Sept 8 HK WRAP HSI +35pts T/O Flat NongFu +55%


10 Sep

Sept 8 HK WRAP HSI +35pts  T/O Flat NongFu +55%

HSI +35pts (+0.1%) 24,624  HSCEI +66pts (+0.7%) 9,830 T/O HK$140.6bn (-11.1% DoD but if you exclude the late trades on Monday from the index reweigh it was flat)  

EUROPE markets opened higher but sold down with Tech under pressure
US markets to re-open Futures pointing to a higher open but pulled back as the Nasdaq futures went negative; currently indicating -3%

INDEXES
CSI 300 Closed +25pts (+0.5%) @ 4,694
Opened slightly higher but trended lower in the morning session with support at 4,640. Investor concerns about the worsening China/US relations and Trumps threat to further decouple. Also new S Korea stepping up efforts to on-shore its businesses out of China. PM saw the market work higher (go Team China) to 4,705 and then ease back slightly into the close. Hopes that the recent data and US/China issues may mean more stimulus from the government. Financials, Education and Energy lead the session as President Xi hosted an award ceremony for success in containing covid; a slight +VE for sentiment.
Tomorrow pre market we get inflation and PPI data; which again may lead to more hopes of stimulus although I doubt the government will do much.
Shanghai Composite Index +23pts (+0.7%) @ 3,316.
Shenzhen Component Index +9pts, (+0.1%) @ 13,293
ChiNext Index +9pts (+0.4%) @ 2,651

HSI Pre Market opened +196pts @ 24,785 with E Commerce seeing a rebound but then initially sold down to 24,720 level and then traded sideway for the first hour. We then saw selling pressure which took the market down to 24,350 level over the next hour before it found support. There was a small bounce into lunch. PM saw the market work higher back to around the opening level 24,720 led by the Chinese Banks and then traded sideways slightly lower into the close and a small tick lower in the closing auction.
Sentiment slight +VE on news the government would ease some of the social distancing measures on Friday as the number of local cases eased.


IPO NONGFU SPRING (9633.HK) closed at $33.1, +54% or $11.6 against the listing price of $21.5, on volume of 224 million shares, involving $8.14 billion. Excluding the handling fees, a book gain of $2,320 was reported per board lot of 200 shares.

SHORT SALES Tuesday 16.7% vs 12.9% Monday
Top Shorts 
Ping An (2318) 46%, MTRC (66) 33%, AIA (1299) 30%, China Res Land (1109) 29%, HSBC (5) 28%, Mengniu Dairy (2319) 27%, CLP (2) 26%, WH Group (288) 25%, CCB (939) 24%.

AFTER MARKET NEWS
BABA-SW (9988.HK) holds 19% of Class A shares of XPeng (XPEV.US) as disclosed by the US SEC filing.
American artificial meat startup Beyond Meat (BYND.US)'s subsidiary Beyond Meat (Jiaxing) Food has entered into an agreement with Jiaxing Economic & Technological Development Zone (JXEDZ) to design and develop manufacturing facilities in the region.
Q TECH (1478.HK) announced that the total sales volume of camera modules +7% MoM and +4.8% YoY, among which camera modules with resolutions of 10 megapixels and above decreased by 0.3% MoM and increased by 20.0% YoY respectively. The MoM increase of total sales volume of camera module products was mainly attributable to the customers’ product cycle.
RAZER (1337.HK) repurchased 1.924 million shares through the Stock Exchange today (8 September), involving $2.9706 million.
Apple will start producing 5G iPhone from mid-September after having overcome travel curbs and other coronavirus snags, the Nikkei reported. This meant that its production delay was narrowed to just weeks instead of months as earlier expected.
SUNLIGHT REIT (435.HK) annual results ended June 2020. Annual distributable income -0.1% yearly to $467 million. Final distribution per unit was 13.6 cents, vs 14.1 cents a year ago; annual distribution per unit was 26.8 cents, as compared with 27.3 cents in the previous year. The payout ratio shrank from 96.4% to 95.2%.
GAC GROUP (2238.HK) production volume was 166,300 vehicles in August 2020, +7.82% yearly; the sales volume was 180,600 vehicles, +11.64%.
LONGFOR GROUP (960.HK) contracted sales amounted to RMB24.22 billion in August 2020, +10.09% yearly.
SHK PPT (16.HK) has published the first price list of Wetland Seasons Park Phase 3, involving 65 flats in saleable area of 316-726 sq. ft.. Based on a maximum of 18% discount, the units launched under the Tin Shui Wai residential project are priced $4.133-9.335 million.
South Korean game developer PUBG Corporation will no longer grant TENCENT (700.HK) the rights to publish its mobile game in India after the local government has banned 117 Chinese mobile apps.

Regional Markets
JAPAN
opened higher and worked slightly higher in the morning session. Opened a little lower in the PM from the morning close but worked higher with a ramp at the end to close +0.8%.
Household Spending was weaker than F/cast and GDP data was mixed. Eco Watchers at lunchtime was better.
Softbank -1.4% but off early lows
S KOREA opened higher and traded sideways but sold down from around 1pm HK time to Kosdaq closed -0.1%. The Kospi traded sideways all day to close +0.7%.
TAIWAN opened higher and again traded sideways (12,600 -700 range) to close +0.5%

CONNECT FLOWS (down DoD)
Shanghai
Northbound Rmb 40,209m Sell 18,923m : 21,286m Buy
Southbound HK$ 13,923m Sell 8,257m : 5,473m Buy

Shenzhen
Northbound Rmb 56,628m Sell 26,320m : 30,308m Buy
Southbound HK$ 12,005m Sell 5,534m : 6,471m Buy


DATA
CHINA No data

HONG KONG
Centre for Health Protection said there were 6 additional COVID-19 cases
in Hong Kong today; (vs 11 Monday). Only 1 from unknown sources

Active Heavyweights
MEITUAN (3690.HK) -4.1%
CCB (939.HK) +3.1%
BABA (9988.HK) +1.5%
AIA (1299.HK) -1.3%
PING AN (2318.HK) +1.2%
HKEX (388.HK) -0.5%
TENCENT (700.HK) -0.5%

HSI & HSCEI Constituents on the move
XIAOMI-W (1810.HK) -7.2%
ICBC (1398.HK) +4.7%
CPIC (2601.HK) +4.5%
PSBC (1658.HK) +4.3%
GUANGDONG INV (270.HK) +4.1%
ABC (1288.HK) +4%
BANK OF CHINA (3988.HK) +3.6%
CM BANK (3968.HK) +3.2%

HSMI & HSSI Constituents on the move
SHUN TAK HOLD (242.HK) +10.1%
CHINARES CEMENT (1313.HK) +4.7%, hitting new high

Market Commentary 
*PETROCHEMS MIXED optimism on economic recovery in China, but global demand seen as fragile. Oil continued to fall below $40 a barrel as a price cut by Saudi Arabia signalled fuel demand is wavering in key markets. PETROCHINA (857 HK +1.2%) CNOOC (883 HK +0.1%), SINOPEC (386 HK -0.6%) CN OILFIELD (2883 HK -1.4%).
*E-COMMERCE MIXED ANT GROUP outlined its ownership structure to address concerns over connections with ALIBABA (9988 HK +1.3%) as its Shanghai/HK IPO approaches. Ant is majority-controlled by Jack Ma, while Alibaba with a 32.65% stake has no control over the company.
TENCENT (700 HK -0.4%) JD.COM (9618 HK +0.4%) NTES (9999 HK +0.5%).
XIAOMI (1810 HK -7.3%) on concerns of impact on sales from Indian border tensions
MEITUAN (3690 HK -3.3%) saw profit-taking following last week's HSCEI inclusion.
KINGSOFT (3888 HK -5.6%) after one of the company's executive director reduced holdings by 431,000 shs last week.
ZA Online (6060 HK -7.2%) after Softbank sold 2m shs of ZA on Sept 1.
*TECH & COMPONENTS WEAK with worries that the US may apply further curbs on Chinese tech companies. Huawei in addition cutting component orders for its upcoming Mate 40 series by 30%, has also cut orders for television set components by 30-40%.
India's minister for information technology said around eight Apple factories have moved from China to India.
SMIC (981 HK +2.4%) and HUA HONG SEMI (1347 HK +0.2%) after heavy selling yesterday. BYDE (285 HK- 4%) TONGDA (698 HK -2.3%) FIT HON TENG (6088 HK -2%) TRULY (732 HK -1%).
*AUTO WEAK some profit-taking after yesterday's rally.
BYD (1211 HK -3%) Aug vehicle sales +2% YoY to 36,800 units.
GREAT WALL (2333 HK -0.6%) Aug vehicle sales +27.4% to 89,442 unit.
GAC (2238 HK -0.3%) DONGFENG (489 HK +0.6%).
*HK PROPERTY FLAT Li Ka Shing Foundation continues to buy CK ASSET (1113 HK -0.5%) 1.36m shares at avg price ranging from HK$41.20 to HK$41.78 between Sept. 1-4. Li Ka-shing’s stake in CK Asset raised to 35.53%, Victor Li’s stake raised to 35.60%.
SHKP (16 HK -0.1%) HENDESON (12 HK -0.5%) SINO (83 HK +0.9%).
*PHARMA FIRM as VACCINE names generally saw support as positive developments on Covid-19 vaccines have been reported.
SINOPHARM (1099 HK +1.6%) and FOSUN PHARM (2196 HK +2.4%) have established a JV for storage and transportation system for the Covid-19 vaccine. They plan further cooperation in the commercialisation of vaccines and building of vaccine supply chains in the future. CANSINO (6185 HK +5.8%) 3SBIO (1530 HK +2%).

MARKET HOURS NEWS
RUMOURED that given development and production delay, Apple Inc (AAPL.US) may split this year's iPhone release
into two stages, Taiwanese media citing sources. The 6.1-inch iPhone 12 Max and iPhone 12 Pro could debut in October, followed by the 6.7-inch iPhone 12 Pro Max, and 5.4 -inch iPhone 12 later
Government said the gathering ban will be relaxed to allow four people in a group, instead of two currently, from this Friday (11 September), whilst restaurants are allowed to have four customers per table at most, with other requirements unchanged. Moreover, game centers, performance venues, public entertainments, mahjong and Tianjiu establishments and all sports premises could reopen on the same date.
Starting from 18 September, the Government will hopefully pull the plug on social distancing guidances on theme parks and exhibition events at the HKCEC where feasible, as Edward Yau, Secretary for Commerce and Economic Development, told reporters. The two major theme parks in Hong Kong stood well-ready with sound precautions in their earlier park re-opening, furthered Yau, while the Government had earlier rolled out economic bailout for the convention industry with plans to put relevant social-distancing measures on hiatus when the pandemic goes muted.
The Government is now discussing the implementation of travel bubble scheme with 11 countries, whereby bilateral talks are underway with Japan and Thailand, said Edward Yau, Secretary for Commerce and Economic Development. The European Union has named Germany as the coordinator to discuss resumption of travel arrangements with Hong Kong.  Yau reminded the public that the travel bubble scheme carries restrictions as well. A visitor shall take a test before his/ her departure and be subject to re-screening upon arrival at his/ her destination. The implementation of the scheme shall be done step by step.
Hon Hai Precision reported revenue of TWD420.546 billion in August 2020, +4.27% MoM and 5.45% yearly. This marked the sharpest single-month rally YTD and the highest-ever August record.
Samsung Electronics is set to ramp up its smartphone shipment to 300 million units next year, foreign media reported. This represents 15% growth from this year's sales volume of 260 million units, said industry sources.
STANCHART (02888.HK) the Indian anti-money laundering agency will fine it INR1 billion (USD13.60 million) for breaching foreign exchange rules during its takeover of the local bank Tamilnad Mercantile Bank.
Ministry of Commerce (MOC), revealed that the authority is hastening the amendment works for the industry catalogue that encourages foreign investment, under which much more incentives will be added to cover more foreign firms under the related taxation policy.
President Xi Jinping delivered a speech at a meeting commending the fight against the COVID-19 pandemic, reported Xinhua Insight. Facing an abrupt and grave epidemic, however, Chinese economy has taken a steady turn for the better through coordination and facilitation. Production and livelihood are heading back to order stably, Xi furthered.
ByteDance will issue a bonus payment to all full-time employees who have worked more than 26 working days from 1 July to  31 August, according to a screenshot circulated online of the TikTok parent's e-mail. The size of the bonus is set at 50% of workers' fixed salary in August 2020, subject to adjustments for different situations and to be paid along with September's salary.
Trump’s administration is weighing a ban against cotton imports from China's Xinjiang region for alleged violation of human rights, the New York Times reported. The ban may be announced as soon as today, according to the report.
BABA-SW (9988.HK)'s online travel agency Fliggy announced that it switched on a subsidy scheme worth of RMB10 billion, covering 100,000 hotels nationwide at the initial stage. The scheme will stretch to transportation and tourist sites prior to National Day holiday.
Minister of Foreign Affairs of the PRC, at a top-tier international seminar, delivered his "Advocacy for Global Data Security”. Yi said the Advocacy states clearly that China safeguards actively the openness, safety and stability of global supply chains; opposes to destruction of key infrastructure and theft of critical data of other nations by means of information technology; requires Chinese firms to respect laws of other countries and not to store overseas data within China forcefully; advises Chinese firms not to set backdoor in their goods and services, and so on.
In response to the first round of enquiries from the Shanghai Stock Exchange, Ant Group replied that it is not a funding hub for BABA-SW (9988.HK)'s Alipay. Despite the high-level strategic synergy between the two parties, Ant Group has established its sound and unique business system based on its own operation need.
Meanwhile, BABA-SW poses no significant adverse rivalry to Ant Group as they focus on their respective fields, the scopes of which differ from each other, according to the reply.
Ant Group accentuated that it is individual from BABA-SW and that it will be free from the constraints under the equity and asset purchase agreement when it embarks on new business which BABA-SW is not yet engaged in (including the reasonable extension thereof).

PRE MARKET NEWS
Not in this mornings report
FOSUN TOURISM (1992.HK) plans to revive its Thomas Cook brand this month the soonest as part of its efforts to rebuild an online travel platform, Sky News reported.
CIFI HOLD GP (884.HK) won the bid for three residential lots in Guiyang at RMB472 million, with a total GFA of 42,800 sq.m., according to Guandian.cn. Meanwhile, CIFI HOLD GP bid one commercial and residential land parcel in Huizhou at roughly RMB321 million, with a floor price of around RMB5,987 per sq.m..
MTR CORPORATION (66.HK) has filed a lawsuit against Bauhaus, the exclusive dealer of Superdry, after Superdry unilaterally terminated the leasehold of two linked shops at Elements, Hong Kong Economic Journal reported. The landlord is seeking a total of over $6.35 million from the boutique chain, covering roughly $1.56 million in rental arrears and rental loss from March to August, together with around $4.79 million of interest fees, said the report.
Fitch Ratings predicted the global economy to shrink 4.4% in 2020, a slight upward revision from a 4.6% decline as earlier expected. The ratings agency attributed the revision to a swifter-than-anticipated economic recovery, although the pace of expansion may soon moderate.
CHANGSHOUHUA (1006.HK) announced that Sanxing Grease, a substantial shareholder owning 52.14% stakes in the Company, proposed the privatisation of the Company by way of a scheme of arrangement at HK$4.19 in cash per share, representing a 16.39% premium to the closing price before trading halt. Upon the scheme becoming effective, the listing of the shares of the Company will be withdrawn from the Stock Exchange. The company applied for a trading resumption with effect from Tuesday (8 September).
KAISA GROUP (1638.HK) announced that the contracted sales amounted to RMB9.360 billion in August 2020, up 119.6% yearly.
YONGDA AUTO (3669.HK) announced that its chairman and controlling shareholder, Cheung Tak On, acquired 1 million shares of the Company in the open market on the last trading day (7 September).

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