Sept 17 HK WRAP HSI -385pts T/O +14% Shorts 20%

21 Sep

Sept 17 HK WRAP HSI -385pts T/O +14% Shorts 20%

HSI -385pts (-1.6%) 24,341 HSCEI -114pts (-1.2%) 9,732 T/O HK$117.69bn (+14.3% DoD)

EUROPE markets opened lower after the FOMC decision and ahead of the BoE decision. Other data today EUROZONE New Car Registrations, Construction Output, Core Inflation Rate, Inflation Rate. UK BoE Quantitative Easing, MPC Meeting Notes
US Futures opened flat but are currently indicating the Dow opening -250pts and the S&P and NDX also opening lower. With caution ahead of the initial claims report. Other data Housing Starts, building Permits, Philadelphia Manufacturing Index, EAI Natural Gas Stocks Change, 10 yr TIPS Auction

CSI 300 Closed -25pts (-0.5%) @ 4,633 
opened lower around 4,600 level and trended lower through the morning to the day low 4,602 before ticking up into lunch. PM saw the market recover all the day’s losses and break above yesterday’s close; hitting 4,665 around 2pm. But only to sell back down to around the opening level. Definitely the feel of Team China at work but failing to generate retail momentum.
SHCOMP was weak with selling of Kweichow Moutai -3.2% In the wider market AUTO’s +VE on good sales data and SemiConductors +VE on the Star Board.
Shanghai Composite Index -14pts (-0.4%) @ 3,270
Shenzhen Component Index +4pts, (flat) @ 13,015
ChiNext Index +3pts (+0.1%) @ 2,557.

HSI Pre Market Opened -49pts @ 24,676 vs -25pts @24,700 E-Commerce names mixed following the weakness in US but Petrochems strong. Financial & Property mixed. The market tried to test yesterday’s closing level but fell short and then sold down finding support at 24,250 about 11:20am and saw a small uptick into lunch. PM saw the market just trade sideways with more caution ahead of tonights initial claims in the US. Market failed to rallied despite the Fed indicating that interest rates will remain low until 2023; the concern is that its ability to stimulate inflation is limited.

Techtronics (669 HK) 
A long time favourite of mine as readers will know. Sold off on the open but managed to close above HK$100 which looks to become the support level.

SHORT SALES Thursday 20.8% vs 21% Wednesday
Top Shorts
Bank of China (3988) 40%, Hang Seng Bank (11) 40%, ICBC (1398) 37%, China Res Land (1109) 36%, BoC HK (2388) 34%, CCB (939) 34%, HK & China Gas (3) 33%, Hang Lung PPT (101) 29%, AIA (1299) 27%, CLP (2) 27%, BABA-SW (9988) 26%, Galaxy (27) 26%, Tencent (700) 25%, Hengan (1044) 25%.

BANK OF E ASIA (00023.HK) noted a press release in connection with enforcement action t
aken by the Securities and Futures Commission against the Bank; The board of directors does not consider the aforesaid matter to have any material adverse impact on the business or operations of the Bank or any of its subsidiaries.
AlipayHK announced to provide Hong Kong merchants with its open mini programs, allowing them to have their own apps instantly and move their services or goods online. The merchants will also get a chance to expand their reach to over 2 million AlipayHK users.
In a notice issued after market close, CTFO (002373.SZ) and YUYUE MEDICAL (002223.SZ) announced that the CBIRC had granted an approval for Ant Group to establish a consumer finance company in Chongqing (Chinese name: 重慶螞蟻消費金融有限公司).
As USD/HKD triggered the Strong-side Convertibility Undertaking 7.75, the HKMA undertook a US$400 million selling order to inject HK$3.1 billion into the market. The balance of the banking system of Hong Kong will increase to HK$214.057 billion next Monday (21 September).
HKT-SS (06823.HK)'s CSL Mobile announced that it has been named as the exclusive mobile network carrier to distribute PlayStation 5. "PlayStation 5 Console Promotion Plan" will be open for booking tomorrow. The console is priced from $3,180.
MTR CORPORATION (00066.HK) will invite developers and/or consortia to submit Expression of Interest (EOI) for LOHAS Park Package Thirteen Property Development tomorrow (18 September 2020). The deadline for submission is 12:00 noon on 24 September 2020.China Passenger Car Association (CPCA) expected China's narrow-sense PV retail sales
volume to grow around 8% YoY to 1.915 million units in September, as "Golden September and Silver October" are traditional peak seasons for sales.
FULU HOLDINGS (02101.HK), to be listed tomorrow, opened at $13.5 in grey market, up nearly 52% against the listing price $8.9, and last stood at $12, up 35% against the listing price, on volume of 890,000 shares, PhillipMart data showed
Centa Valuation Index (Major Banks) (CVI) last printed at 38.54 this week, 4.95 pts weekly. The government has gradually relaxed the anti-plague measures, boosting the second-hand home market with deals turning vibrant, said Centaline Property. CVI's five-week slide came to an end this week.

Regional Markets
opened lower and sold down ahead of the BoJ rate decision but then worked back to the opening level only to sell down into lunch. PM opened lower but traded sideways to close -0.7%
S KOREA Kosdaq opened higher but trended lower through the day. Found support around 883 level and then traded sideways to close -1.2% Kospi Opened lower tested Wednesday closing level but then trended lower finding support of the 2,400 level then traded sideways to close -1.2%.
TAIWAN opened lower but initially moved higher to test the 13,000 resistance. Failed and sold down finding support around 12,850 and then traded sideways; to close -0.8%

Northbound Rmb 37,538m Sell 19,931m : 17,608m Buy
Southbound HK$ 8,585m Sell 3,861m : 4,724m Buy

Northbound Rmb 49,951m Sell 23,594m : 26,356m Buy
Southbound HK$ 8,819m Sell 4,013m : 4,806m Buy

CHINA none

Centre for Health Protection said there were 9 additional COVID-19 cases 
in Hong Kong today 3 with unknown origins.
After Market Unemployment Aug 6.1% vs 6.1% Jul (F/cast was 6.3%)
Still at the highest level since Jan 2005, with under-employment rising as well. Actual employment rose but so did the size of the workforce.
HK Jul Total Exports of Goods Drop 2.3%
The Census and Statistics Department (C&SD) released today the volume and price statistics of external merchandise trade for July. In July 2020, the total volume of exports of goods -2.3% YoY and imports of goods -2.2% YoY. Comparing the first seven months of 2020 with the same period in 2019, the volume of Hong Kong's total exports of goods -5.6% and imports of goods -7.6%.

Active Heavyweights
MEITUAN (3690.HK) -3%
AIA (1299.HK) -2.4%
BABA (9988.HK) -1.9%
TENCENT (700.HK) -1.4%
HKEX (388.HK) -1.2%
CCB (939.HK) -0.9%
PING AN (2318.HK) -0.6%

HSI & HSCEI Constituents on the move
XIAOMI-W (01810.HK) -6.4%
WUXI BIO (02269.HK) -3.9%
SHIMAO GROUP (00813.HK) -3.4%
TECHTRONIC IND (00669.HK) -3.1%
SANDS CHINA LTD (01928.HK) -3.1%

HSMI & HSSI Constituents on the move
BYD COMPANY (01211.HK) +5.9%, hitting new high
VSTECS (00856.HK) +5.8%, hitting new high
FUYAO GLASS (03606.HK) +4.9%, hitting new high
KINGBOARD HLDG (00148.HK) +3.3%, hitting new high
HOPSON DEV HOLD (00754.HK) +3%, hitting new high

Market Commentary
as oil prices jumped the most since early June in New York to close above $40, the highest level in almost two weeks. But it was thanks to shrinking US  inventories due to the hurricane and a pickup in domestic refining.  I think we need to see more robust reasons to off set concerns about lack of demand / oversupply. CNOOC (883  HK +1.9%) CH OILFIELD (2883 HK +3.8%) PETROCHINA (857 HK +0.8%).
*AUTO FIRM extended gains on the good August sales data. BYD (1211 HK +4.9%) after its A-share was +10%, the daily limit to another record high.GREATWALL (2333 HK +1%) on brokers raising price targets as its reported that China is poised to give fossil-fuel cars more time to co-exist with electric cars, moving away from considerations to have a deadline for a ban on conventional autos. GAC (2238 HK +5.6%) GEELY (175 HK +0.1%).
*E-COMMERCE WEAK. Concerns over the TikTok deal after Donald Trump said he is not happy with what he has heard about the terms of Oracle Corp.’s bid. Also on the Nvidia buying of ARM which China could block because of the threat to chip supplies in China, SMIC (981 HK -1.5%) seeking a US licence to supply Huawei with Chips and the sell-off in US E-commerce names overnight. All suggesting that the Tech sector is under pressure.ALIBABA (9988 HK -2.2%) unveiled a pilot factory in the eastern Chinese city of Hangzhou as part of its "smart manufacturing" business initiative, while Tmall said it will set up a real estate department. Follows the success of KE Holding's BEKE, backed by SoftBank and Tencent. The sector is getting to be very interesting with a number of other private Property E Commerce sites looking to list too.
TENCENT (700 HK -1.7%) JD (9618 HK -4%) NTES (9999 HK -2.7%) MEITUAN (3690 HK -3.7%).
*HK PROPERTY FLAT The Buildings Department approved 19 building plans in July, including the 2 Tai Cheong St development project of HENDERSON (12 HK-0.17%), the Yau King Lane project of SHKP (16 HK unch). Sentiment on new projects are seen improving as the latest round of Covid-19 outbreak has been contained. Developers likely to move to bring forward releases.
*EDUCATION WEAK on fund-raising concerns as CH NEW HIGHER EDU (2001 HK -7%) placed 44m shares at HK$5.35/shr, representing a 7.76% discount to last traded price of HK$5.8/shr. The company also selling $100m 1.0% convertible bonds due 2021. VIRSCEND EDU (1565 HK -2%) MAPLELEAF (1317 HK -2.8%) CH XINHUA EDU (2779 HK -2.8%).
*ENERGY PROVIDERS FIRM as China mulls proposal to boost clean energy in a 5-year plan, without further detail. DATANG RENEW (1798 HK +4.3%) HUADIAN POWER (1071 HK +3%) HUADIAN FUXIN (816 HK +0.4%) GOLDWIN (2208 HK +1.1%).
*PAPER MAKERS STRONG extending recent gains as improved in China retail sales raises demand for paper products are view as correlated with retail sales. LEE & MAN PAPER (2314 HK +9.9%) NINE DRAGONS (2689 HK +1.6%) CHENMING PAPER (1812 HK +0.6%).Investors should also consider Amcor in Australia which is the worlds largest manufacturer of consume packing materials.

HYDE PARK in Cheung Sha Wan, co-developed by ITC PROPERTIES (00199.HK) and the URA, has its first price list released, involving 50 flats.
With saleable area of 283-474 sq.ft., the flats are priced at $5.59-10.131 million, or $18,724-23,480 per sq.ft.. After the maximum 4% discount, the flats are sold at $5.367-9.726 million, or an average of $20,201 per sq.ft.. Showrooms and subscription will be available tomorrow (18 September), and sales may start as soon as next week.
Huawei, CHINA MOBILE (00941.HK), Beckhoff China and Huaheng jointly announced for the 5G all-scenario smart logistics system, which leveraged the low latency of 5G network and efficient EtherCAT real-time network communication mechanism to achieve multiple sets of standardized AGV work synchronicity and collaboration between AGVs and robots. The four-party alliance will provide extensive application scenarios for smart warehousing and delivery of large material work pieces.
ZTE (00763.HK) announced that it had signed a strategic cooperation deal with JoySuch. Pursuant to which, both sides will team up thoroughly for various 5G sector fields to build a new "5G+Location IoT" industrial ecosystem.
Gao Feng, spokesman of Ministry of Commerce (MOC), said China and the EU have held six rounds of negotiation year to date where positive progress was reaped in terms of documents and agenda. Pursuant to consensus among leaders, both parties have scheduled next week for the 32nd round of talk. He also announced Chinese firms' non-financial outbound direct investment (ODI) along "Belt and Road" countries surged 31.5% annually to US$11.8 billion for the first eight months of 2020,
Alipay's "wake-up" hotline service announced to upgrade the "152 anti-fraud" package and launch the first anti-fraud AI customer service representative, according to Chinese media. Once a risk of fraud has been detected, the customer service advisor will not only suspend the Alipay transaction, but will also remind users of the risk via phone calls.
Delivery Hero's FoodPanda announced business commencement in Japan. At the beginning stage, delivery services will be available in six cities, involving US$23.50 million in investment.
General Motors' sale of its Indian plant to GREATWALL MOTOR (02333.HK) is subject to delays due to tensions between India and China, which may result in hefty unplanned costs, as Reuters learnt from people familiar with the matter.
TAB Food Investments, the biggest franchisee of Burger King, is looking to sell its China operation in a deal likely worth over US$1.2 billion, Bloomberg citing insiders.
TENCENT (00700.HK)'s WeChat Pay HK teamed up with SHK PPT (00016.HK) malls for consumption promotions. Starting from today to 30 November, any existing WeChat Pay HK user can obtain a $20 SHK PPT e-coupon by registering as a member of The Point by SHKP and logging in to the app. The coupon can be used when shopping in 20 SHK PPT malls in Hong Kong.
EVERGRANDE (03333.HK) garnered the land parcels No. HK286A-03a and HK286A-03c at Hongkou District, Shanghai with RMB2.295 billion, according to Chinese media. The floor price per sq.m. is RMB51,000. The land is for commercial and residential purposes.
XIAOMI-W (01810.HK) has invested more than RMB10 billion into scientific research this year, representing 50% of the total R&D expenditures of all listed companies on Science and Technology Innovation Board, Chinese media citing Chairman Lei Jun.
President of BABA-SW (9988.HK) Cloud Intelligence, exhibited a cloud compute "Shadowless" (literal translation of "無影") launched by Alibaba Cloud at the Apsara Conference. It also announced the launch of its first robot (Chinese name: 小蠻驢) and robot platform, Chinese media reported. The robot is featured with intelligent cognition.
The Bank of Japan (BOJ) announced maintaining the negative short-term interest rate of 0.1%, as expected. The central bank will purchase a certain amount of Japanese government bonds (JGBs) without an upper limit, in order to keep the 10-year JGB yields at around zero
US. Department of the Treasury today released Treasury International Capital (TIC) data for July 2020. The net foreign purchases of long-term securities further moderated to US$10.8 billion monthly. China unloaded the U.S. bonds for the second month by US$1 billion in July to US$1.0734 trillion. In contrast, Japan increased the U.S. bonds for two straight months by US$31.5 billion to US$1.2930 trillion, logging a record high since 2000. Japan was the biggest U.S. bond holder for 14 months.
HSBC launched the new "HSBC One" integrated account, focusing on providing customers with simple and easy one-stop smart mobile wealth management service. In preparation stage, the bank will offer an upgraded service experience on 27 October with reference to opinions from customers, particularly the young generation.
ESR (01821.HK) Block trade of 140 million shares this morning at $22.5 per share, representing a discount of 9.1% to the closing price of $24.75 as quoted yesterday (16 September). The deal involved $3.15 billion. The stake cut was made by South Korean SK Holdings, foreign media said. Upon completion, SK Holdings still holds approximately 6.4% stake in ESR.
Sony announced the launch of the next-generation PlayStation 5 in November, priced at US$399.99 for digital edition and US$499.99 for disk edition. The console will be available in the U.S., Japan, Canada, Mexico, Australia, New Zealand and South Korea on 12 November, and in the rest of the world on 19 November.
Two wholly-owned subsidiaries of FDG EVEHICLES (00729.HK) had received a letter from Xu Haohao proposing to acquire about 5.035 billion FDG KINETIC (00378.HK) shares, together with outstanding overdue loans and shareholders loans. The acquisition proposal has expired despite the previous extension of the Final Closing Date to 21 September 2020. Trading in the shares of FDG EVEHICLES has been suspended since 2 July and will continue to be suspended until further notice.
McDonald's (MCD.US) was the world's most-downloaded food delivery app in August, with 8.6 million installs (+6.8% YoY), reported Sensor Tower. 14% of the downloads were from the United States, while 9% were from Brazil. Uber Eats came as second, preceding Domino's (DPZ.US), KFC and FoodPanda.
In August, RMB maintained its position as the fifth most active currency among global payment currencies based on amount, as revealed by the latest data of SWIFT. By proportion, RMB made up global payment of 1.91% in August, up from July's 1.86%.
China Foreign Exchange Trade System announced today (17 September) that the central parity of USD/ RMB rose 150 bps from the last trading day to 6.7675, hitting an over-16-month high.

Not in this mornings report
Han Zheng, Senior Vice Premier of State Council, visited Huawei's Wuhan base, Yangtze Memory Technologies and other firms to study the R&D and production of silicon optical chips and memory chips. Han suggested focusing on overcoming bottlenecks in technologies and strengthening the guarantee of key basic materials.
CHINA TOWER (00788.HK) has signed a strategic cooperation framework deal with SF Express Group recently. Both sides struck an in-depth collaboration in facilitating energy service, industrial chain logistics and other fields.
Q TECH (01478.HK) announced that it had on 16 September granted 17.8796 million share options to 119 eligible participants at an exercise price of $9.22 per share.
ICBC (01398.HK) announced proposed issuance of US$2.9 billion 3.58% non-cumulative perpetual offshore preference shares for net proceeds of approximately RMB19.64 billion.
NEW HIGHER EDU (02001.HK) announced proposed issue of US$100-million 1% guaranteed convertible bonds due 2021 and proposed top-up placing of 44 million shares at HK$5.35 each. The estimated net proceeds from the issue of the Convertible Bonds approximate US$99 million (about HK$767 million), and around HK$233 million from the share placing.
China's economy continued to recover steadily in July and August, sequentially illustrating the effectiveness of macro policies, said Chinese Premier Li Keqiang at the World Economic Forum's Special Virtual Dialogue with Global Business Leaders. China endeavored to achieve its major annual goals regarding economic development, hopefully tracking a positive economic growth for the year, added Li.
Chinese President Xi Jinping had made a call yesterday to Yoshihide Suga and congratulated his Japanese counterpart for being elected as Prime Minister, Xinhua News Agency reported.  Xi mentioned that a long-term stable and friendly tie between Beijing and Tokyo is in-line with the underlying interest of their citizens and salubrious to the harmony and prosperity in Asia and the world. Chinese Premier Li Keqiang also bid his greeting to Suga via a phone call, adding that he hopes for a further step towards a closer tie between the two countries.
GET NICE (00064.HK) and GET NICE FIN (01469.HK) jointly announced that Hung Hon Man (as the offeror), the chairman of Get Nice Holdings, proposed voluntary conditional cash offers to acquire all the GNH Offer Shares at $0.17 each, representing a premium of 5.59% over the closing price per GNH Share quoted on the Stock Exchange on the Last Trading Day. The maximum cash consideration payable by the Offeror under the GNH Share Offer would be approximately $1.15 billion. The two companies applied for trading resumption with effect from this morning (17 September).
BOSSINI INT'L (00592.HK) annual results ended June 2020. Loss deepened to $368 million from $139 million a year ago. LPS equaled 22.4 cents. No final dividend was declared.
COSMO LADY (02298.HK) announced that Chairman Zheng Yaonan had on 14 September acquired 1 million shares from the market. Altogether, a total of 6.321 million shares have been purchased by Zheng.

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