Sept 30 HK WRAP HSI +184pts Tomorrow S Korea, Taiwan, China & HK closed

02 Oct
Sept 30 HK WRAP HSI +184pts   Tomorrow S Korea, Taiwan, China  & HK closed

HSI +184pts (+0.8%) 23,459  HSCEI +116pts (+1.3%) 9,397 T/O HK$98.29bn (+14.5% DoD)  

As at 5:45pm HK time
EUROPE Opened lower despite good data as Covid concerns remain. GERMAN Unemployment Rate and Retail Sales beat but Import Prices were weak. FRENCH Inflation was weaker than F/cast but Household Consumption beat along with PPI. THE UK GDP Growth Rate was slightly better, Current Account improved but missed forecasts, Business Investment beat along with Nationwide Housing Prices
US Futures opened flat but dropped 100pts during the first presidential debate and continued to slide through the Asian session currently oat one point -300pts but now -200pts ; with S&P and NDX to open lower too. Stimulus package and covid still in focus.Data due MBA Mortgage Applications and 30yr Mortgage Rate, ADP Employment Change, GDP Growth Rate, GDP Price Index, Corporate Profits, Core PCE Prices, PCE Prices, Chicago PMI, Pending Home Sales, EIA Oil Report

CSI 300 Closed -4pts (-0.1%) @ 4,587
Opened higher on good PMI data and worked high to 4,633 before easing back into lunch @ 4,620 level. PM saw the market sell down ahead of the Golden Week holiday, day low was 4,563 around 2:15pm before a bounce to 4,600 but without conviction and it eased back in to the close as investors de-risked ahead of the week long holiday.

Shanghai Composite Index -6pts (-0.2%) @ 3,218
Shenzhen Component Index +7pts, (+0.05%) @ 12,908
ChiNext Index +10pts (+0.4%) @ 2,952

HSI Pre Market Opened +273pts @ 23,548 vs +66pts ADR’s @ 23,341 with E Commerce names strong and a surge in HK and Chinese Developers with the expectations of more developments to be released. The good China PMI data also helping. Market worked higher to 23,780 around 10:40am having little impact before easing back to just above the opening level at lunchtime. The first presidential election debate PM saw initial selling down to 23,370 level around 2:15pm before working back tot the lunchtime level by 3:40pm which was tested a few times before the market eased back into the close. It then ticked down 47pts in the closing auction. Investors cautious ahead of the long weekend with Hong Kong closed until 5 Oct.

Techtronics (669 HK) opened @ HK$100 and initially traded down to HK$98.40 before rebounding to above HK$100. PM saw the stock move higher then retest the HK$100 support before working higher to close around the day high@ HK$101.60I would continue to accumulate if it drops below HK$100.

SHORT SALES Wednesday 17.7% vs 21.4% Tuesday 
Top Shorts Ping An (2318) 39%, China Res Land (1109) 36%, Bank of China (3988) 34%, HSBC (5) 33%, Henderson Land (12) 32%, Hang Seng Bank (11) 29%, ICBC (1398) 28%, CKI (1038) 28%, BoC HK(2388) 28%, CCB (939) 26%, Country Garden (2007) 25%.

CRRC (01766.HK) announced that it had considered and approved the resolutions in relation to the proposed issue of A Shares and listing on the Science and Technology Board of CRRC TIMES ELEC (03898.HK), an indirect non-wholly-owned subsidiary, on 30 September 2020. The number of shares to be issued will not exceed 241 million A Shares.
NEW WORLD DEV (00017.HK) announced the annual results ended 30 June 2020. Underlying profit amounted to HK$6.589 billion, down 25.25% yearly. Net profit -93.96% annually to HK$1.096 billion, with EPS of HK$0.43. A final dividend of HK$1.48 was declared. Full year dividend reached HK$2.04.
NEW WORLD DEV (00017.HK) and MTR CORPORATION (00066.HK) have named their joint project atop Tai Wai Station as "The Pavilia Farm". Sales brochures will be uploaded as soon as today, and the price list next week.Snapping the two-week decline, Centa-City Leading Index (CCL) last posted at 176.74, up 0.08% WoW.
CCL Mass last stood at 179.69, down 0.06% weekly. CCL (small-and-medium units) last reported at 177.24, down 0.03% weekly. CCL (large units) last tracked at 174.12, up 0.74% weekly.

Regional Markets
opened lower despite good retail sales and industrial production data and traded sideways through the morning. The afternoon session opened lower sold down through the PM session to close at the day low -1.5%Housing Starts and Construction orders, out at 1pm HK time were better than expected but had little impact on the market.
S KOREA Market closed. Re opens Monday 5 Oct
TAIWAN market opened higher, and worked higher for the first 90mins to the day high of 12,560 level before easing back to support at 12,500 level. Then traded sideways, slightly higher to close +0.4% @ 12,516  Market willbe closed Thursday

Northbound Rmb 31,078m Sell 16,176m : 14,902m Buy

Northbound Rmb 44,682m Sell 23,156m : 21,526m Buy

CHINA Pre Market 

Manufacturing PMI Sept 51.5 vs 51 Aug (F/cast was 51.4)
Non Manufacturing PMI Sept 55.9 vs 55.2 Aug (F/cast was 54.9)
Out at 9:45am Caixin Manufacturing PMI Sept 53.0 vs 53.1Aug (F/cast was 53.4)

Official data which covers the large businesses continues to see improvement, But the Caixin data of smaller companies hints that the recovery is not going totally to plan. As with Monday’s data I do think that there are pockets that are continuing to recover but is not a smooth recovery and the private sector especially faces headwinds.

HONG KONG Centre for Health Protection said there were 8 additional COVID-19 cases in Hong Kong today (vs 4 Tuesday) 1 local infection of unknown source.

After Market 
Retail Sales Aug -13.4% YoY vs -23.9% Jul (F/cast was -11%)

Again an improvement but not as good as had been forecast.

Government announced its financial results for the five months ended August, 2020. Expenditure (April to August 2020) HK$360.1 billion Revenue HK$127.5 billion, Cumulative year-to-date deficit of HK$232.6 billion.

Rating and Valuation Department (RVD) Private residential property price index hit 380.6 in August, -1.1% MoM vs -0.5% in July. A second straight month of declines to a four-month low. The private residential property rental index ratcheted up 0.4% MoM to 181.7 in August.

Active Heavyweights
BABA (9988.HK) +3.8%
MEITUAN (3690.HK) +31%
TENCENT (700.HK) +1.2%
HKEX (388.HK) +0.8%
AIA (1299.HK) -0.3%
CCB (939.HK) -0.2%
PING AN (2318.HK) +0.1%

HSI & HSCEI Constituents on the move
CHINA RES LAND (01109.HK) +5.9%
CHINA GAS HOLD (00384.HK) +4%
SHIMAO GROUP (00813.HK) +3.6%

HSMI & HSSI Constituents on the move
CGN NEW ENERGY (01811.HK) -26.3%
BYD COMPANY (01211.HK) +12.2%, hitting new high
XINYI SOLAR (00968.HK) +7.3%, hitting new high
XINYI GLASS (00868.HK) +4%, hitting new high
GREENTOWN CHINA (03900.HK) +4%, hitting new high
XINYI ENERGY (03868.HK) +2.5%, hitting new high
Market Commentary 
*FINANCIALS MIXED CHINESE BANKS rebound; I expect as recent shorts covered ahead of the long weekend. The PBOC is seeking to normalise monetary policy as the "economy recovers steadily," in another sign that the country's policymakers are gradually pulling back from the stimulus measures enacted amid the Covid-19 pandemic. CMB (3968 HK +2.25) ICBC (1398 HK +0.5%) BOCOM (3328 HK +1.9%) ABC (1288 HK +0.4%).
HK banks traded mostly lower after HKMA said HK banks saw pretax profits -20% in 1H 2020, with lower asset quality. BEA (23 HK -0.8%) HANG SENG (11 HK +1.5%) HSBC (5 HK -0.7%) STAN CHART (2888 HK -3.5%).
*E-COMMERCE STRONG as the listing plan of ANT GROUP is proceeding as expected. ALIBABA (9988 HK +3.7%) expects AliCloud to turn profitable within FY2021.
TENCENT (700 HK +1.8%) is taking SOGOU private. Sohu Search will receive circa $1.18b in cash for its stake in the Chinese search giant; a 56.5% premium to the closing price of Sogou ADSs on July 24; the last trading day before Tencent's proposal.
PA GOOD DOC (1833 HK -7.5%) after the company sold 80m share in placement at $98.2 a share, an 8.5% discount to last close of HK$107.3.
*HONG KONG PROPERTY STRONG ahead of the extra long-weekend holiday with home viewing and sales at various new projects are expected to increase. Local developers also announced more homes to be offered next month, with CK ASSET (1113 HK +1.2%) planning to launch luxury project El Futuro in Kau To Shan, offering 266 units. MTRC (66 HK -0.4%) opened tenders for the final phase of Lohas Park. It said it has received 35 expressions of interest from developers. The valuation of the project ranges from HK$8.5b to HK$15.5b, or HK$5,500 to HK$10,000 psf.
NWD (17 HK +1.5%) announced FY results after market see news above.
HENDERSON (12 HK +2.1%) SHKP (16 HK +1.6%).
*CHINA PROPERTY STRONG on the expectation that Chinese developers are able to implement debt reduction plans, after CH EVERGRANDE (3333 HK +15.5%) enters into supplemental agreement with some strategic investors where they agreed not to require the company to repurchase of their equity interests in Hengda Real Estate and will continue holding their stakes in the company. That does suggest to me that the company is facing some financial difficulties.
CIFI (884 HK +2.3%) COUNTRY GARDEN (2007 HK +3%) KWG (1813 HK +1.5%).
*PHARMA MAKERS STRONG on vaccine speculations, as CANSINO BIO (6185 HK +2.2%) starts China trial to test coronavirus vaccine in kids.INNOVENT (1801 HK +2.5%) CSPC PHARM (1093 HK +1%) 3SBIO (1530 HK +1%).

CGN NEW ENERGY (01811.HK) has been informed by the Potential Offeror that it has decided not to proceed further with the Possible Privatization. Subsequently, the stock price cascaded 26.3% to $0.98.
Fusion Bank announced the commencement of business trial from today. During the promotion period from today through 31 October, time deposit account holders are entitled to a 5% interest rate offer.
S&P Global Ratings affirmed Hong Kong's long-term and short-term issuer credit ratings at "AA+" and "A-1+", respectively, with a stable outlook. The rating agency believed the city's fiscal deficit will expand further this year due to the third round of Anti-epidemic Fund, but this could be buffered by fiscal reserves.
142K Applications Received under Latest Round of Over 7K HOS Flat Subscription, Over-subscribed by Over 19x. The list closes on 7 October.
HK CHINESE LTD (00655.HK) announced the disposal of 20% interest in the Macau Chinese Bank to Wong, Garrick Jorge Kar Ho, Ho Hon Kong and Lam Ka Vai Carlos for a consideration of MOP322 million. LIPPO (00226.HK), holding 73.95% stakes in HK CHINESE LTD, will record a non-recurring gain arising from the Disposal of approximately HKD100 million. LIPPO and HK CHINESE LTD will resume share trading after midday.
JD-SW (09618.HK) announced the partnership between its JD Service+ and XPeng (XPEV.US) , pursuant to which the former will provide XPeng customers with integrated and comprehensive managed services for home EV charging poles.
BYD COMPANY (01211.HK) accentuated the security and innovation of its Blade Battery at the World New Energy Vehicle Congress, reported Tencent Auto. Particularly, the carmaker expected Blade Battery's maximum energy density to exceed 180Wh/kg by 2025.
HUAZHU-S (01179.HK) In response to another short-selling report from Bonitas Research, has set up a special task force comprising three individuals, external consultants and auditors, said CFO Teo Nee Chuan. A preliminary investigation report has been submitted to the Stock Exchange.
BABA-SW (09988.HK)'s core operations are growth healthily, aside narrowing loss from business under development, pointed out CFO Maggie Wu. The group aims to see Alibaba Cloud swinging into profit, and Cainiao's operating cash flow turning positive by FY21. Domestic demand, cloud computing and big data, as well as globalization are poised to be the three pivotal aspects; said Chairman and CEO Daniel Zhang at the Investor Day.
Top Chinese financial officials are evaluating the risks coming from EVERGRANDE (03333.HK), Bloomberg citing insiders. The Chinese cabinet and its financial stability committee, chaired by State Council Vice Premier Liu He, have talked about EVERGRANDE without deciding on whether to intervene, according to the people.
CSTONE PHARMA-B (02616.HK) announced that it has entered into the Share Subscription Agreement with Pfizer (PFE.US)'s Pfizer Corporation, pursuant to which the Company will allot and issue 116 million new shares at the Subscription Price of $13.37 per Share, representing a 43.8% premium to the closing price on the previous trading day. On the same date, the Company entered into the Collaboration Agreement with Pfizer Investment.
BABA-SW (09988.HK) Co-founder Jack Ma acknowledged that the previous round of globalization was driven by 300 million American consumers, reported Chinese media. However, he believed the next wave of globalization will be propelled by 1.4 billion Chinese domestic consumers instead.

Not in this mornings report

PA GOODDOCTOR (01833.HK) announced the placing of 80 million new shares under general mandate at the placing price of $98.2 per share, representing a 8.5% discount to the closing price on the previous day. The estimated net proceeds from the Placing amounted to $7.824 billion.

Micron Technology (MU.US) announced the fiscal fourth-quarter results ended 3 September 2020. Profit +76% to US$988 million. Adjusted EPS equaled US$1.08, beating US$0.99 in consensus. The chipmaker assumed sales to be US$5.2 billion for the fiscal first-quarter of 2021, plus or minus US$200 million, trailing US$5.31 billion in average estimates, partially due to the US executive ban from selling memory chips to Huawei.

HUAZHU-S (01179.HK): Numerous Errors in New Bonitas Report; May Not Respond Anymore. In response to another Bonitas Report dated 29 September, HUAZHU-S (01179.HK) clarified in another announcement that similar to the initial report, the additional report is without merit and that it contains numerous errors, unsubstantiated statements, and misleading conclusions regarding the Company’s business and operations. Given that it has already responded to Bonitas Research’s allegations twice, the Company may not respond to future allegations by Bonitas Research, unless required by the applicable laws or listing rules, and the market should not interpret that as an admission that any future allegations are true.

Bonitas Research in another report raided HUAZHU-S (01179.HK) for failing to show any material evidence in rebuttal to the allegations mentioned in its previous report. HUAZHU-S had fooled Deloitte by providing an incomplete operation entity list, said the report, whereas Deloitte was criticized as a notorious and incompetent auditor who failed to verify HUAZHU-S' ownership in the provided portfolio. The shortseller stated that it believes in the merit of its research report and that it will go on short selling the Chinese hotelier.

AIA (01299.HK) announced that AIA and CBA have entered into binding documentation to give effect to a portfolio transfer of CBA’s life insurance business conducted through The Colonial Mutual Life Assurance Society (CMLA) to AIA Australia, being an alternative completion mechanism and structure for the proposed acquisition by AIA of the life insurance business of CBA in Australia.

China announced 66 new domestic game edition numbers have been approved in the third batch in September, a record-high YTD, as announced by the State Administration of Press, Publication, Radio, Film and Television. The list included NTES-S (09999.HK)'s War of Roar and a game from TENCENT (00700.HK)

CHINA RAILWAY (00390.HK) (601390.SH) published a proposal for the spin-off of its arm, China Railway High-Speed Electrification Equipment Corporation (CRHEEC), for listing on Sci-tech Innovation Board (SSE STAR Market). The issue size will be not more than 94.1 million A-shares.

21st Century Business Herald reports from an online broker that investors are allowed to partake in Ant Group's new H share subscription at up to 20-time leveraging. An insider in Futu Securities told the Chinese press that roughly $26 billion has been raised to help investors participate in Ant Group's H-share leveraging investment.

HKMA announced that, as USD/HKD triggered the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook a US$984 million selling order to inject HK$7.626 billion into the market. The balance of the banking system of Hong Kong will increase to HK$251.157 billion next Monday (5 October).

ESPRIT HOLDINGS (00330.HK) announced annual results ended June 2020. Revenue amounted to $9.216 billion, down 21.1% yearly. Loss deepened to $3.992 billion from $2.144 billion in the previous year. LPS equaled $2.12. No final dividend was declared.

EVERGRANDE (03333.HK)  announced that regarding the proposed spin-off of Evergrande Property, a listing application has been submitted to apply for the listing of, and permission to deal in, the Evergrande Property Services Shares on the main board.  Evergrande Property Services proposed to conduct an offering of its shares by way of a Global Offering after obtaining the listing approval.

* The email will not be published on the website.