Aug 18 HK Wrap HSI +20pt due to uptick at close. Shorts +23% as HSI fails to take 25.5k


20 Aug

Aug 18 HK Wrap HSI +20pt due to uptick at close. Shorts +23% as HSI fails to take 25.5k

HSI +20pts (+0.1%) 25,367  HSCEI +40pts (+0.4%) 10,425  T/O HK$126.88bn (-1.5% DoD)  
Warrants were 8.5% of market T/O

HK Observatory says it may issue a T8 standby signal by midnight which could delay the market open on Wednesday.
Trading in Hong Kong continues unless there is a T8 signal raised or black rain warningLink to HK Exchange web site on severe weather arrangements https://www.hkex.com.hk/Services/Trading-hours-and-Severe-Weather-Arrangements/Severe-Weather-Arrangements/Trading?sc_lang=en

EUROPE markets to open slightly higher but covid concerns and US/China relations continue to overhang the markets. No European data due to influence the markets
US Futures Dow opened -10pts, edged higher to +50pts then sold down to -8pts around midday but now back to +60pts, S&P and NDX slightly +VE. Data due out today Housing Starts, Building Permits, Redbook, API Crude Oil Stocks Change. Covid and stimulus still overhang the market.


INDEXES
CSI 300 Closed -2.5pts (-0.1%) @ 4,813 
Market opened slightly lower and initially trended lower to 4,792 which was support and then traded sideways in a range 4,792 - 4,815 (yesterday’s close) before rallying into lunch. After lunch the market again trended lower and retested to 4,790 support before rallying into the close.
Leading the gains were agricultural, auto, software and liquor-making sectors led the gains, with the share price of Xinjiang Guannong Fruit and Antler (Group) rising by the daily limit of 10%. Laggards were banking, insurance and securities sectors.
Shanghai Composite Index +0.4% @ 3,451.
Shenzhen Component Index +0.2% @ 13,768.
T/O was -5% DoD

HSI Pre Market opened +124pts vs +29pts ADR’s (25,375) with E commerce names +VE as Washington said no plans to take action on Alibaba at the present. Sunny Optical -5% despite good interim results. But the HSI then sold down to flat and traded sideways for 30 minutes before selling down to 25,270 level before rebounding into lunch. PM saw the market re-open lower just above Monday’s close but trend lower to re-test the support around 25,260 level several times in the late afternoon and bouncing each time but only around 50pts. But the market managed to close off the lows and ticked +50pts higher in the closing auction taking it just into the green at the close.
Results in focus with JD-SW(9618 HK) +9.5% after results beat, NTES-((9999 HK) +3% reports later this week. E Commerce names +VE and ticked higher in the closing auction. China Unicom (762 HK) +11% but Sunny Optical (2382 HK) -9.5% despite good earnings on concerns about shipments ahead.
Techtronics (669 HK) +0.1% but watch as Home Depot, Walmart and Kohl’s report in the US. Stock rallied after good earnings but if facing resistance at HK$95.00; good results from those names could help push the stock higher.
25,500 is becoming a big resistance for the HSI and key will be holding above 25k. Looking back 25k was a key support level during the GFC and I think Beijing will want to try and support the market there. The trouble with that is that is distorts the market.

EARNINGS DUE Wednesday include Kowloon Development (34), China Resources Beer (291), HK EX (388), CNOOC (883), China Merchants Land (978), Hengan Int (1044), Yuexiu Transport (1052), MMG (1208), China Lilang (1234), Samsonite (1910), BBMG (2009), Yancoal Australia (3668), Alibaba (9988).


EARNINGS OUT Tuesday After market
POWERLONG CM (9909.HK) interim results for the period ended June 2020. Turnover +16% YoY to RMB869 million. The net profit RMB145 million, +66.3% YoY EPS was RMB23.4 fen. An interim dividend of HK10 cents was declared.

DURING MARKET HOURS
At lunch CITIC TELECOM (1883.HK) interim results ended June 2020. The net profit HK$512 million, +0.2% YoY. EPS was HK14 cents. An interim dividend of HK5 cents was declared, flattish year-on-year. It announced that 1H20 mobile ARPU -5.3% YoY to RMB44.4; 5G ARPU was RMB80.6. While 1H20 CAPEX totaled RMB43.126 billion, the Chinese telecom carrier foretold FY20 CAPEX to reach RMB85 billion.
At lunch FUFENG GROUP (546.HK) interim results ended June 2020. Net profit amounted to RMB379 million, down 38.1% yearly. EPS equaled 14.97 fen. Interim DPS was HK5.8 cents.
At lunch CHINA TELECOM (728.HK) interim results ended June 2020. Operating revenues +1.7% yearly to RMB193.803 billion. Net profit RMB13.949 billion, +0.3% yearly. EPS equaled RMB0.17. EBITDA was RMB63.154 billion, -0.2%. No dividend was declared.

Out PRE MARKET
BJ CAPITAL LAND (2868.HK) interim results for the six months ended 30 June 2020. Net profit -28.4% YoY to RMB850 million. EPS equaled 11 fen. No interim dividend was declared.
MINSHENG EDU (1569.HK) results for the six months ended June 2020. Net profit was RMB236 million, +14.1% YoY. EPS equaled 5.84 fen. No interim dividend was declared.MODERN LAND (1107.HK) results for the six months ended June 2020. Net profit was RMB398 million, -13.3% YoY EPS equaled 14.2 fen. Interim DPS was HK3.98 cents.
TIMES CHINA (1233.HK) interim results for the six months ended 30 June 2020. Net profit receded 3.6% yearly to RMB1.537 billion. EPS equaled 79 fen. No interim dividend was declared.
WUXI BIO (2269.HK) interim results for the six months ended 30 June 2020. Net profit +63.6% yearly to RMB736 million EPS equaled 57 fen. No interim dividend was declared.
CICC (3908.HK interim results for the six months ended 30 June 2020. Net profit +62.3% yearly to RMB3.052 billion. EPS equaled 69.3 fen. No interim dividend was declared.
3SBIO (1530.HK) interim results for the six months ended 30 June 2020. Net profit +118.6% YoY to RMB702 million. EPS equaled 28 fen. No interim dividend was declared.

AFTER MARKET
CHINA TELECOM (728.HK)'s U.S. division has a local operating license and has been complying with local laws 
while providing telecommunication services to customers, Chairman cum CEO Ke Ruiwen said during a teleconference on results announcement. Although Huawei has been a significant partner of CHINA TELECOM, the company will adopt a strategy of having diversified supplier sources instead of one single supplier, Ke said when he was asked if the company's equipment supplies will be affected by Huawei being targeted by the U.S.
POWERLONG CM (9909.HK) interim results for the period ended June 2020. Turnover +16% YoY to RMB869 million. The net profit RMB145 million, +66.3% YoY EPS was RMB23.4 fen. An interim dividend of HK10 cents was declared.
RAZER (1337.HK) announced that Razer Gold, with which players purchase items in games and other digital entertainment contents, is now available at all Fortress stores. As at the end of 2020, Razer Gold's virtual credit system covered over 130 countries and is applicable to 33,250 digital entertainment contents.
CHINA LIFE (2628.HK) (601628.SH) announced that it had noted market rumors on the Company's merger with other insurers. After verification, CHINA LIFE stated the rumors were untrue and the Company does not have any discloseable information which remains undisclosed.
Starting from June, China has identified the cross-border flow of gambling funds as part of national security risks and mounted tough scrutiny on online gambling to curb capital outflux, Reuters reported. Beijing's move has hit hard the liquidity in Macau’s VIP segment, said the report. -VE MACAU
Shenzhen Stock Exchange (SZSE) is going to run tests related to trading services this Saturday (22nd), with tests focusing on activation of ChiNext reforms and pilot registration services in an effort to assess the accuracy of technical systems of the various market participants.

Market and Pre Market News at bottom of page.

Regional Markets
JAPAN
opened flat, Tankan index Aug -33 vs -44 Jul (F/cast was -32) an improvement in manufacturing but still heavy declines in exports and now a sharp drop in services. Index trended lower with support around 22,950 before lunch. PM opened around 23k level and trading sideways before a small rally late afternoon to close -0.2%
S KOREA Kosdaq opened slightly lower but sold down to 825 level in the first 20 minutes, rebounded to 833 level but then trended lower with the sell off increasing in the afternoon on rising covid cases concerns to close -4.2% at the 800 level thanks to a late bounce.Kospi opened lower but trended higher in choppy trading to day high 2,420 level but the revised down to 2,390 level before bouncing back above 2,400. Traded sideways but then sold off around 1:30pm down to 2,340 on covid impact concerns before a small bounce but only to 2,349 below the important 2,400 level. Closed -2.5%
TAIWAN opened slightly higher but trended lower to 12,850 support and then worked higher to 12,900 then traded sideways to close -0.7% @ 12,872

Short Selling HSI Tuesday 23.4% vs 21.7% Monday
Top Shorts
Hang Lung PPTY (101) 48%, BOC HK (2388) 48%, CCB (939) 46%, Sino Land (83) 45%, China Res Land (1109) 43%, NWD (17) 40%, ICBC (1398) 38%, CLP (2) 38%, MTRC (66) 38%, Power Assets (6) 37%, China Shenhua (1088) 36%, HK & China Gas (3) 35%, Hang Seng Bank (11) 35%, China Life (2628) 35%, Galaxy (27) 35%, Want Want (151) 34%, PetroChina (857) 34%, HSBC (5) 32%, CITIC (267) 30%, Ping An (2318) 30%, AAC Tech (2018) 30%, Swire Pac A (19) 29%, Henderson Land (12) 28%, Wharf REIC (1997) 28%, China Mobile (941) 28%, Sunny Optical (2382) 27%, BoC HK (2388) 27%, Shenzhou (2313) 26%.

CONNECT FLOWS (lower DoD)
Shanghai
Northbound Rmb 52,518m Sell 26,736m : 25,782m Buy
Southbound HK$ 11,216m Sell 5,207m : 6,009m Buy

Shenzhen
Northbound Rmb 64,550m Sell 32,817m : 31,734m Buy
Southbound HK$ 12,343m Sell 6,035m : 6,308m Buy


DATA
CHINA No data

HONG KONG
Centre for Health Protection said there were 36 additional COVID-19 cases
in Hong Kong today; (vs 44 cases Monday). 35 locally transmitted with 6 of unknown origins.

Active Heavyweights

TENCENT (700.HK) +1.5%
HKEX (388.HK) +0.6%
AIA (1299.HK) -0.5%
PING AN (2318.HK) -0.2%

HSI & HSCEI Constituents on the move
CHINA UNICOM (762.HK) +11.1%
SUNNY OPTICAL (2382.HK) +9.4%
CHINA TELECOM (728.HK) +3.7%
HENGAN INT'L (1044.HK) +3.5%, hitting new high
GUANGDONG INV (270.HK) +3.4%
CSPC PHARMA (1093.HK) +3.3%

HSMI & HSSI Constituents on the move
ZHOU HEI YA (1458.HK) Short selling $5.54M; Ratio 12.493% closed at $7.71, up 11.7%, hitting new high
BYD ELECTRONIC (285.HK) Short selling $125.08M; Ratio 17.096% closed at $28.7, down 11.6%
COLOUR LIFE (1778.HK) Short selling $759.99K; Ratio 1.575% closed at $4.45, up 10.7%
CHINA LESSO (2128.HK) Short selling $4.26M; Ratio 9.036% closed at $16.54, up 4.9%, hitting new high
CG SERVICES (6098.HK) Short selling $40.47M; Ratio 35.251% closed at $51.5, up 2.9%, hitting new high
MAN WAH HLDGS (1999.HK) Short selling $4.08M; Ratio 10.214% closed at $10.52, up 2.7%, hitting new high

NEWS
MARKET HOURS
Futu Holdings (FUTU.US), a Nasdaq-listed online brokerage services platform owned as to 33% by TENCENT 
(700.HK), placed 9.5 million new American depositary shares (ADSs) to raise US$322 million possibly for expanding its securities margin financing business.
Wanda Hotel and JD-SW (9618.HK) are entering into a phase of strategic cooperation. The two sides will leverage their own advantages to foster upgrades in various areas including product development, market exploration and sharing of supply chain.
XINYI GLASS (868.HK) announced that CEO Tung Ching Sai had on 14 August acquired 752,000 shares at an average price of $12.6579 each.
Ant Group plans to establish a consumer finance company with Nanyang Commercial Bank, China TransInfo Technology (CFTO) and Contemporary Amperex Technology (CATL) in coming few weeks, according to report. To register and establish in Chongqing, the company will have a registered capital of RMB8 billion.
TVB (511.HK) announced that it signed a strategic cooperation agreement with Youku, one of the three biggest streaming platforms in Chinese Mainland, to work more closely on distribution and production of dramas and variety shows, artistes, e-commerce and streaming service. The new partnership will reinforce TVB as Hong Kong’s leading entertainment brand and further establish a pan-Guangdong entertainment platform with Hong Kong flavour.
CANSINOBIO-B (6185.HK) has noticed the price movement of its shares and certain media reports related to the progress of Recombinant Novel Coronavirus Vaccine (Ad5-nCoV). The company has made a clarification announcement that enrollment of phase III clinical trial has not started as yet.
At lunch CITIC TELECOM (1883.HK) interim results ended June 2020. The net profit HK$512 million, +0.2% YoY. EPS was HK14 cents. An interim dividend of HK5 cents was declared, flattish year-on-year. It announced that 1H20 mobile ARPU -5.3% YoY to RMB44.4; 5G ARPU was RMB80.6. While 1H20 CAPEX totaled RMB43.126 billion, the Chinese telecom carrier foretold FY20 CAPEX to reach RMB85 billion.
At lunch FUFENG GROUP (546.HK) interim results ended June 2020. Net profit amounted to RMB379 million, down 38.1% yearly. EPS equaled 14.97 fen. Interim DPS was HK5.8 cents.
At lunch CHINA TELECOM (728.HK) interim results ended June 2020. Operating revenues +1.7% yearly to RMB193.803 billion. Net profit RMB13.949 billion, +0.3% yearly. EPS equaled RMB0.17. EBITDA was RMB63.154 billion, -0.2%. No dividend was declared.
SUNNY OPTICAL (2382.HK) posted optical components GPM of around 41.5% for the first half of 2020, down 2.6 ppts year-on-year. CEO Sun Yang aims for a full-year handset lens sets shipment growth of 12%, given higher base in the second half of 2019.
In response to online rumors that Huawei will stop supporting Android system as the provisional US agreement is falling expired, the Chinese tech giant replied that system update will still be supported.
CHINA UNICOM (762.HK) is working harder on its co-construction and co-sharing with China Telecom, as Sina cited Chairman Wang Xiaochu's speech at a 5G briefing. At this moment, CHINA UNICOM has switched on 260,000 5G bases, targeting 370,000 by the end of 2020, added Wang.
Oracle has entered the race to bid for TikTok, having engaged in preliminary talks with ByteDance, Financial Times citing insiders. Oracle is seriously considering buying the short video app's operations in the US, Canada, Australia and New Zealand. It is working with partners that are already invested in ByteDance.
Ahead of the Executive Council meeting, Chief Executive Carrie Lam told reporters that community outbreak risks are still lingering in Hong Kong. Hong Kong economy has taken triple blows over the past one year from US-China trade spats, social unrest and the coronavirus crisis, mentioned the city leader. She is not optimistic of the jobless figure to be released tomorrow, after the rate has surged to 6.2% in April-June and reached a 15-year peak. The Government will soon roll out the third round of Anti-Epidemic Fund. Lam underscored that the local financial market is running smoothly and orderly, while HKD index remains robust with no notable capital outflux.
On the Employment Support Scheme Phase 2 which will start from 31 August for a period of two weeks, with the subsidy covering September-December 2020. She said the Phase 2 package will target support to large property managers, which will be required to give no less than 80% of wage subsidy they receive back to landlords or institutions which manage buildings because staff are employed by landlords or Owners Corporations.
On another note, ParknShop and Wellcome, the two major supermarkets in Hong Kong, should provide price offer to customers during the receipt of wage subsidies under the Employment Support Scheme Phase 2, or offer supermarket coupons. Details of which will be unveiled later this afternoon.
Carrie Lam: To Talk with Big Property Owners In Person, Urge to Cut Rent, Mgmt Fee She called on large landlords to provide rental alleviation, including reduction in rent and management fee, to tenants across industries of catering, retailing, personal services and so on in order to share hardships amid epidemic. In case tenants could not pay rent on time, Lam hoped landlords not to force tenants moving out by legal actions. She will talk with big landlords in person later as most of them have received subsidies under Employment Support Scheme. Would be -VE for the companies shareholders.
Sinopharm will move to review and approve its COVID-19 inactivated vaccine candidate after completing the phase III international clinical trials, said Chairman Liu Jingzhen in an interview. He expected to debut the vaccine at end-December 2020.
TENCENT (700.HK) has tapped Roberto Gonzalez, a partner of the law firm Paul Weiss and Former Deputy Legal Counsel to the US Department of the Treasury, to lobby the White House to give up banning transactions with the company and WeChat. Gonzalez was responsible for law cases involving sanction, anti-money laundering and cyber security etc. when he worked at the US Treasury.
CKI HOLDINGS (1038.HK) and POWER ASSETS (6.HK) having jointly announced the disposal of Iberwind, which is an operator of 31 wind farms in Portugal. Li Tzar Kuoi, Victor, Chairman of CKI HOLDINGS, stressed that disposing assets is not a policy of CKI and the transaction is not a regular practice, yet the uniqueness of the deal lies in the different risk tolerance of both parties in local market pricing mechanism in future.
Yum Brands' US franchisee NPC International has filed for bankruptcy protection, under which 300 Pizza Hut restaurants will be shut down across the country.
China Foreign Exchange Trade Center announced, on 18 August, the central parities in the interbank forex market of transaction currencies, including the dollar against CNY, are as follows: USD/CNY = 6.9325, up 37 bps from yesterday's central parity and hitting a record high since 9 March.
China's Ministry of Commerce announced its decision to launch an anti-dumping investigation into Australian wine imports from today (18th).
US President Trump stands ready to spare funding in smaller sizes and provide funding for the Postal Service if he cannot reach a consensus with Democrats for a more comprehensive stimulus kit, said White House Chief of Staff Mark Meadows.

PRE MARKET
LENOVO GROUP (992.HK) CFO Wai Ming Wong said PC demand has risen instead of falling amid the pandemic,
riding on the work-from-home arrangement. He believed such demand will edge up steadily after the epidemic fades out. The group will probably record a cash flow break-even for its handset business in 2FQ before marching towards profit-making, opined Wong.
US President Trump vowed to create 10 million jobs in ten months, partially through tax credits to the US companies to pull their production facilities in China back to the homeland, Reuters reported. Meanwhile, if American companies outsource jobs to Chinese ones, they will have their federal contracts stripped by Washington. In less than three months before the Presidential Election, polling revealed that the support rate for Trump was still lagging behind Joe Biden's. Trump claimed he will make the US economy rebound strongly out of pandemic headwinds if he could be reelected.
White House Chief of Staff Mark Meadows said US President Donald Trump is looking at banning more China-owned firms following his decision to bar TikTok, focusing particularly on those collecting personal data and posing a national security risk. However, US Commerce Secretary Wilbur Ross told Fox News that Washington has no intention to take actions on BABA-SW (9988.HK) right now.
Singapore's Deputy Prime Minister and Minister of Finance, announced the launch of a SGD8-billion (equivalent to around US$5.8 billion) economic stimulus package to relieve the pandemic fallout.
BABA-SW (9988.HK)'s Ant Group will file a listing application at the HK Stock Exchange as soon as this month with potential fundraising amount of US$10 billion in Hong Kong, foreign media cited sources. CICC, Citigroup, JP Morgan and Morgan Stanley are the arrangers for the IPO , report said.
US Bureau of Industry and Security (BIS) announced further access restriction against Huawei and its non-US affiliate to the US technology. The BIS added another 38 Huawei affiliates from 21 countries to the Entity List, which imposes a license requirement for all items subject to the Export Administration Regulations (EAR).
China's Ministry of Commerce held a forum on 17 August, discussing food saving initiatives. For the next move, MOC will refine food saving norms and roll out measures to put a stop to food wastage.
BJ CAPITAL LAND (2868.HK) interim results for the six months ended 30 June 2020. Net profit -28.4% YoY to RMB850 million. EPS equaled 11 fen. No interim dividend was declared.
MINSHENG EDU (1569.HK) results for the six months ended June 2020. Net profit was RMB236 million, +14.1% YoY. EPS equaled 5.84 fen. No interim dividend was declared.MODERN LAND (1107.HK) results for the six months ended June 2020. Net profit was RMB398 million, -13.3% YoY EPS equaled 14.2 fen. Interim DPS was HK3.98 cents.
TIMES CHINA (1233.HK) interim results for the six months ended 30 June 2020. Net profit receded 3.6% yearly to RMB1.537 billion. EPS equaled 79 fen. No interim dividend was declared.
WUXI BIO (2269.HK) interim results for the six months ended 30 June 2020. Net profit +63.6% yearly to RMB736 million EPS equaled 57 fen. No interim dividend was declared.
SMIC (981.HK) announced that the Over-allotment Options in the RMB Share Issue, accounting for 15% of the initial shares, had on 14 August been fully exercised. The total amount of funds and net proceeds from the over-allotment exercise was RMB6.943 billion and RMB6.853 billion respectively.
SMIC (688981.SH) announced that Haitong Securities has fully exercised over-allotment options as of 14 August, under which an additional 253 million RMB Shares were issued, accounting for 15% of the initial share issue size. The total amount of funds and net amount of funds raised from the RMB Share Issue approximate RMB53.2 billion and RMB52.516 billion.
CKI HOLDINGS (1038.HK) and POWER ASSETS (6.HK) jointly announced that UK Renewable, held as to 50% by them respectively, disposed of Iberwind to Ventient Energy. Iberwind is an operator of 31 wind farms in Portugal. Subject to its completion, CKI HOLDINGS’s effective gain expected from the Transaction approximates HK$1.1 billion and the expected gain of POWER ASSETS in the Transaction approximates HK$0.8 billion. +VE
CICC (3908.HK interim results for the six months ended 30 June 2020. Net profit +62.3% yearly to RMB3.052 billion. EPS equaled 69.3 fen. No interim dividend was declared.
3SBIO (1530.HK) interim results for the six months ended 30 June 2020. Net profit +118.6% YoY to RMB702 million. EPS equaled 28 fen. No interim dividend was declared.
LANDING INTL (582.HK) PROFIT WARNING -VE, expecting a decrease in consolidated revenue of approximately 25% and a slight decrease in consolidated net loss for the six months period ended 30 June 2020 as compared with the corresponding period in 2019.

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