Aug 14 HSI -48pts T/O -11% DoD HSI review adds XIAOMI-W, WUXI BIO, BABA-SW

19 Aug

Aug 14 HSI -48pts T/O -11% DoD HSI review adds XIAOMI-W, WUXI BIO, BABA-SW

HSI -48pts (-0.2%) 25,073  HSCEI +21pts (+0.2%) 10,267  T/O HK$103.31bn (-11.3% DoD)  

EUROPE markets opened lower after the weak China data, new quarantine rules for arrivals from France into the UK; with travel names weak. News that Trump was linking US Postal service funding to the new stimulus package was a worry. EUROZONE GDP contracted 12.1% as expected and unemployment was -2.9% worse than forecast but the trade balance was Euro 21.2b (vs 11b F/cast)
US Futures opened flat but have fallen and currently are 156pts.
Key is that the S&P is facing resistance after failing again to make a new high despite the good jobs data. The next US stimulus package, which is being seen as essential for the recovery, is floundering from a lack of compromise. Watch for Gold and Silver to have another bounce. Also caution ahead of the data due today Retail Sales Data, Unit Labour Costs, Non Farm Productivity, Industrial Production, Manufacturing Production, Capacity Utilisation, Business Inventories, University of Michigan Aug Data Prelim (Current Conditions, Inflation Expectations, 5 year Inflation Expectations, Consumer Sentiment, Consumer Expectations), Baker Hughes Total Oil Rig Count

CSI 300 Closed +69pts (+1.5%) @ 4,705
Market opened lower, rallied into the China data and then sold down for the rest of the morning with retail investors disappointed by the data; especially the Retail sales number. Around support at 4,618 before a bounce into lunch. PM saw the market work higher to close at the day high which suggests Team China at work supporting the market despite the weak data and the trade talks to take place this weekend.

HSI Pre Market Pre market Opened -158pts vs -116pts ADR’s With E Commerce names most stocks weak. Market then saw choppy trading; HSI rallied into the China data, sold off bounced back to the morning high (25,280) and then trended lower into lunch. PM saw the market work higher to the day high 25,375 eased and tested again but without conviction and then sold down to 25,145 level before a small bounce in the close. Lighter turnover with investors cautious after the China data and ahead of the trade talks this weekend.

Hang Seng Index Review All changes take effect on 7 September 2020 (Monday).

Link to full details
The HSI Adds XIAOMI-W (1810.HK) weighting 2.59%, WUXI BIO (2269.HK) weighting 1.75% and BABA-SW (9988.HK) weighting 5%
Deletes SINO LAND (83.HK), WANT WANT CHINA (151.HK) and CHINA SHENHUA (01088.HK). The total number of constituents remains unchanged at 50.

Airport Authority Hong Kong released the traffic figures for July 2020. During the month, Hong Kong International Airport handled 96,000 passengers -98.6% YoY and 9,870 flight movements,-73.2% YoY
Cargo throughput -7.3% to 372,000 tonnes compared to the same month last year.
Sinopharm CNBG announced that the Journal of the American Medical Association had yesterday (13 August) published the phase 1 and 2 clinical trial medium results of a novel coronavirus vaccine jointly developed by Sinopharm and Chinese Academy of Sciences. The vaccine has been proven successful in facilitating the development of neutralizing antibodies in the 320 voluntary patients aged 18-59, said the article.
GOLDLION HOLD (533.HK) interim results for the period ended June 2020. The turnover -27.6% YoY to HK$539 million. The net profit amounted to HK$55.792 million, -65.8% YoY. EPS was HK5.68 cents. An interim dividend of HK3 cents was declared against a dividend of HK5.5 cents in the corresponding period of the previous year.
PAK FAH YEOW (239.HK) PROFIT WARNING -VE Group is expected to record a consolidated net loss for the six months ended 30 June 2020 of aprox HK$48 million, as compared to the consolidated net profit of HK$21.3 million for the same period in 2019.
MAOYE INT'L (848.HK) PROFIT WARNING -VE expected consolidated net profit for six months ended 30 June 2020 of RMB100-150 million, representing a significant decrease as compared to the same for the corresponding period in 2019.
CHINA TAIPING (966.HK) its life insurance division posted a gross premium income of RMB97.546 billion for the first seven months of 2020, +1.18% YoY. The property and casualty insurance division +5.3% yearly gross premium income growth to RMB16.465 billion while the pension unit saw gross premiums +16.27% year-on-year to RMB3.459 billion.
The Hong Kong Monetary Authority (HKMA) released today (August 14) the key analytical accounts of the Exchange Fund at the end of July 2020. Foreign assets, added HK$34.8 billion to HK$3.68 trillion.
The Hong Kong Monetary Authority announced that total card receivables edged up by 0.2% in Q2 to $124.2 billion at end-June 2020, after a decrease of 10% in the previous quarter.
CHI KAN HLDGS (09913.HK) , on debut, finished the day at $0.425, -9.5 cents or -18% vs the listing price $0.52, on volume of 108 million shares and turnover of $48.20 million. Excluding the handling fees, a book loss of $380 was reported per board lot of 4,000 shares.
Centa-City Leading Index (CCL) last printed at 180.57, -0.1% weekly. 
The index slid 0.66% in aggregate in three weeks. Centaline Property, said the second-hand market registered more vibrant sentiment with the support of rigid demand in wake of moderated epidemic. It’s forecast housing price trend to become clearer in September.
CCL Mass added 0.35% weekly to 184.16;
CCL (small-and-medium units) inched up 0.11% weekly to 181.24;
CCL (large units) cratered 1.17% weekly to 177.13.
Tesla refused to deliver Model 3 sedans to group buyers on the Pinduoduo platform, according to Chinese reports. The EV maker claimed such kind of team purchase did not conform to the group's delivery policy.

Market and Pre Market News at bottom of page.

Regional Markets
opened higher but sold down initially but found support around yesterday closing level. Tertiary Industry Index Jun +7.9% YoY vs -2.1% May (F/cast was +1.2%) out 30 mins ago was strong than expected and the market moved higher and then traded sideways/lower to close +0.2%. Japanese GDP data pre market Monday.
S KOREA Kosdaq opened flat but sold down to 831 level before a small bounced back to the 840 level but then drift lower for the rest of the day to close -2.3% Kospi opened lower did see an initial uptick but then sold down to below the 2,400 level before bouncing back above and trading sideways just above that key level for most of the afternoon with an uptick at the end to close -1.2% @ 2,407
TAIWAN opened lower but has worked higher, initially to yesterdays closing level and then it traded sideways to midday, before working higher in the after noon to close at the day high +0.25%

Short Selling HSI Friday 20.5% vs 18.9% Thursday
Top Shorts
HK & China Gas (3) 49%, Shenzhou (2313) 47%, Power Assets (6) 42%, Hengan (1044) 42%, Mengniu Dairy (2319) 38%, Petrochina (857) 38%, Sino Land (83) 37%, China Res Land (1109) 35%, MTRC (66) 34%, Hang Lung PPTY (101) 34%, CCB (939) 33%, Ping An (2318) 31%, CKI (1038) 30%, Sunny Optical (2382) 30%, CLP (2) 29%, Galaxy (27) 28%, NWD (17) 27%, Sinopec (386) 27%, China Mobile (941) 26%.

Northbound Rmb 39,766m Sell 18,166m : 21,600m Buy
Southbound HK$ 8,733m Sell 4,059m : 4,674m Buy

Northbound Rmb 54,092m Sell 25,548m : 28,544m Buy
Southbound HK$ 8,708m Sell 3,332m : 5,376m Buy

CHINA During market hours

House Price Index Jul 4.8% vs +4.9% Jun (F/cast was 5%)
NBSPress Conference,
Fixed Asset Investment (YTD) Jul -1.6% vs -3.1% Jun (F/cast was -1.2%)
Industrial Production Jul +4.8% vs +4.8% Jun (F/cast was +5.5%)
Retail Sales Jul -1.1% vs -1.8% Jun (F/cast was +0.5%)
Unemployment Rate Jul 5.7% vs 5.7% Jun (F/cast was 5.7%)

House prices for 70 major Chinese cities saw the softest rise since May 2018. New home Prices Jul +0.5% vs +0.6% Jun
Fixed Asset Investment (YTD) Private investment decreased 5.7 percent (vs -9.6 percent in January-May) while public investments rose at a faster 3.8 percent (vs 2.1 percent). Investment in the primary industry grew 7.7 percent, after increasing by 3.8 in the January-May period; investment in the secondary industry went down 7.4 percent (vs -8.3 percent) on the back of manufacturing; and investment in the tertiary industry rebounded (0.8 percent vs 1 percent) due to transport, storage & postal industry; education, health and social work; and recreation & culture activities.
Retail Sales a surprise fall but one I was expecting as I believe that average Chinese consumers have turned a lot more cautious with uncertainty over jobs and the potential resurgence of covid 19. This was the seventh straight month of contraction in retail trade, with people continuing to avoid crowded places, like shops, restaurants, and cinemas.
Unemployment still unchanged which is surprising but with new graduates and school leavers coming onto the job market I would not be surprised to see the number rise especially as the economy is still recovering.

Centre for Health Protection said there were 48 
additional COVID-19 cases in Hong Kong today; (vs 62 cases Thursday).

The Government Economist, Mr Andrew Au, described the economic situation in the second quarter of 2020 and the latest GDP and price forecasts for 2020.
Hong Kong's short-term economic outlook is still highly uncertain. Considering the actual outturn in the first half of the year, and the difficult and uncertain economic environment in the second half, but also the cushioning effects of the Government's massive relief measures, the real GDP growth forecast for 2020 as a whole is revised downwards to -6% to -8% in the current round of review, from -4% to -7% as announced in late April. If the current wave of local infection can be contained within a short time and barring any further sharp deterioration in the external environment, economic performance for 2020 as a whole can hopefully fall within the upper half of the range forecast. The Government will continue to closely monitor the situation and roll out measures as necessary to maintain the vitality of the economy and pave the way for a speedy recovery once the threat of the pandemic recedes. For reference, the latest forecasts by private sector analysts range from -4.7% to -8.5%, averaging around -6.6%.
On the inflation outlook, with the impact of the surge in pork prices since May last year having largely dissipated, inflationary pressures will likely ease further in the rest of the year amid subdued economic conditions. Taking into account the actual outturn in the first half of the year and the impending waiver of one-month public housing rentals in September, the forecast rates of underlying and headline inflation rates for 2020 as a whole are revised downwards to 1.8% and 0.8% respectively, from 2.2% and 1.4% in the May round of review.

Hong Kong Tourism Board (HKTB) announced that Hong Kong received 20,600 visitors in July 2020, representing a daily average of about 660, -99.6% YoY. The HKTB is working with the Hong Kong SAR Government and the tourism industry on the preparation for the “Open House Hong Kong” tactical promotion.

Active Heavyweights
AIA (1299.HK) +1%
HKEX (388.HK) -1%
TENCENT (700.HK) -0.7%
PING AN (2318.HK) +0.2%
CCB (939.HK) unch

HSI & HSCEI Constituents on the move
CHINA TELECOM (728.HK) +6.9%
ANTA SPORTS (2020.HK) +3.7%, hitting new high
CHINA UNICOM (762.HK) +3.1%

HSMI & HSSI Constituents on the move
TYSAN (687.HK) -32.4%
PAX GLOBAL (327.HK) +23%, hitting new high
LI NING (2331.HK) +8.4%, hitting new high
COSCO SHIP HOLD (1919.HK) +3.5%, hitting new high
MAN WAH HLDGS (1999.HK) +2.4%, hitting new high

Google will no longer directly respond to data collection requests from the Hong Kong government 
and will handle such requests in ways they handle requests from the Chinese government, sources quoted as saying by the Washington Post. The search engine has informed Hong Kong Police yesterday that relevant departments could apply for collecting data based on mutual legal assistance treaty between the U.S. and Hong Kong. The process however will be very complicated and it may take weeks to months.
Thai Airways's share trading was suspended today as its auditor Deloitte declined to sign off for its mid-year financial statements. The Thai airline is now under bankruptcy protection, and will submit a restructuring plan at a bankruptcy court next Monday. The group suffered loss of THB5.35 billion (approximately US$172 million) last quarter.
The Transport Department today (August 14) reminded members of the public that the Government has temporarily relaxed the monthly threshold of the Public Transport Fare Subsidy Scheme to $200 from July 1 for six months till December 31. Commuters may collect the public transport fare subsidy for July starting from August 16.
At lunch LI NING (02331.HK) Joint CEO Kosaka Takeshi, at the online conference, said the retail market still looks murky in 2H20 in wake of uncertainties of pandemic development. A healthy and steady transition amid epidemic therefore tops the company's tasks this year, while preparation will be made for future business development post epidemic. The CEO accentuated that he is not quite optimistic about the after market, while trying not to be too pessimistic. He hoped the overall net profit margin to bust above 10.5% this year. As to the company's discount policy, strategy will be made in response to the inventory change, the CEO said, who assured not to neglect gross profit margin because of de-stocking.
iQIYI said it has been actively cooperating with all of the U.S. Securities and Exchange Commission's regular inquiries and investigations. The video platform has also taken the initiative to engage independent advisers in internal scrutiny.
At lunch CALC (1848.HK) interim results ended June 2020. Net profit amounted to $332 million, up 6.1% yearly. EPS equaled $0.491. Interim DPS was $0.2, as compared with $0.23 a year ago.
CATHAY PAC AIR (293.HK) Cathay Pacific and Cathay Dragon carried nearly 43,000 passengers in July 2020, -98.7% YoY The two airlines carried a total of 102,100 tonnes of cargo and mail last month, -39.8% YoY. As new waves of COVID-19 cases have emerged in Hong Kong and elsewhere, the group adjusted its passenger flights for August to approximately 8% of the normal capacity, subject to the potential further relaxation or tightening of government health measures, said Group Chief Customer and Commercial Officer Ronald Lam.
US says The novel coronavirus vaccine developed under the White House’s “Operation Warp Speed” program will unlikely receive a green light from regulators before November due to the time needed for massive clinical trials, opined National Institutes of Health Director Francis Collins.
HANG LUNG PPT (101.HK) announced that "SPEND TOGETHER" has brought nearly $35-million turnover for its seven shopping malls. Starting from 17 August through 31 October, nearly $10-million e-coupons and up to 100% of redemption offer will be introduced to encourage spending.
XIAOMI-W (1810.HK) had earlier showcased the supreme commemorative version of Redmi K30 at its 10th anniversary keynote speech. Available for sale at 10 am today on numerous platforms, the phone has recorded sales of over 100,000 sets in a minute.
Apple will schedule its iPhone 12 model launch in the week of October 12, MacRumors citing the leaker Jon Prosser. The US tech giant is set to accept pre-orders for the lower-cost iPhone 12 models on October 16, and delivery may start on October 23.
YTD global M&As for the telecom sector burgeoned 57% YoY to US$74.7 billion, according to Refinitiv's data. The scale of global M&A activities declined 33% YTD to roughly US$1.67 trillion.
Global notebook shipment in 2Q20 +27% YoY mainly spurred by the need to work from home and study at home due to the pandemic, survey institute Strategy Analytics reported. Lenovo's notebook shipment went up 17% year-on-year to 13.6 million with market share sliding slightly to 25%. HP's shipment spiked 42% year-on-year to 13.4 million with market share edging up to 24.8%. Dell's shipment rose 21% to 8.4 million.
ByteDance has censored content criticizing the Chinese government on its Indonesian news app Baca Berita (BaBe) during 2018 and mid-2020, Reuters citing insiders. A team from ByteDance’s Beijing headquarters was instructed to delete negative articles about Chinese authorities on the app, the people said.
China's electricity generation increased by 1.9% yearly to 680.1 billion kWh in July, according to National Bureau of Statistics (NBS) data. The accumulated electricity generation dropped 0.9% annually to 4.0451 trillion kWh for the first seven months of 2020.
Installs of Signal ballooned 30% locally six days following the US executive order to ban WeChat, reported Sensor Tower. This represented 10,800 Signal downloads per day, against roughly 8,300 daily installs before the ban. In other words, users are looking for alternatives to WeChat.
US President Trump said the disposal of TikTok to an American company should substantially benefit the United States and provide total security to the country. Trump had earlier signed an executive order that could ban TikTok nationwide if the latter could not be sold to a US company within 45 days.
India will keep Huawei and ZTE (763.HK) out from her local 5G network construction due to her escalating tension with China post border clashes, as Bloomberg learnt from inside sources. New Delhi is going to cite national security concerns to oust the two Chinese tech giants from her 5G project name list, said the insiders.
Two US Republican Senators asked the Federal Trade Commission (FTC) to investigate into TikTok’s user data collection and processing practices. TikTok had been discretely collecting and transmitting data from millions of American users until November 2019, WSJ reported earlier.
SOHO CHINA (410.HK) said in relation to the potential strategic cooperation and general offer as referred in the earlier announcement, all previous discussions with various overseas financial investors have now been terminated and have not at this time resulted in the terms for a Potential Transaction being agreed. Early this year, sources had said Blackstone planned to privatize SOHO CHINA with US$4 billion. The company had announced that it had been exploring potential of strategic cooperation with overseas financial investors, which might result in general offer.
Apple removed the TENCENT (700.HK) backed Fortnite from App Store for violating rules by allowing players to buy in-game currency without using Apple's payment systems. Epic Games, developer of the title, is suing Apple over violating US antitrust law and hindering competition with its monopoly power. Google also removed Fortnite from its Google Play Store.
More than ten key multinational companies in the US, including Apple, Ford and Disney, raised concerns over the executive order signed by Trump earlier in the month which bans business transactions involving WeChat app from TENCENT (700.HK) within the nation, Wall Street Journal reported. These companies spoke with the White House officials, saying the restriction will affect their competitiveness.

CHI KAN HLDGS (9913.HK) on debut, opened at $0.385, -26% against the listing price of $0.52, on volume of 35.13 million shares in pre-market orders.
Apple published its FY19-20 China corporate social responsibility report. Since the App Store launch in Mainland in 2010, Chinese developers have garnered more than RMB200 billion of revenue through iPhones and other Apple devices.
BABA-SW (9988.HK)'s has filed a lawsuit against MEITUAN-W (3690.HK) for improper rivalry behaviour, under which it is seeking RMB1 million in economic damages and reasonable charges from the latter, according to court filings seen by Chinese media. learnt from caterers that MEITUAN-W had been denigrating through its platform and forcing caterers to terminate their ties with and, instead, to enter into exclusive partnership with MEITUAN-W, said the report.
China Foreign Exchange Trade Center announced, on 14 August, the central parities in the interbank forex market of transaction currencies, including the dollar against CNY, are as follows: USD/CNY = 6.9405, up 24 bps from yesterday's central parity and reaching a new high since 10 March.
The United States' ban on Huawei, ZTE (763.HK), HIKVISION (2415.SZ), Dahua (002236.SZ) and Hytera (002583.SZ) takes effect on Thursday (13 August). Entities doing business with Washington must ensure they are not using equipment or services offered by the above companies.
Macao Government Tourism Office and Economic Bureau are going to introduce promotional offer via Alipay to encourage Guangdong tourists to travel and spend in the city, Xinhau News Agency citing insiders.
Baidu's iQIYI (iQIYI.US) -12.36% in extended hours after disclosing it is being investigated by the US Securities and Exchange Commission. The US financial watchdog told the Chinese streaming service provider to provide the financial and business record since January 2018.
Hong Kong market will "go to hell", and it can never succeed under Chinese control, US President Donald Trump told Fox Business Network. Hong Kong had been taking incentives in billions of US dollars as it obtained special treatment from the US, Trump said, who declared to take them all back from Hong Kong, knowing the city has China looming over the top of them.
American Chamber of Commerce in Hong Kong said 53% of its interviewees plan to leave Hong Kong after the national security law was passed in the city. Nearly 39% of the interviewed members are seeking divestment, of which 6% may do so in the near future, according to the survey.
LI NING (2331.HK) interim results for the six months ended 30 June 2020. Net profit declined 14.1% yearly to RMB683 million. Basic EPS equaled 27.98 fen. No interim dividend was declared.
The Securities and Futures Commission has obtained trading records and customer data of NEXT DIGITAL (282.HK) dated 10th to 12th August from broker(s), Hong Kong Economic Journal cited broker(s). Yet, SFC declined to comment on the report.
JD-SW (9618.HK) to acquire a controlling interest in Kuayue Express, an enterprise specializing in “limited-time express service” in China, for a total consideration of RMB3 billion through a combination of acquiring existing shares and subscribing for newly issued shares of Kuayue Express. The Company expects to close this transaction in the third quarter of 2020.
Shandong Gold Group agreed a strategic cooperation with BANK OF CHINA (3988.HK) (601988.SH) in a contract signing ceremony yesterday (13 August) in Jinan, Shandong. Pursuant to which, BANK OF CHINA will grant Shandong Gold Group a comprehensive credit line of RMB30 billion, so that Shandong Gold Group could strengthen its comprehensive competitive edges and sustainable development capability in mining industry.
Rumor has been spiraling on the market that Chinese watchdog will set out three new rules to toughen up the snowballing interest-bearing debts in the real estate industry, 21st Century Business Herald reported. The three "red lines" are: debt-to-asset ratio after deducting prepaid fee should be larger than 70%; net gearing ratio should be larger than 100%; and cash-to-short-term-debt ratio should be less than 100%.
EVERGRANDE (3333.HK) announced that it introduced 14 investors for its wholly owned subsidiary Mangrove by selling an aggregate of 28.061% equity interest of the company for a total cash consideration of $23.5 billion. Following completion of the Reorganisation, Mangrove 3 will become the holding company of the Group’s Property Management Business, and will be held as to 71.939% by the Group. Major investors included Chan Hoi-wan (Kimbee), Huatai International, TENCENT (700.HK)'s Image Frame, CHOW TAI FOOK (1929.HK), LIFESTYLE INT'L (1212.HK) , China Everbright and so on.
LINGBAO GOLD (3330.HK) interim results ended 30 Jun 2020. 
The company swung into net profit of RMB28.22 million from loss of RMB83.48 million over a year ago. EPS equaled 3.3 fen. No interim dividend was declared
WUXI APPTEC (2359.HK) results for the six months ended June 2020. Revenue amounted to RMB7.231 billion, up 22.7% yearly. Net profit was RMB1.717 billion, up 62.5%. EPS equaled 75 fen. No interim dividend was declared.
AUSNUTRIA (1717.HK) announced results for the six months ended June 2020. Revenue amounted to RMB3.859 billion, up 22.6% yearly. Net profit was RMB409 million, up 56.9%. EPS equaled 25.37 fen. No interim dividend was declared.
YUE YUEN IND (551.HK) interim results ended 30 June 2020. The company swung into loss of US$137 million from net profit of US$166 million over a year ago. LPS equaled US8.49 cents. No interim dividend was declared.
POU SHENG INT'L (3813.HK) interim results ended 30 June 2020. Net profit declined 97.1% yearly to RMB12.31 million. EPS equaled 0.23 fen. No interim dividend was declared.
VALUE PARTNERS (806.HK) results for the six months ended June 2020. Revenue amounted to $580 million, -28.9% yearly. Net profit was $126 million, -50%. EPS equaled 6.8 cents. No interim dividend was declared.

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