June 22 HK/CHINA diverge, HK lower, China higher on lighter volumes


22 Jun

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

HSI -179pts (-0.6%) 28,310 HSCEI -78pts (-0.7%) 10,479 T/O HK$141.37bn (-10.1% DoD)

Europe
Markets opened flat and trading sideways as investors try and work out Fed policy. Auto +VE Chemicals -VE
UK +VE sentiment on a progress on joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership
Vivendi awaits a vote from investors Tuesday on a proposed spin-off of its iconic Universal Music Group.
British property groups Land Securities and British Land both +VE after JPMorgan upgraded their shares to “overweight.” British Land also selling part of a London project
Dutch internet investment firm Prosus fell 2.7% after HSBC cut its price target.
Data
EUROZONE due later
Consumer Confidence Flash Jun (May was -5.1, F/cast is -3)
ECB’s Lane speaks
UK 
Public Sector New Borrowing May £-24.3B vs £-29.1B Apr revised (F/cast was £-28.4B)
CBI Industrial Trends Orders Jun 19 vs 17 May (F/cast was 25)
US Futures
Opened Dow +35pts, S&P +0.1% and NDX +0.04%; have eased to Dow +13pts S&P flat and NDX slightly -VE. Today more Fed speakers along with Powell’s testimony and  Redbook, Existing Home Sales, Richmond Fed Manufacturing


CHINA
CSI 300 closed +32pts (+0.6%) @ 5,122
CSI 300 opened higher at 5,106 and traded sideways until 10:25am when it rallied but saw resistance approaching 5,120 and eased back into lunch. PM opened higher but sold off down to 5,092 at 1.55pm before rallying back to the close slightly higher than the lunchtime open. Cautious trading with uncertainty over US interest rates.
Chinese solar names -VE on fears of a Biden ban which investors worry could widen to other areas.
Leaders banks, mining services, agricultural planting.
Laggards Harmony OS concept, digital currency, and domestic software.

Shanghai Composite +28pts (+0.8%) @ 3,557
Shenzhen Composite +55pts (+0.4%) @ 14,696
ChiNext Composite Index +12pts (+0.4%) @ 3,396CHINA DATA
China confirmed 25 additional COVID-19 cases yesterday (21 June), 
including two local infections in Guangdong, reported by National Health Commission of the PRC.
Guangzhou city's National Health Commission reported no new confirmed cases domestically yesterday (21st).  The city has found no new cases in 3 consecutive days.


HONG KONG
HSI Pre market opened @  28,575 +86pts vs +168pts ADR’s  as margin call selling from Monday outweighed the ADR’s and short covering but then sold down to 28,400 before rebounding to traded around flat. PM has sold down again to test 28,400 and bounced to 28,440 but unable to hold and sold in the last hour to close on the day lows.

HONG KONG DATA
After market
Inflation Rate  May +1% YoY  vs +0.8% Apr (F/cast +1%)
Current Account Q1 HK$59.8b vs 31.2B Q4 (F/cast was 30b)

Inflation Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite CPI (i.e. the underlying inflation  rate) in May 2021 was 0.2%, marginally larger than that in April 2021 (0.1%). The larger increase was mainly due to the enlarged increases in the costs for meals out and takeaway food as well as the smaller decreases in the prices of fresh vegetables.
A Government spokesman said that the underlying consumer price inflation rate edged up to 0.2% in May. Price pressures on all major CPI components stayed modest, though prices of meals out and takeaway food showed a slightly larger year-on-year increase amid stabilised local epidemic situation.

C&SD announced that the total employment in the private sector surveyed decreased by 2.7%  YoY or 73,600 persons in March 2021. The total number of vacancies was 39,350, representing a decrease of 7% or 2,920 over the preceding year.

The Centre for Health Protection (CHP) reported 7 new covid cases 
all imported.

Short Selling Tuesday 15.1 vs 15.8% Monday
Top Shorts 
Bank of China (3988) 39%, Bud APAC (1876) 39%, CLP(2) 36%, Hang Seng Bank (11) 33%,  Country Garden (2007) 33%,  Hengan (1044) 32%, Sands China (1928) 32%, Anta (2020) 32%,  Power Assets (6) 32%, HKEX (388) 31%, Geely Auto (175) 30%, Longfor (960) 29%, MTRC (66) 29%, CKAsset (1113) 28%,  Ping An (2318) 28%, Henderson Land (12) 27%, CKI (1038) 25%, Petrochina (857) 25%, Xinyi Solar (968) 25

AFTER MARKET NEWS

PHOENIX TV (02008.HK)  announced that with effect from 22 June 2021, LIU Changle has tendered his resignation as the Chairman and an executive Director.
XU Wei, the chief executive officer of the Company, has been appointed as the Chairman and an executive Director.  HO Chiu King, Pansy Catilina has been appointed as the Vice-chairman of the Board and a non-executive Director.

Fitch Ratings announced to downgrade the long-term foreign notes IDR of EVERGRANDE (03333.HK) and its subsidiaries including Hengda Real Estate Group Co., Ltd and Tianji Holding Limited from "B+" to "B". 
Fitch Ratings projected a negative prospect for EVERGRANDE as the company continues to be pressurized and is forced to reduce its business scale and reduce debts, which might impose a negative influence on the company's business in mid-terms.

YUEXIU SERVICES (06626.HK) has decided to price its Hong Kong
IPO  at $4.88 per share, which is the bottom price within the $4.88-$6.52 range of its listing price,
reported IFR, citing sources.
YUEXIU SERVICES's IPO offers over 369 million shares, if priced at the lower limit, it is estimated to raise approximately $1.804 billion.

SINO-OCEAN GP (03377.HK) announced that the Group had signed a strategic cooperation agreement between a bank and an enterprise with PAB (000001.SZ).  
Accordingly, PAB will provide SINO-OCEAN GP with an intentional credit facility of RMB30 billion, customized financial service products and solutions, as well as both domestic and overseas financing support.

AIA (01299.HK) announces that the China Banking and Insurance Regulatory Commission (CBIRC) has approved AIA China to begin preparations to establish a new branch in Hubei province.
  Lee Yuan Siong, AIA Group Chief Executive and President, said the group is delighted to receive approval to prepare for its branch in Hubei. This is an important next step in the group's geographical expansion strategy in Mainland China, following the recent launch of its newest operation in Sichuan province in April.Chinese Foreign Minister Wang Yi will chair a high-level meeting on Belt and Road international cooperation in Asia-Pacific tomorrow (23 June), according to MoFA Spokesperson Zhao Lijian. Foreign ministers or economic ministers from Asia-Pacific regions, and representatives of international bodies like the United Nations will attend the video conference. The meeting's theme will be strengthening anti-plague team-up and fostering economic recovery.

The U.S. semiconductor manufacturer GLOBALFOUNDRIES announced to partner with the Singapore Economic Development Board and with co-investments from committed customers to expand its global manufacturing footprint with the construction of a new fab on its Singapore campus.  
GF's more than USD4 billion investment will play an integral role in meeting the growing demand for the company's industry-leading manufacturing technologies and services to enable companies worldwide to develop and scale their business. GF expressed that the global demand for semiconductor chips is growing at an unprecedented rate, with worldwide revenue projected to increase 2.1x in the next 8 years. The Singapore fab, when completed, will add a capacity of 450,000 wafers per year, bringing GF's Singapore campus up to 1.5 million wafers per year.

MARKET SECTORS
*PETRO STRONG
led the benchmark indexes higher after WTI+2.7%, as a U.S./Iranian deal uncertain and the dollar retreated from 2-month highs. PETROCHINA (857 HK +5.3%) SINOPEC (386 HK +3.5%) CNOOC (883 HK +3.3%).*E-COMMERCE/INTERNET WEAK Concerns over regulatory pressure as PBoC  ordered banks and ALIBABA's (9988 HK -1%) Alipay to not provide virtual currencies trading services. TENCENT (700 HK -2.9%) MEITUAN (3690 HK -2.4%).*TELCOS MIXED. CH TEL (728 HK -1.5%) despite after announced yesterday that it planned to raise its dividend payout ratio to 70%.
CH MOBILE's (941 HK +1%) number of mobile customers reached 942.78m in May, up 0.1% MoM. The number of 5G package customers rose by 8.11% to 221.95m in May.
CH UNICOM (762 HK -0.2%) said the aggregate number of mobile billing subscribers inched up by 0.08% MoM to 309.72m in May. The aggregate no.of 5G package subs rose by 7.63% to 106.094m in May.*MACAU WEAK as Macau will double the number of gaming inspectors and restructuring several departments in its latest move to ramp up supervision of the sector. The change comes just months before the expiry of multi-bn-dollar casino licenses to rebid for new gaming concessions. SJM (880 HK -3.6%) SANDS (1928 HK -2.5%) GALAXY ENT (27 HK -3.4%) MGM (2282 HK -5%).*SPORTSWEAR STRONG continued buying following Hilhouse's recent investment in XTEP (1368 HK +0.8%), while sector's outlook remains positive ahead of the Tokyo Olympic. VIVA CHINA (8032 HK +16%) LI NING (2331 HK +2.5%) ANTA (2020 HK +2.4%).*HK RETAILERS WEAK, except SASA INTL (178 HK +6.5%) on news it plans to close 15-20 stores in HK and open 30 on the mainland with a focus on the Greater bay area.  The rest weak despite a further relaxing of social distancing measures from Thursday.  Plus plans for a 7-day quarantine for inbound travellers with antibodies (double vaccinated or recovered) from the end of the month. *GAS SUPPLIES STRONG as demand for gas remain robust, with China pushing to replace coal with natural gas as a rural energy source. SUNTIEN (956 HK +11%) CR GAS (836 HK +3%) KULUN (135 HK +3.1%).*OTHER MOVERS:
WANT WANT (151 HK -3.2%) reported at lunchtime, FY net income for the full year +14% YoY, inline with estimate.
XINTE ENERGY (1799 HK  -1.4%) but off lows after Politico reported the Biden administration is considering banning imports from Xinjiang of ultra-conductive metal used in solar panels.Regional Markets
Australia
Market opened higher and then worked slowly higher for most of the day to 7,366 before easing back to close +107pts (+1.5%) @ 7,342
Lead higher by Financials, Miners and Energy names. Healthcare and Tech were the laggards.
Flash PMI data tomorrow
Japan
Nikkei opened 500pts higher and worked higher into lunch at 28,800. PM traded sideways with support at 28,800 and ticked higher at the end to close +873pts (+3.1%) @ 28,884. Yesterdays big decliners rebought in early trading.
Topix similar pattern closed +60pts (+3.2%) @ 1960 Electronics and auto makers were the leaders
Flash PMI data tomorrow, BoJ meeting notes along with Coincident and Leading Economic Indexes.
S Korea
Pre Market PPI increased but not as much as forecast.
Trading volumes were moderate again ($13.4bn) Foreign net buyers, Institutions and Retail were net sellers. Hyundai +3.4%, LG Chem + 2.4%, Samsung edged higher Hynix flat, Naver -1.5% and Samsung Bio -0.9%.
After market MSCI said S Korea failed to join its World Index; Lack of offshore forex trading, English information, regulation on foreign investors were cited as reasons for world’s 8th-largest stock market left in emerging status.
Kospi opened higher, with yesterday’s shorts squeezed. Eased back and traded around 3,260 through to around 1pm; then worked higher in choppy trading to close +23pts (+0.7%) @ 3,264
Kosdaq opened higher and squeezed to 1,017 but then sold down to 1,008 around 10am before working higher but resistance at 1,013 which it tested a few time before easing to close +0.6pt (+0.06%) @ 1,012.
Data out
PPI May YoY +6.4% vs +5.6% Apr (F/cast was +5.9%)
PPI May MoM +0.4% vs +0.6% Apr (F/cast was +0.7%)
BoK Financial Stability Report out at 11am local time showed the economy stable but rising financial imbalances worrying the BoK.
KDCA reported 395 new cases (+38 DoD)
The Korea Fair Trade Commission (KFTC) announced recently to launch an anti-dumping investigation on aluminum hydroxide originating in China and Australia. The products involved are under HS code 2818.30.9000.
Taiwan
Taiex opened higher and rallied to 17,250 after a mixed Export data. Eased slightly and traded sideways for 45 mins before selling down to 17,100. Rebounded to traded around 17,175 until around 12:45pm when it sold down to close +13pts (-0.07%) @ 17,076 T/O was US$19.51bn vs US$18.27b Monday.
After Market
Consumer Confidence May 74.88 vs 77.28 Apr
CECC reported 79 new covid cases (of which 1 was imported)
TSMC plans to give capacity priorities to auto chips and Apple orders, followed by orders for PC, server and networking equipment chips, Chinese media citing semiconductor sector insiders.


CONNECT FLOWS
Shanghai
Northbound Rmb 51,642m Sell 26,551m vs 25,091m Buy
Southbound HK$ 19,269m Sell 9,774m vs 9,494m Buy
Shenzhen
Northbound Rmb 59,089m Sell 30,021m vs 29,068m Buy
Southbound HK$ 19,105m Sell 8,950m vs 10,155m Buy

Active Heavyweights
MEITUAN (03690.HK)  -3%
TENCENT (00700.HK) -2.9%
HKEX (00388.HK) -1.8%
BABA (09988.HK) -1.2%
AIA (01299.HK) +0.1%
CCB (00939.HK) unchanged
PING AN (02318.HK)  unchanged

HSI & HSCEI Constituents on Move:
PETROCHINA (00857.HK)  +5.8%
BYD COMPANY (01211.HK) -4%
HK & CHINA GAS (00003.HK) +3.7%
SINOPEC CORP (00386.HK) +3.5%
JD HEALTH (06618.HK) -3.5%
XIAOMI (01810.HK) -3.2%
GALAXY ENT (00027.HK)  -3.2%


HSMI & HSSI Constituents on Move:
AK MEDICAL (01789.HK)  +30.8%
CR HOLDINGS (01911.HK) +17.3%
KANGJI MEDICAL (09997.HK) +12.4%
GUORUI PPT (02329.HK) +11.9%
WEIGAO GROUP (01066.HK) +11.5%
CR MEDICAL (01515.HK) +11.4%, hitting new high
CGN NEW ENERGY (01811.HK) +10.3%
SHIMAO SERVICES (00873.HK) +8.5%, hitting new high
FRONTAGE (01521.HK) +6.3%, hitting new high
HYGEIA HEALTH (06078.HK) +3.5%, hitting new high
CIMC (02039.HK)  +3.4%, hitting new high

MARKET HOURS NEWS
.

Independent third party research institution and new media "Wogoo" announced to have completed a hundred million-grade Series B financing, with its major strategic investors including Lock Capital, XIAOMI-W (01810.HK) and Sina Corp.  Wogoo expressed upon the completion of this series of financing, the company will officially venture into the rating business in the capital market as well as the realm of trading software. Professional equity reporters team will also be established as the company files applications for related licenses and qualifications.

CK ASSET (01113.HK)'s luxury residential project at Mid-levels - 21 BORRETT ROAD - reported sales of another unit by way of tender today (22nd). Featured four bedrooms with a double parking space, the unit was dealt at $169.5 million. With a saleable area of 2,154 sq.ft., the price per sq.ft. is $78,700.

China's MoC, MIIT, NHC, and NMPA released a notice on the list of COVID-19 vaccine supplies approved for export.  Accordingly, COVID-19 vaccine products that have received NMPA's greenlight or conditional approval for commercialization and registration will be placed on the above list.  Specifically, these vaccine products come from Sinopharm's Beijing Institute of Biological Products Co., Ltd., CANSINOBIO-B (06185.HK) and other drugmakers.AlipayHK reached a partnership agreement with HKTV (01137.HK)'s HKTVmall, with the latter adding AlipayHK as a new payment method, in response to the government's consumption voucher scheme. AlipayHK and HKTVmall will jointly launch discounts for customers who collect their vouchers through AlipayHK, including exclusive HKTVmall shopping vouchers and a $20 rebate for any purchase of $300 or above.
China's purchase of U.S. goods in May further slacked, putting the trading target established in the 2020 trade deal even more out of reach, reported Bloomberg News.  China purchased products worth around USD10 billion from U.S.'s manufacture, agriculture and energy industries in May, smallest amount since last October.  Since January 2020, China has only purchased U.S. goods with an accumulative worth of around USD157 billion, representing merely 41.4% of the trading target upon which both countries agreed previously.

RAZER (01337.HK) announced a 68% YoY gross merchandise
volume (GMV) growth across networks during the latest 618 Shopping Festival. 
Such data came from the backstage of Tmall, JD.com and Douyin for the period between 1 June and 20 June.

WANT WANT CHINA (00151.HK) announced annual result ended March 2021. The revenue rose 9.5% year on year to RMB21.998 billion. The net profit amounted to RMB4.158 billion, up 13.9%. EPS  was 33.83 fen. A final dividend of US1.46 cents was declared, against US2.42 cents in the year-ago period.Canada announced that, from 5 July onwards, quarantine and testing will be exempted for Canadian citizens and permanent residents who have received both doses of COVID-19 vaccine that is approved by the Canadian government.  People entering Canada, however, are still required to follow other pandemic measures, including submitting virus testing results before departure and upon entry as well as keeping a list of close contacts for the first 14 days upon entry, etc.Several big Chinese lenders are limiting credit to EVERGRANDE (03333.HK) amid worries over its financial profile, Bloomberg citing insiders.  Three banks with huge credit exposure to Evergrande have recently decided not to renew loans to the latter when they expire at end-2021, the people said.  However, Evergrande denies the reported funding channel curb placed by banks, adding it has normal business relationships with all lenders and financial bodies without elaborating.

Nayuki (02150.HK) plans to price its shares at $19.8 each, the upper limit of the offer price range $17.2-19.8, IFR citing sources. The Chinese bubble tea chain expects to raise nearly $5.094 billion.  Nayuki decided to cut off subscription for its international offer section today due to overwhelming response, according to sources.

XIAOMI-W (01810.HK) unveiled certain patents on vehicle functions control, reported Chinese media.  The disclosed patents mainly surround methods of controlling vehicle functions, the controlling devices and the storage medium.  The patented technologies guarantee to provide sensor-less control functions while reducing the wear on the vehicle and terminals and subsequently lowering the cost on hardware.

Sotheby announced that a rare pear-shaped diamond will come to auction in Hong Kong on July 9, and it will accept bitcoin or ether as payment. The deal could likely fetch up to US$15 million.
The 101.38-carat pear-shaped diamond, named The Key 10138, will be one of the ten diamonds of over 100 carats ever to be put up for auction.

Partnering with Shanghai Institute of Digital Governance and MEITUAN-W (03690.HK)  launched the country's first digital life services platform in Shanghai on 21 June.  Said platform has already been connected to the digital operating signs system of Shanghai and is expected to connect with 100 cities across the country in 3 years.

ALI HEALTH (00241.HK) formed a strategic alliance with Berry Oncology to build an innovative medical service model that combines cancer early diagnosis combined with digital platforms and medical insurance. The two companies will collaborate on various aspects, including medical products and services, disease preventions, health management services, popular science education and big data medical services, etc.

MTR CORPORATION (00066.HK) has established relevant arrangements in regards to the operation of Tuen Ma Line with Hong Kong government and KCRC.  The new line will commence its service on 27 June 2021 as MTR CORPORATION obtained the service operating concession of Tuen Ma Line for a period of of 2 years.

The chief executive Carrie Lam said, in response to the infringement of the National Security Law by NEXT DIGITAL (00282.HK), that the Hong Kong government will enforce the law fiercely in order to safeguard the safety and prosperity of Hong Kong.  Lam added that said arrests are totally unrelated to the freedom of the press and stressed that journalists would not be tolerated to use the freedom of the press to shield themselves from being prosecuted for criminal actions.  She avoided answering questions on how jounalists could avoid being prosecuted under the vaguely word law.Data from CoinShares showed that bitcoin investment products and funds had tracked the sixth consecutive week of outflows.  Bitcoin outflows aggregated US$89 million last week and US$487 million YTD, according to data.

RAZER (01337.HK) announced that the Company had repurchased 2.5 million shares 
at $2.13-2.13861 each through the Stock Exchange yesterday (21st), involving $5.3465 million.

BIDU-SW (09888.HK) 's Apollo announced its partnership with Science City (Guangzhou) Information Technology Group on establishing the country's first smart transport operator -- Vehicle City Network (Guangzhou) Intelligence Technology, which aims to propel smart transportation within cities as well as to develop the interconnected network between vehicles.  The company's businesses will cover the vehicle infrastructure cooperative system, transportation cloud system, etc.

PRE MARKET HOURS NEWS

The Hong Kong Government will not grant to unfreeze the assets of NEXT DIGITAL (00282.HK) as the case involving national security law is under investigation, Hong Kong Economic Journal cited sources.  
Security Bureau had earlier invoked the national security law to freeze the assets of three companies related to the operation of Apple Daily, running into $18 million.  Since majority of staff has resigned, Apple Daily may be shut down as soon as tomorrow (23rd), whilst the financial page of the newspaper announced no more updates from 00:00 on 22nd, Sing Tao Daily quoted people with the knowledge of the matter.

The US government is considering barring imports of the significant solar panel material polycrystalline silicon from Xinjiang in China, Politico citing insiders because of human rights abuses. 
US President Joe Biden hopes that polysilicon can help replace fossil fuels to achieve zero carbon emission for power generation by 2035. The goal could be hindered by such ban, as roughly half of the world's polysilicon supply stems from Xinjiang.

The price quotation and supply region confirmation for the 5th Batch of National Centralized Medicines Procurement in China is set to mount tomorrow (23rd), 
Economic Information Daily reported.
With reference to the procurement list as previously unveiled, 58 drug types and 137 speculations will be admitted this time, marking the most number of drug types.

Beijing Youth Daily reported the change in deposit interest rates among several Chinese banks.  
As for China's big four state-owned banks, the maximum interest rate was 3.25% for time deposits and 3.35% for large-denomination certificates of deposit after adjustment.

HSBC HOLDINGS (00005.HK) intends to overhaul its American investment banking operation following the resignation of four executives one after another,
including Robert Gelnaw, head of debt capital markets for North America, Bloomberg citing insiders.

China has to deepen its "Decentralization-Control-Service" reform on vehicle production and open up car OEM in an orderly way,
Securities Times citing an official in charge of MIIT's first department of equipment industry at the 11th China Auto Forum.
Beijing shall step up the oversight of product security, network security and data security while increasing industrial concentration, aiming to stifle blind investment and redundant construction, the official added.

China Mobile Group Design Institute, CHINA MOBILE (00941.HK)'s Guangdong company and ZTE (00763.HK)  had recently completed the sector's first commercial verification based on R16 standard for 5G
and the Up-link Time Difference of Arrival (UTDOA) positioning technique, reported Securities Times.

CCB (00939.HK) (601939.SH) announced that no institutions or individuals are permitted to set up accounts at the bank for top-up and withdrawal of trading funds for virtual currencies, 
or for purchase or sale of related transactions of top-up code. The PBOC had earlier consulted some banks and payment platforms regarding crypto speculations.
ICBC (01398.HK) announced that neither institutions nor individuals are allowed to mount financing or virtual currency dealings with tokens via the bank's accounts, products, services and channels.
Alipay equally said it will monitor and investigate any transactions which are involved in cryptocurrencies, and will block them right away if uncovered.

CKH HOLDINGS (00001.HK)'s statement disclosed that it repurchased 1.9695 million shares 
on the Stock Exchange on 21 June at $58.65-59.00 each, involving approximately $116 million.  Year to date, the company bought back 6.7805 million shares, representing 0.1758% of the share capital of the company.

XINYI GLASS (00868.HK) announced that the board lot size of the Shares for trading will be changed
from 2,000 Shares to 1,000 Shares with effect from Monday, 19 July.

Comments
* The email will not be published on the website.