Sept 1 HK WRAP HSI Flat, T/O -24% DoD and Shorts rise to 20%

04 Sep

Sept 1 HK WRAP   HSI Flat, T/O -24% DoD and Shorts rise to 20%

HSI +8pts (+0.03%) 25,185  HSCEI +22pts (+0.2%) 10,013 T/O HK$139.06bn (-23.5% DoD)  

Dax and CAC open higher and trade sideways. FTSE opens flat and trending lower. French PMI beat, Eurozone was inline, UK missed small and German missed. German unemployment was inline. UK consumer credit, Mortgage Approvals and lending data were all higher than forecast. Eurozone Core Inflation missed at only +0.4% vs +0.9% F/cast but unemployment was slightly better.
US Futures opened. Opened slightly lower but are currently flat with S&P and NDX slightly higher.
Media reports Senate Majority Leader Mitch McConnell will "hopefully" announce a fresh coronavirus relief bill next week, said Treasury Secretary Steven Mnuchin. Neither Democrats nor Republicans made major concessions after the negotiations on the relief package had fallen apart by almost a month.

CSI 300 Closed +26pts (+0.5%) @ 4,842
Traded in a tight range with turnover down DoD. Opened lower but rallied into the green on good Caixin PMI data but then sold down to 4,800 level before bouncing back into the green and worked slight higher into lunch. PM saw the market open at yesterday’s closing level and trade sideways for most of the time and then rally 26pts into the close. Team China at its best.
Sentiment cautious as the border dispute with India flares up again. Also with Australia as it arrests the Chinese/Australian TV anchor of an Australian network on espionage charges.
Shanghai Composite Index +14pts (+0.4%) 3,410
Shenzhen Component Index +91pts, (+0.7%) 13,849
ChiNext Index +22pts (+0.8%) 2,750

HSI Pre Market opened -91pts @ 25,085 vs -157pts ADRs @ 25,020 with E commerce mainly +VE (BABA -0.3%) but tech and other sectors weak. Traded within a 150pts range all day. Opened lower but market rallied on good China Caixin PMI number but then sold down to opening level before rallying into the green and trading sideways only to sell down into lunch. PM saw the market have a small initial rally before trending to the low edge of the trading band. It then rallied back to the top edge of the band but ticked 45pts lower in the closing auction.

As USD/ HKD triggered the Strong-side Convertibility 
Undertaking, HKMA undertook US$1.25 billion selling orders to inject HK$9.688 billion into the market. The balance of the banking system of Hong Kong will increase to HK$203.879 billion on 3 September.
YUM CHINA-S (9987.HK) (YUMC.US), on the first day of IPO, reported approximately $4.08 billion margin granted by six brokers in aggregate at around 5:30 pm. Based on the fundraising amount of $785 million from the public offering, HK IPO was over-subscribed by 4.2 times.
GEELY AUTO (175.HK)'s Sci-Tech Innovation Board IPO. review status has been updated to "Application Accepted", according to the Shanghai Stock Exchange website. The Chinese automaker purportedly seeks to raise RMB20 billion.
HSBC's PayMe team announced that, starting from October 1st 2020, the monthly credit card top-up limit will be cut to HK$1,000 from HK$2,000. Although it might bring inconvenience to customers who use credit cards as the major way of top-up, they could choose to use their bank account as a new way of top-up in order to enjoy higher monthly top-up limit of up to HK$50,000, according to the PayMe team.
Penguin ("企鵝號"), TENCENT (700.HK)'s content open platform, launched a 60-day special rectification program during the summer vacation, reported Chinese media. Data showed the platform had uncovered and blocked 2.831 million feeds of violating contents, involving 266,000 feeds of indecent contents jeopardizing adolescents.
TIMES CHINA (1233.HK) announced that aggregated contracted sales for the eight months ended 31 August 2020 amounted to RMB49.366 billion, +14.4% YoY with contracted gross floor area of 3.529 million square meters. In August 2020, contracted sales amounted to RMB8.92 billion, +41% YoY with contracted gross floor area of 622,000 square meters.
R&F PROPERTIES (2777.HK) announced that the Group’s attributable contracted sales for the month of August 2020 amounted to RMB10.86 billion, +3.13% yearly.
BYD COMPANY (1211.HK) announced that its third plant in Brazil had started operation and this plant is the first to produce LiFePO4 batteries in the Manaus industrial region of South America. The plant is located in the north of Amazonas, specialised in producing LiFePO4 batteries.

Regional Markets
opened lower small rally after good employment data but then sold down to day low before rallying 23,200 only to sell down to flat at lunchtime. PM opened lower but trended higher to close flat.
Unemployment Jul @ 2.9% beat f/cast but Capital Spending Q2 -11.3% was missed badly.
PMI @ 47.2 was up MoM and better than expected.
S KOREA Kosdaq opened on good GDP Growth andTrade data, and moved higher before testing the support of yesterday’s close. Then market rallied to 854 level than back to opening level and trading sideways for most of the day before working higher to close +0.6%
Kospi followed a similar pattern; early choppy trading then sideways to close +1%.
GDP Growth Rate Q2 -2.7% down QoQ but beat forecast, Trade Balance $4.12b, Exports -9.9% both beat, Imports were -16.3% small miss.
PMI Aug 48.5 up MoM and beat forecast.
New Covid cases 235 still a concern.
TAIWAN opened higher and small up tick before selling down, support just below yesterday’s close then rallied back and traded slightly higher for the rest of the session to close +0.9%
PMI was 52.2 up MoM and beat forecast.

Northbound Rmb 39,349m Sell 20,577m : 18,772m Buy
Southbound HK$ 11,281m Sell 5,332m : 5,949m Buy

Northbound Rmb 53,450m Sell 25,973m : 27,478m Buy
Southbound HK$ 12,409m Sell 5,036m : 7,373m Buy


Caixin Manufacturing PMI Aug 51 vs 51.1 Jul. (F/cast was 51.3)
Fourth straight month of growth and the sharpest rise since the start of 2011. Both output and new orders grew sharper, while export sales rose for the first time this year. Also, buying activity continued to increase, amid firmer demand conditions. Meanwhile, staffing levels fell fractionally, hinting that employment was close to stabilization as firms saw a further rise in backlogs of work. Prices data, meantime, indicated softer increases in both input costs and output charges. Finally, sentiment remained solid.

Centre for Health Protection said there were 12 
additional COVID-19 cases in Hong Kong today; (vs 9 cases Monday).
After Market
Retail Sales 
Jul -23.9% YoY vs -25.3% Jun revised down (F/cast was -18%)
The 18th successive decrease in retail trade, driven mainly for food, alcoholic drinks and tobacco (-12.9%); other consumer goods, not elsewhere classified (-7.2%); jewellery, watches and clocks, and valuable gifts (-53.7%); electrical goods and other consumer durable goods, not elsewhere classified (-5.6%); and commodities in department stores (-28.8%). Also, wearing apparel (-42.5%); medicines and cosmetics (-50.9%); motor vehicles and parts (-13.1%); books, newspapers, stationery and gifts (-41%); Chinese drugs and herbs (-26.5%); footwear, allied products and other clothing accessories (-53.6%); and optical shops (-37%).

Active Heavyweights
HKEX (388.HK) +1.7%
TENCENT (700.HK) +1.6%
AIA (1299.HK) +0.8%
PING AN (2318.HK) -0.7%
CCB (939.HK) unch

HSI & HSCEI Constituents on the move
BYD COMPANY (1211.HK) +13.8%
GEELY AUTO (175.HK) +4.4%
ENN ENERGY (2688.HK) +3.3%

HSMI & HSSI Constituents on the move
51 CREDIT CARD (2051.HK) +21.1%
FIT HON TENG (6088.HK) +12.1%
FULLSHARE (607.HK) -11.7%
MINTH GROUP (425.HK) +11%
GREATWALL MOTOR (2333.HK) +8.9%, hitting new high
KB LAMINATES (1888.HK) +5.8%, hitting new high
XINYI GLASS (868.HK) +3%, hitting new high
MAN WAH HLDGS (1999.HK) +2.4%, hitting new high

SHORT SALES Tuesday 20.2% vs 14.6% Monday
Top Shorts
MTRC (66) 50%, Hang Seng Bank (11) 44%, HK & China Gas (3) 41%, BoC HK (2388) 39%, BankComm (3328) 38%, Want Want (151) 34%, AIA (1299) 33%, CITIC (267) 30%, Sino BioPharm (1177) 28%, CLP (2) 27%, China Res Land (1109) 27%, Petrochina (857) 26%, Sino Land (83) 26%, Mengniu Dairy (2319) 26%, Ping An (2318 25%, HSBC (5) 25%.

Market Commentary
. Post earnings executives from big banks warned of uncertain outlook in 2H, especially with rising non-performing loans and brokers trimmed targets: ICBC (1398 HK -0.7%), CCB (939 HK unch) ABC (1288 HK -1.1%)
*E-COMMERCE MIXED after ZOOM VIDEO's forecast beat the highest estimates, while White House trade adviser Navarro said it is critical for Americans not to use apps made in China, as the Trump administration plans to go after apps similar to WeChat and TikTok. ALIBABA (9988 HK +0.2%) TENCENT (700 HK +2.6%) JD (9618 HK -0.4%) NTES (9999 HK -1.5%).
PA GOOD DOC (1833 HK +0.5%) expanding its medical practices.
*TECH & COMPONENTS MIXED on news APPLE asked suppliers to build at least 75m 5G iPhones for later this year, roughly in line with last year’s launch. SUNNY (2382 HK -0.3%), AAC (2018 HK +0.8%) TRULY (732 HK +3%) TONGDA (698 HK -1%) FIH (2038 HK +4.5%).
*HK PROPERTY WEAK despite low interest rates and Li Ka Shing buying 3.33m CK ASSET (1113 HK-0.5%) shares Aug 25-28. Local political unrest could upset the market. HENDERSON LAND (12 HK -0.3%) SHKP (16 HK -2.2%) NWD (17 HK -1.4%).
*CHINA PROPERTY WEAK on concern the PBOC plans clamping down on excessive leverage in the real estate sector; SHIMAO (813 HK -2.6%) VANKE (2202 HK -0.6%) JINMAO (817 HK -2%).
CR LAND's (1109 HK +0.1%) prop mgmt arm has filed pre-listing documents with HKEX. EVERGRANDE's (3333 HK -2.4%) profit -56% YoY to 6.5b yuan.
*AUTO STRONG on optimism on 2H recovery. GREAT WALL (2333 HK +8.8%) BYD (1211 HK +14%) DONGFENG (489 HK+5%) GEELY (175 HK+4.3%).
Parts makers also jumped, MINTH GROUP (425 HK +11%) NEXTEER (1316 HK+9.5%).
*MACAU CASINOS FIRM on recovery optimism in 2H, on news the Macau Govt will give away consumption coupons worth of MOP290 million through WeChat platform between 1 September and 31 December to woo Chinese tourists to visit Macau and despite Macau August casino revenue -94.5% YoY vs est -93% YoY. SANDS (1928 HK +0.8%) WYNN (1128 HK +1.5%) SJM (880 HK +1.3%) GALAXY (27 HK +1.7%).
*HK RETAILERS/CONSUMERS MIXED ahead of Retail sales data due after market. Economists forecasted that Hong Kong's retail sales may have dropped 27.4% YoY by value in July, compared with -24.8% in June.
SASA INTL (178 HK +3%) CHOW TAI FOOK (1929 HK +1.8%)
BUT I.T. (999 HK -1.9%) LIFESTYLE (1212 HK -0.2%) TAI HING (6811 HK -2%).
*F&B MIXED post results.
TSINGTAO BREWERY's (168 HK -4.5%) 1H net profit year rose ~14% YoY to 1.855b yuan.
NISSIN FOODS (1475 HK +7.5%) yesterday said its 1H net profit rose 34.3% to HK$178.4m due to increased demand amid the pandemic.

USD/CNH surmounted 6.81 and peaked at 6.8087
, +376 bps, after midday. The rate rose 302 bps, or +0.4%, to last post at 6.8161.
Apple has requested suppliers to produce at least 75mn units of 5G iPhone at the later time of this year, broadly in line with last year's launch, Bloomberg cited sources. Sources said Apple envisioned the iPhone shipment of next generation to reach maximum of 80mn units in 2020. The tech giant also planned to roll out four new models in October featured with 5G technology, different designs and a wider choice of screen sizes. Slight +VE for its supply chain names.
Macau's gaming revenue -94.5% YoY or -1% MoM to MOP1.33 billion in August, reported Gaming Inspection and Coordination Bureau (DICJ).
OFILM (002456.SZ) Aware of news report about being kicked out from Apple's supplier list clarified that the news is untrue, which may mislead investors and distort the market order. The company stated that its tie with major U.S. clients remains rigid with stable orders
SKYWORTH GROUP (751.HK) said it was less prone to pandemic impact for its TV sales units than other industries. GROUP's overall sales volume +0.8% YoY in 7M20, with overseas market growth of +19.3% and domestic market slide narrowing to 14.6%. Mak anticipated for a low single-digit sales growth for the year.
Overnight HIBOR last posted at 0.27429%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.44875%, marking a 1-month high.
HKD strengthened near the Strong-side Convertibility Undertaking, and the spot USD T/T rate was last at 7.7501. The balance of the banking system of Hong Kong may increase to around HKD194.19 billion on 2 September.
HKEX (388.HK) Head of Listing, said at an online seminar that the Stock Exchange has stipulated guidelines for the listing of biotech companies, and is now making clarification on some of them, adding there are also strict regulations for the fundraising purposes. As there are multiple biotech firms are undergoing pre-listing procedure now, Chan is bullish about the prospect.
Kazakhstan sharply reduced oil exports to China over the past two months, from 98,865 tonnes in June to 12,100 tonnes in July, hitting a three-month trough. The monthly shipment stood at only 10,000 tonnes as of 28 August. Due ti the lower crude profitability compared with output cut commitment under the deal and shipments to China, Reuters citing insiders.
The shipment of wearable devices +14.1% yearly Q2 2020, owing to fierce demands for hearable items and health metrics gadgets, IDC wrote in a report. During the period, the market size bulged to 86.20 million units, where Apple (AAPL.US) reaped the largest market share (34.2%), followed by Huawei and XIAOMI-W (1810.HK)

Not in this mornings report
CHINA ZHONGWANG (1333.HK) is scaling back its European business as a result of the EU's anti-dumping investigations and the coronavirus crisis, Reuters reported. The Chinese aluminium company is undergoing a restructuring which may involve layoff, said insiders.
XIAOMI-W (1810.HK) will launch Mi 10 Lite 5G in Japan on 4 September, marking the debut of its 5G smartphone in the country, reported Kyodo. The handset is priced at JPY42,700.
The Macau government plans to rain consumption coupons worth of MOP290mn  through WeChat platform between 1 September and 31 December to woo Chinese tourists to visit Macau.
ZHENGTONGAUTO (1728.HK) interim result ended June 2020. The company swung into loss of RMB1.366 billion from net profit of RMB471 million over a year ago. LPS was 55.7 fen.
ZA ONLINE (6060.HK) announced the proposed issue of U.S.$300 million 3.5% notes due 2026. The proceeds are to be used for working capital and general corporate purposes.
COGOBUY (400.HK) interim results ended 30 June 2020. Net profit +163.4% yearly to RMB100 million. EPS equaled 7.2 fen. No interim dividend was declared.
BAIC MOTOR (01958.HK) interim results ended June 2020. The net profit amounted to RMB1.047 billion, -65.7% YoY. EPS. was 12 fen. No interim dividend was declared.

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