Sept 14 HK WRAP HSI +137pts but T/O remains light

17 Sep

Sept 14 HK WRAP  HSI +137pts but T/O remains light

HSI +137pts (+0.6%) 24,640  HSCEI +54pts (+0.6%) 9,807 T/O HK$99.65bn (+3.7% DoD)  

EUROPE markets opened higher following the lead from Asia but sold down initially on reports of rising covid cases in UK, France and some US states which outweighed the +VE news about vaccine trials. Mood also cautious ahead of Central Bank meeting
US Futures opened 130pts and have worked higher to +290pts before easing back. Currently +220pts with S&P and NDX also positive. The Nvidia deal will help sentiment although there may be concerns about Nivida supply its competitors. Data due is Consumer Inflation Expectation. Again the rise in covid cases in 11 US states a slight -VE. But overall sentiment seems to be +VE

CSI 300 Closed +24pts (+0.5%) @ 4,651
Housing Index was +4.8% announced on the open, unchanged MoM and inline with f/casts. The open was higher helped also by Friday’s good loan growth data and the market initially spiked higher before trading sideways 4,635 - 4,666. Also helping the +VE sentiment was China's Star 50 Index which rose after four companies received permission to offer ETFs tracking the measure of startups listed in Shanghai. But the upside was limited by the news of new restrictions on Financial companies which will now have capital requirements and could limit some conglomerates in the sector.
PM trading saw the market sell down and test Friday’s closing level for support, which is did several times before working higher in the last 30 minutes.
Shanghai Composite Index +19pts (+0.6%) @ 3,279 T/O Rmb 269.2bn (vs 254.5bn Friday)
Shenzhen Component Index +79pts, (+0.6%) @ 13,022 T/O Rmb 500.2bn (vs 429.7bn Friday)
ChiNext Index +36pts (+1.4%) @ 2,573. T/O Rmb 270.5 (vs 215.6b Friday)

HSI Pre Market opened higher +65pts @ 24,569 vs -124pts a@ 24,378 with E Commerce and Tech firm. An initial spike to 24,650 as the China House Price data was in-line prompting a short squeeze. Then the market traded sideways (24,575 - 24,650) until 10:15am when it broke above and squeezed higher to 24,750 the day high. But then retested back to 24,640 level before looking to retest the resistance but without success. Market then eased lower into lunch. PM saw the market trade sideways in a tighter range (24,630 - 24,700) and on lighter volumes. Traders I think are cautious ahead of Central Bank meetings and the rise in covid cases in the UK, France and some US states. China tensions with US and India are also a cause for concern.

Techtronics (669 HK) 
A long time favourite of mine as readers will know. I mentioned this morning that I expected it to retest the HK$100 level shortly and the potential for a break out. Well it has today and closed at HK$101.50 +4.2% on the day.

whose shares will be listed tomorrow, closed at $0.81 in gray market, up 102.5% against the listing price of $0.4, on volume of 15.7 million shares and turnover of $12.9 million, PhillipMart data showed. Excluding the handling fees, a book gain of $2,050 was reported per board lot of 5,000 shares.

SHORT SALES Monday 22.3% vs 20.9% Friday
Top Shorts 
Ping An (2318) 43%, Mengnui Dairy (2319) 34%, BABA (9988) 34%, ICBC (1398) 32%, China Res land (1109) 30%, Bank of China (3988) 29%, Tencent (700) 26%, CCB (939) 23%.

China Tourism Academy published the 2020 domestic tourism development report, 
envisioning a highly probable W-shaped tourism economy revival and boost in growth momentum. The institution modeled the full-year domestic visitation at 3.426 billion, a negative growth of 43% YoY.
The Chinese wearable device market shipment +4.1% yearly to 26.58 million units during the second quarter of 2020, as IDC wrote in a report.
SC CREATIVE DEV (1781.HK) interim results ended June 2020. Loss amounted to $18.146 million, against $14.702 million in profit a year ago. LPS equaled 3.36 cents. No dividend was declared.
JIAYUAN INTL (02768.HK) announced that for the eight months ended 31 August 2020, the contracted sales RMB16.8957 billion, +8% YoY and the corresponding gross floor area sold was 1.5678 million sq.m., +11% YoY
Li Ka-shing and Victor T K Li through Li Ka Shing Foundation Limited acquired a total of 460,000 shares in CK ASSET (01113.HK) at the average price of HK$41.1687, HK$40.845 and HK$40.975 per share on 8 September, 9 September and 11 September respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset have increased from 35.53% to 35.54% and from 35.6% to 35.61% respectively.
SMARTONE TELE (315.HK) has officially launched Home 5G broadband services. Clients may enjoy unlimited 5G data (200GB full-speed data) for a $148 monthly plan.
CHINA SOUTH AIR (1055.HK) announced that in August 2020, passenger capacity (measured by available seat kilometres) of the Group -34.24% YoY. Passenger traffic (measured by revenue passenger kilometres) -44.03% YoY.
PING AN (2318.HK) stated that the life insurance sector reform in China is set to be decisive to the industry development over the coming decade. In the first half of 2020, Ping An Life Insurance has completed 1.69 million compensation cases, said the Chinese insurer.
The Hong Kong Monetary Authority (HKMA) released today (September 14) the key analytical accounts of the Exchange Fund at the end of August 2020. The external assets of the Exchange Fund, increased during the month by HK$1.4 billion to HK$3.68 trillion. Claims on the private sector in Hong Kong amounted to HK$232.9 billion.
August 2020, 195 sale and purchase agreements (SPAs) were registered for luxury homes priced above $20 million (including new homes and second-hand ones), -33.9% from 295 SPAs in July, said Wong Leung Sing, senior associate director at research department of Centaline Property. The transaction value totaled $9.664 billion in the month, down 29.5% from $13.708 billion in July. Both SPA and transaction value figures hit four-month low

Regional Markets
Pre market Tankan Index was not as bad as forecast and improved MoM. Also helping was news of Softbank agreeing the sale of Arm to Nvidia and the potential take Softbank might go private; all prompting the market to open higher. It rallied to 23,550 level and then worked slight higher to 23,580 at lunch. PM the market traded sideways to close +0.7% Softbank closed +9%. Japanese Liberal Democratic Party Chief Cabinet Secretary Yoshihide Suga has been appointed as the new party president.
S KOREA Kosdaq opened higher but sold down to 887 level, bounced and worked back to the opening level and then traded sideways to close +0.6%
Kospi opened higher and has traded sideways to close +1.3%.
TAIWAN opened flat and worked higher through the session to close +0.9% at 12,788 just off the day high.

CONNECT FLOWS (slightly higher DoD)
Northbound Rmb 34,040m Sell 18,362m : 15,678m Buy
Southbound HK$ 10,686m Sell 3,692m : 6,994m Buy

Northbound Rmb 53,500m Sell 26,980m : 26,520m Buy
Southbound HK$ 9,086m Sell 3,572m : 5,514m Buy

House Price Index Aug +4.8%
vs +4.8% Jul (F/cast was +4.8%)
The slowest rise since May 2018 with Covid being blamed for purchasers not wishing to go out which I find strange, I think the economic slowdown has made purchasers more cautious in some non-core areas. Worth noting that Shenzhen recorded the largest increase (6.2% vs 5.9% Jul), followed by Chongqing (5.3% vs 4.6%), Shanghai (4.5% vs 4.2%), Beijing (3.4% vs 3.3%), Guangzhou (1.6% vs 1%), and Tianjin (0.9% vs 0.7%). On a monthly basis, new home prices advanced 0.6% in August, following a 0.65% gain in July.
China has been keen to let the steam out of the housing market with tough restrictions and seems to have done a good job. In Sept 2019 prices were +8.4% MoM and declined gradually through to March and since then have been between 5.3% and now 4.8%. Covid and trade tensions have made purchasers more cautious as the economic outlook looks uncertain. It also means that the PBoC may be able to selectively ease some of the purchase restrictions in order to stimulate the economy if required.

Centre for Health Protection said there were 14 additional COVID-19 
cases in Hong Kong today; (vs 19 Sunday). 3 have unknown origin.

Active Heavyweights
TENCENT (700.HK) +2.6%
BABA (9988.HK) +0.8%
HKEX (388.HK) +0.8%
CCB (939.HK) -0.7%
MEITUAN (3690.HK) +0.7%
PING AN (2318.HK) +0.6%
AIA (1299.HK) +0.2%

HSI & HSCEI Constituents on the move
CHINA UNICOM (762.HK) +5.4%
SUNNY OPTICAL (2382.HK) +4.6%
TECHTRONIC IND (00669.HK) +4.2%

HSMI & HSSI Constituents on the move
HENGTEN NET (136.HK) +29%, hitting new high
COSMOPOL INT'L (120.HK) +13.4%
XINYI ENERGY (3868.HK) +11%, hitting new high
COSCO SHIP HOLD (1919.HK) -10%
POWERLONG CM (9909.HK) +9.5%, hitting new high
YADEA (1585.HK) +8.1%, hitting new high
JS GLOBAL LIFE (1691.HK) +5.4%, hitting new high

Market Commentary  
*CHINESE FINANCIALS WEAK after China issued new rules regulate financial holding companies in its latest move to prevent systematic risks to the vast financial  sector. To be licensed as financial holding firms, companies must have at least 5b yuan in capital. The rules also set requirements in total assets that financial holding firms can  manage. Companies that hold banking assets will need to have at least 500b yuan in total assets, and those that do not hold banking assets should have at least 100b yuan in assets.  CCB (939 HK -0.5%) ICBC (1398 HK -0.5%) CITIC BANK (998 HK -0.3%).
*E-COMMERCE  FIRM mostly traded higher after press reported that ByteDance won't sell or transfer the algorithm in any sale or divestment. Also, Beijing opposes the forced disposal of U.S. operations as making China look weak, and would rather see the app shut down,  Reuters said earlier. The latest news is that Microsoft says Bytedence has rejected its offer.  
ALIBABA (9988 HK +0.7%) is said intalks to invest $3b in GRAB.
TENCENT (700 HK +2.5%) NTES (9999 HK +0.4%) MEITUAN (3690 HK +0.7%).
*TECH & COMPONENT STRONG as SUNNY OPTICAL (2382 HK +4.5%) said the shipment of  handset lens sets grew by 22.3% YoY, or 19.4% MoM to 162m units in August. The shipment of handset camera modules grew by 8.2% YoY, or 10.7% MoM to 60.74m units last month,  and shipment of vehicle lens sets was 5.41m units, up by 16.3% YoY or 14.1% MoM.
AAC (2018 HK +2.5%) BYDE (285 HK +5.1%) FIT HON TENG (6088 HK +6.5%).
*INSURER WEAK on income data.  
CH LIFE (2628 HK -0.11%) said the accumulated premium income for the first eight months this year was 492.8b yuan, rising by 11.19% YoY.
PICC P&C (2328 HK unch) original insurance premium income of 307.62b yuan, +3.9% YoY, for the first eight months this year.
NCI (1336 HK-0.8%) recorded premium income of 1.166b yuan, +28.24% YoY. PING AN (2318 HK +0.5%) and Merchants Shekou agree to scrap share placement deal, ending $512m investment plan in China Merchants Shekou Industrial Zone Holdings Co.
*CHINA  PROPERTY MIXED after new home prices in 70 major cities rose 0.56% last month vs to a 0.47% gain in July. CR LAND (1109 HK +0.6%) acquired 6 land parcels in Changsha, Chongqing, Xiamen, Guangzhou, and Haikou with a total gross floor area of 1.32m sq meters. The attributable land premium payable by the group of the land  acquisition amounted to RMB12.19b.
EVERGRANDE (3333 HK -1.3%) SHIMAO (813 HK +0.3%) LONGFOR (960 HK +0.4%) VANKE (2202 HK -2%) TIMES CH (1233 HK -1%) AGILE(3383HK +3.1%).
*TOURISM FIRM names outperform speculation demand for travel to increase during the  week-long National Day Holiday in October. AIR CHINA (753 HK +1.6%) CSA (1055 HK +3%) TRAVELSKY (696 HK +2.2%).
*RENEWABLE ENERGY STRONG after XINYI ENERGY (3868 HK +11%)  following a HK$839.8m share placemnet, sold 125m new shares at HK$2.50 apiece to China Life, 232.5m new shares at HK$2.50 each to Hillhouse Capital.
Also rumours that Beijing may increase its targets for wind and solar installations from 2021-25 in its next 5 Year Plan. GCL-POLY (3800 HK +7.1%) GOLDWIND (2208 HK +7.9%).

CHINA MOBILE (941.HK) issued a notice, requesting to remove promotion wordings "unlimited data flow" 
from online and offline advertisements, self-channels and marketing events, according to Chinese media. The telecom said it will replace the "unlimited data flow" package with ordinary one, which will charge users with tiered pricing after the assigned data is used up.
Multiple Chinese media have purportedly received an invitation letter from BABA-SW (9988.HK) It was known that BABA-SW will introduce a new business on Wednesday, which it has held confidential for three years.
Hong Kong Trade Development Council (HKTDC) announced that the export index hit 25.1 in Q3, +6.9 pts quarterly and +9.1 pts from Q1 record-low reading. Despite notable export index rebound across sectors, HKTDC Director of Research Nicholas Kwan said the index was still in contraction territory, reflecting quite a lot of challenges faced by Hong Kong exporters.
Japanese Liberal Democratic Party Chief Cabinet Secretary Yoshihide Suga has been appointed as the new party president, Kyodo News reported.
CHINA TELECOM (728.HK) and CHINA UNICOM (762.HK) held a work review and a meeting for deepening 5G network co-building and co-sharing comprehensively in Beijing last week, reported Economic Information Daily. Both sides are striving to gain commercial standalone (SA) network capability by 30 September.
Apple's major iPhone assemblers are approved to join a US$6.6-billion stimulus program to bring their production lines to India, Bloomberg reported. Foxconn, Wistron and Pegatron are among the approved iPhone suppliers, whose current manufacturing bases are located in China, said the report.
TENCENT's VooV Meeting announced that the number of users shattered 100 million after 245 days of launch, 21st Century Business Herald reported. VooV Meeting has hence become a video conference product that tracked over 100 million users the fastest among its kind. VooV Meeting released a payment version for corporate, supporting 2,000 people online concurrently at maximum.
SWIRE PACIFIC A (19.HK) announced that it reached an agreement with DBS Bank (DBS) to convert an existing five-year revolving credit facility of HK$2 billion, entered into in January 2020, into a sustainability-linked loan. This is Swire Pacific's first sustainability-linked loan, with the interest rate payable under it reducible by reference to indicators of Company's environmental, social and governance (ESG) performance.
Johnson & Johnson (JNJ.US) plans to begin phase 2 clinical trials of its COVID-19 vaccine today in Spain.
CATHAY PAC AIR (00293.HK) announced that Cathay Pacific and Cathay Dragon carried a total of 35,800 passengers last month, -98.8%YoY. The month’s revenue passenger kilometres (RPKs) fell 98.1% year-on-year. Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam said the group has already taken decisive actions to reduce its costs, but despite these efforts it is burning cash at a rate of HK$1.5 billion to HK$2 billion per month, and will continue to experience significant cash burn until the market recovers. The recapitalisation provides the group time and a platform from which to transform its business and continue to operate in the short term; however, it is an investment that it needs to repay.
Qualcomm (QCOM.US) may decide to award its budget 5G smartphone application processor (AP) orders to Samsung Electronics, Korean media citing sources.
BMW Brilliance's power battery phase 2 centre has started production, marking the first manufacture hub of the group for BMW's fifth generation of power batteries, according to market news.
A new company (Chinese name: 星苒(上海)投資合夥企業(有限合夥)) has recently been established, mainly engaged in venture capital and investment management, Chinese media reported. The two major shareholders are Starbucks and Sequoia Capital China.
RAZER (1337.HK) disclosed that Razer Fintech is teaming up with Franklin Templeton to create a digital wealth management platform targeted at youngsters.
NTES-S (9999.HK)'s NetEase Cloud Music announced the strategic partnership with Bertelsmann Music Group (BMG). Both sides aim for deep-rooted and diversified upstream and downstream cooperation, namely music copyright, in-depth music IP development, music performance and online karaoke to provide Chinese users with quality music content.
Oxford Economics made forecast in its report that global overseas travel demand will sag 57% this year, before picking up to 2019's level in 2024, in wake of tightened border control and quarantine measures worldwide. Despite border reopening of some countries, the British based research house viewed that there is immense difficulty in striking the correct balance between ensuring the virus remains under control while reviving tourism.
Ministry of Commerce issued the Notice [2020] No.37, deciding to mount a countervailing investigation into monoalkyl ethers of ethylene glycol and propylene glycol imports from the United States immediately.
Macau's DSEC data showed that the the gaming revenue of the city in 2019 -3.5% yearly to MOP292.34 billion. The industry profit rose 0.3% to MOP182.52 billion.
After Zhuhai had revived the granting of Individual Visit Scheme, the number of inbound visitors to Macao approximated 9,000 per day, and around 15,000 to Guangdong, as Macao Daily learnt from Maria Helena de Senna Fernandes, Director of Macao Government Tourism Office.
ZTO Express (ZTO.US) has pass the listing hearing at the Stock Exchange for its planned WVR secondary listing in Hong Kong, with Goldman Sachs as its sole sponsor. The major shareholder BABA-SW (09988.HK) holds roughly 68.287 million class-A ordinary shares in the Chinese logistics company.

Not in this mornings report
EVERG VEHICLE (708.HK) announced its subsidiaries Guangzhou Hengze and Jialize Tourism had agreed to sell their entire equity interest in Evergrande Hengkang and Jialize Property Management for respective consideration of RMB46.8567 million and RMB684,400.
RUNDONG AUTO (1365.HK) announced that as of 30 June 2020, there were approximately 549 ongoing legal proceedings; approximately 173 concluded legal proceedings with judgments in the amount of approximately RMB251 million in aggregate granted by the courts in the PRC Court. Certain freezing orders has been imposed on the company. As of 11 September 2020, there were in total 153 freezing imposed on 49 PRC subsidiaries and one company in which RUNDONG AUTO holds approximately 15.0% equity interest.
ENN ENERGY (2688.HK) announced that the transfer of all 369 million shares held directly and indirectly by EGII to Xinneng (Hong Kong), a wholly-owned subsidiary of the Purchaser, had completed on 10 September 2020. As a result, Xinneng (Hong Kong) has become the controlling shareholder of the Company, holding approximately 32.78% of the Company’s total issued share capital.
Primary market saw 43 deals over the weekend, flattish week on week,
CK ASSET (1113.HK) 's "SEA TO SKY" recorded four deals;
K. WAH INT'L (173.HK)'s "K.SUMMIT" reported 14 deals.
With the government unwinding gathering ban, property developers flurried to launch new projects.
SHK PPT (16.HK)'s "Wetland Seasons Park Phase 3" launched 45 units more on Sunday. HENDERSON LAND (12.HK)'s "Two ArtLane" tracked approximately 2,500 visitors at their showroom.
PSBC (1658.HK) announced that its controlling shareholder China Post Group increased 870 million shares of the bank for RMB4.571 billion.
NEW WORLD DEV (17.HK) 's K11 MUSEA disclosed 2Q20 turnover recovered 35% quarterly and expected 3Q20 turnover to rise 60% quarterly. Local consumer group displayed "retaliatory consumption" phenomenon.
VINDA INT'L (3331.HK) announced that CHIA Yen On has tendered his resignation as an independent non-executive Director due to his other work commitments. Subsequently, the company's current number of independent non-executive Directors fell below the minimum number as required.
HENDERSON LAND (12.HK) had in last year sold stake in the company of Wo Shang Wai Project in Yuen Long at $4.705 billion, with buyer being EVERGRANDE (3333.HK), according to local media. Ming Pao reported that HENDERSON LAND holds Wo Shang Wai Project through Profit Point Enterprises Limited. HENDERSON LAND Chairman Lee Ka Shing and others, having resigned as the company's directors in July, claimed that any mortgage document will be signed by new director Gao Xiong. Gao Xiong is reportedly a senior executive of Evergrande Industry, the Hong Kong branch of EVERGRANDE.
GET NICE (64.HK) Trading has been halted with effect from 9:00 a.m. on 14 September 2020 pending the release of an announcement in relation to the Hong Kong Code on Takeovers and Mergers, which is inside information of the Company.
MACAU LEGEND (1680.HK) Trading has been halted with effect from 9:00 a.m. on 14 September 2020, pending the release of an announcement of inside information of the Company pursuant to the Hong Kong Code on Takeovers and Mergers.
XINYI ENERGY (3868.HK) announced planned placement of roughly 358 million Placing Shares at the Placing Price of HK$2.5 each, representing 8.09% discount to the closing price last Friday, to China Life Insurance and Hillhouse Capital. The estimated net proceeds of HK$893 million are intended to be applied for the general working capital.
Ant Group: Team-up with Megvii Never Involves Sinovation Ventures Chair Kai-Fu Lee  As to Sinovation Ventures Chairman and CEO Kai-Fu Lee's public remarks about cooperation between Ant Financial and Megvii, Ant Group clarified that the Group has never involved Lee for cooperation with Megvii, and that Ant Group has never transmitted any face detection data to Megvii. Ant Group further clarified that cooperation with Megvii had been merely limited to authorization from Megvii for the latter's image recognition algorithm capability to Ant, which did not involve any data sharing and transmission. Both parties have ceased the related business cooperation.

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