Sept 28 HK WRAP HSI +241pts T/O -20% DoD Futures expire tomorrow.

02 Oct
Sept 28 HK WRAP HSI +241pts T/O -20% DoD  Futures expire tomorrow.

HSI +241pts (+1%) 23,476  HSCEI +81pts (+0.9%) 9,383 T/O HK$93.34bn (-20% DoD)  

As at 6:15pm HK time
EUROPE markets opened higher with HSBC bouncing +8% in London trading helping the Banks. But the rise in US covid cases may limit the upside. Investors encouraged by the China Industrial profits data.
US Futures opened +100pts and rose through the day to +213pts with S&P and NDX also +VE.But the rise in new covid cases likely to be a concern.

HK and China were stronger than I had expected; SMIC and tech were weak but the broader markets were strong. Evergrande bounced but I still think there are concerns out there. It really is too big to fail; the impact to investors and ordinary home purchasers in China would be devastating.

CSI 300 Closed +12pts (+0.3%) @ 4,582 
Traded in a tight range having opened higher after the good Industrial Profits number out Sunday, after 10 minutes it rallied to 4,608 which it tested several times before breaking through but only to 4,614 and then reversed and tracked lower into lunch at 4,573, just above Friday’s close. PM saw the market work up to test 4,600 but failed to break above and eased back and traded sideways into the 4,580 and trade sideways into the close.Many investors already out of the market for this shorten trading week; just 3 days. Tech weak as SMIC being sanctioned which will impact other tech companies in China.
Shanghai Composite Index -2pts (-0.1%) @ 3,218Shenzhen Component Index -53pts, (-0.4%) @ 12,761ChiNext Index -19pts (-0.8%) @ 2,521

HSI Pre Market Opened +48pts @ 23,284 vs +2pts ADR’s @ 23,233 with E Commerce stocks firm but SMIC -7.6% on news of US sanctions. After the initial brief sell off the market rallied to 23,400 level and then traded sideways into lunch. PM saw an initial leg up to test 23,500 but failed and then retrenched to 23,440 until around 3:30pm when the market worked higher in choppy trading to 23,520 level but then eased back to 23,500 going into the close and ticked 24pts lower in the closing auction. Ping An was -0.3% on news it increased its stake in HSBC which closed +9.2%.Evergrande +20.6% having denied financial problems.
Futures expiry tomorrow and no Southbound Connect from tomorrow due to holidays.

IPO ZAI LAB-SB (09688.HK), on debut, closed at $610, up $48 or +8.5% against the listing price $562, on volume of 1.07 million shares and turnover of $648.9 million. Excluding the handling fees, a book gain of $2,400 was reported per board lot of 50 shares.Still in the red, has no schedule for a positive turnaround, said CFO Billy Cho. However, apart from the monetized Zejula and Optune, 14 projects from the fields of oncology, anti-infective and autoimmune diseases are now at a clinical stage, among which two are pending approvals as registered new drugs in China. Following the approval, sales may commence.
ZTO EXPRESS-SW (02057.HK), to be listed tomorrow, opened at $225.4 in gray market, up 3.4% against the listing price $218, and last stood at $231, up 6% against the listing price, on volume of 49,000 shares, PhillipMart data showed.
BAOZUN-SW (09991.HK), to be listed tomorrow, opened at $83 in gray market, up 0.1% against the listing price $82.9, and last stood at $82.9, flattish with the listing price, on
volume of 190,000 shares, PhillipMart data showed.

PICK Techtronics (669 HK) Opened lower and tested suppoprt at HK$98.00 then tested higher but resistance at HK$99.50.   Tight range of trading in the PM. I would continue to accumulate slowly below HK$100; I still think the outlook is +VE Interesting to see the short interest rise which will make it prone to a squeeze on good news.

SHORT SALES  Monday 19.1% vs 20.9% Friday Top Shorts Sands China (1928) 39%, MTRC (66) 38%, Ping An (2318) 36%, Bank of China (3988) 35%, CCB (939) 34%, CLP (2) 34%, BoC HK(2388) 32%, Mengniu Dairy 29%, Petrochina (857) 28%, HK & China Gas (3) 28%, Hang Seng Bank (11) 26%, Techtronic (669) 25%, HK EX (388) 25%.

The Government will launch the Wong Chuk Hang MTR station project this quarter to offer 1,000 units, as Secretary for Development Michael Wong told the press. The total number will add to 1,150, taking into account four private redevelopment projects. An aggregate of 2,780 private housing flats will be available in the quarter, implying a private home supply of 7,400 units via different channels for the first three quarters, furthered Wong.
Chinese regulators have recently asked major commercial banks to lower and curb the size of real estate loans including individual mortgage loans, 21st Century Business Herald citing sources. Earlier this year, the watchdog had required that new home loans must not exceed roughly 30% of the total new loans for the year, according to sources.

Regional Markets
opened higher and traded sideways through the morning and early afternoon but then rallied in the last hour to close +1.3%
S KOREA Kosdaq opened higher and worked slowly higher through the day to close +3.4%
Kospi opened higher and saw some initial selling down to 2,290 level but then bounced to 2,310 and traded sideways to close +1.3%. Talk of bargain hunting as the won weakened vs USD. Moderate volume considering it will be a short trading weak. Foreigners and Retail selling with Institutions buying.
TAIWAN opened higher and worked up to 12,400 in the first hour and then worked gradually higher for the rest of the day to close +1.9%

CONNECT FLOWS (down DoD)  No Southbound tomorrow due to holidays
Northbound Rmb 28,306m Sell 14,711m : 13,595m Buy
Southbound HK$ 8,549m Sell 3,576m : 4,974m Buy

Northbound Rmb 39,224m Sell 19,593m : 19,631m Buy
Southbound HK$ 9,890m Sell 3,817m : 6,072m Buy

CHINA No data.
HONG KONG Centre for Health Protection said there were 10 additional COVID-19 cases
in Hong Kong today (vs 2 Friday) 3 local infections.

Active Heavyweights
MEITUAN (3690.HK) +2.2%
BABA (9988.HK) +2.1%
HKEX (388.HK) +1.3%
CCB (939.HK) +1%
AIA (1299.HK) -0.8%
TENCENT (700.HK) +0.5%
PING AN (2318.HK) -0.3%

HSI & HSCEI Constituents on the move
HSBC HOLDINGS (00005.HK) +9.2%
BANKCOMM (03328.HK) +4.4%
SUNAC (01918.HK) +4.3%
HANG SENG BANK (00011.HK) +3.9%
CHINA VANKE (02202.HK) +3.7%
ABC (01288.HK) +3.3%
WUXI BIO (02269.HK) +3%
CHINA UNICOM (00762.HK) -3%

HSMI & HSSI Constituents on the move
MINTH GROUP (00425.HK) +12.9%, hitting new high

Market Commentary 
*E-COMMERCE FIRM after a federal judge halts Trump administration's TikTok ban but DOC says it will defends its action. TENCENT (700 HK +0.3%) said to have proposed to create a U.S. version of WeChat in an attempt to alleviate the US govt’s concerns about user data security. The suggestions was said to be rejected by the US Government. ALIBABA (9988 HK +2%) JD (9618 HK +2.7%) MEITUAN (3690 HK +2.1%).
*TECH & COMPONENTS WEAK after the U.S. imposed export curbs on SMIC (981 HK -3.9%), a new blow to China's tech industry. SMIC yesterday said it has not received notice of any US restrictions against it and denied that it links to China's military.HUA HONG SEMI (1347 HK +5.9%) FIT HON TENG (6088 HK -1%) ASM (522 HK -1.7%) AAC (2018 HK -1.2%) TONGDA (698 HK -1.2%) QTECH (1478 HK +1.3%) BYDE (285 HK +3.7%).
*AUTO MAKERS STRONG as Beijing Auto Shows started at weekend triggering a number of announcements; EVERGRANDE NEV (708 HK +20.4%) proposed listing on Shanghai STAR Board. The board proposed to issue yuan share of no more than 1.56b yuan shares, subject to regulatory approvals.
GREATWALL AUTO (2333 HK +5.7%) says it aims to export 70,000 cars this year, up 7.7% from 2019.
GAC (2238 HK +1.8%) expects to achieve its sales-growth target of +3% in 2020, said the company's President.
GEELY (175 HK +0.5%) BYD (1211 HK +1.7%).
AUTO PARTS maker MINTH GROUP (425 HK +12.9%) announced it has entered into loan agreements with multiple banks for a total amount of US$200m. It says the loan will be used for the company's general corporate purposes and refinancing of its existing debt.
*HK BANKS STRONG as HSBC (5 HK +9.2%)best day since 2009 as PING AN increased stake to 8%. HANG SENG (11 HK +3.9%) STAN CHT (2888 HK +2.8%).
*HK PROPERTY WEAK ahead of the govt's announcement of the land sales schedule in Q4, which came after market. Off-setting the good weekend sales:
HENDERSON LAND (12 HK -1.5%) released 28 homes in the fourth price list of Two.Artlane in Sai Ying Pun and will offer 18 units for sale this Thursday. The cheapest flat in the price list, measured 196 sq ft, is offered at HK$5.52m, or HK$28,183 psf after discounts. The developer sold about 51 out of 72 units on offer at the project on Saturday.
SHKP (16 HK -0.15%) sold about 84% of the units at Wetland Seasons Park Phase 3 Tin Shui Wai.NWD (17 HK -1.6%) SINO (83 HK -1.3%).
*CHINA PROPERTY STRONG after sector got hammered last week amid debt concerns. Market speculate that a number of developers have adopted the new financing rules, which requires these firms to accomplish the debt target by June 30, 2023. CHINA EVERGRANDE (3333 HK +20.6%) KWG (1813 HK +4%) SUNAC (1918 HK +4.3%) CIFI (884 HK +4.6%).

Taobao Live tracked turnover of more than RMB300 billion over the past 12 months with continuously rapid growth, according to BABA-SW (09988.HK)'s investor seminar. Equally, the live-streaming platform recorded user growth of 1.6 times year-on-year.
PING AN (02318.HK)'s spokesperson told Bloomberg that HSBC HOLDINGS should have suspended dividend payment on a short-term basis and that the group is in active talks with the London-based lender about possible resumption of dividend payment going ahead. The Chinese insurer restated its confidence of the long-term prospect of HSBC HOLDINGS.
Baidu (BIDU.US) plans to spin off Xiaodu for independent financing, probably opting for a listing on Sci-tech Innovation Board, Chinese media citing a person familiar with the matter.
HKEX (00388.HK) has launched the latest tranche of futures contracts as part of its new index licensing agreement with MSCI, further expanding product breadth and depth in Hong Kong’s international financial markets. The five MSCI index futures contracts that were successfully listed on HKEX’s derivatives market are MSCI Taiwan 25/50 (USD) Index Futures, MSCI Taiwan 25/50 Net Total Return (USD) Index Futures, MSCI Singapore Free (SGD) Index Futures, MSCI Japan (JPY) Index Futures and MSCI Japan Net Total Return (JPY) Index Futures.
Hong Kong banks will, over the coming 6-12 months, face three major headwinds from credit risks, operation challenges and landscape changes, said HKMA Deputy Chief Executive Arthur Yuen. Amid the coronavirus crisis and geopolitical threats, the ratio of problematic loans is on the rise in Hong Kong, of which the rate has somehow slowed in the second quarter from the first's, added Yuen.
TIME WATCH (02033.HK) announced annual results ended June 2020. Net profit amounted to $91.402 million, down 70.1% yearly. EPS equaled 4.4 cents. No dividend was declared.
Overnight HIBOR last posted at 0.04941%, logging a 1-month low, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.47643%.
Gree Group After transferring a 15% stake to Hillhouse Capital to cash in over RMB40 billion, invested RMB3.545 billion in XIAOMI-W (01810.HK)'s Xiaomi Industry Fund, reported Chinese media.
Kowloon Bay 'Goldin Financial Global Centre' Open for LOIs; Valuation May Top $12B, Floor Price $14K/Sq.Ft. Knight Frank announced the engagement by Cosimo Borrelli and Simon Ma (i.e. receiver and manager) as the exclusive agency to sell GOLDIN FIN HOLD (00530.HK)'s Goldin Financial Global Centre at 17 Kai Cheung Road, Kowloon Bay. Knight Frank is now inviting letters of intent (LOIs) for the property, which will be closed at 12pm on 11 November. The selling price will likely exceed $12 billion, i.e. around $14,000 per sq.ft., projected the estate agency.
BABA-SW (09988.HK) will fully unlock its digital capability held for two decades in reserve for rural areas, as Sina Tech quoted from BABA-SW Chairman and CEO Daniel Zhang at the China Taobao Villages Summit Forum.
337 new homes were transacted at the weekend due to loads of new big project launches, up +30 WoW according to market sources.
SHK PPT (00016.HK)'s Wetland Seasons Park Phase 3 sold 144 units. HENDERSON LAND (00012.HK)'s Two.Artlane launched 28 more units on Sunday after selling 51 flats the day before.
TENCENT (00700.HK) has put forward a raft of proposals, including the creation of a new US version of WeChat, to brush off Washington's user data security concerns, reported Chinese media. However, the US Department of Justice said the proposals still allowed TENCENT to retain its ownership of WeChat and failed to address the US government's concerns.

Not in this mornings report

Director of Macao Government Tourism Office, told Macao Daily that the long-waited "Beijing-Macao Week" celebrated a milestone to the revival of Macao's tourism industry. The hotel occupancy rate will probably recover to roughly 50% of the pre-pandemic level during the National Day Golden Week. At this moment, Macao has around 17,000-18,000 tourists per day, representing a sharp rebound from the worst days, said the director.

NONGFU SPRING (09633.HK) announced that the Over-allotment Option had yesterday been fully exercised by the Joint Global Coordinators, in respect of an aggregate of 58.2346 million H Shares, representing approximately 15% of the total number of the Offer Shares initially available under the Global Offering before any exercise of the Over-allotment Option to cover over-allocations in the International Offering. The Company will receive additional net proceeds of approximately HK$1.227 billion from the issue of the Over-allotment Shares, after deducting the commissions and other offering expenses payable.

CST GROUP (00985.HK) announced that it has acquired an aggregate principal amount of US$5 million each of 6.25% EVERGRANDE (03333.HK) Notes Due 2021 and 8.9% EVERGRANDE Notes Due 2021 on the open market at an aggregate consideration of approximately US$4.29m and approximately US$4.35m respectively

Carl Nichols, a U.S. court judge in Washington, has temporarily suspended the executive order which aims to remove TikTok from app stores, Reuters reported. Apple and Google are hence banned from removing the short video app from their app stores under US President Donald Trump's order, which was to take effect at 11:59 p.m. on Sunday (local time). The US Department of Commerce said it would comply with the court's ruling, but stressed that the executive order was "fully consistent with the law and promotes legitimate national security interests". Washington will take actions to defend its order, DOC added.

SMIC (00981.HK) stated that it was aware last Saturday of a document circulated online, which was suspected to be signed off by the U.S. Department of Commerce's Bureau of Industry and Security. According to the filing, export restrictions will be slammed on certain products of SMIC and its subsidiaries and joint venture. As of Sunday, the Chinese chipmaker has received no official notice thereabout, according to the statement.

China must not regard real estate as short-term stimulus in the course of her new "dual circulation" development, reported Economic Information Daily. Instead, Beijing has to further optimize the framework of real estate financial management system to achieve solid property market buildout and balanced operation of risk prevention and control in the long run.

CHINA LIFE (02628.HK) (601628.SH) bought 20 million H-shares of ICBC (01398.HK)  (601398.SH)  though the Hong Kong secondary market at an average price of $4.2339, revealed by the Insurance Association of China. Upon completion, CHINA LIFE holds roughly 4.359 billion ICBC H-shares, with stake rising from 4.9989% to 5.02%.

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