HK/ CHINA PM rally with MSCI rebalance Evergrande reports risk

This and previous notes can be found at asianmarketsense.com  and Substack (Asian Market Sense)
Check out ERI-C.com  for your research needs


HSI 
+340pts (+1.3%) 25,879 HSCEI +188pts (+2.1%) 9,184 T/O HK$213.37bn (+56.2% DoD)  Increased T/O due to MSCI rebalance on the close Tuesday

Europe
Dax opened higher FTSE and CAC trading in the green but flat, most sectors in the green.
Danish medical device company Ambu, strong while the worst performer was Danske Bank. Airline shares weak as EU looks to place restrictions on travellers from the US.
Data
Eurozone 
Core Inflation Rate Aug 1.6% YoY vs +0.7% Jul (F/cast was +1.4%)
Inflation Aug +3% YoY vs +2.2% Jul (F/cast was +2.7%)
Inflation Aug +0.4% MoM vs -0.1% Jul (F/cast was +0.1%)
Germany 
Unemployment Rate Harmonised Jul +3.6% vs +3.7% Jun (F/cast was +3.7%)
Unemployment Rate Aug +5.5% vs +5.6% Jul (F/cast was +5.6%)
France
 
Inflation Rate Aug +1.9% YoY vs +1.2% Jul (F/cast was +1.6%)
Inflation Rate Aug +0.6% MoM vs +0.1% Jul (F/cast was +0.3%)
GDP Growth Rate Q2 +1.1% QoQ vs 0% Q1 (F/cast was +0.9%)
Household Consumption Jul -2.2% vs +0.3% Jun (F/cast was +0.7%)
PPI Jul +1.3% MoM vs +1.1% Jun (F/cast was +0.6%)  
PPI Jul +8.6% YoY vs +7.6% Jun revised (F/cast was +7.7%)  
UK  
BoE Consumer Credit Jul £-0.042B vs 0.308b Jun revised from 0.3b (F/cast was +0.5b)
Mortgage Approvals Jul 75.2k vs 80.3k Jun revised from 81.3k (F/cast was 79.1k)
Mortgage Lending Jul £-1.4B vs 17.7bJun revised from 17.9b (F/cast was 3b)
Net Lending to Individuals  Jul £-1.4B vs 18bJun revised from 18.2b (F/cast was 3.2b)
US Futures 
Opened Dow +40pts, S&P +0.1%, NDX flat,
Ahead Redbook, Case-Shiller Home Prices, House Price Index, Chicago PMI, Consumer Confidence, API Crude Oil Stock Change

CHINA CSI 300 closed -7pt (-0.2%) @ 4,806
Market opened around flat but sold down through the morning on the weak PMI data impacted by the weak PMI data raising questions about the impact of the global and local recovery and covid clampdowns. Also further regulation clampdown in China on tech a concern. PM saw a market reversal, worked better to 4,800 in the first hour and then worked around that level into the close.

Shanghai Composite +16pts (+0.5%) @ 3,544 T/O US$102,031bn +2.5% DoD
Shenzhen Composite -94pts (-0.7%) @ 14,328 T/O US$121,184bn +11% DoD
ChiNext Composite Index -52pts (-1.5%) @ 3,496

CHINA DATA pre market
Manufacturing PMI Aug 50.1 vs 50.4 Jul (F/cast was 50.3) 
Non Manufacturing PMI Aug 47.5 vs 53.3 Jul (F/cast was 53)

HONG KONG
Pre market opened @ 25,505 -34pts vs -35pts ADR’s
But market sold down on the weak PMI data finding support around the 25,120 level. PM there was a turnaround in sentiment and the market rallied as Japan and S Korea rallied and Hong Kong followed resistance approaching 25,800. But then the market ticked +111pts in the closing auction as the MSCI rebalance took place. Earnings now effectively over. Meituan +VE on good results but upside limited by regulatory threats. Evergrande reported after the close and admits a default risk which is likely to be a -VE cross read to other Chinese Developers

EARNINGS mainly complete on Wednesday just SmarTone (315).
Earnings season effectively over.


HONG KONG DATA
HK reported 2 new covid cases; both imported.
After market
Retail sales Jul +0.9% YoY vs +2.9% Jun revised (F/cast was +3%)
A government spokesman said that retail sales continued to increase in July over a year earlier as the local epidemic remained stable and labour market situations improved further, although the growth pace moderated somewhat as compared to the preceding month. Looking ahead, the spokesman pointed out that the electronic consumption vouchers that the Government began to disburse in August have helped stimulate consumption sentiment and will render support to the retail business in the rest of the year. Yet, it is essential for the community to keep the epidemic under control and strive towards more widespread vaccination, so as to strengthen the foundation for continued recovery of the retail sector and the overall economy.

SHORT SELLING Tuesday 17.3% vs 19.6% Monday
Top shorts 
Bank Comm (3328) 44%, Country Garden (2007) 38%, CCB (939) 34%, Sands China (1928) 33%, Haidilao (6862) 32%, Shenzhou (2313) 31%, Baba (9988) 30%, China Life (2628) 30%, Bank of China (3988) 29%, Wuxi Bio (2269) 27%, ICBC (1398) 27%, Geely (175) 25%.

After Market News
SINO BIOPHARM (01177.HK) +0.160 (+2.520%) Short selling $86.58M; Ratio 16.904% announced the interim results
. Net profit was RMB8.48 billion, an increase of 580% over the same period last year.
EPS was RMB45.15 cents. The Company has declared the payment of a quarterly dividend of HK2 cents per share. Together with the first quarterly dividend of HK2 cents per share paid, the total dividend of 1H21 amounted to HK4 cents per share.

EVERGRANDE (03333.HK) -0.030 (-0.683%) Short selling $35.28M; Ratio 17.448% announced the interim results for the six months ended 30 June 2021. Revenue was RMB222.69 billion, down 16.5% YoY. Net profit surged 119.9% YoY to RMB14.383 billion. EPS was RMB1.085. No interim dividend was declared.

EVERG SERVICES(06666.HK) 0.000 (0.000%) Short selling $4.51M; Ratio 3.089% announced interim result ended June 2021.
The revenue rose 68.3% year on year to RMB7.873 billion. The net profit amounted to RMB1.935 billion, up 68.6% year on year. EPS was RMB0.18. No dividend was declared.

Regional Markets
Australia
Market opened higher testing 7,524 in early trades. It then pulled back to 7,510 before working higher and touched 7,555 around 3:40pm before easing back to close +30pts (+0.4%) @7,535. Domino’s Pizza clsoed at a new all time high. Tech names seeing good interest along with
Healthcare blue chips CSL, ResMed. Earnings wrapping up but Losses at stem cell treatments producer Mesoblast -11% as losses continue as it still tries to get US FDA approval for its flagship product. Harvey Norman weak after bowing to public pressure and repaid $6 million in JobKeeper subsidies to the federal government following record profits for the 2021 financial year. 
The weak Chinese PMI data a slight concern to the wider economy.
Data
Inflation Gauge Aug +0.5% MoM vs+0.4% Jul (F/cast was -0.3%)
Building Permits Prelim Jul -8.6% MoM vs -5.5% Jun revised (F/cast was -4.5%)
Current Accounts Q2 A$20.5b vs 18.9B Q1 (F/cast was 19b)
Private Sector Credit Jul +4% YoY vs +3.1% Jun (F/cast was +2.5%)
Private Sector Credit Jul +0.7% MoM vs +0.9% Jun (F/cast was -0.3%)
Japan 
Pre market data was +VE. Trading volumes remain light
Nikkei opened lower and tested 27,600 in early trades despite the good unemployment and Industrial data. But markets worked higher despite the weak China PMI data. PM the markets re-opened higher and worked better to touch 28,159 before easing back to close +300pts (+1.1%) @ 28,090.
Topix trended lower to test 1,938 bounced but trended lower. PM opened higher tested to 1,968 before pulling back to close; +11pts (+0.5%) @ 1,961
Difficult to see any real drivers rumours of CTA pushing the futures.
Leaders Shippers, Iron/Steel, Precision Insts, Services and Pharma.
Laggards Rail, EPG Cos, Insurers, Property.
Volume picked up but thanks to the MSCI rebalance.
Softbank -0.9% broker downgrade on China Exposure.
Shippers still seeing interest Nippon Yusen +2.8%
Warren Buffett invested USD6bn (approx HKD46.8 bn) through Berkshire Hathaway in the shares of five major Japanese trading companies in August last year, and has gained USD2 bn (approx HKD15.6 bn) by now, on the back of the soaring commodity prices, reported Bloomberg News. Berkshire Hathaway's gain of more than 30% has even outperformed Topix index’s 21% rise. The five Japanese trading houses being favored by Buffett were Itochu Corp, Marubeni Corp, Mitsubishi Corp., Mitsui & Co. Ltd. and Sumitomo Corp., the report added.
Data out
Unemployment Rate Jul 2.8% vs 2.9% Jun (F/cast was +2.9%)
Jobs/Application Ratio Jul 1.15 vs 1.13 Jun (F/cast was 1.1)
Data pre market
Industrial Production Jul -1.5% MoM vs +6.5% (F/cast was -3.2%)
Industrial Production Jul 11.6% YoY vs +23% Jun (F/cast was 19%)
Data out PM later 
Consumer Confidence Aug 36.7 vs 37.5 Jul (F/cast was 37)
Housing Starts Jul +9.9% vs +7.3% Jun (F/cast was 5.1%)
Construction Orders  Jul -3.4% vs 3.7% Jun (F/cast was 35%)
S Korea
Generally good pre market data but a week morning but PM market rallied with foreigners turning buyers of growth stocks.
Kospi opened lower as along with Japan and saw choppy trading but 3,130 providing good support and from late morning the market traded better and currently +17pts (+0.5%) @ 3,160 Local Institutions broad sellers. Foreigners small buyers Finance and Internet. 
Leaders: Tech (good bounce in SEC & Hynix), Service and Pharma
Locals selling Tech, Chem and Financials some rotation into Telcos
Galaxy fold supply chain names +VE 
Weakness in Gaming on China news. 
Kosdaq Initially traded around flat but sold down from 10am to 1,026 before rebounding, currently +2pts (+0.2%) @ 1,034  
Data out
Industrial Production Jul +7.9% YoY vs +11.9% Jun (F/cast was +7.2%) 
Industrial Production Jul +0.4% MoM vs +2.2% Jun (F/cast was -0.1%) 
Retail Sales Jul +7.9% YoY vs +1.6% Jun (F/cast was +2%) 
Retail Sales Jul -0.6% MoM vs +1.4% Jun (F/cast was +0.3%)  
Manufacturing Production Jul +7.6% YoY vs 12.1% Jun (F/cast was +7.4%)
Construction Output Jul -8.1% YoY vs -3.1% Jun (F/cast was -3.3%)
Taiwan
Taiex opened lower and trended down to 17,208 level mid morning before working better to 17,327 then drifted lower before rallying in the last 90 mins to close +94pts (+0.5%) 17,490.
Tech saw selling pressure after recent gains and despite news of chipmakers raising prices. Steel +VE but Textile, Paper and Cement weak.
Delta weak on news of flooding causing a production shutdown. 
T/O was US$12.07bn vs US$9.69bnMonday
CECC reported 4 new covid cases (1 imported).

CONNECT FLOWS   
Shanghai
Northbound RMB 88,430m Sell 42,755m vs 45,676m Buy
Southbound HK$ 20,471m Sell 12,160m vs 8,311m Buy
Shenzhen
Northbound RMB 86,737m Sell 41,756m vs 44,981m Buy
Southbound HK$ 19,389m Sell 11,112m vs 8,276m Buy

Active Heavyweights
MEITUAN (03690.HK)  +20.600 (+9.019%)    Short selling $3.67B; Ratio 19.749%   closed at $249, up 9%
BABA (09988.HK)  +7.300 (+4.614%)    Short selling $2.41B; Ratio 29.823%   closed at $165.5, up 4.6%
PING AN (02318.HK)  -2.400 (-3.822%)    Short selling $1.27B; Ratio 21.058%   closed at $60.4, down 3.8%
TENCENT (00700.HK)  +15.400 (+3.306%)    Short selling $1.49B; Ratio 6.163%   closed at $481.2, up 3.3%
AIA (01299.HK)  -0.950 (-1.012%)    Short selling $486.03M; Ratio 16.401%   closed at $92.95, down 1%
CCB (00939.HK)  +0.040 (+0.717%)    Short selling $576.35M; Ratio 34.436%   closed at $5.62, up 0.7%
HKEX (00388.HK)  -0.800 (-0.163%)    Short selling $283.61M; Ratio 16.705%   closed at $490.8, down 0.2%

HSI & HSCEI Constituents on Move:
KUAISHOU-W (01024.HK)  +6.700 (+8.612%)    Short selling $364.35M; Ratio 9.977%   closed at $84.5, up 8.6%
HAIDILAO (06862.HK)  +2.300 (+7.823%)    Short selling $289.74M; Ratio 31.705%   closed at $31.7, up 7.8%
ALI HEALTH (00241.HK)  +0.840 (+7.047%)    Short selling $228.82M; Ratio 23.325%   closed at $12.76, up 7%
WH GROUP (00288.HK)  +0.440 (+6.973%)    Short selling $59.42M; Ratio 19.999%   closed at $6.75, up 7%
CONCH CEMENT (00914.HK)  +2.100 (+5.250%)    Short selling $153.22M; Ratio 22.664%   closed at $42.1, up 5.3%
SHIMAO GROUP (00813.HK)  +0.760 (+4.961%)    Short selling $62.03M; Ratio 28.095%   closed at $16.08, up 5%
CITIC (00267.HK)  +0.430 (+4.649%)    Short selling $110.71M; Ratio 19.624%   closed at $9.68, up 4.6%, hitting new high
GEELY AUTO (00175.HK)  +1.200 (+4.461%)    Short selling $659.31M; Ratio 24.707%   closed at $28.1, up 4.5%
CHINA FEIHE (06186.HK)  +0.597 (+4.428%)    Short selling $52.93M; Ratio 11.668%   closed at $14.08, up 4.4%
SUNNY OPTICAL (02382.HK)  +9.800 (+4.348%)    Short selling $405.34M; Ratio 22.460%   closed at $235.2, up 4.3%
LONGFOR (00960.HK)  -1.350 (-3.852%)    Short selling $45.91M; Ratio 5.219%   closed at $33.7, down 3.9%
SHENZHOU INTL (02313.HK)  +5.900 (+3.604%)    Short selling $303.62M; Ratio 31.210%   closed at $169.6, up 3.6%
ENN ENERGY (02688.HK)  +5.000 (+3.358%)    Short selling $113.87M; Ratio 17.987%   closed at $153.9, up 3.4%
PETROCHINA (00857.HK)  +0.110 (+3.333%)    Short selling $78.90M; Ratio 12.244%   closed at $3.41, up 3.3%
PSBC (01658.HK)  +0.180 (+3.315%)    Short selling $116.89M; Ratio 29.053%   closed at $5.61, up 3.3%
NONGFU SPRING (09633.HK)  +1.250 (+3.133%)    Short selling $18.09M; Ratio 6.400%   closed at $41.15, up 3.1%

HSMI & HSSI Constituents on Move:
DONGYUE GROUP (00189.HK)  +3.250 (+13.800%)    Short selling $112.09M; Ratio 6.472%   closed at $26.8, up 13.8%, hitting new high
FOSUN TOURISM (01992.HK)  +1.180 (+10.424%)    Short selling $1.15M; Ratio 6.666%   closed at $12.5, up 10.4%
YANZHOU COAL (01171.HK)  +1.020 (+8.121%)    Short selling $17.62M; Ratio 3.912%   closed at $13.58, up 8.1%, hitting new high
CHINA COAL (01898.HK)  +0.280 (+5.303%)    Short selling $9.18M; Ratio 3.510%   closed at $5.56, up 5.3%, hitting new high
CHALCO (02600.HK)  +0.170 (+3.108%)    Short selling $215.60M; Ratio 28.915%   closed at $5.64, up 3.1%, hitting new high

MARKET NEWS

ByteDance's leisure game publishing platform Ohayoo announced that the company is fully in support of China's National Press and Publication Administration (NPPA)'s notice
on preventing minors from developing online game addiction and will actively implement relevant requirements, reported Chinese media.

PING AN (02318.HK) -3.100 (-4.936%) Short selling $521.59M; Ratio 17.324% made an announcement on the recent share fluctuation. It said the Company has clear strategy and stable business operations, which are all in line with the requirements stated by the law, rules and regulations.
Also The Company has maintained steady operating profit growth in the first half of 2021. The Company’s designated media for information disclosure are China Securities Journal, Shanghai Securities News, Securities Times, Securities Daily, website of the Shanghai Stock Exchange and website of The Stock Exchange of Hong Kong Limited. Information published on the aforementioned media shall prevail for all information of the Company.

SINO LAND (00083.HK) +0.180 (+1.585%) Short selling $1.68M; Ratio 21.547% and TST PROPERTIES (00247.HK) 0.000 (0.000%) jointly announced that on 30th August, 2021, the Singapore URA awarded the tender for the acquisition of a commercial and residential property to the joint ventures with the tender price of approximately SGD1.028 billion. Jetful (a wholly-owned subsidiary of Sino Land) owns 20% equity interest in the joint ventures, and the remaining 80% equity interest in the joint ventures is owned by companies owned and controlled by the Ng Family.

China's State Administration for Market Regulation (SAMR), alongside Ministry of Education, National Health Commission and Ministry of Public Security, issued a notice on pandemic measures and food safety at schools during Fall. In particular, the notice highlighted that the government will strengthen the regulation and control on the sales of alcohol to minors and that the regulation which forbids businesses to set up alcohol-selling stores in the surroundings of schools will be strictly enforced.

Magnachip Semiconductor Corporation (MX.US) -1.160 (-6.083%) was informed by the U.S. Treasury Department that the Foreign Investment in the U.S. (CFIUS) had found national security risks
arising from the South Korean chipmaker's planned disposal of Wise Road Capital to a Chinese private-equity firm.

The Hong Kong Government announced that the Telecommunications (Registration of SIM Cards) Regulation (the Regulation) will take effect tomorrow (September 1) to implement the Real-name Registration Programme for Subscriber Identification Module (SIM) Cards.

The Real-name Registration Programme will be implemented in two phases. Telecommunications operators are required to put in place relevant infrastructure and systems for implementing real-name registration within phase one (i.e. on or before February 28, 2022).
Phase two of the Real-name Registration Programme will begin on March 1, 2022.

XIAOMI-W (01810.HK) 0.000 (0.000%) Short selling $285.00M; Ratio 22.931%'s Xiaomi Game announced that, in support of China's National Press and Publication Administration (NPPA)'s notice on preventing minors from developing an addiction to online games, the company will endeavor to protect both physical and mental health of minors and will complete the revamp on its anti-addiction system for minors by 1 September.
After the system adjustment, Xiaomi Game will comply with the requirements listed out in NPPA's notice and offer only one-hour of gaming services to minors between 8-9 pm on Fridays, Saturdays, Sundays and statutory holidays.

The chief executive Carrie Lam expressed that the government understands many families are waiting for their foreign domestic workers to arrive in Hong Kong, so it intends to open Penny’s Bay Phase 1 and 2 as quarantine camps for these workers, involving around 800 units.
Lam added that the government would like the camps to be available by late September and will open reservation as soon as possible. The cost is expected to be no more than $500 per day per worker.

While the supply chain situation has not seen significant improvement, the smartphone market has been tracking positive performance over the past few quarters, according to a report published by IDC.
This year's smartphone shipment is forecast to hike 7.4% to 1.37 billion units, followed by 3.4% growth in 2022 and 2023 respectively, the report added.

PRE MARKET NEWS

Chinese regulators are more concerned about the market entity's ability to cope with RMB exchange rate volatility risks,
Reuters citing insiders. The State Administration of Foreign Exchange (SAFE) has recently surveyed some commercial banks and enterprises to understand the potential business impact from higher RMB exchange rate volatility.

The British sports car manufacturer Lotus under Geely Group has completed a new financing round, adding its valuation to approximately USD2.3 billion,
reported Chinese media. The report added that Nio Capital -- the investment unit of NIO Inc. (NIO.US) has participated in said financing round and that Lotus may announce the new investors at the foundation stone-laying ceremony of the Lotus technology global headquarters in Wuhan at the earliest.

CHINA MER PORT (00144.HK) and TENCENT (00700.HK) inked a partnership agreement.
The two parties will jointly establish a laboratory for smart port technology and innovation, with the aim to propel innovative port business models and the digitalization of the sector.

XIAOMI-W (01810.HK) +0.100 (+0.402%) Short selling $285.00M; Ratio 22.931% announced it has become a community member of Open Invention Network (OIN). The OIN community would cross-license Linux System patents on a royalty-free basis and protect the patents of core Linux and adjacent open source technologies.

Macau's Novel Coronavirus Response and Coordination Center announced that, with effect from 00:00 on 1 September 2021, all individuals entering Macao from the Mainland via the Macau International Airport must present a proof of negative COVID-19 nucleic acid test with samples taken within the past 7 days prior to boarding.

Chinese President Xi Jinping remarked at a meeting that strengthening anti-monopoly measures and propelling fair competition remain as the vital internal requirements to perfect the Chinese economy, reported Xinhua News Agency.
The president added that, in order to realize the ultimate goal of common prosperity, China has to push for high-quality development, foster a competitive but fair market environment, create room for growth for mid-small-scaled businesses and better protect the consumers' rights. A proper regulatory system, likewise, is paramount for ensuring fair competition within the burgeoning digitalized economy, so as to prevent people from abusing administrative power, Xi added.

China's National Press and Publication Administration (NPPA) published a notice on tougher management and practical prevention of online game indulgence among minors. In reply, NetEase Games pledged to strictly comply with and actively implement NPPA's notice and requirement.

As to report that CBIRC is investigating PING AN (02318.HK)(601318.SH)’s real estate investment, having ordered the insurer to halt sales of alternative investment products typically linked with the property market,
the company was quoted as saying by Shanghai Securities News that its investment has been in stringent compliance with related regulations, reluctant to comment on any groundless rumor.

BILIBILI-SW (09626.HK) -20.000 (-3.298%) Short selling $84.01M; Ratio 39.379% 's gaming arm, the platform's anti-indulgence system for minors will undergo adjustment at 23:00 tonight.
Afterwards, Bilibili Game (including its own titles and other games running at Bilibili's game center) will only provide minors with one-hour gaming services during 20:00-21:00 from Fridays to Sundays and on statutory holidays.

KINGSOFT (03888.HK) announced that the company's board formally resolved to utilize the share repurchase mandate to repurchase shares of the company not exceeding 10% of the total number of the issued shares, in the open market from time to time at a maximum aggregate price of HK$1 billion.

COSCO SHIP HOLD (01919.HK) announced its interim results for the six months ended June.
It recorded a net profit of RMB37.098 billion, an annual increase of 31.6 times, with an EPS of RMB2.33. No interim dividend was declared.

CONCH VENTURE (00586.HK) +0.100 (+0.323%) Short selling $7.04M; Ratio 24.766% announced the interim results for the six months ended 30 June 2021.
Net profit increased by 0.2% yearly to RMB3.477 billion.
EPS was RMB1.93. No interim dividend was declared.

GCL NEWENERGY (00451.HK) announced the interim results for the six months ended 30 June 2021.
Net profit increased by 24.9% yearly to RMB52.83 million. EPS was RMB0.26 cents. No interim dividend was declared.