Sept 4 HK WRAP. HSI -312pts T/O +45% (index reweigh) Shorts drop to 11%

08 Sep

Sept 4 HK WRAP. HSI -312pts T/O +45% (index reweigh) Shorts drop to 11%

HSI -312pts (-1.3%) 24,696  HSCEI -56pts (-0.6%) 9,884 T/O HK$213.15bn (+45.4% DoD)  

markets opened lower despite have sold down into the close on Thursday but then rallied lead by the Banks as Spain’s Caixabank and Bankia announced Thursday that they have entered merger talks to create Spain’s largest bank. Also helping it the US futures turning positive. But European Macro data was generally weak.
US Futures Dow futures opened -100pts and fell to -207pts but then recovered and are currently +147pts along with the S&P but the NDX still -VE. I would expect a cautious open ahead of the US jobs report. Other data due tonight; Ave Weekly Hours, Ave Hourly Earnings, Participation Rate, Baker Hughes Total Oil Rig Count.

CSI 300 Closed -47pts (-1%) @ 4,770
Opened lower and traded sideways in the range 4,760 - 4,726 during the morning session. PM saw the market work higher to close just off the day high as the ChiNext bounced. Yuan remains firm as President Xi looks to cheapen imports to try and stimulate domestic consumption.
Shanghai Composite Index -30pts (-0.9%) @ 3,355
Shenzhen Component Index -116pts, (-0.8%) @ 13,657
ChiNext Index -15pts (-0.5%) @ 2,732

HSI Pre Market opened -338pts @ 24,668 vs -363pts ADRs @ 24, 644 with pre market T/O @ HK$8.6b nearly 3x normal levels. E commerce names leasing the declines. Market trade initially sold down to 24,490 and tested the support before a small bounce and trading sideways for the first hour in choppy trading. It then ticked higher to 24,670 level and for a while before trading back down into lunch. PM worked slightly higher for most of the afternoon and then rallied from 24,600 at 3pm to 24,800 into the close. Only to tick down 100pts in the closing auction as the HSI rebalance was executed
New HSI constituents will be effective after market close.
Adds BABA-SW (9988.HK) -3.6% to $274;
WUXI BIO (2269.HK) -2.2% to $188.2;
XIAOMI-W (1810.HK) +2.5% to $24.5.
Deletes CHINA SHENHUA (1088.HK) +1.4% to $13.36;
WANT WANT CHINA (151.HK) +2.6% to $5.56:
SINO LAND (83.HK) -0.9%.

SHORT SALES Friday 11.3% vs 21.6% Thursday
Top Shorts
Petrochina (857) 23%, Hengan (1044) 20%

ELEC & ELTEK (1151.HK) announced that an application has been made to each of HKEX and SGX-ST for the withdrawal of listing
of the Shares from the respective exchanges. So far, SGX-ST has advised E&E that it has no objection to the proposed delisting of the Shares from SGX-ST; and the delisting application made to HKEX is pending HKEX's approval. Subject to the completion of the compulsory acquisition (and approval for delisting of the Shares from HKEX being granted by HKEX), the withdrawal of listing of the Shares from each of HKEX and SGX-ST is expected to take effect from 9:00 a.m. on 25 September 2020.
WISDOM EDU INTL (6068.HK) announced that Li Suwen, the chairperson, an executive Director and a controlling shareholder of the Company, acquired an aggregate of 300,000 ordinary shares of the Company on the market on 4 September 2020 at an average purchase price of approx HK$2.99 per Share.
CROCODILE (122.HK) PROFIT WARNING -VE The Group’s audited annual results for the Year was expected to deteriorate greatly and record a consolidated loss within the range of HK$250-300 million (2019: profit of HK$30.6 million), primarily due to the substantial losses arising from the revaluation of the Group’s investment properties, the worsening performance of the garment business during the Year; and the reversal of the securities trading in the second half of the Year.
CHINA OVERSEAS (688.HK) contracted property sales in January-August 2020 RMB222.294 billion, +2.1% yearly.
HK Private domestic housing completion -94% MoM in July 2020 to 83 units, hitting new low in recent 3.5 years, data from Rating and Valuation Department showed. In the first seven months of 2020, private domestic housing completion lifted 83% year-on-year to 11,454 units, representing 55% of the estimated completion of 20,854 units.
Centa-City Leading Index (CCL) last printed at 177.43, down 0.72% weekly.
CCL Mass fell 0.93% weekly to 180.22;
CCL (small-and-medium units) went down 0.91% weekly to 177.79;
CCL (large units) added 0.31% weekly to 175.60.
Three major indices started to narrow their slide. As property prices are starting to bottom out, they predicted the price level to pick up growth around mid-autumn festival.

Regional Markets
opened much lower and tested the opening level before working higher through the day, hitting the morning high just before lunch time. PM opened lower and traded sideways to close -1.1%
S KOREA Kosdaq opened at the 840 level worked up to 860 and then after about 1pm worked slowly higher to close -09%.
Kospi opened around 2,332 and worked higher for the first hour to 2,370 level and then traded sideways to close -1.2%.
TAIWAN opened at 12,645 and has traded sideways in the range 12,655 - 12560 to close -0.9%.

Northbound Rmb 38,306m Sell 20,706m : 17,600m Buy
Southbound HK$ 15,637m Sell 6,829m : 8,807m Buy

Northbound Rmb 55,077m Sell 29,144m : 25,933m Buy
Southbound HK$ 11,834m Sell 4,503m : 7,331m Buy

CHINA No data
But Monday pre market we get Balance of Trade, Exports and Imports for August. Then later Foreign Exchange Reserves.

Centre for Health Protection said there were 12 additional COVID-19 cases 
in Hong Kong today; (vs 8 Thursday). 4 of the 12 were detected via the universal testing scheme.

Active Heavyweights
AIA (1299.HK) -3%
TENCENT (700.HK) -3%
HKEX (388.HK) -1.6%
CCB (939.HK) +1.1%
PING AN (2318.HK) -0.4%

HSI & HSCEI Constituents on the move
GALAXY ENT (27.HK) -4.8%
BYD COMPANY (1211.HK) -3.6%

HSMI & HSSI Constituents on the move
SHOUCHENG (697.HK) +9.2%, hitting new high
BYD ELECTRONIC (285.HK) +6%, hitting new high
KINGBOARD HLDG (148.HK) +5.2%, hitting new high
KAISA GROUP (1638.HK) +4.9%, hitting new high
KB LAMINATES (1888.HK) +3.6%, hitting new high

Market Commentary 
*E-COMMERCE VERY WEAK following the weakness seen overnight in US ecommerce names. Also news that China approved new rules to tighten oversight of the sprawling financial operations controlled by conglomerates. The rules will impact ANT GROUP but had been expected although the details have not yet been released. The aim is to prevent a repeat of the HNA episode. Also rising concerns that Indian, the US and other nations could start banning the use of Chinese apps. TENCENT (700 HK -2.3%) ALIBABA (9988 HK -3.1%) CH LIT (772 HK -2.5%) JD.COM (9618 HK -4.2%).
*TECH & COMPONENTS WEAK Followed the overnight trend from the US. There was been very little reaction to the news that China is planning to support the development of so-called 3rd generation semiconductors until 2025 to counter U.S. restrictions.
SMIC (981 HK -3.8%) shareholder sold 175m shares for ~4% discount at HK$23.62 apiece, raised US$533m.
AAC (2018 HK -4%), TONGDA (698 HK -2.2%) HUA HONG (1347 HK -3.8%).
BYDE (285 HK +6.4%) continue to trade strong following its recent results beat.
XIAOMI (981 HK +2.9%) advanced ahead of Monday's inclusion into HSI/HSCEI.
*CHINA PROPERTY MIXED following sales data and on the news that China to allow HK and Macau SAR citizens who purchase homes in the Greater Bay Area, Guangzhou to use their properties in the city to back mortgage loans from SAR banks. EVERGRANDE (3333 HK -2.2%) Aug contract sales +7.7% YoY to 51..4b yuan.
AGILE (3383 HK-0.7%) Aug contract sales +17.8% YoY to 11.96b yuan.
YUEXIU PROP (123 HK-0.7%) Aug contract sales jumped 1.32 times to 7.66b yuan.
VANKE (2202 HK +0.2%) CIFI (884 HK +2%) CR LAND (1109 HK -3%).
*HONG KONG PROPERTY WEAK as home sales and house viewing continue to be affected by the virus outbreak, but KERRY PROP (683 HK +1.5%) advanced on its plans to redevelop the Kerry Hung Kai Warehouse in Cheung Sha Wan into a residential project offering a total of 3,647 units.
HENDERSON (12 HK -1.5%) SHKP (16 HK -2%) NWD (17 HK -2.2%).
*AUTOS WEAK amid profit-taking from recent rebound, despite PCA data showed China's average daily sales of passenger vehicles increased by 10% on year in August to 50,494 units. GREAT WALL (2333 HK +1.9%) GEELY (175 HK -1.2%) GAC AUTO (2238 HK -1.6%) BYD (1211 HK -5.4%) DONGFENG (489 HK -3.5%).
*CHINA AIRLINES STRONG on the news that China will optimize and integrate domestic airlines’ all-cargo aircraft fleet resources to make them more competitive in the international market, according to a guideline posted on top economic planner NDRC’s website. CEA (670 HK +1.5%) AIR CHINA (753 HK +1.1%) CSA (1055 HK +1.2%).

India's army chief General Manoj Mukund Naravane is confident that the border stand-off with China in the west of Himalayas region could be fully resolved through negotiations
, foreign news agency reported. Naravane also pointed out that there are tensions in Latin America and Caribbean.
Fitch Ratings predicted Chinese banks to record a steeper slide in profits during the second half of 2020 as the coronavirus crisis is set to ramp up bad loans. Chinese watchdogs target at disposing RMB3.4 trillion in bad loans from the banks this year, whereas only RMB1.1 trillion, or around a-third of the target, has been written off, said the ratings agency.
The Home Affairs Bureau (HAB) is creating over 2,500 time-limited jobs related to culture, arts, leisure, sports and district administration under the Anti-epidemic Fund Job Creation Scheme. Over 1,000 vacancies have been filled by now, said a spokesman. Recruitment for the remaining vacancies will commence gradually. This initiative will cost around $354 million.
The top grossing non-gaming app worldwide went to TikTok in August 2020, which generated over US$88.1 million in user spending, up 6.3 times yearly, according to Sensor Tower's report. YouTube (US$83.9 million) closely followed.
The tablet shipment in Europe, Middle East, and Africa (EMEA) market grew 23.8% yearly to 11.9 million units in the second quarter of 2020, marking the first positive growth in six years, according to International Data Corporation (IDC)'s report.
Among new iPhone models of Apple, only iPhone 12 Pro Max will support millimeter-wave 5G, as foreign media cited sources. What's more, only American, South Korean and Japanese versions of iPhone 12 Pro Max will support such speedy wave. iPhone 12, iPhone 12 Max, or even iPhone 12 Pro will only support Sub-6 5G, whilst only iPhone 12 Pro Max will support millimeter-wave 5G as it is the largest phone in the line has room for the special antenna design required for millimeter wave and larger battery, according to sources.
GOLDIN FIN HOLD (530.HK) issued an announcement, admitting that the company has reached a financing plan for a $8.7 billion financing with the aid of CK ASSET (1113.HK).  Meanwhile, the company entered into the Term Sheet, conditionally agreeing to sell the entire issued share capital of Goldin Factoring Limited, a subsidiary of the Company, together with the Shareholder’s Loan of $1.262 billion, at an aggregate Consideration of $2.05 billion.
The trading in the shares of the company will be resumed this afternoon.
The Government announced to extend the Universal Community Testing Programme (UCTP) by four days until next Friday. As at 11 am, approximately 917,000 people successfully registered online for the test, whilst 521,000 people completed the test.
PING AN (2318.HK) General Manager cum Co-CEO Xie Yonglin, at the Shanghai Lujiazui Forum, said there are two essential conditions to self-build its technology capability through the strategy of "from 0 to 1". First of all, a tremendous and ongoing amount of technological investment is needed. Hence, the insurer had pumped over RMB100 billion in technology in the last decade, and pledged to keep pouring RMB100 billion in the next five years. Interesting as its Chief Technology officer has just been poached by Zurich.
Sidrah Haque, a trade and investment advisor to Pakistan's embassy in Cairo, has met with a representative from Taiwan Trade Center in Cairo to discuss about bilateral trade relations, The Times of India reported. Haque once tweeted a photo about the meeting but later deleted the post.
China to Slam Interim Anti-Subsidy Moves on US-made 1-Propanol Imports from Next Wed Chinese State Council's preliminary investigation found that the domestic 1-propanol industry is suffering actual harm from the subsidies in US-made 1-propanol imports. Based on Chinese Ministry of Commerce's advice, Beijing decided to impose provisional anti-subsidy measures on US-made 1-propanol imports in form of anti-subsidy customs deposit starting from 9 September.
Yoshihide Suga Likely to Become Next JP PM with Public Support Lead
38% of Japanese residents support Chief Cabinet Secretary Yoshihide Suga as the next prime minister, ahead of the former Defence Minister Shigeru Ishiba (25%) and Liberal Democratic Party’s Policy Chief Fumio Kishida (5%), according to an Asahi Shimbun survey.
Huawei is set to open 50 brick-and-mortar stores in Europe this year, as Walter Ji, President of Huawei Consumer BG Europe, told foreign reporters. The company will set up flagship stores in France, Spain, Belgium, Italy, Germany and the United Kingdom.
GREE GROUP posted on WeChat that it entered into a strategic cooperation agreement with XIAOMI-W (1810.HK) and CITIC BANK (998.HK). Pursuant to which, the three parties agreed to commence deep cooperation in industrial funds, financial services, industrial investment, project cooperation, resource sharing and so on. GREE GROUP will contribute RMB3.545 billion to join investment and management of Xiaomi Industrial Fund set up by XIAOMI-W.
JD-SW (9618.HK) announced that JD Health, a subsidiary of the group, had reached a strategic cooperation agreement with the National Health Commission of Hubei Province, pursuant to which the two sides would develop on projects related to COVID-19 patient recovery and psychological consultation and would collaborate to improve the public health system in Hubei Province.
US drugmaker Pfizer (PFE.US) is set to get the trial results in October for a COVID-19 vaccine it is working on with its German counterpart BioNTech, said Chief Executive Albert Bourla.
Multiple European countries are mounting new taxes on technology enterprises, said foreign media. In order to pass on costs, Apple, Google and Amazon over the past one month declared price adjustments for British enterprise clients as they seek to offset a new “digital services tax” introduced by London.
YUM CHINA-S (09987.HK) (YUMC.US) -2.080 (-3.591%) will not set its. offer price at the upper end for its second listing in Hong Kong, Bloomberg cited people familiar with the matter. The group reportedly notified some investors that it plans to price its stock at $412, which is $56 below the highest offer price.

Not in this mornings report
TENCENT (700.HK)'s Tencent Cloud announced that it will launch VOD (video-on-demand) online teaching support program for Hong Kong's education sector, jointly with the integrated education platform GRWTH, to provide free VOD services for secondary, primary and kindergarten students in Hong Kong. Schools and teachers could use the function to send latest teaching materials, syllabus or guidelines to students, whilst students and parents could tap such resources via their smartphones, tablets or computers to learn or revise every chapter, or receive any notification.
SKYWORTH GROUP (751.HK) announced that as at the latest acceptance time, valid acceptances in respect of a total of 756 million shares were received, representing 24.69% of the total number of issued shares and 192.41% of the maximum number of shares to be bought-back under the offer.
TSINGTAO BREW (168.HK) announced FOSUN INTL (656.HK), as the seller, had reached a placing agreement for placing 36 million shares of the company.
China Securities Regulatory Commission (CSRC) in Beijing revealed on its website that JD Digital Technology terminated the SSE STAR Market listing guidance agreements with CITIC SEC (6030.HK) and Hua Jing Securities on 26 August, according to Chinese media.
Broadcom (AVGO.US) announced that the third-quarter profit faded 14% to US$614 mn. Adjusted EPS equaled US$5.4, beating US$5.24 in consensus. The Apple supplier stated that the ramp-up in shipment may be delayed this year, hinting that the launch of new iPhone may fall behind the late-September schedule as usual.
BOC HONG KONG (2388.HK) announced it and Schroder Investment Management (Hong Kong) Limited jointly introduced “Asset Allocation Reference Portfolio” which enables customers to make reference to portfolios composing of different asset classes in the global market based on their financial needs and risk appetites. This will help customers diversify their risk more effectively while achieving their long-term investment goals. The “Asset Allocation Reference Portfolio” provides customers with five model portfolios corresponding to different investor profiles for reference. This service will also be available for all customers at internet banking and mobile banking in phases.
SoftBank is actively looking for Indian partners for its intended takeover of TikTok's Indian business, as Bloomberg learnt from inside sources. The Japanese conglomerate, an investor in TikTok's parent ByteDance, was in talks with local telecom carriers, Reliance Jio Infocomm and Bharti Airtel, over the past one month, said insiders.
India's Ministry of Communications and Information Technology has recently issued a notice, blocking 118 applications developed by China, including Tencent's PUBG MOBILE LITE, WeChat Work, WeChat Read, Baidu and so on. The Chinese media quoted Tencent as saying that the company will treat the user privacy and data protection seriously, and will approach India's watchdog to ensure the sustainability of its apps in India.
HKC (HOLDINGS) (190.HK) announced that during the period from 11 June 2020 to 3 September 2020, the Group acquired on the open market a total of 6.04 million XIAOMI-W (1810.HK) Shares at an aggregate consideration of approximately HK$125 million at an average price of approximately HK$20.66 per Xiaomi Share.

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