May 25 HK/CHINA Wrap Team China back


25 May

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HSI +499pts (+1.75%) 28,910 HSCEI +151pts (+1.4%) 10,793 T/O HK$167.87bn (+38.9% DoD)

EUROPE
Markets opened higher but FTSE and DAX drifted lower FTSE into the red;  German GDP growth data slightly weaker that F/cast but Ifo data overall was positive. Caution as EU to set out sanctions on Belarus and possibly Russia. German in an awkward position wants a tough response but will not want to jeopardise the Nord 2 pipeline. Talk that inflation fears are easing
Earnings due from Aviva
DATA 
GERMANY
GDP Growth Rate Final Q1 -1.8% QoQ vs+0.5% Q4 (F/cast was -1.7%)
GDP Growth Rate Final Q1 -3.1% YoY vs -3. 3% Q4 (F/cast was -3%)
Ifo
Business Climate May 99.2 vs 96.6 Apr revised (F/cast was 98.5)
Expectations May 102.9 vs 99.2 Apr revised (F/cast was 100.9)
Current Conditions May 95.7 vs 94.2 Apr revised (F/cast was 95.1)
UK
CBI Distibutive Trades May 18 vs 20 Apr F/cast was 34)
US Markets openes higher
But markets working lower good housing data but  consumer confidence missed 

CHINA
CSI 300 closed +163pts (+3.2%) 5,319
CSI 300 opened slightly higher and has worked higher all day to 5,324 about 15mins before the close but then eased back. Team China back in charge and despite resources being weak.
Policymakers cracking down on commodity price increases trying to calmed inflation concerns. RMB stronger (USD weaker ?) touching its highest since 2018. The surge came as overseas investors net purchased 21.7b yuan ($3.4 billion) worth of A shares via stock connect today.
Leaders brokerages, insurance, banking, pharmaceuticals, coal, food and beverage, medical beauty, and biological vaccines Laggards power and agricultural industries

Shanghai Composite +84pts (+2.4%) @ 3,581
Shenzhen Composite +340pts (+02.3%) @ 14,847
ChiNext Index +65pts (+2%) @ 3,197CHINA DATA
None 
Next data from China is on Thursday when it announces Industrial Profits

HSI
Pre market opened @ 28,462 +49pts vs +43pts ADR’s
But quickly rallied to 28,660 as recent shorts covered before working higher to test 28,800 ahead of lunch. PM worked slowly higher and closed just off the day high and ticked lower into the close.
HONG KONG DATA
The Centre for Health Protection (CHP) reported 2 new covid case and 2 uncertain cases from unknown sources
(vs 1 Monday & 2 uncertain)

IPO
NEW HOPE SERV (03658.HK) , 
on debut, closed the day at $3.82, up 2 cents against the listing price of $3.8, on volume of 21.32 million shares and turnover of $80.97 million.

Short Selling Tuesday 16.8% vs 20.1% Monday
Top Shorts 
Shenzhou Int (2313) 38%, Hengan (1044) 37%, Country Garden (2007) 37%,  AIA (1299) 34%, Anta Sports (2020) 31%, Henderson Land (12) 31%, Ping An (2318) 30%, Haidilao (6862) 29%, Bank Comm (3328) 27%,  ICBC (1398) 27%, Petrochina (857) 25%, CKI (1038) 25%, CITIC (267) 25%.

AFTER MARKET NEWS
CHINA GAS HOLD (00384.HK) announced that it had repurchased 2.172 million shares 
through the Stock Exchange today (25 May), involving around $61.8209 million
Responding to the recent report by Reuters regarding SAMR launching an anti-monopoly investigation on housing broker KE Holdings (BEKE.US) , the company deems the report saying "KE Holdings is under investigation by SAMR" to be untrue.  KE Holdings later reiterated on their official Weibo account that such report is false.
ICBC (01398.HK) announced that ICBC Wealth Management, a wholly-owned subsidiary of the Bank, received the China Banking and Insurance Regulatory Commission’s approval, that ICBC Wealth Management is approved to cooperate with Goldman Sachs Asset Management to establish a Sino-foreign joint venture wealth management company.  The funding contribution ratio of ICBC Wealth Management and Goldman Sachs Asset Management will be 49% and 51% respectively.
KINGSOFT(03888.HK) announced the first quarter results ended March 2021. The revenue rose 33.1% year-over-year to RMB1.56 billion. The net profit amounted to RMB117 million, reflecting a 1763.1% increase year-over-year.  EPS was RMB0.09.
Spot USD/CNY closed at 6.4078, up 215 bps, setting a new high in nearly three years. As at 16:46, USD/CNY rose 118 bps in the night session. USD/CNH stood at 6.3989, up 90 bps.
China's market regulator has commenced an investigation on KE Holdings (BEKE.US) for its suspected anti-competitive practices, 
sources cited by Reuters said. With its substantial shareholder being TENCENT (00700.HK), KE Holdings, operating housing platforms Lianjia and Beike, has been warned by the State Administration for Market Regulation (SAMR) against abuse of market dominance and ordered to conduct self-inspection.

MARKET COMMENT
*COMMODITIES STRONG CNOOC (883 HK +0.9%) CH OILFIELD (2883 HK +1%) PETROCHINA  (857 HK +1.3%) After Oil climbed the most in a month as Iran said that gaps remain in negotiations aimed at reaching a deal to end US sanctions on it supplying crude to the world markets.
RESOURCES names firm after the recent correction as the NDRC said it was fight against soaring commodities prices. ANGANG (347 HK +3.9%) JIANGXI COPPER (358 HK +2.15) CHALCO (2600 HK +2.6%).
*E-COMMERCE/INTERNET MIXED as inflation concerns eased.
BUT KUAISHOU TECH's (1024 HK -11%) 1Q net loss widened by 89.4% to 57.8b from a year earlier, as sales and marketing expenses surged to 69% of revenue, and 1Q revenue +36.6% to 17.02b yuan. WEIMOB (2013 HK +5.2%) despite placing 156m shares at HK$15/shr, and issued the 2021 Convertible Bonds in an aggregate pincipal amount of US$300 approximately
JD.COM (9618 HK +0.9%) fined 300,000 yuan for false advertising in violation of China's anti-monopoly law, the Beijing Economic Technological Development Area announced.
ALIBABA (9988 HK +0.5%) TENCENT (700 HK +4.2%).
*TECH & COMPONENTS FIRM led higher by XIAOMI (1810 HK +4.1%) as FTSE Russell says it plans to re-add Xiaomi and Luokung Technology to certain indexes, subject to the final decision of a US court that would cause them to fall within the scope of Executive Order 13959. ZTE (763 HK +3.1%) SMIC(981 HK +2.2%).
*CHINA PROPERTY MANAGERS FLAT on fund-raising concerns.
COUNTRY GARDEN SERVICES (6098 HK -2.4%) raised HK$15.5b selling 139.4m new shs at HK$75.25 apiece, a 6% discount to its last closing price.
*BROKERS STRONG on sector optimism due to ongoing capital market reforms and valuations. Market speculates more reforms and attracting long-term funds into the stock market can extend the sector’s rebound from a bottom. HAITONG (6837 HK +2.9%) CGS (6881 HK +4%) CITIC SEC (6060 HK +6.3%).
*MACAU STRONG after Macau visitor arrivals hit 794,800 in April 2021, +5.3% MoM and 71x YoY said Statistics and Census Service yesterday. SANDS (1928 HK +2%) WYNN (1128 HK +2.1%) MELCO (200 HK +2.1%) MGM (2282 HK +2.7%).
*EDUCATION PROVIDERS WEAK on  regulatory fears, despite authorities said reports that Beijing Haidian district has banned tutoring classes during the summer school vacation are untrue. YUHUA (6169 HK -1.6%) MINSHENG (1569 HK -3%) VIRSCEND (1565 HK -4%) NEW HIGHER EDU (2001 HK -2.6%).

Regional Markets
Australia
Market opened higher and rallied to 7,080 and then tested 7,100 around 11:15am and then traded in that range until around 3:30pm when it just broke above to cloee  +69 pts (+1%) @ 7,115
Tech +VE led by Technology One on good earnings. Oil stocks also +VE. Gold miners +VE
Japan
Nikkei opened higher but initially eased back to 28,450 before testing 28,576 but then eased back and traded sideways into lunch. PM tested 28,550 but failed to break above and trened lower with support at  28,500 then rallied into the close  +189pts (+0.7%) @ 18,554
Topix traded in the similar pattern initial low was 1,914 and the high 1,921. Closed +7pts (+0.3%) @ 1,920
S Korea
Good Consumer Confidence data pre market.  KDCA announced only 516 new covid cases; dropping for a third day +VE for sentiment. Inflation concerns also seem to be easing. Tech rebounding. Auto’s seeing some weakness
Kospi opened higher and traded up to 3,173 around 12.20pm and since then has drifted lower; but rallied to close 27pts (+0.9%) @ 3,171
Kosdaq opened higher, rallied to 958 and then worked slowly higher, to close +14pts (+1.4%) @ 962
Business confidence data pre market Wednesday
Taiwan
Taiex opened higher and worked higher; initial resistance 16,600 but broker above that around 11:00 to test 16,660 but failed to break above. Eased back to 16,565 and traded sideways to close +257pts (+1.6%) @ 16,596
Sentiment helped by GS raising their index target to 19k. But concerns that the Level 3 alert will be extended  Tech +VE following the US and a +VE forecast from the Institute for Information Industry's Market Intelligence & Consulting Institute (MIC).

CONNECT FLOWS (Significantly higher than Monday)
Shanghai
Northbound Rmb 58,662m Sell 20,925m vs 37,737m Buy
Southbound HK$ 21,386m Sell 9,205m vs 12,181m Buy
Shenzhen
Northbound Rmb 63,707m Sell 29,398m vs 34,309m Buy
Southbound HK$ 22,909m Sell 9,013m vs 13,896m Buy

Active Heavyweights
H
KEX (00388.HK)  +5.4%
TENCENT (00700.HK) +4.2%
PING AN (02318.HK) +2.1%
MEITUAN (03690.HK) +2.1%
AIA (01299.HK) +1.3%
CCB (00939.HK) +1.3%
BABA (09988.HK)  +0.5%

HSI & HSCEI Constituents on Move:
KUAISHOU-W (01024.HK)  -11.5%
CM BANK (03968.HK) +6.3%, hitting new high
CPIC (02601.HK) +6.2%
WUXI BIO (02269.HK) +5.9%
NONGFU SPRING (09633.HK) +4.6%
PSBC (01658.HK) +4.1%
XIAOMI (01810.HK) +4.1%
SHENZHOU INTL (02313.HK) +3.7%, hitting new high
ANTA SPORTS (02020.HK) +3.5%, hitting new high
SUNNY OPTICAL (02382.HK) +3.4%
GEELY AUTO (00175.HK) +3.2%
BUD APAC (01876.HK) +3%
HANSOH PHARMA (03692.HK) +3%
HENDERSON LAND (00012.HK)  +0.7%, hitting new high

HSMI & HSSI Constituents on Move:
VIVA BIOTECH (01873.HK)  +12.9%
CICC (03908.HK) +10.9%
ALPHAMAB (09966.HK) -10.6%
CHINASOFT INT'L (00354.HK) +10.2%
CITIC SEC (06030.HK)  +6.3%, hitting new high

MARKET HOURS NEWS
.
Cryptocurrency investment is part of Ample Capital (AmCap)'s fund portfolio, making up less than 2% of the total and will merely contribute to around 6% of the sum even supposing a 300% growth, revealed Director of Asset Management Alex Wong.
Wong is more upbeat on Ethereum in the crypto market given its broader application as compared with Bitcoin. Finding Ether more well-accepted, AmCap's funds have taken the chance to shift some Bitcoin holdings to Ether in the early phase of market downturn.
NEW WORLD DEV (00017.HK) states in a press conference that the first price list of the jointly developed residential project by the company and MTR CORPORATION (00066.HK) situated above Tai Wai MTR station -- The Pavilia Farm III is expected to be released in two days, with model flats being available to public from this weekend. The earliest date to commence the first round of sales is early June. NEW WORLD DEV is confident in the sales of The Pavilia Farm III and has said that the price will be adjusted according to the market's demand and reaction, with the expectation to surpass the $30,000 per square foot record achieved in the sales of the one-bedroom units of the first two phases. The Pavilia Farm III offers 892 units in total, with sizes ranging from 285 square feet to 1,695 square feet.
Spot USD/CNY once peaked at 6.4016 after midday, nearing the 6.40 level. USD/CNH zoomed past 6.40, hitting a new high in almost three years.  As at 14:30, USD/CNY and USD/CNH stood at 6.4067 and 6.3983, respectively up 0.36% and 0.17%.
CKH HOLDINGS (00001.HK) dumped its stakes in AlipayHK to less than 20%, local media reported.  AlipayHK is operated by Alipay Payment Services (HK), the joint venture founded in 2017 by CKH HOLDINGS and BABA-SW (09988.HK)'s Ant.
Two asset-backed securitization (ABS) projects under Ant Group's Huabei (Ant Check Later) and Jiebei, with respective sizes of RMB10 billion and RMB8 billion, were terminated according to SSE's bond information platform.
Moody's assigned a Baa2 senior unsecured rating to the proposed bonds to be issued by AAC TECH (02018.HK). The issue will further improve the company's debt maturity profile and financial flexibility.  The proposed bond issue will not affect the company's Baa2 rating or stable outlook since the rating agency expected the company to employ a significant part of the proceeds to refinance existing debt, Gerwin Ho, a Moody's Vice President and Senior Credit Officer, stated.
According to the shareholding disclosure from HKEX, Wheelock and Company Limited, a substantial shareholder of WHARF HOLDINGS (00004.HK), purchased approximately 150 million shares off exchange with an average price per share of $23.184 on 20 May. The total amount involved $3.474 billion. The purchase resulted in Wheelock and Company Limited's shareholding percentage rising from 54.99% to 59.9%.
BABA-SW (09988.HK) announced the official launch of the annual event "Tmall 618" for 2021, during which the company will provide merchants with more operational support measures and innovative tool backups.  Around 250,000 brands will join the event, representing 2.5 times of last year's "Tmall 618", the group revealed. Also, approximately 13 million items will hit the shelves during the period.   For this year, "Tmall 618" will be scheduled into two sales periods, which are 1-3 June and 16-20 June, and the pre-sale period will start at 8pm on 24 May.
LINK REIT (00823.HK) announced today (Tuesday) that it has successfully issued CNH650 million worth of three-year offshore Renminbi (CNH) notes. The annual coupon rate is 2.8%, which is the lowest coupon CNH debt issuance achieved amongst Hong Kong real estate companies.  The three-year issue, which will be due on 24 May, 2024, is Link’s debut issuance of CNH notes. Proceeds of the debt will be used for general corporate purposes. The notes are rated “A” by Fitch Ratings.
Having cleared the listing hearing on Stock Exchange, Yuexiu Services, an urban operation service and integrated property management service provider under YUEXIU PROPERTY (00123.HK), will likely start IPO soon. Foreign sources said Yuexiu Services had kick-started its pre-marketing, aiming to raise around US$200-250 million.
New HKEX (00388.HK)  CEO Nicolas Aguzin, at the LME Asia Metals Seminar 2021, said the China's members of LME are considerably significant, viewing the country has higher power in commodity pricing. With Hong Kong unfolding the Covid vaccination program, the CEO envisioned the local economy to be on track of recovery.
Hong Kong Disneyland Resort (HKDL) posted a record-high FY20 loss of $2.7 billion. The LegCo's Panel on Economic Development discussed the theme park's financial profile yesterday (24th).  HKDL had secured a $2.1-billion revolving credit facility from substantial shareholder Walt Disney to support its working capital and business needs, replied HKDL Managing Director Michael Moriarty at the meeting. He temporarily saw no need for additional Hong Kong government funding.
HSBC HOLDINGS (00005.HK) announced that it had completed the issuance of US$2-billion 0.976% Senior Unsecured Notes due 2025. The bank also issued US$3-billion 2.804% Fixed Rate Senior Unsecured Notes due 2032.
U.S. Commerce Secretary Gina Raimondo expressed that the U.S. government is proposing to invest USD52 billion in the production and development of the semiconductor chips that could result in 7 to 10 new factories in the U.S.  She said that the federal funding would attract private capital and is estimated to generate more than USD150 billion worth of investment in chip development and research.
COUNTRY GARDEN (02007.HK)'s management said the company's GPM stays at a steady level amongst the sector, citing last year's GPM downfall to 22%. It assumed the sales margin to have already bottomed out in 1H20 and picked up notably in 2H20. The future GPM was forecast to demonstrate remarkable improvement.
NEW HOPE SERV (03658.HK) , on debut, opened at $3.8, flattish against the listing price of $3.8, on volume of 7.97 million shares per-market.

PRE MARKET HOURS NEWS
FTSE Russell index company announced its plan to reintroduce XIAOMI-W (01810.HK) and Luokung Technology (LKCO.US)
into FTSE Global Equity Index Series and relevant market capitalization weighted indexes.  XIAOMI-W will be admitted to the indexes in two stages: 50% from June 4's after bell, and the remaining 50% from June 18's after bell.
CG SERVICES (06098.HK) announced that Best Path Global, which is a subsidiary of the Company,  proposed to issue convertible bonds in the aggregate principal amount of  HK$5.038 billion. Based  on an initial Conversion Price of HK$97.83 per Share (i.e. a 22.21%  premium to yesterday's closing price of HK$80.05), the Maturity Date on 1  June 2022, and assuming full conversion of the Bonds at the initial  Conversion Price, the Bonds will be convertible into 51.4975 million  Shares, representing 1.65% of the share capital as enlarged.
China's State Administration of Press, Publication, Radio, Film and Television released the approval information for the first batch of home-grown online games in May 2021, according to its official website.  86 domestic games were on the approval list, including titles produced by TENCENT (00700.HK), NTES-S (09999.HK), ZQGame, etc.
WEIMOB INC (02013.HK)  announced that it plans to place 156 million shares, accounting for 6.4% of the enlarged share capital. The placing price per share is HK$15, a 6.6% discount to yesterday's closing price.   Besides, the company proposed issue of US$300 million zero coupon guaranteed convertible bonds due 2026. Based on the initial Conversion Price of HK$21 and assuming full conversion of the 2021 Convertible Bonds at the initial Conversion Price, the 2021 Convertible Bonds will be convertible into a maximum of 111 million New Shares.
Huawei is set to formally introduce HarmonyOS at a virtual event slated for 8pm on 2 June, reported Xinhua News Agency.
HarmonyOS will be able to support smartphones following Huawei's 2019 official announcement on this home-grown operating system.
China confirmed 15 additional COVID-19 cases yesterday (24 May), including two local infections in Anhui, reported by the National Health Commission.
CG SERVICES (06098.HK) announced that it entered into a placing agreement with placing agents on 24 May, planning to place approximately 139 million shares, accounting for 4.35% of the enlarged share capital. The placing price per share is $75.25, a 6% discount to yesterday’s closing price.  The company estimated that the net proceeds from the placement will be $10.424 billion.
Beijing Shougang (000959.SZ) announced that it had on 24 May signed the strategic cooperation agreement with Tencent Cloud Computing (Beijing) Limited, whereby both parties will work together on industrial Internet, blockchain, industrial finance, digital economy infrastructure construction and business management.
YUEXIU PROPERTY (00123.HK) announced that the Company has successfully won the bid for the  residential site located in Yuhuatai District, Nanjing for a  consideration of RMB4.14 billion.  The land parcel has a site area of 63,214 sq.m. and a total gross floor area of 237,688 sq.m..
TOPSPORTS (06110.HK) results for the financial year until February,  recording a revenue of RMB36.009 billion with a 6.9% increase   year-over-year; a gross profit of RMB14.681 billion with a 3.5%   increase; and a net profit of RMB2.77 billion with a 20.3% increase. The  earning per share is recorded to be RMB44.67 cents.
The  final dividend is RMB12 cents, with the final dividend of last year  being RMB7 cents. Combined with the interim dividend and special  dividend, the total amount of issued dividends throughout the year  amounted to RMB64 cents.

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