This and previous notes can be found at Substack ( Asian Market Sense )
Check out ERI-C.com for interesting research and trading analysis
HSI -20pts (-0.1%) 29,268 HSCEI -15pts (-0.1%) 10,864 T/O HK$101.59bn (-35.3% DoD but only half day trading)
Opened mixed; FTSE drifting lower. DAX and CAC saw an initial uptick in the open then trading sideways just in the red.
Concerns over the Covid Delta+ variant and the weak China data out Sunday.
Burberry -6% as CEO resigns to join Ferragamo. Daimler to spin off truck unit. NN Group announced Sunday that it had offered to acquire some of MetLife’s businesses in Europe, though the size of the offer and the specific businesses targeted remain
German Import Prices May +1.7% MoM vs +1.4% Apr (F/cast was +1/2%)
German Import Prices May +11.8% YoY vs +10.3% Apr (F/cast was 11.1%)
Opened higher in Asia Dow +47pts, S&P +0.1% and NDX flat but have eased lower; Dow -17pts, S&P now flat an NDX slightly +VE. Covid concerns seem to be outweighting the news of the infrastructure bill, but CAT higher premarket.
Ahead Dallas Fed Manufacturing Index
Fed Speaker Quarles
CHINA CSI 300 closed +12pts (+0.2%) @ 5,252
CSI 300 opened higher after weekend Industrial Profits number showed the recovery continues but was uneven and slowing on a YoY basis. Market sold down to 5,230 in the first 40 mins before rebounding and then trading in a tight range for the rest of the day. With the Communist Party anniversary this week I would expect ‘Team China’ will ensure stability in the markets.
Leaders Pharma, biotech, pork, animal stocks.
Active trading Generic drugs, lithium batteries, Covid testing, and chips were actively traded.
Laggards;the coal sector fell sharply as Govt seeks to control prices, Financial as Citic does due diligence on Huarong, Real Estate and Steel.
Shanghai Composite -2pts (unch) @ 3,606
Shenzhen Composite +146pts (+1%) @ 15,150
ChiNext Composite Index +60pts (+1.8%) @ 3,491
Guangdong's National Health Commission reported zero local COVID-19 case and asymptomatic case yesterday (27 June), along with five imported infections.
HSI Morning session was cancelled due to a blackrain warning and only traded from 1:30 pm. Afternoon market opened @ 29,366 +78pts vs -67pts ADR’s. Li Ning +10% after good results.
Saw an initial spike as Friday’s shorts covered but then sold down in choppy trading to 29,201 level in the first 30 minutes then traded in a tight range 29,220/29,280. Ticked up 18pts in the closing auction.
Expect a stable trading into the end of month / first half and with the market closed Thursday for SAR day.
MORIMATSU INTL (02155.HK), on debut, opened at $4.96, one time higher than the listing price of $2.48. The stock last stood at $5.48, 1.2 times above the listing price, on volume of 33.28 million shares.
HONG KONG DATA
Balance of Trade May HK$-25.5B vs -31.8B Apr (F/cast was -33B)
Exports May +24% YoY vs 24.4% Apr
Imports May +26.5% YoY vs 25.2% Apr
In May, Hong Kong's Private Domestic Price Index hiked 0.6% monthly to 393.7, Rating and Valuation Department (RVD) announced. Class A units with a saleable area of 430 square feet or less had prices increased more than 1.1% monthly to 439.9, exceeding the historical high of 439.7 in May 2019.
The Centre for Health Protection (CHP) reported 3 new covid cases all imported (vs 6 Sunday with 5 of them being imported).
Short Selling Monday 16.0% vs 16.5% Friday
Top Shorts CLP(2) 45%, Hengan (1044) 39%, Bud APAC (1876) 38%, Petrochina (857) 37%, Ping An (2318) 35%, Country Garden (2007) 34%, Longfor (960) 33%, AAC Tech (2018) 33%, Anta (2020) 29%, Sunny Optical (2382) 28%, MTRC (66) 27%, Galaxy (27) 27%, WH Group (288) 26%, Bank Comm (3328) 25%, Meituan (3690) 25%
AFTER MARKET NEWS
Government to ban flights from UK from Thursday -VE Cathay Pac. CHINA GAS HOLD (00384.HK) announced annual result ended March 2021. The net profit amounted to HK$10.479 billion, up 14% yearly. EPS was HK$2.01. A final dividend of HK45 cents per share was declared. Together with the interim dividend of HK10 cents per share, the total dividend amounts to HK55 cents per share.
L'OCCITANE (00973.HK) announced annual result for the year ended 31 March 2021. The Group delivered its highest ever net profit of EUR155 million, up 32.9% yearly. EPS was EUR0.105.
The Board proposes a final dividend of EUR0.03687 per share, equivalent to a payout ratio of 35%. It has initiated the global store consolidation plan and been negotiating with landlords on the rent since last year, said Vice-Chairman Andre Hoffmann at the press conference. At the moment, the group is maintaining its store size in Hong Kong. Seeing economic revitalization in Hong Kong, Hoffmann envisioned growth potential in L'OCCITANE's sales volume going ahead. However, it would be hard to tell the exact timing as recovery takes time.
Hong Kong Exchanges and Clearing Limited (HKEX) (00388.HK) announced that it is pleased to welcome the first group of participants to join its pilot programme for HKEX Synapse (Synapse), HKEX’s new Stock Connect settlement acceleration platform. The programme will help to further enhance HKEX Synapse’s design and features, ahead of its launch, targeted for 2022. In November 2020, HKEX announced its plans to launch Synapse, which uses DAML smart contracts to help institutional investors participating in Northbound Stock Connect to better manage their post-trade operations, in particular to meet the tight settlement cycle of the Mainland China’s securities market.
Huawei reiterated that the company has no intention to become a shareholder or investor of any automobile companies and that such decision is made after careful consideration. Huawei stressed that automobile manufacture differs greatly from that of mobile phones and the company is not equipped with the ability to produce vehicles at the moment.
*COMMODITIES WEAK Caution ahead of OPEC+ meeting this week: Rumoured Russia is angling for an increase, and Saudi Arabia may be amenable. CNOOC (883 HK -1.2%) PETROCHINA (857 HK -1.3%)
BASE METALS WEAK expectation of price curbing moves by the Chinese gov't remain in focus. JIANGXI COPPER (358 HK -1.3%) MAANSHAN IRON (323 HK -2.6%) CHALCO (2600 HK -1%) ZIJIN (2899 HK -3.3%).
COAL WEAK after a Chinese govt official said the country’s coal prices are set to see a “substantial drop” next month with imports and output poised to increase. CH COAL (1898 HK -7.8%) YZ COAL (1171 HK -6.7%) CH SHENHUA (1088 HK -3.2%).
*AUTO MIXED after GEELY AUTO (175 HK -2.1%) withdraws its application for a proposed yuan share issue on Shanghai’s Nasdaq-style Star board, citing the “company’s business decisions and strategic adjustments.” DONGFENG (489 HK -1.8%) GREATWALL (2333 HK +2.5%) GAC AUTO (2238 HK +2%) BYD (1211 HK +2.5%). Trucks & trailers makers CIMC VEHICLES (1839 HK -1%) will issue 252.6m A-shares at 6.96 yuan apiece, raising 1.76b yuan.
*HK PROPERTY WEAK as Treasuries yields rose slightly on Friday. CH OVERSEAS LAND (688 HK -0.7%) expects to release about 100 flats in the second price list of One Victoria in Kai Tak soon. The developer has received around 2,600 registrations of intent from potential buyers for 212 flats in the first list, making them more than 11 times oversubscribed.
NWD (17 HK -0.4%) has collected about HK$1b after over the weekend. The third phase of the project received about 30,500 registrations of intent from potential buyers in the third round of sale, the highest number of registrations since 1997.
The Li Ka Shing Foundation bot 2.08m shs in CK ASSET (1113 HK +0.6%). HENDERSON (12 HK -0.8%) SINO (83 HK -0.5%) buying 40.33% of the total issued shares of HQH with SGD339 million (approx HKD1.985 bn).
*CHINESE PROPERTY WEAK The total of new home sales in China’s four first-tier cities fell last week from the previous week to 515,297 square meters of floor space; Beijing had the biggest increase, while Guangzhou the biggest decrease.
CH EVERGRANDE's (3333 HK -1.7%) Kailong Real Estate plans to sell 29.9% stake in China Calxon Group, a property developer, to Shenzhen Huajian Holdings for 2.76b yuan. TIMES CHIN (1223 HK -1.2%) SHIMAO (813 HK -1%) AGILE (3383 HK -1.7%).
*SPORTWEAR MAKERS STRONG after LI NING's (2331 HK +14%) expects to record a net profit of not less than 1.8b yuan for the six months ending June 30. That compared with the net profit of 683.27m yuan in the first half of 2020, which means the first-half net profit would have jumped by at least 160%.
ANTA (2020 HK +5.4%) XTEP (1368 HK +10.5%) 361 DEGREES (1361 HK +5%) DONGXIANG (3818 HK +14%).
*PHARMA FIRM Traditional Chinese Medince companies jumped after the Ministry of Commerce and other seven departments jointly issued a notice to support development of the industry. TONG REN TANG (3613 HK +7%) BAIYUNSHAN (874 HK +3.1%) SHINEWAY (2877 HK +7.3%). INNOVENT (1801 HK +4.5%) announced receiving China NMPA approval of TYVYT® (sintilimab injection) in combination with BYVASDA® as a first-line treatment for people with advanced or unresectable hepatocellular carcinoma. FRONTAGE (1521 HK +5.6%) surged more than 10% intraday on acquisition of Quintara Discovery Inc.
Market opened higher briefly before selling off sharply as the market reacted to the new lockdowns. Finding support at 7,273 after 45 mins of trading. The market then trended higher for the next 2.5hrs but saw resistance approaching flat and eased back to 7,300 and traded sideways to close flat @ 7,307
Travel & Leisure weak with Qantas-3.9% along with REITs but Iron ore miners and CSL +VE along with Woolies +2.9% and Coles +0.6%.
Metcash +0.8% on strong FY results, buyback and higher dividend.
Nikkei opened higher as expected but sold down to 29,030 and then traded sideways for most of the morning around 29,050 level(vs 29,066 close Friday). But then sold down to 29,000 at lunch
PM opened higher drifted lower with a small uptick to close -18pts (-0.06%) @ 29,048.
Topix Opened higher and traded around 1,965 through the morning before selling down to 1,962 at lunch. PM opened higher and trading around 1,964 before ticking higher to close +3pts (+0.2%) @ 1,966.
Toshiba +1.6% after shareholder revolt on Friday.
Tomorrow pre market Unemployment & Retail Sales.
Trading volumes were moderate ($11.9B) gainers outnumbers losers. Foreigners & Institutions Selling, Retail buying. Financials +VE, Auto weak and Tech mixed.
Kospi opened slightly higher, dipped to 3,298 but then rallied to 3,111, eased back to trade around flat. Until 10:50am when it sold down to 3,291 before working back to flat Closed -1pt @ 3,302.
Kosdaq Opened higher and rallied to 1,018 in the first 30 minutes and had traded around there for the rest of the session. Closed +6pts (+0.6%) @ 1,018
Taiex opened higher @ 17,531 saw an initial up tick before selling down to 17,480 level before rebounding to flat. Around 10am it rallied to 17,595 level which it tested a few times before easing back to trade around 17,550 level and ticked higher into the close +88pts (+0.5%) 17,591. T/O was US$15.8bn vs US$17.07bn Friday.
Shipping and Steels lead, Old Economy mixed and Tech under pressure (TSMC weak as China-based Bitmain, a cryptocurrency mining machine supplier, reduced its orders to the contract chipmaker).
CECC announced covid cases dropped to 60, a one month low.
After market 4.7 earthquake hit Hualin.
Northbound Rmb 27,384m Sell 14,775m vs 12,609m Buy
Southbound HK$ 15,312m Sell 8,669m vs 6,643m Buy
Northbound Rmb 32,115m Sell 17,002m vs 15,112m Buy
Southbound HK$ 15,515m Sell 7,041m vs 8,474m Buy
BABA (09988.HK) +3%
AIA (01299.HK) -1.4%
PING AN (02318.HK) -0.8%
CCB (00939.HK) -0.6%
TENCENT (00700.HK) -0.5%
MEITUAN (03690.HK) -0.4%
HKEX (00388.HK) unchanged
HSI & HSCEI Constituents on Move:
ANTA SPORTS (02020.HK) +5.4%, hitting new high
EVERG SERVICES (06666.HK) +4.7%
SHENZHOU INTL (02313.HK) +3.6%
BIDU-SW (09888.HK) +3.3%
CM BANK (03968.HK) -3.2%
WUXI BIO (02269.HK) +2.3%, hitting new high
HSMI & HSSI Constituents on Move:
SSY GROUP (02005.HK) +16.3%, hitting new high
CHINA DONGXIANG (03818.HK) +13.8%, hitting new high
XTEP INT'L (01368.HK) +10.5%, hitting new high
INNOCARE (09969.HK) +10.2%, hitting new high
MARKET HOURS NEWS.
Octopus Cards Limited issued a statement to clarify false online information about e-consumption voucher collection using Octopus Cards. Rumor has it that the $2 public transport fare concession scheme will not be available to Elder Octopus cardholders claiming their consumption vouchers through Octopus Cards. The Company emphasized the rumor was false, reiterating that Elder Octopus cardholders can still enjoy the fare concession as usual.
As the Hong Kong government's $5,000 electronic consumption voucher scheme was scheduled to be open for registration on 4 July, shopping mall Elements announced its "Summer Breeze" reward program. Starting from today until 15 August, any electronic spending reaching $2,000 will be rewarded with gifts worth as much as $2,000, including $1,000 dining vouchers and $1,000 tenant vouchers; while any electronic spending reaching $28,000 is eligible to receive rewards worth $8,000 in total.
AlipayHK announced that the participating merchants under the company's reward program have further enlarged the scope of the reward, stretching the total value of the voucher merchant rewards from the original $1 billion to nearly $1.7 billion.
Midland reported that the MCI last posted 70.7, up about 1.0% week-over-week, achieving a 6 consecutive weekly rise. Midland expressed that the promising trend of the MCI indicates an upward momentum for property prices and project the Hong Kong home prices to mount a historical high.
BYD COMPANY (01211.HK) will pour RMB2 billion into construction of automatic NEV EHS power assembly line in Taiyuan, Shanxi, paired with motor production and assembly line, aluminum alloy die-casting and so on, Chinese media reported. The NEV EHS power assembly is the super hybrid core system for BYD's DM-i with an estimated annual output of 500,000 sets and operation commencement in coming August.
The legal representative of Tencent Healthcare (Shenzhen) Co., Ltd was changed from Chen Guangyu to Wang Shaojun, Sina Tech citing the Tianyancha app. Meanwhile, Tencent Healthcare's registered capital increased sharply from RMB5 million to RMB900 million.
TENCENT (00700.HK)'s Pengyou app announced to shut down its server and officially cease operation from Wednesday (30 June) due to adjusted business development strategy.
CITIC Group is evaluating the financial condition of CHINA HUARONG (02799.HK) , and has sent a team to the latter to look into the troubled-debt manager’s books for due diligence, Bloomberg cited sources. Sources also said CHINA HUARONG is at the final stage of annual report audit, which is forecast to publish within next few weeks, earlier than the planned end-August.
BANK OF CHINA (03988.HK) announced that it had inked a comprehensive strategic cooperation agreement with JD-SW (09618.HK). Under which, both parties will unfold cooperation in multiple arenas, such as corporate finance, capital markets, equity investment, inclusive finance, personal finance, financial technology, payment business, insurance business, platform co-construction, express logistics, procurement business, medical and health care.
GREATWALL MOTOR (02333.HK) announced to launch the first product under the new brand "Shalong" next year, focusing on luxurious smart BEVs.
Didi Chuxing's parent company Didi Global Inc will end its bookbuilding one day earlier today (28th) for its U.S.
IPO, following a rumor that the company has already secured a $4 billion full subscription on its first day of bookbuilding, reported Reuters, citing people familiar with the matter. DiDi Global intends to issue 288 million American depositary shares (ADSs) at USD13-14 apiece, on a basis that four ADSs equals to one A-share, targeting to raise slightly more than USD4 billion.
GREATWALL MOTOR (02333.HK) Chairman Wei Jianjun announced during a strategic conference that the company targets to achieve a full-year sales figure of 4 million units by 2025, with NEVs taking up 80% of it, and representing over $600 billion of operating revenue. The company's accumulative R&D investment in the coming 5 years will reach $100 billion.
Over 130 new home deals were recorded over the past weekend with NEW WORLD DEV (00017.HK)'s The Pavilia Farm, atop Tai Wai station, selling 81 units over the weekend, involving a total of over $1 billion.
CHINA OVERSEAS' 'One Victoria' -- first residential project in the Kai Tak Runway area, received over 3,600 subscription sheets, oversubscribed by approximately 16x on the 212 units previously released on its first price list.
As for second-hand sales, Centaline's Hong Kong Property's top ten housing estates reported 15 transactions, down 6.3% compared to last week but still maintaining a stable double-digit figure for 19 consecutive weekends.
SINO LAND (00083.HK) announced to purchase 40.33% of the total issued shares of HQH with SGD339 million (approximately HKD1.985 billion). Upon completion of the proposed acquisition, the SINO's shareholding interest in HQH will increase to 63.86% with its effective interest in Shanghai HQREM (through HQH) and the underlying property will remain unchanged at approximately 22.35% because the divestment will reduce HQH's interest in Shanghai HQREM from 95% to 35%. The underlying property is Raffles City Shanghai, a commercial building comprising of prime office tower and a shopping mall located in Shanghai. SINO LAND expressed that the investment is intended to generate steady recurrent income for the group.
CATHAY PAC AIR (00293.HK) CFO Rebecca Sharpe predicted that the monthly cash burn of the company in the latter half of the year will scale down to less than $1 billion. Owing to the quarantine restrictions on cabin crew earlier on, the company burnt cash as much as $1.9 billion in the first half, the CFO disclosed, yet saying the cash burn will be alleviated with loosened constrains and higher freight capacity given crew vaccination.
PRE MARKET HOURS NEWS
CIMC VEHICLES (01839.HK) announced that the Company will issue 252.6 million A Shares at the issue price of RMB6.96 per A Share upon the completion of the preliminary price consultation among inquiry targets on 23 June.
The British projects of the group entered harvest period, boasted Cheong Thard Hoong, Managing Director of FE CONSORT INTL (00035.HK), stressing the company's strategy is to follow footprints of Chinese middle-class and identify promising projects in places with higher population growth for development. Taking note of more Hong Kong people buying properties in the UK, the management said most of them are self-use buyers, which are different from those in the past who intend to invest and earn rents. The prices of its projects range from $2 million to $30 million, Hoong said, and most people buy in a range of $4-8 million.
Black Rainstorm Warning Signal Special Announcement has been issued by the Hong Kong Observatory at 8:20 a.m. today (28th). Education Bureau announced that as the Black Rainstorm Warning Signal is now in force, classes of all AM schools and whole-day schools are suspended today.