June 21 HK China Wrap closed off the day lows.

21 Jun

This and previous notes can be found at Substack ( Asian Market Sense )
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HSI -312pts (-1.1%) 28,590 HSCEI -99pts (-0.9%) 10,548 T/O HK$157.3bn (-23.5% DoD)

Markets opened lower but worked higher but now pulled back to flat; after a weak handover from Asia.  Investors waiting for Fed speakers especially Bullard to see if he walks back any of his Friday comments.
Morrisons +31% after rebuffing a proposed £5.52 billion ($7.62 billion) takeover from private equity firm Clayton, Dubilier & Rice on the grounds that it “significantly undervalued the company and its potential.” The rejection prompted speculation that CD&R will be forced to raise its offer.
At the bottom of the European blue chip index, German telecoms company Freenet -7.2%.

US Futures
Opened Dow -66pts, S&P -0.2% and Nasdaq -0.1%. dropped to Dow -207pts, as Europe opened but reversed and now Dow +150pts S&P and NDX +0.3% .  Oil strong in the pre market along with Boeing and Royal Caribbean.  Banks look set to rebound.  Crypto related names weak
Data due Chicago Fed National Activity.
More Fed speakers this week; today Bullard and Kaplan likely to give more insight into the Fed’s tilt. It was Bullard on Friday who spooked markets so it will be interesting to see if he looks to reassure the markets about tightening.

CSI 300 closed -12% @ 5,090
CSI 300 opened lower despite PBoC left Prime Loan Rates unchanged but market sold down (news of tightening social distancing in Shenzhen on covid concerns) to 5,060 initially before rebounding and rallying to 5,120 but unable to hold and sold down to 5,072 at lunch. PM resistance @ 5,080 but pushed though in the last 30 minutes saw a rally in the lst 10 minutes. Team China working hard.

Shanghai Composite +4pts (+0.1%) @ 3,529
Shenzhen Composite +58pts (+0.4%) @ 14,641
ChiNext Composite Index +48pts (+1.4%) @ 3,384

China's National Health Commission reported 23 newly confirmed cases yesterday

HSI Pre market opened @ 28,501 -300pts vs -247pts ADR’s
Initial rangebound trading 28,500/28,400 for the first 30 mins, then broke higher to 28,600 but unable to break higher and consolidated back to 28,400 at lunch. PM sold down but found support at 28,310 level. Then traded slowly higher to 28,516 and the eased slightly into the close E-Commerce and Chinese Financials leading the declines. Retail +VE on news of the Govt spending vouchers. Evergrande rebounded after recent weakness and Auto’s also +VE

The Centre for Health Protection (CHP) reported 3 new covid cases 

Short Selling Monday 15.8% vs 22.14% Friday
Top Shorts 
Country Garden (2007) 46%,  CLP(2) 38%, Longfor (960) 34%, Hengan (1044) 34%,  Bank of China (3988) 33%, Hang Seng Bank (11) 29%, MTRC (66) 28% (joined a property consortium for the central development not associated with an MTR station),  Baba (9988) 27%,  China Life (2628) 26%, Mengniu Dairy (2319) 26%,  HSBC (5) 25%, HK and China Gas (3) 25%


Macau and Hong Kong have reached an initial consensus on border resumption under the premise of stable epidemic of both places, said Alvis Lo Iek Long, Macau Health Bureau Director. 
Arrivals in Macau from Hong Kong will be waived quarantine medical observation, if Hong Kong does not find any local cases for 28 straight days.
The relaxation will be unfolded by phases with limited travel quotas at each phase, Lo furthered, while adequate safety precautions are in place to protect people of both places, including requiring them to be inoculated and undergoing several virus tests before and after arrival in Macau. Lo stressed that the above consensus is only preliminary with enforcement details to be unveiled after deep discussion with Hong Kong.

Washington is actually safeguarding her technology monopoly and dominance, and abusing state power in jeopardizing Chinese hi-tech firms at all costs, as Chinese Foreign Ministry Spokesperson Zhao Lijian responded at a regular press conference today (21th) in respect to the U.S. FCC ban on utilization of federal subsidy funds by American companies in purchase of Huawei's 5G products.

Australia filed a complaint with World Trade Organization (WTO) over China's anti-dumping duties on wine exports from the former country.  
Chinese Foreign Ministry Spokesman Zhao Lijian replied that China had repeatedly specified its position in this regard, yet stressing Beijing would abide by and act in compliance with WTO rules.

PBOC is engaged in a discussion with several banks and payment platforms, including ICBC (01398.HK), ABC (01288.HK), CCB (00939.HK), PSBC (01658.HK), Industrial Bank and Alipay (China), on the matter regarding the virtual currency trading hype.

PBOC expressed that virtual currency trading poses disturbance to the normal financial and economic order, along with the threat of infringing laws and the safety of people's property. Such trading must therefore be strictly prohibited in all financial institutions.  The participating institutions all expressed that they would not engage in any virtual currency-related business activities and enlarge  the scope of their inspection and reviews on suspicious trading.

Midland Property Price Index last printed at 172.75,
down 0.17% weekly but up 1.19% from four weeks earlier.CHINA MOBILE (00941.HK) announced that the number of 5G package customers approximated 222 million, with 16.651 million net additional customers monthly. The net addition in May was faster than the 16.538-million growt in April.

CHINA TELECOM (00728.HK) announced that, the number of the mobile subscribers in May amounted to 361 million, a net increase of 2.85 million month-over-month, among which 125 million are 5G subscribers, recording a net increase of 6.72 million month-over-month.
Both numbers reflect a slightly faster rate of growth compared to previous month.  Within the first five months of the year, the cumulative number of 5G package subscribers saw a net Increase of 37.99 million.

CHINA UNICOM (00762.HK) announced that the aggregate number of 5G package subscribers reached 106 million in May 2021. 
There was a net addition of 7.529 million 5G package subscribers for the month, accelerating from the 6.713-million growth in April.

The Government announced the subscription and allocation results of the eighth inflation-linked retail bond, or iBond, issued under the Government Bond Programme.
As at the close of the subscription period at 2pm on June 11, 2021, 709,200 valid applications were received for a total of HK$53.949 billion in principal amount of bonds.   The final issuance amount of iBond is HK$20 billion. The valid applications received have been allocated different amounts of bonds up to a maximum of three units. The iBond will be issued on June 23, 2021, and listed on the Stock Exchange of Hong Kong on June 24, 2021.1957 & CO. (08495.HK) signed the Tenancy Agreement in respect of the renewal of the lease of Hokkaidon for 18 months to 19 April 2023 in Cityplaza.

Golden Harvest announced that its brand new cinema "GH Tai Po" is scheduled to open in the third quarter. 
The project will be located in Tai Po Mega Mall under SHK PPT (00016.HK).  GH Tai Po will provide 4 theaters and near 400 seats on an area reaching 15,000 square feet.

NEXT DIGITAL (00282.HK)'s board meeting concluded that they are leaning towards a shutdown of Apple Daily and Next Animation Studio, in case the Security Bureau refuses to unfreeze the capital of the company, market sources said. A further meeting will be held on Friday for final decision.Regional Markets

ASX 200market opened significantly lower and then drifted lower through the morning to the low of 7,217 around noon. It then traded sideways with resistance at 7,250 and support at 7,225; to close -134pts (-1.8%) @ 7,235
Laggards were lead lower byFinancials with weakness in Energy and Industrial’s. Miners were mixed with Gold miners seeing some interest. Tech was back in demand.
CBA -5.4% despite news it was selling its home and motor insurance business to Hollard Group for $625m
Retail Sales May +0.1% vs +1.1% Apr (F/cast was +0.5%)
Closed at the lowest in over three months
Laggards were Fast Retailing, Tokyo Electron top the Nikkei losers. All sectors closed in the red. Electronics and Chemicals lost the most in the Topix.
Tomorrow daily data from the BoJ will be watched to see if it was active; having been out of the ETF market in May
Nikkei opened about 460pts lower and proceeded to lose a further 500 points through the morning. PM opened lower and trading sideways with resistance at 28,000 and support 27,875  Closed -953pts (-3.3%) @ 28,011
Topix traded in a similar pattern; opened 1,917 was 1,897 at lunch, just off the morning lows. PM opened lower with resistance at 1,900 and support 1,890 Closed -47pts (-2.4%) @ 1,900
PM Suga said, should the state of emergency be declared during the Tokyo Olympic Games and Paralympic Games, the games will carry on without any spectators, reported Kyodo. Otherwise venues will be capped at 50% or 10k spectators.
S Korea
Trading  volumes remained moderate; Foreigners and Institutions sellers but retail still a buyer.  Most large caps closed lower.  But LG  Chem flat and Samsung SDI +1%
Kospi opened lower, first support was 3,240 and traded sideways until around 10:30am when it sold down to 3,230 level and then traded around there until around 1pm. Then worked slightly better but resistance at 3,240 Closed -27pts (-0.8%) @ 3,241.
Kosdaq similar pattern support around 1,008 and resistance 1,014. In the afternoon the upside was capped at 1,011 where it closed -5pts (-0.5%).
Exports 20 days Jun +29.5% YoY vs 53.3% May
Imports 20 days Jun +29.1% YoY vs 36.0% May
Robust demand for chips, autos and petroleum products
KDCA reported 357 new covid cases (317 local) vs 429 Sunday.
Taiex opened lower and trended down to 17,023 around 11:30am. Then traded sideways with resistance at 17,100.
Closed -256pts (-1.48%) @ 17,063 T/O was US418.27b ($19.24bn Friday).
Heavy rain forecast +VE for alleviating the recent water shortage and good for tech manufacturers
After market
Export Orders May +34.5% YoY vs+ 42.6% Apr (F/cast was 44%)
Strong but not as much as expected, possibly due to chip shortage, covid closures and water shortage. Orders increased the most from Japan (41.3 percent), followed by China (40.0 percent), the US (28.1 percent), and Europe (20.9 percent). Looking ahead, the Ministry of Economic Affairs of Taiwan forecasts June export orders to jump between 28.1 and 31.7 percent

Northbound Rmb 48,320m Sell 25,038m vs 23,282m Buy
Southbound HK$ 25,283m Sell 14,080m vs 11,204m Buy
Northbound Rmb 64,734m Sell 32,494m vs 32,240m Buy
Southbound HK$ 22,446m Sell 10,026m vs 12,421m Buy

Active Heavyweights
HKEX (00388.HK)  -2.1%
TENCENT (00700.HK) -2.1%
PING AN (02318.HK) -1.8%
AIA (01299.HK) -1.6%
BABA (09988.HK) -0.8%
MEITUAN (03690.HK)  +0.4%

HSI & HSCEI Constituents on Move:
EVERGRANDE (03333.HK)  +9%
EVERG SERVICES (06666.HK) +7.3%
CHINA FEIHE (06186.HK) -7.1%
AAC TECH (02018.HK) +5.1%
HAIDILAO (06862.HK) -5.1%
TECHTRONIC IND (00669.HK) - 4.8%
CHINA GAS HOLD (00384.HK) +4.7%
XINYI SOLAR (00968.HK) +4.6%
GEELY AUTO (00175.HK) +4.4%
LONGFOR (00960.HK) -4.4%
WUXI BIO (02269.HK) +4%, hitting new high
SMIC (00981.HK) -3.7%
HSBC HOLDINGS (00005.HK) -3.5%
HANG SENG BANK (00011.HK)  -3.3%

HSMI & HSSI Constituents on Move:
Q TECH (01478.HK)  +13.9%
GREENTOWN CHINA (03900.HK) +12.2%
CHINA TELECOM (00728.HK) +11.2%
HENGTEN NET (00136.HK) +11.1%
BOSIDENG (03998.HK) +6.6%, hitting new high
CANVEST ENV (01381.HK) +5.4%, hitting new high
SHIMAO SERVICES (00873.HK) +5%, hitting new high
LUK FOOK HOLD (00590.HK)  +5%, hitting new high


Hong Kong government announced 3 additional COVID-19 cases today, all being imported cases. Chief Executive Carrie Lam said that, as Hong Kong has found no local cases for 14 consecutive days, the government will implement a new set of social distancing measures from this Thursday (24th).   Lam also said that the government has no plan yet to fully lift the restrictions and will gradually ease up the pandemic measures depending on the progress of vaccination.
She announced that, the quarantine period for any inbound travelers can be shortened to 7 days as long as they are fully vaccinated, taken the testing upon entry and have passed the COVID-19 antibody test.
Lam, on another note, expressed that, as Hong Kong has found no new local cases for the past 14 days, the government has already engaged in talks with Macau's counterpart on the matter of reopening the borders.
The "Come2hk" scheme, meanwhile, will be reignited as Guangdong's outbreak stabilizes.

Secretary for Food and Health Sophia Chan announced to relax social distancing measures from Thursday (24 June), with unchanged steps in public bathhouses and cinemas.
The maximum seating capacity at category C premises can be raised from 50% to 75%. As for category D premises, the seating capacity can be lifted from 75% to 100% 14 days after all staff members' full vaccination. The number of banquet attendants will be relaxed to 180 people.
Chief Executive Carrie Lam mentioned the easing cap for certain types of gatherings. For instance, the attendance of religious gatherings can be heightened from 30% to 50%, or even 100% if two-thirds of the participants are already vaccinated
CATHAY PAC AIR (00293.HK) is seeking to develop new business initiatives such as goods, services and products within its ecosystem,
SCMP citing sources. The airline has yet to comment on the above news.  CATHAY PAC AIR's senior management will refer to the operation mode of AirAsia, whose business has expanded to cover food delivery, online groceries, as well as health and insurance units.

Volvo announced its joint venture with the Swedish battery maker Northvolt, which entails their partnership on developing and manufacturing electric vehicle batteries specifically for the next generations of Volvo and Polestar EVs.  The companies target to set up a R&D center in Sweden by next year and to begin operation in 2022.

XINYI GLASS (00868.HK) Chairman and Executive Director Lee Yin Yee acquired 504,000 shares of the group at $29.4522 each on 17 June, involving $14.8439 million as revealed by Stock Exchange's data.ABC (01288.HK) (601288.SH) announced that the action of using the bank's services as a means for virtual currency transactions like Bitcoin is forbidden, and stressed that the bank has no intention to start or participate in any businesses related to virtual currency.  Any user who is involved in virtual currency transactions will likewise be denied access to the bank's services, as the bank enlarges the scope of inspection and review on the capital transactions of its clients.
XIAOMI-W (01810.HK)  announced the setup of Xiaomi Studios, the first official globally-oriented mobile movie studio brand under MI. The studio strives to explore content creation of phone images and to amass
outstanding  producers and works.Calxon (000918.SZ)  issued a notice that the controlling shareholder Guangzhou Kailong Real Estate had entered into an equity transfer framework agreement with Shenzhen Huajian Holdings, agreeing to transfer around 539 million Calxon shares, or around 29.9% of Calxon's total shares, to the latter.  Guangzhou Kailong is a subsidiary of EVERGRANDE (03333.HK)

China's cloud infrastructure expense in the first quarter this year rose 55% year-over-year to USD6 billion, with its cloud infrastructure service seeing the most substantial growth around the globe, reported Canalys.
Supported by national policies, economic development as well as business digitalization in the post-pandemic era, China's cloud service market ranked second in the world, just behind the U.S., accounting for approximately 14% of the global investment in the sector.
Among the four major cloud service providers, Ali Cloud topped the chart, accounting for 39.8% of the market shares, with Huawei Cloud and Tencent Cloud coming in second and third.

Alvis Lo Iek Long, Macau Health Bureau Director, was delighted to know that Hong Kong has tracked nil locally confirmed cases for 14 days, as Radio Macau (TMD) reported.  He said Macau is planning to discuss with Hong Kong the related facilitation for border resumption between the two regions, and whether there is condition to shorten or waive quarantine medical observation period on tourists, and the establishment of circuit breaker. Lo said announcement will be made immediately after any specific arrangement.

K11 group and WeChat Pay HK announced their partnership in response to the government's $5,000 consumption voucher scheme, stating that, from 26 July to 26 September, any payment made through WeChat Pay HK in the designated merchants in the four major shopping malls under the group, is eligible to receive a 10x K Dollar reward.  Citizens who have elected to collect their vouchers through WeChat Pay HK, can also collect an exclusive $40 K11 cash voucher via QR codes available in K11's shopping malls.

TENCENT (00700.HK) has started building the "Penguin Island" project for its global headquarters "Internet+" future technology city in Shenzhen, Chinese media citing the giant's reply.  The Tencent Dachan Bay project is divided into two phases, with a total construction area of 2 million sq.m. and a planned aggregate investment of RMB37 billion.

BYD Semiconductor has recently issued a price hike notice to its customers, announcing the decision on price adjustment of IPM and IGBT products by hiking prices of no less than 5%, effective 1 July 2021, Chinese media reported.  The cost of the company's products kept increasing due to market changes where upstream productivity was intense and suppliers raised prices, according to the notice.
XINYI GLASS (00868.HK) announced that the group has successfully obtained a second-party opinion from HKQAA regarding the Strategic Corporate Framework for Green Finance, and has subsequently received HKD1 billion green loan from Hang Seng Bank.  XINYI GLASS expressed that the received loan will be utilized in the green projects in the company's industrial park.HSBC and HKTDC announced to be engaged in a strategic partnership, with the aim to help small-mid scaled businesses to grasp and realize the growth potential of GBA.  Said partnership will utilize the vast network, business connections, expertise as well as digital talents from both parties to provide all-rounded support to local businesses.  The alliance will tap into different aspects, including providing extensive business-related information and market analysis on GBA on each others' applications and platforms, such as GoGBA and HSBC VisionGo.

The U.K. remains the most attractive place for financial service investment in Europe, though its lead has narrowed in recent years, showed EY's research.  EY said the number of financial service investment projects in the U.K. last year has been reduced to 56, 43 less compared to that in 2019.
Related NewsBritain May Reconsider Vaccine Passport to Resume Overseas Travel  Meanwhile, France surpassed Germany to take second place, with the number of financial service FDI grew 11 year-over-year to 49, amid the 23% shrinkage of FDI in Europe last year under the global pandemic.
AlipayHK announced to collaborate with businesses to launch discounts worth over $1 billion for the consumption voucher scheme, 
allowing each user who collects the voucher through AlipayHK to potentially get an extra reward worth as much as $5,000.

Mark Simon, adviser to NEXT DIGITAL (00282.HK)  Chairman Jimmy Lai, told Reuters that Apple Daily may be forced to suspension in a matter of days 
as the HKSAR government has frozen the assets of the local pro-democratic newspaper according to National Security Law.
Simon furthered that NEXT DIGITAL will convene a board meeting today to discuss the solution, viewing Apple Daily may only run until the end of month.

CKH HOLDINGS (00001.HK)'s HUTCHMED (00013.HK) (HCM.US) was fully subscribed in its international placing, revealed IFR. HUTCHMED may consider listing on the Sci-tech Innovation Board of Shanghai Stock Exchange following its Hong Kong floating.


The Hong Kong government will review the possibility of easing up social distancing measures depending on factors like the development of the pandemic
, the progress of the vaccination scheme and the circumstances regarding the "vaccine bubble", Matthew Cheung, Chief Secretary for Administration, said on his web blog.  Cheung continued to state that, according to the current "vaccine bubble" trend around the globe, regions with a higher vaccinated rate are more likely to resume economic and social activities as soon as possible.

Upon enforcement of the National Security Law of HKSAR and improvement of election systems, the Hong Kong society is resuming stability whilst the implementation of "One Country, Two Systems" is also returning to the right track, 
said Chief Executive Carrie Lam during her speech in a video conference with the Chinese media ifeng.com.   She was confident that the metropolitan city can stand the test of time, depicting the "golden business card" of Hong Kong as an international financial hub has not been scratched even a bit.

LENOVO GROUP (00992.HK) announced that the group's sales value had surpassed RMB7.5 billion across networks during the 618 shopping spree (1-18 June),
topping 26 computer and digital sector sales charts among the top-three e-commerce platforms.

JD LOGISTICS (02618.HK) announced that ,on June 18, the joint representatives fully exercised the over-allotment
option  in respect of an aggregate of 91.3741 million shares, representing approximately 15% of the offer shares initially available under the global offering.  
The company will receive additional net proceeds of approximately $3.632 billion for the issue of the over-allotment shares.

China Association of Automobile Manufacturers (CAAM)'s forecast on 2021 domestic auto market growth was revised from around 4% to around 6.5%, Securities Times citing CAAM vice chief engineer Xu Haidong.

Among which, the PV segment may track a roughly 10% increment. The total NEV sales will exceed 2 million units, up 46%.

As of yesterday (20th), Hong Kong has found no locally confirmed COVID case for 13 consecutive days and the Hong Kong government is said to have been engaged in constant and close communication with its Macau counterparts on matters of pandemic measures, reported Macao Daily News.  
Both Hong Kong and Macau authorities expressed that the governments of Guangdong, Hong Kong and Macau have been actively exploring the possibility of resuming travel among the three places, should the pandemic in all three places become under control.
CHINA TELECOM (00728.HK) announced that taking into account shareholders’ return, the Company’s profitability, the cashflow level and capital needs for future development, the Board considered and approved the resolution to adjust the dividend policy of the Company, agreeing that the profit to be distributed by the Company in cash for year 2021 shall be no less than 60% of the profit attributable to equity holders of the Company for that year, and that within three years after the A Share Offering and Listing, the profit to be distributed by the Company in cash for each year will gradually increase to 70% or above of the profit attributable to equity holders of the Company for that year. Meanwhile, the dividend arrangement will be adjusted to provide for the declaration and payment of interim dividends from year 2022.

The supply chain company of Huawei has received the design draft of Huawei's Mate50 mobile phone, with the date of commencing mass production and delivery remain to be confirmed, reported China Securities Journal, citing the company

Companies listed on National Equities Exchange and Quotations (NEEQ) had tracked turnover of RMB55 billion as of market close on 18 June,  Xinhua News Agency citing NEEQ data.  As of the same date, there were a total of 7,487 NEEQ-listed companies.China's first batch of public real estate investment trusts (REITs) are going public on the Shenzhen Stock Exchange today, reported Securities Times. This batch of public REITs posted a 30% price fluctuation limit on debut, according to product announcement.

Dongguan Municipal Health Bureau announced that there has been one local confirmed COVID-19 case reported in Dongguan city Machong yesterday (20th).  
The patient is reported to be one of the close contacts of a confirmed case in Dongguan city previously acquired on 18 Jun.

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