Sept 23 HK WRAP HSI +25pts T/O drops again. Short Rise to 20%

25 Sep

Sept 23 HK WRAP HSI +25pts T/O drops again. Short Rise to 20%

HSI +25pts (+0.1%) 23,743 HSCEI -18pts (-0.2%) 9,559 T/O HK$98.48bn (-7.1% DoD)

Markets opened higher German Consumer Confidence beat PMI’s for UK & Germany were better but Eurozone and French missed. Market peaked late morning and started drifting lower
US Futures opened rallied to +170pts with S&P +VE but NDX weaker. Good results from Nike +VE for sentiment, reopening stocks +VE as Trump so no second round of lockdowns. Data due MBA Mortgage Applications & 30 year Mortgage Rate, House Price Index, PMI Flash Services, Manufacturing and Composite, Fed Chair Powell Testimony, EIA Oil Report.

CSI 300 Closed +17pts (+0.4%) @ 4,653
opened higher and bounced around Tuesday closing level initially before trending higher to 4,650 but then reversed to 4,624 before bounding back to 4,642 at lunch. PM saw the market trend higher to 4,666 before selling back down to the lunchtime level. Then pushed higher into the close. Chopping trading suggest Team China battling with retail concerns. Rotational trading continues are investors cautious as Chinese relations with; US, India, Australia and Taiwan continue to deteriorate. The four new ETF’s tracking the Star 50 seen as slight positive giving retail investors an affordable way to ‘play’ the new board
Shanghai Composite Index +5pts (+0.2%) @ 3,280.
Shenzhen Component Index +87pts, (+0.7%) @ 13,110
ChiNext Index +51pts (+1.7%) @ 3,039

HSI Pre Market Opened -15pts @ 23,701 vs -39pts ADRs at 23,678 with E-commerce names slightly +VE but weakness in HSBC, Hang Seng Bank and Chinese Developers with consolidation in the sector expected. Market then saw choppy trading around Tuesday’s closing level for the firs 30 minutes before trending lower top 23,560 level where it found support and then bounced back to the opening level going into lunch. PM saw the market trade sideways in a tight range (+or - 60pts).T/O dropped again as investors turn cautious as Powell warns of a slower recovery unless the US government offers more stimulus especially to SME’s and UK sees increased Covid cases.
JOY SPREADER (06988.HK) on debut, settled the day at $2.7, -18 cents or -6.3% against the listing price $2.88, on volume over 515 million shares and turnoverof $1.482 billion. Excluding the handling fees, a book loss of $180 was reported per board lot of 1,000 shares.
Techtronics (669 HK) Rebounded on good results from UK’s Kingfisher, broke back above HK$100.00 I still think the outlook is +VE and would slowly accumulate under HK$100.
SHORT SALES Wednesday 19.6 vs 18.5% Tuesday 
Top Shorts Petrochina (857) 52%, Hang Seng Bank (11) 51%, BoC HK(2388) 45%, Country Garden (2007) 42%, Bank of China (3988) 41%, CCB (939) 38%, Bank Comm (3328) 37%, CKH (1) 32%, Ping An (2318) 30%, Hengan (1044) 29%, Sands China (1928) 28%, MTRC (66) 27%, ICBC (1398) 26%, AIA (1299) 25%.
HAITIAN ANTENNA (08227.HK) announced that the Board passed a resolution to approve the proposed non-public issuance of domestic invested shares of nominal value of RMB0.1 in the share capital of the Company to selected investors under the general mandate.
CHINA GAS HOLD (00384.HK) announced that it had today repurchased 541,200 shares through the Stock Exchange, involving nearly $11.46 million.
MoFA: To Allow Foreign Entry with Valid Permits for Work, Private Matter, Reunion From Next Monday Amendments have been made to the notice on the temporary entry suspension of foreigners with Chinese visas or residence permits, which was jointly published by Ministry of Foreign Affairs and National Immigration Administration on 26 March 2020. Starting from 00:00 next Monday (28 September), foreigners with valid residence permits for working, private matters and reunion will be allowed to enter China.
Hyde Park, jointly developed by ITC PROPERTIES (00199.HK) and Urban Renewal Authority, will start selling 50 flats at its sales office in Wan Chai at 09:30 Saturday (26 September). The discounted entry fee of the Cheung Sha Wan residential project is $5.367 million.
CHINA RE (01508.HK) announced that the aggregate primary premium income as derived from China Continent Property & Casualty Insurance for the period from 1 January 2020 to 31 August 2020 was RMB33.961 billion, up 7.03% yearly.
The Government will not extend the option for Hong Kong Disneyland Resort to purchase the adjacent site at Penny's Bay, having taken into account the current economic conditions. Walt Disney Company (DIS.US) expressed its extreme disappointment at the Government's decision. Disney has lived up to its word to invest in Hong Kong Disneyland over the past 15 years, promoting the city's tourism development, according to the firm's spokesman.
The Government will publish in the Gazette 29 pieces of regulation and one order on September 25, 2020, to give effect to the extension of existing waivers/ concessions of government fees and charges implemented in 2019 and provide legal backing for new waivers as announced on September 15, 2020, to sustain the support for businesses and relieve individuals' financial burden in view of the impact of coronavirus disease 2019.
The estimated revenue forgone amounts to $2.048 billion.
Financial Services Development Council (FSDC) issued a document, promoting the development of structural products linked to A shares under Southbound Trading of Stock Connects or related indices, with priority in Northbound products. While investors are now able to trade A shares through Southbound Trading, the trading of the new structural product is believed to mitigate risk.
Centa-Salesman Index (CSI) last stood at 52.28, up 0.54 pts weekly, said Centaline Property. Since the Government started easing precautionary measures at end-August, CSI has been clawing back to the critical point 50, signally that frontline agents are getting more bullish.

Regional Markets
Re opened lower, having been closed Monday & Tuesday. Flash PMI data was slightly weaker than F/cast and the market initially traded sideways for the first 45mins. Then is sold won to 23,155 level before a small bounce back to initial levels at lunchtime.All Industry Activity Index just missed too but PM market opened higher around 23,275 level (25pts higher than the initial open) and traded sideways before rallying in the last hour to close flat
S KOREA Kosdaq opened higher but sold down to 822 before bouncing back to flat and then effectively traded sideways to close +0.1%
Kospi flowed a similar pattern, morning low was 2,287, the bounce back was only to 2,320 level. Trade sideways for 2 hours before testing Tuesday’s close and traded around there into the close flat.
TAIWAN opened higher but trended lower through the morning. Support at 12,550 and then saw a small bounce to 12,600 and then traded sideways to close -0.5% After Market Industrial Production Aug +4.7% YoY vs +2.75% Jul Revised (F/cast was +2.*%)Retail Sales Aug +8.17% vs +2.79% Jul Revised (F/cast was +2.5%

Northbound Rmb 29,839m Sell 15,337m : 14,502m Buy
Southbound HK$ 9,571m Sell 4,520m : 5,051m Buy

Northbound Rmb 45,791m Sell 23,855m : 21,936m Buy
Southbound HK$ 6,454m Sell 2,663m : 3,791m Buy

CHINA No data.

HONG KONG Centre for Health Protection said there were 3 additional COVID-19 cases in Hong Kong today (vs 3 Monday)

Active Heavyweights
MEITUAN (3690.HK) +3.1%
CCB (939.HK) -1.5%
HKEX (388.HK) +1.1%
BABA (9988.HK) +0.8
PING AN (2318.HK) -0.6%
TENCENT (700.HK) +0.5%

HSI & HSCEI Constituents on the move
ANTA SPORTS (02020.HK) +4.3%
PSBC (01658.HK) -4%
CHINA GAS HOLD (00384.HK) -3.2%

HSMI & HSSI Constituents on the move
ND PAPER (02689.HK) +13.3%, hitting new high
XINYI ENERGY (03868.HK) +4.5%, hitting new high

Market Commentary 
*ALTERNATIVE ENERGY STRONG after President Xi said China to be carbon neutral by 2060, a tightening of its target, and said emissions should peak before 2030. While his speech to the UN general assembly didn't include details, it's a signal the next five-year plan will seek to accelerate the adoption of clean energy. DATANG RENEWABLE (1798 HK +8.4%) GOLDWIN (2208 HK +0.9%) XINYI SOLAR (968 HK +6%) GCL (3800 HK +1.7%).
*E-COMMERCE FIRM as PA GOOD DOC (1833 HK +0.5%) acting chairman said sales of the firm's private doctor membership services doubled to 420m yuan in 1H. ALIBABA (9988 HK +1.4%) JD (9618 HK+0.9%) TENCENT (700 HK +0.7%) MEITUAN (3690 HK +2.4%).
NETDRAGON (777 HK -3.2%) is in discussions with a company mainly engaged in education related business regarding a potential transaction involving acquisition of and/or other corporate actions related to the target company.
*TECH & COMPONENT MIXED as Intel has received a license from US authorities to continue supplying certain products to Huawei. SMIC (981 HK -1.7%), SK Hynix and others have also sought permission to continue servicing Huawei.
HUA HONG (1347 HK +3.3%) TONGDA (698 HK +3.6%) TRULY (732 HK +2.3%) Q TECH (1478 HK -1.7%).
*HK BANKS FIRM as HSBC (5 HK +0.17%) rebounds after trading down to a HK$27.50 level; a 25-year low; stock then rebound at HK$28.75. STAN CHART (2888 HK +2.9%) also rebounded from yesterday's selloff.
BEA (23 HK +0.3%) pressing ahead with a potential sale of its life insurance assets which could raise about $500m to $600m as the bank concludes a strategic review.
*HK LANDLORDS WEAK as JLL said the vacancy rate of Grade A office buildings in Central rose to 6% last month, hitting a 15-year high, and office rents in Central dropped 2.5% MoM in August. SHKP (16 HK -0.4%) HENDERSON (12 HK -0.9%) CK ASSET (1113 HK -0.3%) SINO LAND (83 HK -1%).
*SPORTSWEAR MAKERS STRONG after good NIKE's 1Q revenue that beat the highest estimates, and noted rising sales in China
ANTA SPORTS (2020 HK +4.3%) LI NING (2331 HK +3.3%) POU SHENG (3813 HK +1.6%).
*PAPER MAKER STRONG after NINE DRAGONS (2689 HK +13.3%) annual profit +7% YoY to 4.17b yuan. A final dividend of 22 fen per share was declared. Revenue -6% as the selling price slumped by 13%. The gross profit margin edged up by 2 percentage points; LEE & MAN (2314 HK +4.7%).
*PHARMA MAKERS STRONG ,Helped by comments on the efficacy of the nation’s Covid-19 vaccine candidates from WHO chief scientist. SINO BIOPHARM (1177 HK +2.5%) CANSINO (6185 HK +9.6%) INNOVENT (1801 HK +3.5%).
CSPC (1093 HK +0.9%) proposed a Bonus Shares Issue on the basis of three Bonus Shares for every five existing Shares on the Record Date of 21 Oct 2020. The board says the reason for the Bonus Shares Issue is to enable Shareholders to enjoy a pro-rata increase in the number of shares being held in the Company without incurring any costs.

EIGHT STAR STREET, a residential project under SWIREPROPERTIES (01972.HK), offers 37 flats with saleable area of 430-900 sq.ft.. Adrian To, Residential Director assumed the project to be sold in 4Q20. Hopeful of the economic prospect of Hong Kong, the Group viewed the housing demand is enormous, envisioning a steady market in mid-to-long term.
CCB (00939.HK) (601939.SH) has been taking the initiative to explore a digital operation mode YTD, with preliminary results for digital operation, said President Liu Guiping. The bank will go all-out to build a "digital factory" and deeply facilitate "digital engineering", Liu added.
BANK OF CHINA (03988.HK) (601988.SH) President Wang Jiang stated that the banking sector should shoulder the responsibility to bolster the real economy, cited Chinese media. As part of the pro-cyclical industry, banks should learn a lesson from the previous financial crisis that over-caution in loan granting during economic pullback will only exacerbate economic downturns.
The search volume of various types of Macau tourism products started to increase from yesterday (22 September), rising as much as 500%, Chinese media citing Ctrip's data. The National Day holiday will likely be a mini-peak season for Macau's tourism.
The Japanese government mulls over significant easing of its border policy, which was adopted to curb the COVID-19 outspread, as early as October, reported Kyodo. Foreigners from around the world will hence be allowed to enter Japan under certain conditions. Around 1,000 foreigners staying in Japan per day for three months or longer (except tourists) will be granted entry.
Macau Hotel Association said that the booking volume remains not high at this moment, roughly 10-20% on average, cited Radio Macau. It is hard to foretell the overall booking rate during the national day golden week holiday this year given the special circumstances, and most visitors should be individual visitors this year.
The Government announced the existing social distancing measures will be broadly held steady for seven days from 00:00 on 25 September through 1 October. Based on the latest public hygiene risk evaluation, save for moderate adjustments on the operation arrangements at billiard rooms, bowling centers and public baths, other restrictions will be kept in place at catering premises and other listed premises, effective Friday (25 September), according to the press release.
Chevron in an internal email asked its employees to delete WeChat from their smartphones or they will be denied access to the company system, Bloomberg reported.
Hong Kong was ranked third in the global chart with 99 IPOs and a fundraising size of $213.8 billion for the first three quarters of 2020, up 1% and 67% yearly, mentioned Deloitte China. Hong Kong is poised to come in second in the chart this year, listing 140 firms for funds worth nearly $400 billion, predicted Dick Kay, Co-leader of National Public Offering Group at Deloitte China.
Sablier, a Tai Kok Tsui residential project co-developed by CHEVALIER INT'L (00025.HK) and Urban Renewal Authority, released the first price list for 50 flats, involving 23 open studios and 27 one-bedroom units with saleable area of 262-340 sq.ft. The project prices range $5.97-7.97 million. Deducting the maximum discount of 9.75%, the selling prices range $5.388-7.193 million, i.e. $20,934 per sq.ft. on average.
BANK OF E ASIA (00023.HK) said the Bank has now completed its comprehensive strategic review of its portfolio of businesses and assets. As an immediate output of the strategic review, the Bank has decided to initiate a sale process for BEA Life in order to enhance the value of the Bank’s business, improve its financial position and enable its management team to focus on its core banking operations in Hong Kong and Mainland China. This announcement is supported by Elliott Management Corporation. BEA Life is a wholly-owned subsidiary of the Bank providing a comprehensive range of life insurance products to both individual and corporate customers in Hong Kong.
Huawei Card, a digital credit card of Huawei, has officially launched online, according to Chinese media. Users could make direct application via the e-wallet inside the system. Purportedly, Huawei Card waives annual fee for the first year, and offers cash rebate and fast-track application.
Chinese lenders are facing capital pressure and greater difficulty in replenishing core tier 1 capital under existing policies, said PwC China's financial sector partner at a conference call. Seeing an uncommon profit slide among Chinese banks in the first half of year, the partner foresaw continued stress in the second half of year.
XIAOMI-W (01810.HK)'s Founder Lei Jun announced on Weibo that the company is set to roll out its optimal 8K TV set master on 28 September.
China has built and commissioned more than 500,000 5G base stations so far, as People's Daily learnt from the Ministry of Industry and Information Technology (MIIT). With an ever-growing 5G user base, the country has gradually connected over 1 billion 5G terminals.
HSBC HOLDINGS (00005.HK) in the morning session drifted lower this morning below the rights issue price of $28 in 2009. Bottoming at $27.5, the stock further hit the trough in over 25 years. It last printed at $27.85, down almost 3%, on turnover of $734 million.
TIGERMED (03347.HK) announced that its wholly owned subsidiary, Hong Kong Tigermed Healthcare Technology, proposed to raise approximately US$22 million itself to subscribe for JHBP-B (06998.HK)’s IPO shares in capacity of cornerstone investor.
US Pork exports during the year ended August 2020, to China have surged 370% from the same period in 2017 to a level beyond pre-trade war figures, as WH GROUP (00288.HK)'s JBS and Smithfield Foods increased their delivery, according to Panjiva' analysis.
CHINA GAS HOLD (00384.HK) repurchased 150,000 shares of the company further on market yesterday (22 September) for $3.24 million, according to the interest disclosure of the Stock Exchange.
BANK OF E ASIA (00023.HK) will propel the potential sale of its life insurance assets upon completion of strategic review, Bloomberg cited people familiar with the matter. Sources said the bank will unveil on Wednesday the review results that have taken as long as nine months, and will submit so to the board of directors, which comprised of exploration of sale of its life insurance unit and a bancassurance partnership. The potential disposal may purportedly raise US$500-600 million.
Huawei is joining hands with Intel to launch 2488H V6, a new model of FusionServer Pro server, meaning that Intel has obtained the license to supply goods to the Chinese tech giant.
China's National Immigration Administration announced the resumption of travel pass granting (including Individual Visit Scheme and group tours) for Mainland residents from today. Tourists, except for those from high-risk areas, will have to present their NAT-negative certificates or negative health codes valid for seven days when entering Macau.
Financial Secretary Paul Chan, at an online seminar restated that Hong Kong is still a commercial bridge between the world and China, having an unparalleled role. He illustrated the multi-edged regime and foundation of Hong Kong, including rule of law and judicial independence, free flow of information and funds, in addition to simple low tax system. The two main strategic themes of China, namely "Belt and Road" initiative and Greater Bay Area development, will entail abundant prospect and opportunities to Hong Kong companies and their European counterparts, Chan added. Simple rule of law is being questioned by some.
The9 Limited (NCTY:US) announced that it entered into a cooperation agreement with Voodoo, a French game developer backed by TENCENT (00700.HK) Pursuant to which, both sides will team up for the distribution and operation of casual gaming products in the Mainland market.

Not in this mornings report
Chinese President Xi Jinping, delivering his speech through the UN video conference, said China has invented several COVID-19 vaccines which entered phase three of clinical trial. Upon completion of R&D and commencement of usage, the vaccines will be deemed as global public products which will be distributed to developing countries in priority.
Mox, the new virtual bank co-created by Standard Chartered Hong Kong, PCCW (00008.HK),  HKT-SS (06823.HK) and, started public registration and provided services from yesterday (22 September). Local media reported that the bank has already garnered over 14,000 new accounts.  Mox had said yesterday it takes the lead to launch Asia's first all-in-one numberless bank card, further enhancing privacy and security for customers. Mox is also the first virtual bank in Hong Kong to support both Apple Pay and Google Pay.
HKMA announced that as USD/HKD triggered the Strong-side Convertibility Undertaking during New York trading hours, it had undertaken a USD124-million selling order to inject HKD961 million into the market.  The balance of the banking system of Hong Kong will increase to HKD242.49 billion tomorrow (24 September).
IBI GROUP HLDGS (01547.HK)announced that on the last trading day (22 September), the Company acquired on the open market a total of 17,600 shares of HSBC HOLDINGS (00005.HK) at an aggregate consideration of approximately HKD502,000 at an average price of HK$28.55 per HSBC Share. Upon acquisition, the Group will hold an aggregate of 258,400 HSBC Shares.
ASM PACIFIC (00522.HK) The Company categorically states that there are no plans to take the Company private, or to consider listing the Company elsewhere.
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