10 July HSI Closed -483pts T/O -6% DoD Shorts 20%

14 Jul

HSI -483pts (-1.8%) 25,727 HSCEI -241pts (-2.2%) 10,541 T/O HK$194.56bn (-5.9% DoD)

EUROPE opened lower but working higher all markets in the green on surprisingly good Italian and French Industrial Data.

US Futures opened flat initially drifted higher in Asian time but sold off late in the session; current Dow futures -200pts

INDEXES

CSI 300 Closed -88pts (-1.8%) @ 4,753. Market opened lower with as European markets eased back and the Dow closed lower. Sentiment weakened by a new virus in Kazakhstan, the sanctions from the US and news that some large funds were selling (which I think is the Govt trying to manage the bull market and illustrating that occasional selling it good).

Markets tried to push higher but met with resistance around 4,816 level. Having tested a couple of times they sold down to 4,762 before working up into lunch. PM saw a downward trend in choppy trading. Not helped by weaker than expected Auto sales announced after lunch. Found support at 4,740 around 2:15pm and then worked slightly higher into the close.

After market the release of New Yuan Loans, a slight +VE. Next week we are due China FDI, Trade Data (Tuesday) and then Thursday; House Prices, GDP Growth, Industrial Production & Capacity Utilisation, Retail Sales, and Unemployment. All expected to show an improvement MoM. The overhang remain Covid, the new Virus and Q2 reporting season.

HSI Pre Market -278pts @ 25,932 vs -307pts ADR’s @ 25,903. Pre market T/O dropped to HK$9.5b in late trades/IPO's but then 3b in pre market seems to indicate less Team China activity. Sentiment weaker following news of increased local covid-19 cases, individual sanctions on Chinese leaders in Xinjiang and news of a new virus in Kazakhstan. E-commerce stocks pre market were lower together with Financials and HK EX. But the market initially worked higher but hit resistance at 26,140 level did try a couple of attempts to work higher but without enthusiasm. Then sold down below 26,000 to 25,870 and then traded sideways into lunch. PM saw an initial 120pt sell off and then trended lower to the support level around 25,600. Small bounce before but then drift back down to the 25,600 support. Crept slightly higher in the last 30 minutes after the China New Loans data was released and ticked up in the closing auction. It finished below the 250 day MA with Insurers weak and Autos +VE after the China Vehicle sales data and news BYD (1211) may spinoff its semiconductor business. T/O remains elevated.

Company news flow is light ahead of Q2 earnings season.

AFTER MARKET

CHINA MER PORT (144.HK) PROFIT WARNING for the six months ended 30 June 2020 Profit to drop by more than 70% YoY

GAC GROUP (2238.HK) June sales volume 186,600 units, -1.26% YoY; production volume 97,900 units, +25.27% YoY.

LEYOU TECH H (1089.HK) said its controlling shareholder Yuk Kwok Cheung Charles and the Company entered into an exclusivity agreement with Tencent Mobility Limited, a wholly-owned subsidiary of TENCENT (700.HK), regarding a possible acquisition and privatization of the Company.

Negotiations are still in progress and there is no certainty as to the terms of the Possible Privatization will proceed or that it will result in a binding agreement. Trading in the Shares of the Company was halted with effect from today (10 July). The trading of the Shares on the Stock Exchange will be resumed with effect from next Monday (13 July).

In a joint declaration, TENCENT (700.HK) and Lao Gan Ma clarified that their misunderstanding over an alleged advertising fraud has been resolved after in-depth communication. TENCENT has given an apology in person, said the Chinese chili sauce maker, and the two parties will explore opportunities and embark on a series of cooperations.

SUNNY OPTICAL (2382.HK) said that the June spherical glass lenses shipments were 1.153 mn -53.7% YoY and handset lens shipments were 18 mn sets +16.5% yearly.

KINGDEE INT'L (268.HK) Profit Warning It is expected that the Group will record a loss for the interim period ended 30 June 2020 ranging from RMB200 million to RMB300 million, against RMB110 million in the same period last year.

EVERGRANDE (3333.HK) sold out all 54 available units under THE VERTEX, its first residential project in Hong Kong, as of 4pm today (10th), cashing in more than $470 million. Over 100 flats have been launched under the project, generating over $810 million. As two-bedroom units are particularly sought after and completely sold out, the developer plans to launch more flats in the short run.

HONLIV HEALTH (9906.HK), to be listed next Monday, opened at $1.98, -5.7% against the listing price of $2.1, and last stood at $3.15, up 50% against the listing price, on volume of 860,000 shares, PhillipMart data showed.

GREENTOWN MGMT (9979.HK) closed at $3.25, up 75 cents or +30% against the listing price of $2.5, on volume of nearly 167 million shares and turnover of $499 million. Excluding the handling fees, a book gain of $750 was reported per board lot of 1,000 shares.

IMMUNOTECH-B (6978.HK) closed at $15.48, up $4.48 or +41% against the listing price of $11, on volume of 73.62 million shares and turnover of $1.099 billion. Excluding the handling fees, a book gain of $4,480 was reported per board lot of 1,000 shares.

ZHENRO SERVICES (6958.HK) finished the day at $5.6, up $1.05 or +23% against the listing price of $4.55, on volume of nearly 159 million shares and turnover of $818 million. Excluding the handling fees, a book gain of $1,050 was reported per board lot of 1,000 shares.

OCUMENSION-B (01477.HK), on debut, concluded the day at $37, up $22.34 or 1.5 times against the listing price of $14.66, on
volume of 59.06 million shares and turnover of $2.395 billion. Excluding the handling fees, a book gain of $11,170 was reported per board lot of 500 shares.

SMOORE INTL (6969.HK) closed at $31, up $18.6 or 1.5 times against the listing price of $12.4, on volume of 318 million shares and turnover of over $8.5 billion. Excluding the handling fees, a book gain of $18,600 was reported per board lot of 1,000 shares.

Centa-City Leading Index (CCL) last printed at a 19-week high 176.14, 1.21% WoW, the sharpest in 22 weeks. CCL (large units) surged 2.32% weekly over the past eight weeks, posting the biggest rally among the four major CCL indices. During the period, CCL +1.71%, CCL Mass +1.62%, and CCL (small-and-medium units) +1.6%. Luxury home prices stood out recently, likely chasing laggard.

Market and Pre Market News at bottom of page.

Short Selling HSI Friday 20.4% vs 20.5% Thursday (High considering it was a falling market and the uptick only rule)

Top Shorts Hang Seng Bank (11) 54%, China Res Land (1109) 34%, MTRC (66) 34%, Wharf REIC (1997) 33%, HSBC (5) 31%, Ping An (2318) 31%, HK & China Gas (3) 30%, Petrochina (857) 30%, Henderson Land(12) 30%, AAC Tech (2018) 29%, NWD-New(17) 29%, AIA (1299) 27%, China Overseas (688) 27%, CCB (939) 27%, CNOOC (883) 27%, BoC HK (2388) 27%, SunnyOptical (2382) 26%, Mengniu Dairy (2319) 26%, China Unicom (762) 25%.

CONNECT FLOWS

Shanghai

Northbound Rmb63,770m Sell 32,706m : 31,002m Buy

Southbound HK$ 21,318m Sell 10,040m : 11,278m Buy

Shenzhen

Northbound Rmb90,818m Sell 46,753m : 44,064m Buy

Southbound HK$ 17,269m Sell 7,839m : 9,430m Buy

DATA

CHINA after lunch Vehicle Sales Jun +11.6% YoY vs 14.5% May (F/cast was 14%)

After China Market closed

New Yuan Loans Jun CNY 1810b vs 1480b May (F/cast was 1800b)

Outstanding Loan Growth Jun 13.2% YoY vs 13.2% May (F/cast was 13.3%)

Total Social Financing Jun CNY 3430b vs 3190b May (F/cast was 3250b)

M2 Money Supply Jun 11.1% YoY vs 11.1% May (F/cast was 11.2%)

HONG KONG
Centre for Health Protection said there were 38 additional COVID-19 cases starting from yesterday, of which 6 were imported infections and 32 were local contractions. 9 of the confirmed local infections were of unknown origin, while 10 were associated with previous cases, and 11 were linked to Ming Chuen House in Shui Chuen O Estate.

Active Heavyweights

TENCENT (700.HK) -2.9%

PING AN (2318.HK) -2%

HSBC (5 HK) -1.9%

CCB (939.HK) -1.8%

HKEX (388.HK) -1.8%

AIA (1299.HK) -1.8%

HSI & HSCEI Constituents on the move

PICC P&C (2328.HK) -7.3%
CHINA LIFE (2628.HK) -6.7%
ANTA SPORTS (2020.HK) -5.8%
CPIC (2601.HK) -4.8%
CHINA VANKE (2202.HK) -4.3%
HANG LUNG PPT (101.HK) -4.2%
SUNNY OPTICAL (2382.HK) -4.1%
GEELY AUTO (175.HK) +3.9%
PETROCHINA (857.HK) -3.8%
CHINA TOWER (788.HK) -3.7%
CITIC SEC (6030.HK) -3.7%
BYD COMPANY (1211.HK) +3.6%, hits new high
CHINA UNICOM (762.HK) -3.6%
CHINA TAIPING (966.HK) -3.5%
CM BANK (3968.HK) -3.5%
CHINA SHENHUA (1088.HK) -3.4%
HENGAN INT'L (1044.HK) -3.3%
WH GROUP (288.HK) -3.3%
SHIMAO GROUP (813.HK) -3.2%
SINOPHARM (1099.HK) -3.1%
SINO BIOPHARM (1177.HK) +2%, hits new high

HSMI & HSSI Constituents on the move

KASEN (496.HK) +19.6%
HUABAO INTL (336.HK) -19.2%
SUNEVISION (1686.HK) -11.6%
FIT HON TENG (6088.HK) +10.5%, hits new high
DC HOLDINGS (861.HK) +9.7%, hits new high
CHINASOFT INT'L (354.HK) +4.1%, hits new high

REGIONAL MARKETS

JAPAN opened lower despite good PPI data the concerns over the rise in covid-19 cases and news of a new virus in Kazakhstan capped the upside. Traded sideways lower in the afternoo. Closed -1.1%

S KOREA opened lower and saw some further selling initially before a small bounce back. Kosdaq bounced back to flat but the trended lower. Kospi less of a bounce back but again traded lower Closed Kosdaq flat -0.01% and Kospi -0.8%.

TAIWAN Opened flat but sold down, then worked slowly back towards flat but failed to get then and drifted lower in the PM. Closed -1%

NEWS
MARKET HOURS

TSMC announced that operating income amounted to TWD120.88 bn in June 2020, up 28.8% MoM and 40.8% YoY.

Inland Revenue Department's Stamp Office announced 251 residential transactions involved with Ad Valorem Stamp Duty (AVD) in June, up 50 or 24.9% monthly. The duty amounted to $501.2 million, up 5.2% monthly, setting a seven-month high.

TENCENT (700.HK) plans to acquire shares of LEYOU TECH H (1089.HK) with SONY as its potential rival, Bloomberg citing insiders. TENCENT and LEYOU TECH H are now having negotiations, which will likely involve the TENCENT-backed CENTURY HUATONG (002602.SZ) as well as IDREAMSKY (1119.HK) according to sources. The transaction has not been finalized yet.

SA SA INT'L (178.HK) was notified that one of its shops at MOSTown in Ma On Shan had a cashier staff diagnosed with COVID-19. The involved shop was closed immediately for thorough disinfection and cleansing to ensure safety of staff and customers. The second store to have to close. -VE

Macau Secretary for Social Affairs and Culture Ao Ieong U announced that the mutually recognized health code program between Hong Kong and Macau should be shelved given the grave coronavirus situation in Hong Kong, Radio Macau reported.Secretary for Education Kevin Yeung will declare an early summer vacation for all schools, as local media quoted from inside sources.

Harbour BioMed announced the recent completion of its US$103mn Series C financing, led by Hudson Bay Capital, Country Garden Venture Capital, OrbiMed, GTJA Investment Group and Sage Partners.

App Arnie report showed that during the first week of 2Q20, mobile game download volume broke records with over 1.2 billion installs, TENCENT (700.HK)'s Honour of Kings ranked top in terms of user spending, while PUBG MOBILE seized first spot when it comes to monthly active user count.

At lunchtime Hong Kong added at least 30 initially confirmed COVID-19 cases today, over 10 of which were residents at Shui Chuen O Estate in Sha Tin, according to the media. Professor David SC Hui at CUHK, also an expert of the Government's Anti-epidemic Steering Committee, told a radio program that the transmissibility of COVID-19 is multiple-time overshoot of previous waves of outbreak given genetic transmutation of the coronavirus since the transmission from Europe to Asia at end-March. The Professor advised to suspend the upcoming Book Fair as people should not be loosened up before an effective vaccine debuts. Yet if the government decides to go ahead with the organization, it should have anti-plague measures well in place.

Hong Kong Airlines had on 8 July notified its bondholders that it will defer payment of US$24.33 million in semi-annual interest payments for its US$683 million perceptual bonds due on July 26, South China Morning Post reported. Redemption of notes is not highly possible, said the creditors.

IDC said during Q2 2020, the traditional PC shipment, comprising desktops, notebooks, and workstations, totaled 72.3 million devices, +11.2% YoY

Gartner reports that during Q2 2020, global PC shipments totalled 64.8 million devices, +2.8% YoY

TENCENT (700.HK) announced the roll-out of an AI drug discovery platform "Smart Cloud Drug" to help users save time and cost in seeking potentially active drugs. On the platform, ten R&D projects are in operation, including virtual screening and property prediction for anti-COVID-19 cure.

Hong Kong investigated at least 14 initially diagnosed COVID-19 cases last night (9 July), sources said. Leisure and Cultural Services Department announced that children's playground and road safety towns will be closed from 11 July due to the latest development of COVID-19. The number of entrants for public swimming pools will be lowered as well, the Department said.

BYD COMPANY (1211.HK) is poised to spin off its semiconductor business for listing on Sci-tech Innovation Board in Shanghai or ChiNext in Shenzhen, Reuters' IFR quoted people familiar with the matter. The automaker is now in talks with a financial advisor.

ALI HEALTH (241.HK)'s substantial shareholder Innovare Tech placed 137 mn shares of the company at $22.65-22.85 each, cashing in $3.1-3.13 billion, as local media cited a sales document. The placing price represented a discount of 3%-3.8% to the closing price of $23.55 as quoted yesterday. Innovare Tech is a subsidiary of YF Capital, which was co-founded by BABA-SW (9988.HK) Founder Jack Ma and his friend David Yu.

The World Health Organization (WHO) updated its guidance, saying it could not rule out the possibility that the COVID-19 virus can be transmitted through air particles in indoor crowded spaces. WHO also advised the public to avoid overcrowding and ensure adequate ventilation indoors and appropriate social distance.

PRE MARKET

HENDERSON LAND (12.HK) will readopt flexible working or work-from-home measures from today (10 July) for 14 days until 24 July, as local media cited Vice Chairman Colin Lam Ko-yin's internal memo. HENDERSON LAND's office will open as usual under normal operation, according to the notice.

China Foreign Exchange Trade Center announced, on 10 July, the central parities in the interbank forex market of transaction currencies, including the dollar against CNY, are as follows: USD/CNY = 6.9943, up 142 bps from yesterday's central parity.

In BABA-SW (9988.HK)'s annual report, Chairman-cum-CEO Daniel Zhang extended his appreciation to investors for their continued help, support and trust in the group amid intense global uncertainty due to the unexpected endurance of the COVID-19 pandemic. During this past fiscal year, despite the impact of the pandemic, BABA-SW still delivered US$1 trillion in GMV. Their next goal is to serve more than 1 billion consumers in China and facilitate more than RMB10 trillion of consumption on their platforms in the next five years, furthered Zhang.

ESPRIT HOLDINGS (330.HK) said that it had on 8 July received a written requisition from North Point Talent, the second largest shareholder, made pursuant to Bye-law No. 58 of the Memorandum of Association and New Bye-laws of the Company, whereby the Requisitionist requested the Company to convene a special general meeting to consider and transact multiple businesses. The company has resumed share trading today (10 July).

Chinese Embassy in Kazakhstan issued a notice, citing a Kazakhstan media that three places have recorded notably higher incidence of an unknown pneumonia since mid-June. So far, almost 500 people have been infected and over 30 critically ill. In 1H20, the disease caused over 1,700 deaths; and in June alone, 628 people died, including Chinese citizens. The Embassy furthered that the unknown pneumonia had a much higher death rate than COVID-19, for which local health department conducted study.

SA SA INT'L (178.HK) disclosed that a worker from its branch at Domain Mall, Yau Tong had tested positive for novel coronavirus. In order to guarantee the safety of workers and customers, the store will be shut down for 14 days with immediate effect for thorough sterilization and disinfection. All staff at the said branch and other workers who had contracted the diagnosed worker will be subject to a 14-day home isolation, stated the cosmetic chain retailer.

As USD/ HKD triggered the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook a selling order of US$257 million to inject HK$1.992 billion into the market. The balance of the banking system of Hong Kong will increase to HK$180.289 billion next Monday (13 July).

CPIC (2601.HK) 1 Jan - 30 Jun accumulated gross premium income of CPIC Life RMB138.347 bn -0.06% YoY and CPIC P/C RMB76.928 bn +12.1% YoY

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