May 27 WRAP HK Struggles with Ecommerce under pressure. CHINA bounced on US trade talks but then eased.


27 May

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HSI -53pts (-0.2%) 29,113 HSCEI -7pts (-0.1%) 10,848 T/O HK$250.5bn (+52.5% DoD)  MSCI reweight on the close

EUROPE
Markets opened mixed Dax lower and trading sideways just in the red. FTSE lower and trading around flat. CAC flat but working higher.
Earnings come from Johnson Matthey, Pets at Home, Daily Mail & General Trust, United Utilities, Tate & Lyle and Ted Baker.
Airbus strong after the planemaker announced ambitious production plans, targeting 64 A320 models per month by the second quarter of 2023.
Tate & Lyle’s weak despite achieving double-digit growth for its fiscal year and increasing its dividend,
Data due
EUROZONE No data due, ECB’s Guindos, Elderson & Schnabel Speeches
GERMANY
Gfk Consumer Confidence Jun -7 vs -8.6 May Revised (F/cast was -3)
Bundesbank Weidmann Speech
FRANCE
Unemployment Benefit Claims Apr 65.9k vs -16.8k Mar (-26k)
Jobseekers Total Apr 3.6238m vs 3.5579m Mar (F/cast was 3.5319m)
UK
Car Production Apr +34573% YoY vs 46.6%  Mar (F/cast was +125%) (Reflects only 197 car built last April vs 68,306 this year, still 3.8% below April 2019 output)
BoE’s Vlieghe Speech
US Futures
Opened flat Dow +20pts initially but eased to -73pts  in Asian time but now Dow +80pts.  S&P & NDX were flat but now S&P still flat but NDX -0.3%
AHEAD Durable Goods Orders, GDP (Price Index & Growth Rate), Corporate Profits,Initial Claims, 4 week Average Claims, Continuing Claims, Core PCE Prices, PCE Prices, Pending Home Sales, EIA Natural Gas Report, Kansas Fed Manufacturing Index,
4 & 8 week Bill and 7year Note Auction,
Fed Speakers None
Earnings
: Best Buy, Salesforce.com, Costco, Dell Technologies, Box, Ulta Beauty, VMWare, Autodesk, Lions Gate, Canadian Imperial Bank, Toronto Dominion, Burlington Stores, Dollar General, Dollar Tree, Royal Bank of Canada, Medtronic eased to -10pts S&P & NDX flat ahead of Jobs and PCE data.


CHINA CSI 300 closed +18pts (+0.3%) 5,338
CSI 300 opened lower and tested 5,285 level a couple of times in the first 30 mins but then rallied strongly to 5,378 around 11am on news that the trade reps from US and China had held their first call. But the euphoria was short lived as the sides said the talks were “candid, pragmatic and constructive” but the market sold down to flat at lunch. PM opened slightly higher but trading sideways around flat
A bullish view on the yuan also support the broad market, with onshore RMB rose to break 6.38, refreshed a historical new high since May 2018. Foreign Traders Buy Net $2.3b Chinese shares via Stock Connect significantly up from Wednesday.Shanghai Composite +16pts (+0.4%) @ 3,609
Shenzhen Composite +104pts (+0.7%) @ 14,897
ChiNext Index +38pts (+1.2%) @ 3,223

CHINA DATA
Industrial Profits YTD Apr +106.1% vs 137% Mar (F/cast was +52%)
Profits soared at both state-owned industrial firms (186.8%) and private-sector (89.2%). Among the 41 industries surveyed, 39 saw profit rises. The non-ferrous metal smelting and rolling industry posted the largest gain in profit (484%), followed by ferrous metal smelting and rolling (416%), chemical raw materials (272%), automobile (157.5%), petroleum industry (119%), coal mining and washing (91.5%), communications (86.2%), electrical machinery and equipment (85.8%), special equipment manufacturing (77.7%), and the electricity industry (40.5%).
In April alone, industrial profits rose by 57% YoY, but slowing sharply from a 92.3% jump in March, amid high commodity prices and weaker performance in the consumer goods sector.
China confirmed 19 additional COVID-19 cases yesterday (26 May), including two local infections in Guangdong, reported by the National Health Commission.

HSI
Pre market opened @ 28,998 -168pts vs +95pts ADR’s
Tested lower initially to 28,950 then rallied effectively traded slightly better in the range 29,000/29,150. Closed at lunch 29,078. PM opened higher but basically traded sideways through the afternoon 29,040/29,110. Did sell down to 29,050 in the last 10 mins as the MSCI rebalance got underway but then bounced back to 29, 080 and then ticked up 33pts in the closing auction. E commerce mixed as Beijing continues its clampdown on E commerce. But Xiaomi strong on confirmation that its off the US blacklist +VE Tech names.

HONG KONG DATA
The Rating and Valuation Department announces that the private residential property price index +0.4% monthly to 390.8 in April 2021, reaching the peak since July 2019 and being just around 1.5% way from the historical high in May 2019.
After market
Balance of Trade Apr HK$-31.8b vs HK$-27bMar (F/cast was HK$-20b )
Exports Apr +24.4% YoY vs +26.4% Mar
Imports Apr +25.2% YoY vs +21.7% Mar

The Centre for Health Protection (CHP) reported No new imported covid case no cases from unknown sources
(vs 1 Wednesday)

Earning due Friday include:  Sincere (244), Meituan (3690)

Short Selling Thursday 17.5% vs 18.8% Wednesday
Top Shorts 
Ping An (2318) 42%, Henderson Land (12) 39%, Sands China (1928) 37%, Shenzhou Int (2313) 29%, Mengniu Dairy (2319) 29%, Techtronics (669) 28%,  SHKP (16) 27%, Country  Garden (2007) 27%, Wuxi Bio (2269) 26%, Haidilao (6862) 25%, Baba (9988) 25%, Ali Health (241) 25%.

AFTER MARKET NEWS
JD LOGISTICS (02618.HK), to be listed tomorrow, closed at $48.55 in gray market, up $8.19 or 20.3%
against the listing price of $40.36, on volume of 1.3 million shares and turnover  of $649 million, PhillipMart data showed.
SINO BIOPHARM (01177.HK)  announced that Vice Chairman and Executive Director Zheng Xiangling  increased 1.38 million shares of the company at an average price of  $8.9672 per share on 27 May, involving approx $12.3747 million.
LENOVO GROUP (00992.HK) Chairman Yang Yuanqing said during performance phone meeting that the component shortage, especially that of chips, is expected to last for 12 to 18 months and is considered to be a consequence of the better-than-expected increased demand of products like electric cars.  However, he adds that with the company's robust supply chain and unique operating mode, he remains confident that LENOVO GROUP would still outperform the market as well as its main competitors and will be able to maintain the momentum for growth.
Information from Macau's Statistics and Census Service (DSEC) indicated that the number of guests checked into hotels & guesthouses leapt by 550% year-on-year
to 694,000 in April 2021.  The average occupancy rate of guest rooms surged by 45.9 percentage points year-on-year to 58.5%. Data on hotels & guesthouses designated for medical observation were excluded in the compilation of the results.
HANG SENG BANK (00011.HK) announced that Raymond K F Ch’ien has retired as an Independent Non-executive Director of the Bank and ceased to be the Chairman of the Board and Nomination Committee, and a member of the Remuneration Committee.
Irene Y L Lee has succeeded the above positions with effect from 27 May 2021.
HUIXIN CREDIT (01577.HK) announced that from 27 December 2019 to 30 December 2020, for treasury purpose, the group entered into a series of transactions involving acquisitions and a disposal of TENCENT (00700.HK)    shares
on the open market. The net aggregate consideration for the previous TENCENT transactions was RMB45.999 million.
Spot USD/CNY closed at 6.3758, up 172 bps, setting an about-three-year high. As at 16:34, USD/CNY added 158 bps in the night session. USD/CNH stood at 6.3706, up 90 bps.
John Lee Ka Chiu, Secretary for Security, had issued letters to the founder of NEXT DIGITAL (00282.HK)  Jimmy Lai Chee Ying, HSBC and Citibank last month, warning the banks that if they attempt to manage Jimmy Lai's account, they may be convicted and sentenced up to 7-year imprisonment.  John Lee said when he was responding to media's questions today (27th) that he has the responsibility to inform the banks of the possible legal ramifications if they try to handle the bank accounts of the persons who have allegedly violated The National Security Law
The Legislative Council passed the third reading of the Improving Electoral System Bill by a 40-2 vote. The pro-Beijing camp voted in favor of the bill, while Civic Passion lawmaker Cheng Chung-tai and medical sector lawmaker Pierre Chan opposed the bill.
The Pavilia Farm III, the residential project co-developed by NEW WORLD DEV (00017.HK) and MTR CORP (00066.HK) atop Tai Wai Station, unveiled the first price list for 182 units measuring 310-1,014 sq.ft. each.  Based on the maximum discount, the sales prices of the project range $6.748-23.832 million.
MARKET COMMENT
*COMMODITIES MIXED
  CNOOC (883 HK -0.8%) CH OILFIELD (2883 HK -1.2%) OIL COMPANIES weak on  concerns about the prospect of more Iranian supply. RESOURCES STRONG after Cailian Press reported that major Chinese banks haven't been told to stop selling financial products linked to commodity futures to individual investors, Cailian reported, contradicting a Reuters story saying regulators had requested a halt. ANGANG (347 HK +5.8%) MAANSHAN (323 HK +3.3%) CHALCO (2600 HK +1.4%).
*E-COMMERCE/INTERNET MIXED after TENCENT (700 HK -2%) was told to shift its finance-related operations into a new holding company to enable stepped-up supervision, Caixin reported. Chinese regulators have yet to specify which assets must be transferred, and wants the company to submit its own plan first. ALIBABA (9988 HK +0.9%) NTES (9999 HK +0.8%) CH LIT (772 HK -0.8%) MEITUAN (3690 HK -2.8%).
JD.COM (9618 HK -1.1%) despite JD LOGISTICS's (2618 HK) opened +25% in the gray market this afternoon ahead of its IPO tomorrow.
*TECH & COMPONENTS STRONG after XIAOMI (1810 HK +3.2%) confirmed off US blacklist and reported Q1 revenue which beat the average analyst estimate. Net income 7.79b yuan vs. 2.16b yuan +261% YoY.
Semiconductor makers strong as the chip shortage becomes more severe due to the Covid outbreak in Taiwan. SMIC (981 HK +5.5%) HUA HONG (1347 HK +8%) ASM (522 HK +4%) FIT HON TENG (6088 HK +3.3%).
*HK PROPERTY STRONG on the expectation of rising home prices. Lands department said that of the bid prices of developers who failed to secured a 200,000 sq ft residential site in Kwu Tung, four exceeded HK$6b - the upper limit of market estimates. SHKP (16 HK +1%) won the tender last mongh for the first residential site in the area which had been sold by tender for HK$8.61b, 44% higher than the market estimate. HENDERSON (12 HK +2.7%) KERRY PPT (683 HK +2.8%) WHARF (4 HK +5.3%).
*OTHER MOVERS: 
COUNTRY GARDEN (2007 HK -1.6%) is selling 98m shares in E-HOUSE CHINA (2048 HK -11%) in a placement that could raise as much as $103 million.
SMOORE (6969 HK +3.4%) rebound after dropping 12% yesterday after the National Health Commission and the WHO issued a report saying that e-cigarettes are not safe.

Regional Markets
Watch for lighter international volumes on Friday ahead of long weekends in the UK and US.
Australia
Market opened higher and tested 7,110 a couple of times but failed to break above so tested down to 7,080 before working higher and breaking through 7,110 to 7,119 before easing back to 7,110 and then bounced into the close +2pts flat 2 7,095.
Costa Group weak after earnings, Fisher & Paykel Healthcare slipped despite good earnings and Ramsay lower after making an offer for Spire in the UK
Data
Private Capital Expenditure Q1 +6.3% QoQ vs +4.2% Q4 revised (F/cast was +1.8%)
Japan
Weak ahead of key US PCE data tonight and the exepctation that the Govt will extend the State of Emergency as covid cases remain elevated and there is increased pressure to cancel the Olympics.
Nikkei opened lower ticked higher initially but then trended lower to 28,360 mid morning before working better into lunch. PM opened higher and trading sideways around 28,500 level with a slight uptick to close -93pts (-0.3%) @ 28,549
Topix traded with a similar pattern support at 1,910 for most of the day but sold down approaching the close to 1,908 but then tick up to close -10pts (-0.5%) 2 1,911
Data
Foreign investments
Stock investment 22 May ¥-223.5B vs ¥-471.4B prior
Bond investment 22 May ¥-551.5B vs ¥+600B prior revised
Tomorrow pre market Unemployment and Tokyo CPI
S Korea
BoK left rates unchanged but raised its growth forecast to 4% (from 3%)for next year and was cautious when asked about a rate hike "depends on the pace of recovery." KDCA reported 629 new covid cases (vs 707 Wednesday)  
Kospi opened slightly higher but trended lower found support at 3,142 level around 10:30am and traded around that level until 12.20pm before working better but saw resistance initially at 3,160 but then broke above, again at 3,165, consolidated and pushed higher and into the green @ 3,174 but then pulled back to close -3pt (-0.1%) @ 3,166
Kosdaq opened higher traded down to 960 level bounced around at that level for an hour then worked better for the rest of the session to close at the day high +8pts (+0.8%) @ 974.
Taiwan
Taiex opened lower and sold down to 16,420 level in early trades. Bounced and traded sideways around 16,475 until 11am. Worked higher to 16,580 where it met resistance and drifted lower to close -42pts (-0.3%) @ 16,602

CONNECT FLOWS (significantly higher northbound flow vs Wednesday)
Shanghai
Northbound Rmb  69,483m Sell 31,573m vs 37,911m Buy
Southbound HK$ 19,401m Sell 10,662m vs 8,739m Buy
Shenzhen
Northbound Rmb 69,804m Sell 30,757m vs 39,047m Buy
Southbound HK$ 21,298m Sell 10,093m vs 11,205m Buy

Active Heavyweights
MEITUAN (03690.HK)  -2.8%
TENCENT (00700.HK) -2%
PING AN (02318.HK) +1%
BABA (09988.HK) +0.9%
CCB (00939.HK) -0.5%
AIA (01299.HK) -0.2%
HKEX (00388.HK)  flat

HSI & HSCEI Constituents on Move:
SMIC (00981.HK)  +5.5%
NONGFU SPRING (09633.HK) +4.9%
XIAOMI (01810.HK) +3.2%
HENDERSON LAND (00012.HK) +2.7%, hitting new high
CSPC PHARMA (01093.HK) + 2%, hitting new high
SHENZHOU INTL (02313.HK)  +1.7%, hitting new high

HSMI & HSSI Constituents on Move:
FRONTAGE (01521.HK)  +16.2%
SIMCERE PHARMA (02096.HK) +13.4%
E-HOUSE ENT (02048.HK) -10.7%
CHINAGRANDPHARM (00512.HK) +10.2%
CMS (00867.HK) +7.2%, hitting new high
XTEP INT'L (01368.HK)  +6.9%, hitting new high


MARKET HOURS NEWS
.
Asked whether the hastened corn purchase by China from the US indicated China will keep its promise in the phase one trade deal, Gao Feng, spokesman of Ministry of Commerce (MOC), responded at a regular press conference that the phase one trade deal is conducive to China and the US as well as the world, hence viewing both nations should make concerted efforts in nudging the enforcement.
The strategic alliance between HANG SENG BANK (00011.HK) and Cyberport marks that they would cooperate on assisting innovative and technology enterprises to grasp the business opportunities in the Greater Bay Area.  Gilbert Lee Man Lung, head of strategy & planning of HANG SENG BANK, commented that the company will provide the most convenient and suitable banking and working capital options for I&T companies, so as to help them capitalize on the ever flourishing Greater Bay Area market.The local property market reported a slight boom in the first quarter post CNY, before keeping the robustness in the first- and second-hand transactions, observed Louis Chan Wing-kit, Chief Executive Officer (Residential) of Asia Pacific at Centaline Property Agency Ltd. Chan could almost affirm that the second quarter has already fostered a bull market, forecasting the price to break record high next month.
CHINA HUARONG (02799.HK) is expected to appoint Liang Qiang as the new president, said sources cited by Bloomberg News. Liang's recent promotion to president at China Great Wall Asset Management Corporation is rumored to a preparatory step for his upcoming appointment.  Source confirmed that said appointment has already been approved by the banking regulator's Communist Party committee.
China's car manufacturing sector achieved profits of RMB179.96 billion in 4M21, up 1.6 times YoY, as China Association of Automobile Manufacturers (CAAM) cited National Bureau of Statistics (NBS)'s data.
SHENGJING BANK (02066.HK)'s investment worth over RMB100 billion in EVERGRANDE (03333.HK) through direct or indirect channels, including holding a vast quantity of EVERGRANDE bonds, is under the radar of China's regulatory authority.
BYD COMPANY (01211.HK) (002594.SZ) cooperates with Huawei across various arenas, as the company answered investors' inquiry at the interactive platform of Shenzhen Stock Exchange.  Asked whether the company will have alliance with Huawei's HarmonyOS, it said it will conduct R&D and application on products in accordance with the market demand and self-planning.
LENOVO GROUP (00992.HK) released the FY2020/21 annual results announcement. Net profit surged by 77.2% to US$1.178 billion when compared to last year.  Earnings per share  were US9.54 cents. The Board resolved to recommend the payment of a final dividend of HK24 cents per share for the year (2020: HK21.5 cents).  For the year ended March 31, 2021, the Group achieved record total sales of US$60.742 billion, up 19.8% yearly.
MEITUAN-W (03690.HK)  weak after Alibaba's Ele.me has implemented the transparency policy of pilot rates in the core locations of MEITUAN-W, igniting war of cost reduction and subsidy.  Ele.me has so far launched transparency policy of pilot rates in over ten cities, and cut price in Sichuan, Chongqing, Guangzhou and Shenzhen, being the core locations of MEITUAN-W, The Beijing News reported.
The U.S. president Biden is expected to announce his nomination of the former deputy secretary of state, Nicholas Burns, as the ambassador to China, and Los Angeles Mayor Eric Garcetti as the ambassador to India, said the sources quoted by Associated Press.
HSBC HOLDINGS (00005.HK) announced the reposition of US Wealth and Personal Banking business to focus on the banking and wealth management needs of globally connected affluent and high net worth clients.  The group stated that the US will continue to be the key wealth market and investment location for global wealth and private banking customers, especially as part of the Asian wealth strategy. It will continue to fully support Asian customers in the US.
NTES-S (09999.HK) intends to spin-off Cloud Village by way of a separate listing of the Cloud Village Shares on the
Main Board  of the Hong Kong Stock Exchange,
with its joint sponsors being Bank of America, CICC and Credit Suisse.
The preliminary prospectus shows that NetEase Cloud Music's monthly active users of online music services reached 181 million in 2020 while the number of monthly subscription users amounted to 16 million. Cloud Village is the operator of NetEase Cloud Music.
HSBC HOLDINGS (00005.HK) announces that it will exit its US domestic mass market retail banking business through several transactions, pending regulatory approval with Citizens Bank and Cathay Bank for certain parts of the Business.  The Group will exit 90 branches out of a current branch network of 148 branches, while retaining a small network of physical locations in existing markets which will be repurposed into 20-25 international wealth centres.
Chinese Vice Premier Liu He, also the Chinese leader of the China-U.S. Comprehensive Economic Dialogue, spoke with United States Trade Representative Katherine Tai this morning (27 May), Ministry of Commerce (MOC) announced.
Both parties considered that developing bilateral trade is of high importance, and exchanged opinions on their concerned issues. They agreed to keep the dialogue looking ahead.
WEICHAI POWER (02338.HK) (000338.SZ) announced that the registration at the CSDC of the A shares to be issued pursuant to the Non-public Issuance of A shares is expected to be completed on 31 May 2021, with the issuance of a total of over 792 million A shares to 25 specific subscribers by way of non-public issuance, at a final issue price of RMB16.4 per share. The offering is expected to raise a net proceeds of approximately RMB12.988 billion.

PRE MARKET HOURS NEWS
Pinduoduo (PDD.US) announced revenues of RMB22.167 billion for the first quarter ended March 31, 2021, above street consensus of RMB20.2 billion.
The figure also increased by 239% from RMB6.541 billion in the same quarter of 2020.  Active buyers reached 824 million for the year, a net increase of 196 million or 31% YoY.
Airport Authority Hong Kong (AA) announced that 60,000 air tickets will be given away by lucky draw to Hong Kong residents and airport staff who receive COVID-19 vaccination, 
so as to support the Government’s vaccination promotion.
The Government announced that social distancing measures currently in place will be extended for 14 days until June 9.  
The requirements and restrictions applicable to catering businesses and scheduled premises, as well as the requirements for group gatherings and mask wearing will be maintained.
US Trade Representative Katherine Tai intends to have her first dialogue with Chinese officials this week, Reuters citing people familiar with the matter.  
Tai will reportedly call her Chinese counterparts as soon as Wednesday (26 May) evening (US time) with an unknown timing. It is unclear whether Chinese Vice Premier Liu He or other senior Chinese officials will speak with Tai.
China Foreign Exchange Trade System announced today (27 May) that the central parity of USD/ RMB added 69 bps from the last trading day to 6.4030,
hitting a new high since June 2018.
XIAOMI-W (01810.HK) maintains the annual sales target despite the chip supply tension, highlighted Senior Vice President Xiang Wang during the results conference call.
As to the aggravated epidemic in India, Wang said the company will pay close heed to the local market change and adjust business there, adding the annual targets for delivery and market share has remained intact.
FEIYU (01022.HK) announces that on 26 May, TENCENT (00700.HK) (a substantial shareholder of the Company) acquired from certain shareholders an aggregate of 90 million shares of the Company, representing approximately 5.24% of the total issued share capital of the Company.

Upon completion of the Acquisitions, Tencent is deemed to be interested in 15.24% of the equity interest of the Company.
Insiders revealed to Caixin.com that Chinese regulators have asked TENCENT (00700.HK) to integrate its finance-related operations into a new financial holding company where they can be managed and supervised in a better way.

The watchdog has not specified which financial businesses will have to be put into the new firm, set to unveil details after receiving TENCENT's proposal.
NEXT DIGITAL (00282.HK) announced that the Security Bureau had frozen Group founder Jimmy Lai's 71.26% stakes in NEXT DIGITAL, and his property of three private companies in local bank accounts. The Company does not expect the asset freeze to have an immediate negative effect on the financial situation or operations of the Group. An application has been made for the resumption of trading in the shares of the Company with effect from today. Stock closed +50% off the initial high.
ByteDance will buy back shares from both existing and former employees this week,
Reuters citing people with knowledge of the matter.  In an email, ByteDance said eligible shareholders can apply for selling their positions before 20 June at US$126 each for current staff and US$100.80 each for former staff, the people revealed.
KINTOR PHARMA-B (09939.HK) announces the proposed top-up placing of 18.2 million shares of the Company.
Meanwhile, Chuangxin Guo, the co-founder and a substantial shareholder of the Company, intends to sell 3.7 million shares at the Placing Price of HK$64.5 per Share, representing a discount of 8.8% to the closing price yesterday.  Guo would unload shares to pocket HK$239 million, with his stakes falling to 11.1% upon the completion of placing.
The index company FTSE Russell announced that it will assess whether XIAOMI-W (01810.HK) is eligible to be included in the FTSE China A50 Index.
  FTSE Russell’s assessment results will be unveiled on June 2.
ZIJIN MINING (02899.HK) announced that the Phase 1, 3.8 million-tonne-per-annum (Mtpa) concentrator plant of stage one of the Kamoa-Kakula Copper Mine Project
in the Democratic Republic of the Congo (the DRC), being a joint investment among the Company, Ivanhoe and the government of the DRC, has started on 25 May ahead of schedule.
CASH FIN SER GP (00510.HK)  announced that on 26 May 2021, the Group, on the open market, disposed an aggregate of 16,500 TENCENT (00700.HK) Shares at an aggregate consideration of approximately HK$10.1 million. The Group will realise a book gain of approximately HK$100,000.

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