HK WRAP HSI -505pts @ 23,951, T/O unch DoD shorts rise to 20%

23 Sep
HK WRAP HSI -505pts @ 23,951, T/O unch DoD shorts rise to 20%

Hope you find it useful; feedback welcome
Andrew Sullivan
Open for jobs
HSI -505pts (-2.1%) 23,951 HSCEI -163pts (-1.7%) 9,640 T/O HK$144.91bn (flat DoD)

markets opened lower following Asia and sold down with Banks under pressure on handling illicit funds (HSBC, STANCHART, DEUTSCHE and JPM) and with the rise in covid cases in the UK and France still a concern. No data due.
US Futures opened -151pts but worked their was back to flat -17pts; before selling off heavily DOW -500pts and significant weakness in the S&P -2% and NDX -1.8%. The uncertainty of the Supreme Court adding to the existing concerns. Data due Chicago Fed national Activity Index.

CSI 300 Closed -46pts (-1%) @ 4,691 
opened slightly higher but sold down, initially to 4,720 and traded sideways for an hour in choppy trading before trended lower into lunch where is was -0.5%. PM saw the market continue to drift lower again with choppy trading. I think that suggest that Team China was active trying to support the market. Sentiment weak on concerns about international relations deteriorating with US, India and Taiwan. Chinese short sellers pushed the balance of lent securities for week end 18 Sept to a record high of Yuan 81.87bn. Shanghai Composite Index -21pts (-0.6%) @ 3,316. T/O Rmb 287.7bnShenzhen Component Index -95pts, (-0.7%) @ 13,149 T/O Rmb 467.4bnChiNext Index -26pts (%) @ 2,569

HSI Pre Market Opened +25pts @ 24,483 vs -96pts @ 24,359 with weakness in E commerce names on the threat of US action. HSBC and StandChart weak on handling of illicit funds with a number of other international banks. Other financials and tech were positive. But market trended lower though the morning with support at 24,170 and a small bounce into lunch. PM saw the market continue to drift lower and closed just off the day lows.

IPO HUAZHU-S (01179.HK), to be listed tomorrow, opened at $303 in gray market, up 2% against the listing price $297, and last stood at $301.2, up 1.4% against the listing price, onvolume of 27,000 shares, PhillipMart data showed. Huazhu (HTHT.US) closed up 0.4% last Friday at US$42.02 in the U.S..

PICK Techtronics (669 HK) A long time favourite of mine as readers will know. Traded below $100 today and whilst it attempted to break back above closed at HK$99.00. I still think the outlook is +VE and would slowly accumulate here or lower.

SHORT SALES Monday 20% vs 16.8% Friday 
Top Shorts Ping an (2318) 54%, CCB (939) 40%, BoC HK(2388) 39%, Hang Seng Bank (11) 36%, ICBC (1398) 33%, China Res Land (1109) 30%, Petrochina (857) 28%, BABA-SW (9988) 27%, Shenzhou (2313) 27%, Tencent (700) 24%

HKMA announced that it had undertaken a US$1.9 billion selling order during Hong Kong trading hours 
to inject HK$14.725 billion into the market. The balance of the banking system of Hong Kong will increase to HK$239.379 billion on Wednesday (23 September).
CHINA TELECOM (00728.HK) announced August, mobile subscribers grew 1.62 million MoM to 348 million, slower than a 2.6-million addition last month. 5G subscribers increased by 7.87 million MoM to 57.14 million in August, slower than a 11.43-million growth last month.
JD Digits unveiled the official strategic cooperation with the Digital Currency Research Institute of the People's Bank of China, according to Chinese media. Both sides will facilitate the R&D of basic mobile technology platforms and blockchain technology platforms based on DCEP (Digital Currency Electronic Payment) projects.
CHINA GAS HOLD (00384.HK) announced it and CHINA MOBILE (00941.HK) entered into a strategic cooperation framework agreement, pursuant to which both parties agreed to jointly develop the ‘‘smart kitchen’’ and actively carry out digital economic cooperation on the basis of opening both parties’ business channels, with 5G effectively enabling the integration of key livelihood sectors, the gas industry and the communication business. Under the agreement, the Company and China Mobile agreed to cooperate in multiple main areas, including basic communication business cooperation.
CHINA UNICOM (00762.HK) announced that in August, the number of mobile billing subscribers declined by 886,000 monthly to 309 million, worse than the July's growth of 26,000 users. The number of 4G subscribers increased by 1.581 million monthly in August, slower than the 1.659-million addition last month.
Spot USD/CNY closed at 6.7733, down 145 bps. As at 16:45, USD/CNY fell 55 bps in the night session. USD/CNH stood at 6.7750, up 41 bps. While the USD Index held steady during Asian session, RMB appreciation may be hampered by news uncertainties in absence of new countermeasures from both the US and China, Reuters cited traders. Nevertheless, the market remained sanguine about RMB, which may in turn tweak the exchange rate in short term.
The Hong Kong Monetary Authority announced the tender results of RMB Sovereign Bonds. The application amount for 2-year RMB bonds was RMB13.273 billion, oversubscribed by 2.79 times than the issue amount of RMB3.5 billion. The application amount for 5-year RMB bonds was RMB7.542 billion, oversubscribed by 4.03 times than the issue amount of RMB1.5 billion.
China voiced unswerving opposition against and strong condemnation of American officials' frequenting Taiwan, said Chinese Foreign Ministry spokesman Wang Wenbin at a regular press conference. Beijing must take proper countermeasures, including the US moves aiming at individuals, Wang added.
YUM CHINA-S (09987.HK) Bullish on the Chinese catering market in a long run is capable of stretching its presence to 20,000 restaurants across the country, said CFO Andy Yeung. In the first half of 2020, the group has opened 350 restaurants. The current cash flow, together with investment and Hong Kong listing proceeds, approximates US$4.0 billion in total, CEO Joey Wat disclosed. The caterer group will carefully identify acquisition opportunities on market while attaching great importance to rate of return.
Regional Markets
JAPAN Closed until Wednesday

S KOREA opened slightly higher Kosdaq saw a choppy start, then traded sideways just above flat but sold down from about 10:30; with support at 877 level. Increased selling seen around 2pm pushed it down to the day low (860 level) and then a small bounce at the close -2.5%
Kospi opened higher, choppy initial trading hit the day high around 10:15am and then reverse to Friday's close and traded sideways before trending slightly lower from midday. Again increased selling around 2pm pushed it down to 2380 level before rebounding at the end to close -1%
TAIWAN opened flat initially trended higher to 12,936 (day high), then trended lower to 12,820 level and then drifting lower to close -0.6%.

CONNECT FLOWS (down DoD mainly northbound Shanghai)
Northbound Rmb 36,084m Sell 19,663m : 16,421m Buy
Southbound HK$ 9,598m Sell 4,314m : 5,284m Buy

Northbound Rmb 50,004m Sell 26,629m : 23,375m Buy
Southbound HK$ 8,525m Sell 3,814m : 4,711m Buy

China Loan Prime rate was unchanged for both 1 and 5 year as expected.
Gross Domestic Product (GDP) Q2 by economic activity -9.0% YoY in real terms in vs -9.1% in Q1. Analyzed by constituent services sector net output of all the services activities taken together -8.9% YoY Q2 vs-9.0% Q1
Total employment in the private sector -5.1% YoY or 144,700 persons in June. The total number of vacancies was 39,100, -47% YoY or 34,340 people. In June, the selected industries as a whole employed 2.719 million persons. Employment decreased in majority of the surveyed industries compared with a year earlier.
Composite CPI -0.4% YoY in August 2020 vs -2.3% in July 2020, as effect of the Government's payment of public housing rentals and waiver of two-thirds of rent for tenants of Group B estates by Hong Kong Housing Society in July dissipated in August. Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation rate) in August 2020 was 0.1%, slightly smaller than that in July 2020 (0.2%). Mainly due to the smaller increases in the prices of pork and private housing rentals.
A Government spokesman said that the underlying consumer price inflation rate edged down further to 0.1% in August as economic conditions remained weak amid the third wave of local epidemic.
Centre for Health Protection said there were 6 additional COVID-19 cases in Hong Kong today (vs 23 on Sunday) 1 of unknown origin.

Active Heavyweights
BABA (9988.HK) -2.8%
AIA (1299.HK) -2.1%
TENCENT (700.HK) -1.6%
HKEX (388.HK) -1.5%
PING AN (2318.HK) -1.4%
CCB (939.HK) -0.8%
MEITUAN (3690.HK) unch

HSI & HSCEI Constituents on the move
XIAOMI-W (01810.HK) -6.6%
CHINA TAIPING (00966.HK) -5.8%
HSBC HOLDINGS (00005.HK) -5.3%
SANDS CHINA LTD (01928.HK) -4.8%
GALAXY ENT (00027.HK) -4.8%
PSBC (01658.HK) -4.1%
PICC P&C (02328.HK) -4.1%
CHINA UNICOM (00762.HK) -3.7%
AAC TECH (02018.HK) -3.3%
NEW WORLD DEV (00017.HK) -3.2%
CHINA RES GAS (01193.HK) -3.2%

HSMI & HSSI Constituents on the move
MAN WAH HLDGS (01999.HK) -11%
HUADIAN FUXIN (00816.HK) +0.4%, hitting new high

Market Commentary
*BANKS WEAK  HSBC (5 HK -5.3%)  now -51% this year as it is a possible candidate for China's Unreliable  Entity List"  PLUS news that it and STAN CHART (2888 HK -6.2%) hurt by media reports that they and other banks (Deutsche and JPM) moved large sums of allegedly illicit funds over nearly two decades despite red flags about the origins of the money.
CH BANKS traded softer after the PBOC kept 1-year rate at 3.85% and the 5-year at 4.65% unchanged. ICBC (1398 HK -1.2%) ABC (1288 HK-2%).
*TECH & COMPONENTS WEAK on concerns that APPLE may be included on China's  Unreliable Entity Lists concerns. China set up rules for the list that will prohibit foreign firms listed as unreliable entities from engaging in import, export and investment in the country. Foreign companies which may be added to this list will depend on whether they violate Chinese laws, endanger China's national sovereignty, security, and development interests, violate market principles and damage Chinese companies, other organizations and individuals. AAC TECH (2018 HK -3.5%) TRULY (732 HK -3.2%) HUA HONG (1347 HK -4.3%)
BYDE (285 HK -5.15).
*E-COMMERCE WEAK as invesors wait for further development over TikTok and WeChat. The U.S. govt on Saturday delayed its plan to prohibit downloads of TikTok, after Donald Trump said he’s approved Oracle’s bid for the TikTok U.S. operations "in concept”.  WeChat got a reprieve after a California judge on gave an injection on   free speech concerns. TENCENT (700 HK -1.6%) ALIABABA (9988 HK -2.8%) JD (9618 HK -2.6%)  NTES (9999 HK -1.1%).
ANT GROUP received approval to list on the Shanghai Start board following a review meeting on Friday.
*HK PROPERTY  WEAK despite good weekend sales HENDERSON LAND (12 HK -0.15) released 68 homes in the third price list of Two.Artlane, @ 4% higher than the first list. The developer sold 74 of the 80 flats on offer at Two.Artlane on Saturday. SHKP (16 HK-1.1%) released 38 units in the fourth list of Wetland Seasons Park Phase 3 at an average price 5.55% higher than the first price list. The developer sold about 95% of the 133 flats on offer at the project.
LKS Shing Foundation bot 600,000 shs CK ASSET (1113 HK -2.5%) last week.
*PHARMA MAKERS MIXED. WUXI BIO (2269 HK -1.2%) plans a 1 for 3 stock split aimed at boosting liquidity as well as attracting more investors. SINOPHARM (1099 HK -2.2%) said the company will have the capacity to make 300m doses of its coronavirus vaccine. A company official said the vaccine has already been given to 350,000 people under emergency use authorization, and will likely be on market by year-end.
FOSUN PHARMA (2196 HK -1.7%) announced that its buyback plan has expired. The controlling shareholder, from September 19, 2019 to September 18, 2020, has cumulatively increased its shareholding in the company by 17,169,500 H shares.
INNOVENT (1810 HK +1.4%) SIHUAN (460 HK +5.8%).
* BROKERAGES MIXED on news that Guolian SEc plans to acquire rival Sinolink Sec to create an entity worth $13b. CITIC SEC (6030 HK +0.7%) CGS (6881 HK -3%) GF SEC (1776 HK +0.3%) HTSC (33883 HK +0.8%) HAITONG SEC (6837 HK -3%).
*MACAU CASINOS WEAK CS downgrades and cuts GGR forecast and SJM (880 HK-3.2%) CEO said the company expects gaming revenue to be 30%-35% of last year’s level during the Oct. 1-8 Golden Week holiday. The projection is less that the project of a 50% recovery by some brokers.
Chinese media reported a lack of Golden Week bookings at a lot of the Macau hotels and falling room rates.
BUT MACAU LEGEND (01680.HK +10.4%) announced that Co-chairman Chow Kam Fai, David sold roughly 1.28 billion shares to Perfect Achiever Group, representing about 20.65% of the issued share capital for a total consideration of HK$1.344 billion. The offer price of HK$1.05 per share represented a premium of approximately 9.38% over the closing price of HK$0.96 before trading halt.
MELCO (200 HK -4.5%) SANDS (1928 HK -4.8%) GALAXY (27 HK -4.7%) MGM (2282 HK -6.4%).

Wang Shouwen, China's Vice Minister of Commerce, said that the government will ramp up its efforts in various fields to highlight digital economy. Digital tycoons and industry alliances will be encouraged to set up their sector development funds, added Wang.
Hang Seng Indexes Company today (21st) launched the Hang Seng Shanghai-Shenzhen-Hong Kong (Selected Corporations) 300 Index, which measures the overall performance of the 300 largest companies in terms of full market capitalisation listed in Hong Kong and/or mainland China that operate in mainland China, Hong Kong and Macao.
JD-SW (09618.HK) Applies for 'JD Live' & Related Trademarks. Beijing Jingdong 360 Degrees E-Commerce Co., Ltd applied for several trademarks like "JD Live" and "JD Live Base", involving international trademark classes like advertising and sales, as well as education and entertainment, reported Chinese media. The trademarks are still in application process.
SABLIER, jointly developed by CHEVALIER INT'L (00025.HK) and Urban Renewal Authority, has issued the first layout plan, involving 144 flats in salable area of 262-706 sq. ft. The residential project in Tai Kok Tsui, targeting single-room units, has obtained a presale consent from the Government. Sales brochures will be uploaded later today, and show flats will be available to the public as soon as this weekend. Price lists may be made public soon in case of fine responses.
Losing a patent trial, TENCENT (00700.HK)'s Supercell was ordered to pay Japan's game developer Gree US$8.5 million, reported foreign media. Equally, the jury found Supercell's infringement willful. Supercell's Clash of Clans, Clash Royale and Brawl Stars infringed on Gree's patents through controlling and presenting downloadable titles to smartphone players, controlling in-game purchases and object transfers between users, the Japanese firm claimed.
XINYI GLASS (00868.HK) announced that CEO Tung Ching Sai had purchased a total of 704,000 shares of the Group on 17 September, involving $10.2782 million in total.
Ant Group has kicked of the preparation work for the establishment of a consumer finance firm after holding a ceremony earlier, as Chinese media learnt from people close to the Chongqing regulators.
KIDSLAND INTL (02122.HK)'s kkplus was officially opened in Langham Place on 18 Sept. Aside local brands, the toy collector showcases brands from Singapore and the United States, such as Tom & Jerry and SpongeBob. kkplus' sales value reached $400,000 for the first week. kkplus will look for suitable store locations going ahead, said Marco Ng, KIDSLAND INTL's General Manager for Hong Kong & Macau.
Housing Authority Extends Non-domestic Tenants' Rent Concession by Another 6 Mths To tie in with the Government's latest helping measures, the Commercial Properties Committee (CPC) of the Hong Kong Housing Authority (HA) today (September 21) approved the extension of the existing rent concession for the HA's eligible non-domestic tenants/ licensees for another six months from October 1, 2020, to March 31, 2021.
Macao Daily learnt from travel agencies that they have up to this moment received no enquiries from Chinese travelers about hotel booking for the "National Day Golden Week" and that the room rate at some 5-star hotels is now around MOP800 only, as compared with last year's MOP4,000-5,000. The efforts may not pay off this golden week holiday as expected because it coincides with the mid-autumn festival holiday, opined the travel agencies.
CHINA MOBILE (00941.HK) and CHINA GAS HOLD (00384.HK) today executed a strategic cooperation framework agreement in Beijing, Securities Times reported. Under the agreement, the two companies will deepen their cooperation in NB IoT business and such other fields.
Moody's moved up issuer rating to COUNTRY GARDEN (02007.HK) to Baa3 from Ba1, with Stable outlook; and tweaked up the company's senior unsecured bond rating to Baa3 from Ba2. The report elaborated that the Baa3 issuer rating displayed COUNTRY GARDEN's strong brand power, diversified geographical deployment, resilient liquidity, and so on. Besides, the company had a balanced land bank across key Chinese regions, backing its business growth over the next three to four years.
The Hong Kong Association of Banks (HKAB) called on the players to discuss interbank charges on a level and rational principle, as Hong Kong Economic Journal learnt from inside sources. This report came after HSBC had purportedly spurred grudges from virtual banks by collecting up to 2% charges from them for eDDA transfer services.
TENCENT (00700.HK) has renamed WeChat into WeCom to address the US ban, foreign media reported. The report said TENCENT registered the WeCom trademark on 19 August. Sources close to TENCENT said WeCom will not be affected by the US ban on WeChat, TENCENT said WeCom is the overseas edition of WeChat Work, an internal and external communication management tool for both organizations and companies, and hence an entirely different product from WeChat.
HSBC, Stanchart Move Suspicious Funds In Past: had helped customers move funds between 1999 and 2017, although the funds were flagged by internal compliance divisions as suspicious, foreign media citing lenders' confidential documents to the US Treasury Department. The suspicious activity reports filed by banks numbered as many as 2,100, involving over US$2 trillion. Lenders including HSBC HOLDINGS , STANCHART , JPMorgan, Deutsche Bank and Bank of New York Mellon Corp have appeared in the filings.
HENDERSON LAND (00012.HK( has lodged an application at Lands Tribunal for the compulsory sale of buildings at No. 94, 94A and 96 Robinson Road, which is valued over $353 million.AIA (01299.HK)'s
AIA Investment Management told Hong Kong Economic Journal that it anticipates to develop funds under its own brand name in a long run to provide ILAS clients and MPF members with more choices. The investment management firm will in the future stay in close touch with AIA in Hong Kong and Macau and consider the rollout of other new funds based on the actual needs.
FULU HOLDINGS (02101.HK) announced that for the six months ended June 30, 2020, as compared with that for the corresponding period in 2019, the non-IFRS measures adjusted profit (adding back listing expenses) is expected to record an increase of approx 50%.

Not in this mornings report
Chinese regulators are exercising prudence on insurers' establishment of after-sales centers in the Greater Bay Area, as Hong Kong Economic Journal learnt from market sources. At the beginning stage, insurers may only set their customer service centers in a focused region or at a particular building. The service coverage is limited to routine enquiries and basic information updates. Contribution and claim settlement services may not be available.  Insurance Authority told the press that it is working with Chinese watchdogs and local players to take forward Outline Development Plan for Guangdong-Hong Kong-Macao Greater Bay Area.
MACAU LEGEND (01680.HK)  announced that Co-chairman Chow Kam Fai, David sold roughly 1.28 billion shares to Perfect Achiever Group, representing about 20.65% of the issued share capital for a total consideration of HK$1.344 billion. The offer price of HK$1.05 per share represented a premium of approximately 9.38% over the closing price of HK$0.96 before trading halt. The Company applied for a trading resumption with effect from today.

AMD has secured a license from the U.S. Department of Commerce to supply goods to Huawei, said Senior Vice President Forrest Norrod, who does not expect to see "a significant impact" on business from any of those bans owing to the license secured. This celebrated the first semiconductor manufacturer to secure the license to continue shipment to Huawei after Washington's toughened sanction took effect.

WUXI BIO (02269.HK) announced that it proposes to implement the Share Subdivision on the basis that every one issued Existing Share will be subdivided into three Subdivided Shares. The Shares are currently traded on the Stock Exchange in board lot size of 500 Existing Shares. Upon the Share Subdivision becoming effective, the board lot size for trading in the Subdivided Shares will remain as 500 Subdivided Shares.

The Chinese and American central banks opted for different monetary and interest rate policies based on their respective GDP and unemployment data, cited Ma Jun, Member of the Monetary Policy Committee of the People's Bank of China. Meanwhile, the Chinese economic fundamentals underpinned positive interest rates. The appreciation or depreciation of RMB against USD largely hinges on whether the US or China has stronger economic growth in future, Ma opined.

PALACE BANQUET (01703.HK) announced that it placed up to 200 million new shares, representing 16.67% of the share capital of the company as enlarged. The place price was $0.25 per share, being a discount of 16.67% to the closing price as quoted on last trading day (18 September). The gross and net proceeds amounted to $50 million and $49 million.

BAUHAUS INT'L (00483.HK)  announced that it disposed to an independent third party the 1/F and 6/F and lorry car parking space at Sino Industrial Plaza, Kai Cheung Road, Kowloon, Hong Kong for a total cash consideration of $68.48 million.  The Group currently expects to record a gain on disposal of approximately $47.4 million upon Completion, among which about $44 million was intended for the payment of a special dividend.

* The email will not be published on the website.