Sept 9 HK WRAP HSI -155pts T/O drops Shorts rise. US looks to open higher
HSI -155pts (-0.6%) 24,469 HSCEI -102pts (-1%) 9,729 T/O HK$120.67bn (-14.1% DoD)
EUROPE markets opened flat following the improving trend in Asia and are working higher. No Data Due. But news that AstraZeneca suspending put Pharma names under pressure.
US Futures opened -230pts, but have eased back to flat over the morning and are now indicating +200pts. Same for the S&P and Nasdaq futures which were negative but now +VE; Nasdaq +1.9% and S&P +0.9%. Data due today MBA Mortgage Applications & 30 year Mortgage Rate, Redbook, JOLT’s Job Openings, API Crude Oil Stocks
CSI 300 Closed -110pts (+2.3%) @ 4,585 Opened lower on increased US/China tensions and the continued sell off in the US. But the inflation & PPI were in-line. There was an initial tick higher but then markets trended lower to 4,580 level before finding support. After which it worked higher into lunch. PM saw the market initially tick up to 4,635 but then trend lower through the afternoon, in choppy trading to close at the afternoon low.
Sentiment hurt slightly by the news that AstraZeneca a leading vaccine production candidate said its late-stage trial had been put on hold due to safety concerns after a suspected adverse reaction to a UK trial participant
Shanghai Composite Index -62pts (-1.9%) @ 3,255. T/O Rmb 341.1bn
Shenzhen Component Index -432pts, (-3.3%) @ 12,862. T/O Rmb 695.3
ChiNext Index -127pts (-4.8%) @ 2,523. T/O Rmb 402.2b a record high
HSI Pre Market opened -329pts @ 24,295 lower in line with the ADR’s 24,299 level. E commerce names were weak. Apple supply chain names were weak despite Apple announcing its next launch date. Market saw an early uptick to 24,445 the morning resistance and then basically traded sideways through the morning (24,200-24,400). PM saw the market initially rally to 24,520 level but then trade sideways (24,330-24,440) with a small uptick in the closing auction.
YUM CHINA-S (9987.HK), whose shares will be listed tomorrow, opened flat at $412 in gray market with a lack of support. It last stood at $400, -2.9% against the listing price of $412, on volume of 45,000 shares, PhillipMart data showed.
NONGFU SPRING (9633.HK) Closed -0.2% To Included in Hang Seng Composite Index - Consumer Staples, Hang Seng Composite LargeCap Index, Hang Seng Composite LargeCap & MidCap Index and Hang Seng Consumer Goods & Services Index. Effective 22 Sept 2020.
SHORT SALES Wenesday 19.6% vs 16.7% Tuesday
Top Shorts MTRC (66) 33%, Petrochina (857) 36%, HSBC (5) 35%, Bank of China (3988) 35%, Hengan (1044) 34%, BABA (9988) 32%, CCB (939) 30%, AIA (1299) 29%, Hang Seng Bank (11) 29%, Country Garden (2007) 28%, CLP (2) 28%, ICBC (1398) 27%, Mengniu Dairy (2319) 25%.
AFTER MARKET NEWS
Chinese chipmakers are striving to reduce their use of American semiconductor gear, being concerned about an escalation of the tech war with the United States, reported Nikkei. SMIC (981.HK) and Yangtze Memory Technologies are two of the chipmakers that ambitiously test homegrown and non-U.S. equipment in their production lines, whilst several Chinese state-backed chipmakers are doing likewise, according people familiar with the matter.
Baidu (BIDU.US) is in talks with investors to raise up to US$2 billion for a biotech startup in the coming three years, as Reuters learnt from people with direct knowledge of the matter.
FOSUN PHARMA (2196.HK) announced that a novel coronavirus reagent (fluorescent PCR) developed by its subsidiary has been listed on the WHO's emergency list.
SIM TECH (2000.HK) unaudited revenue for the eight months ended 31 August 2020 was to $681 million, -7.9% YoY
Consulate General of the United States in Hong Kong has received one tender for its property at 37 Shouson Hill, local media reported, although the tender size and successful tenderer are remain veiled. The deal was expected to be completed by the end of this year.
CHINA SOUTH AIR (1055.HK) announced its wholly owned logistics subsidiary intends to carry out mixed ownership reform and be publicly listed on the Shanghai United Assets and Equity Exchange to publicly recruit 1-15 strategic investors through capital increase with a share capital ratio not exceeding 49.5%. Upon completion, the company will maintain its status as a controlling shareholder of the logistic subsidiary.
Thailand is planning to reopen for foreign travellers, hoping to revive its tourism industry and save millions of jobs. The new plan is expected to be unveiled at end-October. Tourists will hence be allowed to visit the country through airports and travel freely after a compulsory 14-day quarantine at the port of entry.
Centa-Salesman Index (CSI) last stood at 49.85 this week, -0.58 pts weekly. The index may gradually go up, and home prices may get rid of the range-bound gesture at high level around the Mid-Autumn festival, in light of taming epidemic and relaxing social distancing, said Centaline Property.
Mox, a virtual bank jointly invested by STANCHART (2888.HK), HKT-SS (6823.HK), PCCW (8.HK) and Ctrip, has officially commenced operation. The bank first invited pre-registrants who had signed up on the waiting list to start experiencing its services. Any user can open an account in minutes for free. They can earn 1% p.a. daily interest on up to HKD1 million deposit across all Mox account
JAPAN opened lower and traded sideways in the range 22,900/23,000. After lunch tested the upper resistance of that band and after a few attempts broke above but without much momentum; to close -1% Machine Tool Orders out @ 2pm HK time for Aug -22.5% YoY vs -31.1% Jul (F/cast was -26%) which helped in the last hour. Softbank -3% off the initial lows
S KOREA markets opened lower but worked higher but failed to test yesterday’s closed and Kosdaq sold down in the last hour, to close -1% and the Kospi followed a similar patten tp close -1.1%.
TAIWAN opened lower around 12,590 level and initial sold down to 12,480 but then worked higher through the day to close -0.4%
CONNECT FLOWS (up DoD)
Northbound Rmb 42,709m Sell 22,175m : 20,535m Buy
Southbound HK$ 9,232m Sell 4,209m : 5,023m Buy
Northbound Rmb 61,958m Sell 32,038m : 29,920m Buy
Southbound HK$ 9,346m Sell 4,213m : 5,133m Buy
Inflation Aug +2.4% YoY vs +2.7% Jul (F/cast was +2.5%)
Inflation Aug +0.4% MoM vs +0.6% Jul (F/cast was +0.3%)
PPI Aug -2% YoY vs -2.4% Jul (F/cast was -1.5%)
Data out on the open showed Inflation slowed as food cost rises slowed and the prices for most other items declined less.PPI continued to fall but by the smallest in 5 months as the economy continues to recover.
Next expected data from China is the new loans, social financing etc which might come out Friday.
Centre for Health Protection said there were 6 additional COVID-19 cases in Hong Kong today; (vs 6 Tuesday).
MEITUAN (3690.HK) -2.5%
BABA (9988.HK) -2.4%
CCB (939.HK) -1.6%
TENCENT (700.HK) -0.9%
PING AN (2318.HK) -0.4%
AIA (1299.HK) -0.2%
HKEX (388.HK) -0.1%
HSI & HSCEI Constituents on the move
MENGNIU DAIRY (2319.HK) -4%
CONCH CEMENT (914.HK) -3.1%
PSBC (1658.HK) -3%
HSMI & HSSI Constituents on the move
HENGTEN NET (136.HK) -16.1%
COSCO SHIP HOLD (1919.HK) +5.5%, hitting new high
HOPSON DEV HOLD (754.HK) +2.8%, hitting new high
*ENERGY WEAK as WTI -7.3% and Brent -5.1%; to below $40 for the first time since June, on concerns of a stalling consumption recovery in Asia and increased supply from OPEC+ . PETROCHINA (857 HK -1%), SINOPEC (386 HK -2.6%) CNOOC (883 HK -2%) CHINA OILFIELD (2883 HK -2%).
*E-COMMERCE WEAK following the US sell-off
PUBG Corp,will no longer grant TENCENT (700.HK -0.8%) the rights to publish its mobile game in India after the local government has banned 117 Chinese mobile apps.
ALIBABA (9988 HK -2.4%) JD.COM (9618 HK -2.7%) NTES (9999 HK -2.1%).
Interesting to note that Gene Munster in the US still likes Apple, Amazon, Alphabet and Zillow and looks as this as an opportunity.
*TECH & COMPONENTS WEAK as Apple -7% overnight despite news that it will start producing 5G iPhones in mid-September to reduce production delays but may still miss its 80-million unit target. Samsung is expected to increase smartphone shipments as it bids to grab market shares from Chinese rivals. The company is planning to increase its smartphone shipments to 300m units in 2021 when its rival Huawei is facing sanctions by the US govt. SMIC (981 HK -2.2%), XIAOMI (1810 HK-1.3%), HUA HONG (1347 HK -1.2%)
Q TECH (1478 HK +1.8%) Aug camera module sales +4.8% YoY (+7% MoM) to 33.8m units.
*HK PROPERTY FIRM following recent consolidation and as social distancing rules are being eased gradually.
SHKP (16 HK +1%) released 65 flats in the first price list of Wetland Seasons Park Phase 3 in Tin Shui Wai, at an average HK$12,968 psf discounts, 14% higher than the 1st price list of Phase 2.
SINO (83 HK +2.2%) CKA (1113 HK +0.12%).
SUNLIGHT REIT (435 HK +4%) annual distributable income was -0.1% YoY to HK$467m after it recorded a net loss of HK$751.39m.
*CHINA PROPERTY MIXED on sales data.
LONGFOR GROUP (960 HK -1.9%) Aug contract sales +10% YoY to 24.22b yuan. POWERLONG REAL EST (1238 HK +5.6%) Aug contract sales +47.6% YoY to 7.2b yuan.
*AUTO MAKERS MIXED.
GAC (2238 HK +2.9%) Aug vehicle sales volume +12% YoY to 180,060 units.
But GREATWALL (2333 HK -1.4%) GEELY (175 HK -2.4%) after their recent rally.
*VACCINE MIXED as AstraZeneca paused a Covid-19 vaccine trial following a single unexplained illness. CANSINO (6185 HK +6.6%) INNOVENT (1801 HK -0.7%) FOSUN (2196 HK -1.4%) CSPC (1093 HK-0.6%).
Very good FT article the Big Read A very interesting read about how bats cope with so many viruses without dying. Seems interferons (which I have to admit sounds like something from Captain Scarlet… just showing my age) but which are very important in combating viruses in the early stages.
A key point it makes it that vaccines are systematic and deliberate way to prevent disease from a virus you have not met before and a well designed one is better that immunity than natural infection. BUT the first generation vaccine currently being developed may not be good enough; especially as covid-19 is continuing to evolve or mutate.
MARKET HOURS NEWS
Taiwan's Central Epidemic Command Centre has listed Hong Kong as a mid-to-low risk region with immediate effect in light of the gradually muted epidemic. The home isolation period is shortened to seven from 14 days for all businessmen upon arrival in Taiwan.
Kakao Games recorded 1,500 times of over-subscription in its IPO in South Korea, foreign media reported. KRW115 trillion (USD97.0 billion) was frozen.
IMF says there are signs of global economic recovery, where some economies are doing better than expected, said International Monetary Fund's Managing Director Kristalina Georgieva. The recovery is attributable to powerful and concerted policy response by governments and central banks, and the situation has improved since May, opined Georgieva.
NEW WORLD DEV (17.HK) and its relevant parties have filed for the compulsory sale of No. 306, 308, 310 and 312 Tung Chau Street, Sham Shui Po, which are valued over $160 million, according to the information from Lands Tribunal.
Nintendo plans to raise the Switch console production volume to nearly 30 million units for the fiscal year, reported Bloomberg. The Japanese firm boosted its output target to 25 million units in early August, according to earlier reports. Assemblers are now operating at a capacity utilization rate of 120%.
Samsung and LG decided to pull plug on supply of high-end smartphone panels to Huawei after the US ban takes effect on 15 September, since the ban covers chips that are needed in display panels and Huawei only makes up small slice of orders of the two companies, South Korean online media Chosun Biz reported.
China Resources plans to ramp up its investment in Fujian and pour roughly RMB100 billion therein between 2021-25, as Chairman Wang Xiangming told Chinese media.
CKH HOLDINGS (1.HK) is considering selling stakes in Partner Communications, Israel's second-biggest mobile company, according to Israeli report. Partner Communications has yet to obtain license approval from Israeli authorities, although the latter have not rejected the application. Discussions between both sides have been stalled for months.
HSBC HOLDINGS (5.HK)'s HSBC Insurance (Asia-Pacific) announced that it will establish HSBC Financial Technology Services (Shanghai) Co., Ltd. in China by the end of the year. The new company will initially render technological innovation and digital empowerment to HSBC mobile wealth planning services, and will gradually provide support to more institutions.
BOCI Securities' private cloud platform has commenced operation, supporting operation of the official website of BOCI Securities, in addition to applications of retail, asset management, investment banking, research and so on, according to Chinese media. The platform was forged based on Tencent Cloud's TCE, representing the first comprehensive private cloud platform nationwide run by a Chinese broker.
Big 4 CN Banks Trial Digital Currencies Internally via Invitation Codes to Some SZ Staff
Citibank China's Shanghai Branch is one of the 1st batch of pilot banks in Shanghai under the pilot program for facilitating trade-related forex receipts and payments launched by State Administration of Foreign Exchange (SAFE), reported Chinese media.
On 21-23 August, SJM HOLDINGS (880.HK) held a major recruitment, designated for Macao residents, for new jobs at "Grand Lisboa Palace", Macao Daily reported. Nearly 2,000 candidates joined the event.
STANCHART (2888.HK) has started cutting private-banking jobs in London and Dubai for cost saving, reported Bloomberg. 20 people will reportedly be sacked in the United Arab Emirates, while 25 will leave in Britain. With roughly 1,400 staff, the private bank will finalize the redundant positions by October and complete the layoff by end-2020.
Schroders Plc unloaded stake in HUA HONG SEMI (1347.HK) by 5.084 million shares at an average price of $28.99 per share on 4 September, involving approximately $147 million, as disclosed by the Stock Exchange. The shareholding of Schroders Plc in HUA HONG SEMI was as a result axed to 4.89% from 5.29%.
AGILE GROUP (3383.HK) announced the acquisition of a residential lot in Wuxi, Jiangsu at a consideration of RMB2.14 billion. The plot has a total GFA of roughly 161,000 sq.m., with a floor price of around RMB13,240 per sq.m.
Cushman & Wakefield: 3Q20 Home, Property Investment on Ongoing Slide; Home Prices May Dive 10% in FY20. The coronavirus pandemic and global political headwinds are sending Hong Kong residential and property investment markets into ongoing slide during the third quarter of 2020, said Cushman & Wakefield. However, the markets are stabilising and may moderately recover by the end of the quarter thanks to rigid demands, along with the eased LTV ratio and low rates. In the macro landscape, the pandemic will unlikely fade away in the near future, whereas the local jobless rate will possibly rocket to 7% amid latent political turmoils. Home prices may thus stay subdued and slump 10% on a full-year basis. The real estate consultancy firm foretold the property investment market to plunge into a 10-year trough in both transaction volume and turnover due to the lacklustre market sentiment.
PRE MARKET NEWS
Not in this mornings report
GOLDIN FIN HOLD (530.HK) disclosed further information on the financing plan of the Group. On 1 September 2020, Smart Edge Limited, an indirect wholly-owned subsidiary of the company, entered into a facility agreement led by a wholly-owned subsidiary of CK ASSET (1113.HK), in respect of term loan facilities in an aggregate amount of HK$8.8 billion.
Temasek's annual report showed higher investment gains of Chinese firms, including BABA-SW (9988.HK) and MEITUAN-W (3690.HK) , reported foreign media. As of 31 March 2020, Temasek's Chinese asset weighting rose to 29%, overtaking that of Singapore for the first time.
Under Armour (UAA.US) announced a plan to lay off roughly 600 employees from its worldwide workforce, citing the business impacts from the coronavirus crisis.
The virtual bank WeLab Bank posted on social media that it will roll out a fixed deposit offer with an annual interest rate as high as 9.8%. The maximum amount of deposit that could enjoy such rate is capped at $10,000. The preferential rate is subject to the number of customers that will join the fixed deposit scheme.
KOOLEARN (1797.HK) announced the placing of 59.432 million shares (i.e. 5.95% of the share capital as enlarged) to controlling shareholder New Oriental and chairman Yu Minhong at US$3.87 per share (around HK$30), representing a 7.3% discount to the closing price yesterday. The net proceeds are estimated to be approximately HK$1.781 billion.