -0.1%

HSI & HSCEI Constituents on the move
CM BANK (03968.HK) -6%
CHINA GAS HOLD (00384.HK) -4.3%
BANKCOMM (03328.HK) -4.2%
ENN ENERGY (02688.HK) -3.9%
ABC (01288.HK) -3.2%
HANG SENG BANK (00011.HK) -3.2%

HSMI & HSSI Constituents on the move
TIANLI EDU (01773.HK) -17.6%
XINYI ENERGY (03868.HK) +13.4%, hitting new high
HUA HONG SEMI (01347.HK) +11%
XINYI SOLAR (00968.HK) +6.5%, hitting new high
MINTH GROUP (00425.HK) +0.8%, hitting new high

Market Commentary
*CHINESE BANKS WEAK
on earnings concerns as reported after market Monday regulators are requiring large commercial banks to reduce size of individual mortgages and other types of property-sector loans to prevent speculation. Banks have been asked to provide more loans to small and micro enterprises and help them to roll over their matured debts.
CMB (3968 HK -6%) BOCOM (3328 HK -4.2%) ICBC (1398 HK -1.5%) ABC (1288 HK -3.2%).
*E-COMMERCE FIRM after WEIBO reported revenue that beat estimates, and SINA US said it had agreed to go private in a deal that values the company at $2.59b.
JD HEALTH INTL, the online health care arm of JD.COM (9618 HK +1.8%), has filed an application for HK IPO that could raise at least US$3b, according to news.
ALIBABA's (9988 HK +0.76%) after Taobao recorded a 20% growth in gross merchandise volume in August, the highest in a year, while Taobao Special Offer app, its new platform directly competing Pinduoduo, saw the number of monthly active users reach around 55m.
*HK PROPERTY WEAK after the HKSAR govt yesterday announced two residential sites at The Peak and in Kai Tak will be offered for sale by tender next quarter as well as a prime commercial harborfront site in Central originally scheduled for sale this quarter.
NWD (17 HK +0.7%) obtained presale consent for the first phase of the residential project atop Tai Wai Station. The project will offer 3,090 units across three phases, including 783 units in the first phase.
CK ASSET (1113 HK -1.3%) has collected about HK$6.1b after selling 644 units at Seaside Sonata; HENDERSOND (12 HK -1.6%) SHKP (16 HK -0.66%).
*CHINA PROPERTY WEAK after yesterday bounce as heavy debts concerns overhang the market.
EVERGRANDE (3333 HK -0.7%) after +20% yesterday, said its debt-cutting measures are working and the Hong Kong bourse had approved its spinoff plan for its property management business. SHIMAO (813 HK -1.7%) CIFI (884 HK -3.2%) KWG (1813 HK -3.6%).
*AUTOS MIXED after sector yesterday rallied on STAR Board listing speculation: GEELY AUTO (175 HK -0.9%) has obtained regulatory approval for a secondary listing on Shanghai’s Nasdaq-like exchange for start-ups, to raise as much as 20b yuan, as it redefines itself as a technology company with its line-up of 10 electric cars by 2025. GREATWALL (2333 HK -1.7%) EVERGRANDE EV (708 HK -4.3%) BYD (1211 HK +3.1%).

MARKET HOURS NEWS
China's internet companies above designated scale posted business revenue of RMB796.2 billion for 8M20, +13.6% yearly,
with the growth rate slipping 1.3 ppts from 7M20 and 7.3 ppts from 8M19, according to data from Ministry of Industry and Information Technology (MIIT). The industry achieved operating profits of RMB73.6 billion, up 23.7% yearly, with the growth rate rising 17.8 ppts from 7M20.
During the first eight months of 2020, Chinese software industry generated nearly RMB5 trillion in revenue, up 10% yearly, according to data from Ministry of Industry and Information Technology (MIIT).
Toshiba will forsake its loss-making System LSI chip business in hopes of raising the group's profit margins. The Japanese conglomerate will provide the 770 affected employees with relocation or early retirement plans, likely incurring JPY11.8 billion (around US$112 million) of expenses.
Tencent WeSure inked a strategic cooperation deal with SINOPHARM (01099.HK) and MedTree Health Technology, reported China Securities Journal. The parties will foster profound cooperation in inclusive business insurance projects for city-level integration of social and business, pharmacy benefit projects, commercial insurance projects and patient services.
PING AN (02318.HK) boosted its stake in HSBC HOLDINGS (00005.HK) to 8%, becoming the largest shareholder of the London-based bank. The stake increase could be linked to financial reasons rather than political considerations, Financial Times citing an HSBC insider.
BABA-SW (09988.HK)'s online literature platform Shuqi will pump over $10 million in cash under a new program to nurture new writers, Chinese media reported. The newly contracted writers may be entitled to a monthly income as high as RMB6,000.
China has bought less than one-third of the targeted purchases under the Sino-US trade deal as of end-August 2020, SCMP citing US customs data for the month.
As USD/HKD triggered the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook a US$134-million selling order to inject HK$1.039 billion into the market. HKD strengthened this morning, leading the spot USD T/T rate to 7.7500. The balance of the banking system of Hong Kong will increase to HK$243.528 billion tomorrow (30 September).
BABA-SW (09988.HK) held its Investor Day virtually yesterday, citing 742 million annual active consumers in the Chinese retail market over the past year, reported Sina Finance. 70% of the new users came from lower-tier markets, with huge upside room in the next 2-3 years. From April to June 2020, Tmall Global tracked an over 40% YoY GMV growth in terms of payment, the group revealed.
Tencent Cloud officially released its lightweight application server, Lighthouse, to help SMEs and developers swiftly create websites, blogs, e-commerce applications, forums as well as test environments on Cloud. Even primary school kids are capable of using Lighthouse, the giant claimed.
MTR CORPORATION (00066.HK) is inviting developers or consortia to submit tenders for Lohas Park Phase 13. The tender for the project will close at 2 p.m. on 29 October 2020.
The global smart home device shipment is set to grow 4.1% yearly to 854 million units in 2020, as the International Data Corporation (IDC) wrote in a report, and the shipment may reach up to 1.4 billion units by 2024, representing a CAGR of 14%.
The police has detained Baidu (BIDU.US) Mobile Ecology Group's special consultant Shi Youcai, Baidu's Key Account head Li Zhongjun,
as well as relevant agents and customers in Zhejiang, Jiangxi and Jiangsu, Chinese media citing insiders. Baidu included gambling games like chess and cards in its portfolio, according to people familiar with the matter. The Chinese tech firm had never allowed gambling site promotions in the past.
The Chinese government plans to endorse a lower economic growth target for the 14th five-year plan as compared with the 13th, as Reuters learnt from policy sources.
Carrie Lam said the third spike of coronavirus pandemic has now gone relatively muted. However, the social distancing guidance falling due this week will broadly carry on. There will be amendments to some anti-plague measures, of which the details will later be made public by the Food and Health Bureau, added Lam. The policy address will not include many public-expenditure-consuming measures this year due to spending on anti-plague measures, said Chief Executive Carrie Lam. Some industries are particularly hit by the coronavirus crisis, added the city leader. The
unemployment rate of the construction sector hit 11.1%, with an underemployment rate as high as 8.1%.AlipayHK stated that more than 100 wet markets are now accepting AlipayHK as a payment tool, of which almost 70% are modern ones. AlipayHK is suitable for frequent transactions in smaller amounts as it frees merchants and users from giving changes, said the statement. Findings showed that in August, certain wet markets recorded over 40% higher transaction volume than in January.
HUAZHU-S (01179.HK) addressed the main allegations against the Group in the Bonitas Report. The Company believes that the Report is without merit as it contains numerous incorrect, misleading and unsubstantiated allegations regarding the Company’s business and operations. The allegations relating to the Group's high net property, plant and equipment (PP&E) per room are unfounded and are based on inaccurate information or misleading interpretations of the relevant data.
Kwok Hiu Kwan, son of KAISA GROUP (01638.HK)'s substantial shareholder Kwok Ying Shing and the owner of 29.9% CONVOY (01019.HK) stakes, wrote to CONVOY and asked for a Board reshuffle through EGM, reported Hong Kong Economic Journal. Kwok Hiu Kwan proposed the appointment of Frederick Ma, former MTR CORPORATION (00066.HK) chairman, and Abraham Shek, real estate and construction sector lawmaker, as CONVOY's directors.
The exclusive fund sale by Ant Group's Alipay platform has sparked debate on the exclusive offering competition between banks and internet channels, reported the Beijing News. Wang Jun, General Manager of Ant's Wealth Management Unit, replied that the group was merely offering differential services in view of different client bases.

PRE MARKET NEWS
Not in this mornings report
TikTok In his temporary injunction blocking Washington's TikTok download ban, U.S. District Judge Carl Nichols wrote that the government has given "ample evidence that China presents a significant national security threat," but the specific evidence regarding the threats posed by the Chinese short video app "remains less substantial.” +VE for TikTok
Huawei CFO Sabrina Meng Wanzhou has returned to a Canadian court for a trial, likely to last for five days, to fight extradition to the U.S., Reuters reported. Her lawyers would mainly target at arguing that the extradition request was flawed as it had omitted key evidence.
US' Cerberus and another investment firm intend to buy HSBC HOLDINGS (5.HK)'s French retail wing for a symbolic EUR1 as long as the London-based lender pumps at least EUR500 million into the business, as Reuters learnt from inside sources. The negotiation has come to the final stage, said the insiders, although it is hard for HSBC HOLDINGS to attract bidders given heavy restructuring needed and complex talks with local watchdogs involved in the disposal.
Five 18-month closed-end hybrid funds highlighting the strategic allotment of Ant Group went on sale on Alipay earlier, reported Jiemian. The funds will partake in Ant Group’s IPO as strategic investors, placing up to 10% shares of the group in their positions, according to their notice.
HKMA announced that, as USD/HKD triggered the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook a US$134 million selling order to inject HK$1.039 billion into the market. The balance of the banking system of Hong Kong will increase to HK$243.528 billion tomorrow (30 September).

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