This and previous notes can be found at Substack ( Asian Market Sense )
Check out ERI-C.com for interesting research and trading analysis
HSI +171pts (+0.6%) 27,741 HSCEI +60pts (+0.6%) 9,946 T/O HK$154.61bn (-17.2% DoD)
No data due. Markets opened around flat but seeing some initial weakness. Seemingly ignoring the positive handover from Asia.
Opened Dow +25pts S&P +0.1% and NDX +0.2% and rose in Asian time but dropped as Europe started trading.
Currently DOW -43pts, S&P and NDX flat
US earnings season kicks off with banks in focus. Data on Consumer Inflation Expectations due today. Focus this week likely to be Powells testimony, PPI data and earnings.
CHINA CSI 300 closed +63pts (+1.3%) @ 5,133
CSI 300 opened higher but saw some initial selling to test Friday’s close. It then rallied to 5,154 over the next hour, with most of the buying taking place around 10am. It then traded sideways into lunch.
PM initially sold down to 5,112 in the first hour before a bounce and then worked slightly better into the close.
Market reaction mixed to the PBOC’s RRR cut which was bigger than expected. News that the U.S. added 23 Chinese entities to an economic blacklist also added pressure to market sentiment as China-U.S. tensions remain.
Leaders in the CSI 300 were materials and health care firms
Worth noting the liquidity-sensitive ChiNext gained 3.9% to its highest level since June 2015.
Sector wise; Network security and lithium battery sectors hit their daily limits, and there was good interest in salt lake lithium extraction and cloud computing sectors
Laggards were banking and aquaculture
Shanghai Composite +24pts (+0.7%) @ 3,548
Shenzhen Composite +317pts (+2.1%) @ 15,162
ChiNext Composite Index +111pts (+3.1%) @ 3,651
Yunnan's National Health Commission reported, as of yesterday (11 July), 9 new covid cases along with 3 new imported confirmed cases.
Tuesday morning after the open China due to release trade data. Then on Thursday GDP, Retail Sales, House Price, Industrial Production and Unemployment data.yes
HSI Pre market opened 27,672 +328pts vs +280 pts ADR’s
It then trended lower for the first 30 minutes to 27,456 before a bounce but it was short lived and it dropped back to 27,470 level.
Investors remain cautious ahead of Tuesday’s Trade data and Thursdays GDP which is expected show growth eased to 8% from the record gain of 18.3% in 1Q.
Regulatory concerns remain a focus, as China outlines new rules that would require nearly all companies seeking to list in foreign countries to undergo a cybersecurity review, a move that would significantly increases oversight over its internet giants.
UNQ HOLDINGS (02177.HK), on debut, closed at $9.04, down 23.8% against the listing price of $11.86, on volume of 18.6 million shares and turnover of $208 million. Excluding handling fee, the book loss was $564 per board lot size of 200 shares.
BRII - B (02137.HK), whose shares will be listed tomorrow, opened at $24.5 in gray market, up 10% against the listing price of $22.25, and last stood at $22.3, up 0.2% against the listing price, on volume of 3.7 million shares, PhillipMart data showed.
SCVE GROUP (06913.HK), whose shares will be listed tomorrow, opened at $2 in gray market, up 25.8% against the listing price of $1.59, and last stood at $1.56, down 1.9% against the listing price, on volume of 3.89 million shares, PhillipMart data showed.
HONG KONG DATA
Hong Kong reported no new covid cases today
Short Selling Monday 15% vs 13.8% Friday
Top Shorts Bank of China (3988) 43%, BankComm (3328) 34%, HSBC (5) 34%, Hengan (1044) 31%, AAC Tech (2018) 30%, Sunny Optical (2382) 30%, Hang Seng Bank (11) 29%, Country Garden (2007) 29%, CK Asset (1113) 28%, Ping An (2318) 28%, CCB (939) 28%, Haidilao (6862) 28%, China Life (2628) 28%, AIA (1299) 28%, Wuxi Bio (2269) 27%, Henderson Land (12) 26%, CLP (2) 25%,
AFTER MARKET NEWS
GOOD FRIEND (02398.HK) announced that the total sales to customers for the six months ended 30 June 2021 amounted to approximately RMB478 million, representing an increase of approximately 25% when compared to the same period in 2020.
GANGLONG CHINA (06968.HK) announced that from January to June 2021, the group achieved contracted sales amounted to approximately RMB17.853 billion, increased by around 58% compared to the period from January to June 2020.
The HKSAR Government, the National Development and Reform Commission (NDRC) and relevant Mainland ministries held the fourth Joint Conference on Advancing Hong Kong's Full Participation in and Contribution to the Belt and Road
Initiative (B&RI) today (July 12) through video-conferencing.
Financial Secretary Paul Chan stressed that, during the 14th Five-Year Plan, the country's economy will continue to expand steadily. Following this trend, the HKSAR Government will continue to support Hong Kong companies in promoting domestic sales, including assisting them in their brand building and moving up in the value chain.
*FINANCIALS WEAK with CHINESE BANKS mostly trading lower on growth and earnings concerns after the loans data and RRR cut Friday. ICBC (1398 HK -1.1%) CCB (939 HK -0.4%) ABC (1288 HK -0.4%) CMB (3968 HK +0.9%).
INSURERS were softer as a sector amid concerns of slowing of economic growth in 2H, ahead of this week's GDP data release. CH LIFE (2628 HK -1%) NCI (1336 HK -0.6%) PING AN (966 HK -0.5%) PICC P&C (2328 HK -0.9%).
*HK DEVELOPERS FIRM There were nearly 800 new homes sold in the first 10 days of July. CH OVERSEAS LAND (688 HK +0.5%) launched second-round sales for its One Victoria project at Kai Tak on Saturday and sold 118 out of the 286 flats offered in one day, the flats were priced 12% higher vs the average price of the first batch. CK ASSET (1113 HK +2%) said it has sold all 1,422 flats at Sea to Sky in Lohas Park, cashing out around HK$16.3b, following the launch of the project a year ago. Wheelock and SINO LAND (83 HK +0.8%) sold 11 flats at Grand Victoria phase I for HK$182m. HENDERSON LAND (12 HK +0.4%) sold 20 flats at Skypoint Royale in Tuen Mun for more than HK$105m.
*E-COMMERCE/INTERNET MIXED. Chinese regulators rejected TENCENT-owned (700 HK -0.7%) Huya's proposal to acquire rival DouYu because it would strengthen the game streaming dominance of Tencent, a shareholder in both companies. The case marks the first rejection by the agency on mergers and investment deals by China's internet companies. Companies holding data on more than 1 million users must now apply for cybersecurity approval when seeking listings in other nations because of the risk that such data and personal information could be “affected, controlled, and maliciously exploited by foreign governments,” the Cyberspace Administration of China said in a statement on Saturday. The cybersecurity review will also look into the potential national security risks from overseas IPOs, it said. ALIBABA (9988 HK +1%) MEITUAN (3690 HK +2.1%) NTES (9999 HK +1.1%) advanced as laggards, while BILIBILI (9626 HK +5%) jumped on bargain-hunting.
*TECH & COMPONENTS FIRM
SUNNY OPTICAL (2382 HK -2.3%) said shipments of handset lens sets dropped by 27.1% YoY to 85.8m units.
Q TECH (1478 HK +4.9%) total sales volume of camera modules in June +20.5% YoY to 38.39 units.
ZTE (763 HK +13.5%) reported preliminary net income for 1H of +105% to +132% of 3.8b yuan to 4.3b yuan.
HUA HONG (1347 HK +6.6%) SMIC (981 HK +2.3%) as chip shortgages remain an industry concern.
*AUTOS FIRM despite China's auto sales fell 12.4% in June from the corresponding month a year earlier, CAAM data showed on Friday. GAC (2238 HK -1.1%) reported vehicle sales for June of -11% to 166,049 units. BYD (1211 HK +7.7%) amid market's optimism on its July/August sales forecast, due to China customer’s “keen adoption and acceptance” of new energy vehicles. GEELY (175 HK +2.1) BAIC (1958 HK +2.6%).
FOSUN PHARM (2196 HK +4%) to sell Covid shots to TSMC and Hon GHai Precision for Taiwan Inoculation.
BEIJING CAP LAND (2868 HK +46%) spiked on proposed merger with Beijing Capital City Development Group Co.
HAIDILAO (6862 HK +8.8%) jumped on optimism of recovery on the sector, while recent table turnover at its restaurants have seen improvement.
Market opened strongly at the day high (7,273) with strength in iron ore miners (helped by the Chinese RRR cut), banks and energy names. It has drifted lower with news of more covid cases making it likely the current lock down will be extended. But saw good support at 7,320 and trended higher from about 1:30pm to close +60pts (+0.8%) @ 7,334
Wesfarmers announced a $1.38 per share bid for Australian Pharmaceutical Industries, valuing the Priceline owner at about $687 million. Shares in API were +20%.
Building Permits May -7.1% vs -5.7% Apr (F/cast was -7.1%)
Markets opened strongly on good pre market data, saw increased initial volumes. Cyclicals +VE as Yaskawa Electric +6.5% raised its annual profit forecast (Fanuc +6.6%). Shipping stocks were weak.
Nikkei opened 28,413 and worked higher through the morning session. PM the market traded sideways to close +629pts (+2.3%) @ 28,569
Topix similar, opened at 1,943 worked higher but resistance at 1,955 and then worked sideways into lunch. PM traded sideways around 1,950 level with an up tick at the end to close +41pts (+2.1%) @ 1,953
Data pre market
Machinery Orders May +7.8% MoM vs +0.6% Apr (F/cast was +2.3%)
Machinery Orders May +12.2 % YoY vs +6.5% Apr (F/cast was +6%)
PPI Jun +5% YoY vs +5.1% May revised (F/cast was +4.9%)
PPI Jun +0.6% MoM vs +0.8% May revised (F/cast was +0.5%)
Machine Tool Orders Jun +98% vs 140.7% May (F/cast was +85%)
Opened strongly after good July 1-10 export/import data and news that Hynix was starting mass production of 1ANM DRAM using EUV. Signs of bargain hunting. New covid cases reported at 1,100 above 1,000 for a sixth day.
Kospi a strong open initially to 3,240 and then worked higher but saw resistance at 3,250 but good support at 3,242. Closed +29pts (+0.9%) @ 3,247
Kosdaq opened higher, initially to 1,034 but then rallied again to 1,037 around 9:40am before easing back to trade around 1,036 for around 40 minutes, it then eased again back to trade around the 1,035 level for the rest of the day. Closed +6pts (+0.6%) @ 1,035
Daily Average Exports +21.1% YoY
Exports +14.1% YoY
Imports +33.3% YoY
Taiex opened higher at 17,843 and rallied to 17,948 in the first 15 minutes but then trended lower to 17,760 at 11:45am before working higher into the close +153pts (+0.9%) @ 17,814. T/O was US$19.79bn vs US$19.39bn on Friday.
Buying focused on Large Cap Tech, Shipping and Steel
Hon Hai and TSMC to donate 10 million doses of COVID-19 vaccine to Taiwan +VE for sentiment. CECC reported 24 new covid cases today.
After market TSMC announced to actively expand and optimize the production capacity of its 28nm technology, in order to address the increasing demand, predicting to stretch the total capacity of the 28nm chip by 100,000-150,000 units per month over the next 2-3 years.
Northbound RMB 59,127m Sell 30,525m vs 28,602m Buy
Southbound HK$ 21,810m Sell 10,043m vs 11,767m Buy
Northbound RMB 75,433m Sell 35,934m vs 39,499m Buy
Southbound HK$ 24,626m Sell 13,466m vs 11,160m Buy
HKEX (00388.HK) +2.7%
MEITUAN (03690.HK) +2.1%
BABA (09988.HK) +1%
TENCENT (00700.HK) -0.7%
AIA (01299.HK) -0.5%
CCB (00939.HK) -0.2%
PING AN (02318.HK) +0.1%
HSI & HSCEI Constituents on Move:
HAIDILAO (06862.HK) +8.8%
NONGFU SPRING (09633.HK) +8.5%
BYD COMPANY (01211.HK) +7.8%
JD HEALTH (06618.HK) +4.8%
EVERG SERVICES (06666.HK) -3.9%
ALI HEALTH (00241.HK) +3.4%
TECHTRONIC IND (00669.HK) +3%
HSMI & HSSI Constituents on Move:
ZTE (00763.HK) +13.5%
IDREAMSKY (01119.HK) +11.1%, hitting new high
IGG (00799.HK) +10.6%
ASCENTAGE (06855.HK) +10.5%
TIGERMED (03347.HK) +10%
DONGYUE GROUP (00189.HK) + 8.1%, hitting new high
GENSCRIPT BIO (01548.HK) +7.9%, hitting new high
SINOFERT (00297.HK) +6.8%, hitting new high
CRRC TIMES ELEC (03898.HK) +4.8%, hitting new high
MARKET HOURS NEWS.
China's regulator is poised to request Tencent Music to forgo the exclusive music copyright of its record arm, according to Chinese media. It remains unclear now as to whether TENCENT (00700.HK) will be imposed further antitrust penalty.
In June, the number of residential property transactions involved Buyer's Stamp Duty (BSD) amounted to 104, -8.8% MoM with the amount of BSD collected recorded at $182.5 million, -23.6% MoM, setting a 4-month low, according to the Stamp Office of Inland Revenue Department.
China's Ministry of Industry and Information Technology (MIIT) disclosed in its 3-year action plan for the cybersecurity industry the target of expanding the scale of the industry to over RMB250 billion and achieving a CAGR of over 15% by 2023. MIIT mentioned that a series of core cybersecurity technologies have recorded a breakthrough and the cybersecurity industry have shown great potential in its ability to create new products and services in its union with innovative technologies.
China's Ministry of Culture and Tourism issued a notice to solicit public opinions on the Measures for the Administration of Cyber Performance Agencies. It is stipulated that cyber performance agencies cannot tempt users to spend money by making phony payment and taking the lead to give out rewards, nor can they bring up online performers' income by reward ranking and false promotion.
GEELY launched its premium SUV Xingyue S line, with four models priced from RMB135,700-171,700. The newly announced coupe SUV line is built on the CMA architecture and powered by the 2.0T turbo engine.
YUEXIU PPT-NEW (00123.HK) announced to form a strategic alliance with Ziwei Property indicating that both parties will be supported by the dual-drivers of market-oriented resources allocation and resources integration of state-owned enterprises. YUEXIU PPT-NEW stated that the partnership signifies the company's determination to further develop the market of western China.
CHI MER LAND (00978.HK) Prositive Profit Alert announced that for the six months ended 30 June 2021, the net profit is forecast to increase by circa 240%-260%, as compared to the corresponding period in 2020, primarily due to a significant increase in carried forward income and gross profit and the year-on-year increase of the group’s share of profits of associates and joint ventures due to the increase in income from the associates and joint ventures of the group for some projects located in Nanjing.
With preparation mostly ready, the Wealth Management Connect is expected to be announced on a "specifically good day" soon, Chief Executive Carrie Lam disclosed. Meanwhile, there will be measures to tackle the travel issues of personnel who are not required to go back and forth between Hong Kong and China under strict border requirement of epidemic.
Qincheng Innovation Center, a smart co-working space under BABA-SW (09988.HK), commenced operation in Hangzhou Future Sci-tech City, having signed entry agreements with Tmall Genie and two other corporations, Chinese media reported. Measuring nearly 12,000 sq.m., the office has an occupancy rate of 95% at the moment.Guggenheim Global CIO Scott Minerd, once a Bitcoin booster, told CNBC that Bitcoin is in a grave crash and may plunge to US$10,000-15,000. Looking at crypto history and the current situation, Minerd believed the Bitcoin slide is a crash, meaning the crypto's price will slip 70%-80% to hit US$10,000-15,000.
TikTok expressed that the company intends to use extensive auto-control tools to remove improper videos that violate the platform rules and to issue warnings within the app to first-time rule-breakers. For multiple violations, users will be informed that their accounts might be permanently deleted.
SCVE GROUP (06913.HK), to go public tomorrow, fixed its offer price at $1.59, the lower limit of the offer price range $1.59-2.01. A subscription of 6.01 times was recorded in the public offering. One-lot success rate was 20%.
The bio-technology company BRII - B (02137.HK) announced the
offer price and allotment results. Oversubscribed by 291x, the Hong Kong public offering section has been increased to 50% of the total number of offer shares of around 112 million shares. One-lot success rate is 5%. The IPO has been priced at the top end of the listing price at $22.25 and is estimated to raise net proceeds of $2.334 billion. If the over-allotment option is exercised in full, the company will receive additional net proceeds of approximately $357 million.
MEITUAN-W (03690.HK)'s independent Meituan Dache application has been re-added to application stores such as that of Xiaomi after being integrated into the Meituan app two years ago, reported Chinese media. The ride-hailing app, however, is currently only available on the Android application store with no official updates being released yet.
Chief Executive Carrie Lam said she had filed a report to the Chinese government, elaborating on Hong Kong's epidemic situation and referring to strong public opinion on border resumption. Lam hoped that the partial resumption could proceed orderly, underscoring there is no hardline benchmark for the reopening. She opined that Hong Kong is stronger now in detecting and tracking the coronavirus with higher quarantine capability, hoping the central government to give positive guidance.
China Overseas' One Victoria sold out roughly 500 units in eight days, pocketing about $5.7 billion.
190 new home deals were recorded at the weekend despite the lack of big project launches.
Second-hand sales, Centaline's Hong Kong Property's top ten housing estates reported 18 transactions, down 18.2% weekly yet maintaining a double-digit figure for the 21st consecutive weekend.
Global PC shipments surged 13.2% YoY to 83.6 million units in 2Q21, as PC demand had stayed strong in the quarter despite component shortage and logistics issues worldwide, reported IDC.
By brand, LENOVO GROUP (00992.HK)'s shipments burgeoned 14.9% YoY to 20.005 million units. The group topped the global market share chart (23.9%).
EVEREST MED-B (01952.HK) announced that the Company has entered into a strategic commercial partnership with TENCENT (00700.HK) to explore novel ways to optimize meaningful digital engagement with patients and healthcare providers.
The Company will explore a number of capabilities and potential solutions with Tencent, including ways to engage patients and healthcare professionals in disease awareness, particularly in various cancers, kidney diseases and severe infectious diseases.
HSBC HOLDINGS (00005.HK) has extended its streamlining measures to senior management level, revamping the original four bands of managerial ranks into three, effective from September, in order to address the issues of a comparatively complicated system and lack of consistency, reported Bloomberg News. HSBC expressed the measures are taken in hope to aid the business transition and growth of the company and will not affect the employees' benefits.
PRE MARKET HOURS NEWS
CHENMING PAPER (01812.HK) positive profit alert, forecasting that the net profit for the period from 1 January 2021 to 30 June 2021 to reach RMB2-2.1 billion, implying a year-on-year increase of 287-307% as compared to the corresponding period of last year. The EPS is forecast to jump to RMB0.6-0.63 with that of the corresponding period of last year being RMB0.05.Paul Chan saw overwhelming response from citizens in the first week of the Consumption Voucher Scheme rollout. Up to now, more than 4.8 million residents have signed up for the scheme, where over 3.9 million of them (around 80%) completed electronic registration by authenticating their identity using data filed under last year's Cash Payout Scheme.
GAC GROUP (02238.HK) (601238.SH) announced that it has approved its subsidiary's GAC AION's collaboration project with Huawei on the AH8 model, which is scheduled to go into mass production by the end of 2023. The project focuses on the jointly developed smart electric SUV model, involving a total investment amount of RMB788 million.
CAPITAL GRAND (01329.HK) announced that it noted that its controlling shareholder BJ CAPITAL LAND (02868.HK) was proposed pre-conditional privatisation of BJ CAPITAL LAND by Beijing Capital City Development Group by way of merger by absorption; and proposed withdrawal of listing of BJ CAPITAL LAND. Trading in the H Shares of CAPITAL GRAND on the Stock Exchange was halted from 8 July 2021. An application has been made by the Company to the Stock Exchange for the resumption of trading in the H Shares from 9:00 a.m. today.
Ahead of the final Policy Address delivery of the current administration in October, Chief Executive Carrie Lam told a radio program yesterday (11th) that the Address will map out ways for Hong Kong's future to leverage traditional advantages, China's "14th Five-Year Plan", GBA planning and "One Belt, One Road" report, instead of meeting anybody's demand. Among which, land development and infrastructure foundation are of upmost importance, Lam viewed, who claimed the contents will be sort of a conclusion to the Hong Kong society.
The organization committee of the Tokyo Olympics Games expressed that the ticket income is expected to plunge from the estimated JPY90 billion (approximately HKD6.34 billion) to few billions yen, down HKD6 billion, as the events in five regions, including Tokyo, will be held without any spectators, reported Jiji Press. The committee stated that apart from the loss of ticket income, rearranging the entire operation mode of the games will also incur additional expense, adding to the unequivocal problem of imbalanced payment.
JINKE SERVICES (09666.HK) positive profit alert. The Group is expected to record for the first half of 2021 an increase of more than 70% in net profit. The net profit of the Company for the same period of 2020 was RMB293 million.
Sheng Songcheng, former head of the Financial Survey and Statistics Department at the People's Bank of China, did not see huge inflationary pressure for China in the near term, citing relatively stable asset prices which would be the prerequisite for the gradual easing of solid monetary policy in the second half of year.
KINGBOARD HLDG (00148.HK) is expecting to record an increase in net profit of 350%-400% in the first half of 2021 as compared with the corresponding period last year. This is primarily attributable to factors including the market demand has stayed strong, and the unit prices of products in various departments of the Group have risen sharply.
KB LAMINATES (01888.HK) is expecting to record an increase in net profit of 330%-380% in the first half of 2021 as compared with the corresponding period last year. The increase is primarily attributable to the strong market demand with significant increase in both unit selling price and quantity of the products manufactured and sold by the Group.
FOSUN PHARMA (02196.HK) announced that its subsidiary Fosun Industries entered into sales agreements with TSMC and Foxconn and with Yonglin Foundation and Zuellig Pharma, respectively. Pursuant to which, Fosun Industries will sell a total of 10 million COVID-19 mRNA vaccine doses to TSMC, Foxconn and Zuellig Pharma (entrusted by Yonglin Foundation). These shots will be donated to Taiwan's disease control units for local vaccination.