July 13 HSI +45pts T/O -12%, Sold down in PM


15 Jul

July 13 HSI +45pts T/O -12%, Sold down in PM


HSI +45pts (+0.2%) 25,772  HSCEI +35pts (+0.3%) 10,576 T/O HK$171.27bn (-11.9% DoD)  

EUROPE Expect markets to open higher following momentum from Asia off-setting concerns about rising Covid cases. But expect some caution ahead of US earnings kicking off.

US Futures opened +130pts but have eased back to +65pts mid day Asia time but then rallied and are +223pts going into the open. S&P Futures opened +0.5% eased to +0.2% and are now +0.7%. NDX steady at where they opened +0.4% for most of the day but then rallied +0.9%


INDEXES      

CSI 300 Closed +100pts (+2.1%) @ 4,853  Market opened slightly high but initially sold down to the day low (4,741) before working higher, in choppy trading, through the morning and into the early afternoon, to the day high 4,878 at around 1:40pm.  It then eased back to 4,826 before mounting a last rally into the close.  ChiNext lead higher with EV related stocks. SHCOMP saw good interest in F&B, Materials and Healthcare.  
Sentiment encouraged by the prospect of T+0 trading for A shares.
Liquidity continues to drive the market with seemingly little concern over the rise in global covid cases or Trumps declaration that Phase II of the trade agreement is unlikely as relations with China have reached such a low point.

HSI Pre Market +121pts @ 25,849 vs +101pts ADR’s @ 25,828. E-Commerce names were mixed, handset names were +VE and GF Sec weak on news of a 6 MTh ban from sponsoring.  Pre market T/O dropped to HK$2.95b in late trades.  Market initial squeezed higher in the first 10 minutes as shorts covered before selling down to the day low (25,715) below Friday’s close, on margin call selling from Friday’s sell off.  Market then trended higher in choppy trading through the morning and into the early afternoon following the trend in China.  Day high was 26,104 around 1:40pm but it ran out of steam and then sold all the way back down, again in choppy trading, to just above the day low. Tick lower in the closing auction.  The morning rise again fuelled by liquidity but there are rising concerns over a range of issues: local covid-19 cases, US earnings season, US/China relations, the prospect of no phase II to the US/China trade deal and local pro democracy primaries that saw nearly 600k people turn out despite a police cyber section raid and a statements from members of the administration that people might be breaking the new national security law.
The fact that so many were willing to turn out and risk infringement of the new law has raise further concerns about what might happen at the September local elections and the reaction from Beijing.
Company news flow is light ahead of Q2 earnings season.

AFTER MARKET 
HISENSE HA (921.HK)  announced that, on 13 July, it subscribed for the 2020 Hua Xia Bank Eighth Wealth Management Product in the subscription amount of RMB300 million (equivalent to approx HK$332 million) through Refrigerator Marketing Company, the non-wholly owned subsidiary of the Company.
The SFC has recently completed an enquiry into the shareholding of RITAMIX (01936.HK)  The findings suggested that, as at 3 July 2020, a group of 15 shareholders held an aggregate of 91.092 million shares, representing 18.22% of the issued Shares. Such shareholding, together with an aggregate of 375 million shares (representing 75.00% of the issued Shares) held by 2 substantial shareholders of the Company, represented 93.22% of the issued Shares as at 3 July 2020.  Therefore, only 33.908 million shares (representing 6.78% of the issued Shares) were held by other shareholders.
CATHAY PAC AIR (00293.HK) held an Extraordinary General Meeting today concerning the Rights Issue and the Preference Share Subscription Agreement. Both of the resolutions were passed with more than 99.9% of votes. The carrier proposed a capital restructuring plan worth about $39 billion in early June.
GREATWALL MOTOR (02333.HK) announced that, during 16 November 2019 and 30 June 2020, the Group received RMB496 million of revenue-related government subsidies.
Macau Statistics and Census Service (DSEC) indicated that the Tourist Price Index (TPI) for the second quarter of 2020 dropped by 4.97% year-on-year to 121.70.  The decrease was mainly attributable to lower hotel room rates and falling prices of clothing; yet, dearer prices of jewellery and higher airfares offset part of the decrease.
Macau's health authorities have allowed all Hubei residents to visit the city's casinos, in accordance with evaluation results for the epidemic situation in the province, reported Macao Daily News.  The restrictions were lifted as the Hubei province has reported zero COVID-19 cases for a fairly long period of time.
VINCENT MED (1612.HK) +VE PROFIT WARNING expected to record profit for the six months ended 30 June 2020 of not less than HK$80.0 million, as compared to that of HK$13.7 million for the six months ended 30 June 2019. The surge in profit was mainly attributable to a 105.8% jump in the Group’s total revenue.
SA SA INT'L (178.HK) sales update for the first quarter from April to June, where the Group's retail and wholesale turnover decreased by 67.9% on a year on year basis to HK$590 million.In Hong Kong and Macau, the Group's turnover -74.3% YoY to HK$406 million, while same store sales -71.9% annually.
NCI (1336.HK) accumulated gross premium income of the Company for the period between 1 January 2020 and 30 June 2020 was RMB96.879 billion, +30.9% yearly.
PICC P&C (2328.HK) original insurance premium income of the Company for the period from 1 January 2020 to 30 June 2020 totalled RMB245.639 billion, +4.4% YoY
PICC GROUP (1339.HK) aggregate premiums income of the company as derived from its operating subsidiaries for the period from 1 January 2020 to 30 June 2020 PICC P&C RMB245.639 billion +4.4% YoY
PICC Health RMB22.173 billion +45.7% YoY 
PICC Life RMB67.233 billion -5.1% yearly.
Guangdong's Animal Epidemic Disease Prevention and Control Center confirmed the outbreak of foot-and-mouth disease among pigs in the city of Leizhou on 11 July, announced by Ministry of Agriculture and Rural Affairs. The disease has infected 39 of the 131 pigs, killing one of them. -VE
Q TECH (01478.HK) June total sales volume of camera modules amounted to 31.863 million units -1% YoY 
YIK WO INTL (8659.HK) closed the day at $0.76, up 36 cents or 90% against the listing price $0.4, on volume of 57.40 million shares and $41.86 million. Excluding the handling fees, a book gain of $1,800 was reported per board lot of 5,000 shares.
China's pork price started to rally in June, reaching RMB53.15/kg on average for the week ended 12 July, according to Ministry of Agriculture and Rural Affairs.  The price advanced 15.6% for the sixth straight week, yet still being RMB6.49/kg below the mid-February peak.

Market and Pre Market News at bottom of page.


Short Selling HSI Monday 17.9% vs 20.4% Friday 

Top Shorts Hang Seng Bank (11) 42%, Wharf REIC (1997) 40%, NWD-New(17) 37%, MTRC (66) 36%, China Shenhua (1088) 31%, Ping An (2318) 31%, HK & China Gas (3) 30%, CCB (939) 30%, China Overseas (688) 29%, CNOOC (883) 28%, China Res Land (1109) 28%, Want Want (151) 25%, Sunny Optical (2382) 25%.

CONNECT FLOWS Shanghai Northbound Rmb68,400m Sell 32,529m : 35,871m Buy Southbound HK$ 22,508m Sell 10,188m : 12,320m Buy

Shenzhen Northbound Rmb94,047m Sell 45,270m : 48,778m BuySouthbound HK$ 21,497m Sell 8,719m : 12,778m Buy


DATA
HONG KONG Centre for Health Protection
said there were 52 additional cases with 41 local transmitted COVID-19 cases in Hong Kong today.


Active Heavyweights
HSBC (5 HK) +2.3%
CCB (939.HK) -1.3%
TENCENT (700.HK) -1%
HKEX (388.HK) -0.7%
PING AN (2318.HK) +0.3%
AIA (1299.HK) -0.1% 

HSI & HSCEI Constituents on the move
BYD COMPANY (1211.HK) +16.2%, hits new high
GEELY AUTO (175.HK) +8.3%, hits new high
CSPC PHARMA (1093.HK) +6.7%
CHINA RES BEER (291.HK) +4.8%
WH GROUP (288.HK) +4%
ANTA SPORTS (2020.HK) +3.6%

HSMI & HSSI Constituents on the move
HENGTEN NET (136.HK) +23%, hits new high
GLORY SUN FIN (1282.HK) +21%
JINCHUAN INTL (2362.HK) +17.2%
MMG (1208.HK) +0.340 (+16.505%) +16.5%
SHOUGANG RES (639.HK) +15.1%
CRRC TIMES ELEC (3898.HK) +14.1%
DONGYUE GROUP (189.HK) +13.9%
NEXTEER (1316.HK) +12.3%
TONGDA GROUP (698.HK) -10.9%
CMOC (3993.HK) +10.9%
FOSUN PHARMA (2196.HK) +10.8%
IMPRO PRECISION (1286.HK) -10.6%
CHINA EAST EDU (667.HK) +10.3%
WISDOM EDU INTL (6068.HK) +10.2%
FIT HON TENG (6088.HK) +9.5%, hits new high
COFCO MEAT (1610.HK) +8.9%, hits new high

COMMENT

*CHINESE BANKS WEAK concerns over rising bad debts following the global shut down as Chinese loan data shows credit growth picked up in June with good demand for loans via banks and informal channels. ICBC (1398 HK -0.8%) CCB (939 HK -1.2%) ABC (1288 HK -0.7%).

*BROKERS MIXED rumours of T+0 trading for A-shs.CGS(6881 HK +3.3%) CITIC SEC (6030 HK +1.1%) HAITONG SEC (6837 HK +1.7%).

GF SEC (1776 HK -5.8%) after its sponsor qualification got suspended for 6-mths for Kangmei Pharma's bond work.

*TECH & COMPONENTS MIXED SUNNY OPTICAL (2382 HK +2%) after market Friday reported June handset lens set shipments of 117.8 million, +16% YoY. June vehicle lens set shipments 3.67m. June handset camera module shipments 43.7m, +1.1% YoY.

ZTE (763 HK +3%) was informed that at the 3GPP SA approved the standard project of "5G mobile communication network equipment security assurance requirements for inter-network user plane security" led by ZTE; it means that equipment manufacturers, including ZTE, can develop, test, and commercialize corresponding products according to this version, speed up the deployment of 5G networks, and further promote the 5G market.

TONGDA (698 HK HK -10%) on broker downgrade after company sees 85%-95% decrease in interim net profit.

*HK PROPERTY WEAK on mixed weekend home sales. Wheelock Prop sold 85 out of 165 flats on offer at Koko Hills in Cha Kwo Ling on Saturday.

CK ASSET (1113 HK +0.2%) sold 97 out of its 285 flats offered at Sea To Sky in Tseung Kwan O on Saturday.

HENDERSON LD (12 HK -1%) SHKP (16 HK -0.3%) NWD (17 HK -1.8%).

*AUTO MAKERS FIRM led higher BYD (1211 HK +16%) on solid pre-sale orders, after launching 4 new models in Shenzhen and HK over the weekend.

EVERGRANDE HEALTH (708 HK +30%) on its auto battery biz.

GEELY (175 HK +7.3%) brokers expect its car sales to see a strong 2H.

GAC (2238 HK +5.7%) June vehicle sales -1.26% YoY but +13% MoM to 587 units. ZHONGSHENG AUTO (881 HK +2.7%) to buy 8 Chinese companies that own several Mercedes-Benz & Jaguar Land Rover dealerships across China for 720m yuan. ZHENGTONG (1728 HK +9.2%) GRAND BAOXIN (1293 HK+7%).

*MEDICAL/PHARM MIXED. LIFETECH SCIENTIFIC (1302 HK -5%) after a 90m share block trades at HK$2.49.

CANSINO (6185 HK +10.6%) on news vaccine trial may start in. some nations.

*RESOURCES/MATERIALS FIRM CH MOLYBDENUM (3993 HK +11%) entered into an agreement to sell $550m equivalent of gold and silver in its Northparkes Mines in Australia to a solely owned unit of Canadian's Triple Flag Precious Metals Corp. Base Metals led higher by JIANGXI COPPER (358 HK +6.3%), as copper prices surge on supply disruptions due to flooding in the region.

CHALCO (2600 HK +7.8%) ZIJIN (2899 HK +5.3%).


REGIONAL MARKETS

JAPAN working higher through the morning Tertiary Industry Index May -2.1% vs -7.7% Apr (F/cast was +3.2%), market saw a slight dip when it came out but has continued to work higher, Closed +2.2%

S KOREA Opened higher, no data today and market have worked higher in choppy trading. Sentiment +VE on hope ’New Package’ to be announced by government tomorrow. Closed Kospi. +1.7% and Kosdaq +1.1%

TAIWAN Opened higher as saw an initial spike following Friday’s sell off and after market good numbers from TSMC, then worked higher Closed +1.1%


NEWS
MARKET HOURS

China and Iran are planning to ink an 18-page cooperation deal, intending to strengthen their partnership in infrastructure, finance, telecommunications and military fields for the 25 years ahead, reported New York Times. The document obtained by the New York Times was dated June 2020 and labeled as the "final version". However, the agreement has neither been passed at Iran's parliament nor made public by China.

Qantas may cancel all international flights, except the New Zealand routes, through to 2021, having confirmed that all seats have been pulled up to 28 March 2021. While this does not mean flights have been cancelled, it is regarded in the industry as a precursor to massive cancellations.

The Hong Kong Jockey Club announced the postponement of resumption of Mark 6 draws as originally scheduled next Tuesday (21 July) until further notice, due to latest epidemic development.

At lunchtime CANSINOBIO-B it was announced it was mulling launching Phase 3 COVID-19 Vaccine Test: Dongxu Qiu, executive director and co-founder of revealed at a forum that the firm is in talks with Russia, Brazil, Chile and Saudi Arabia to activate the phase three trials for its COVID-19 vaccine candidate, Reuters citing sources.

Savills Hong Kong wrote in a report that the rents of Grade A offices in Hong Kong sank 3.8% during the second quarter of this year, when the rents of general offices slipped 11% from peak over a year ago.

TENCENT (700.HK) announced that the Board had resolved to issue a total of 26,640,678 new Shares pursuant to the general mandate granted by the shareholders at the 2020 AGM, for the purpose of awarding a total of 26,640,678 Awarded Shares to not less than 29,700 Awarded Persons under the Share Award Schemes. The new Shares to be issued and allotted represent approximately 0.2780% of its enlarged issued shares after the allotment.

The Australian government will offer roughly 10,000 Hong Kong passport holders currently living in the country a chance to apply for permanent residency.

Australian Acting Immigration Minister Alan Tudge said many Hong Kong passport holders are looking for other places to go after the implementation of the National Security Law. Hence, Australia has put forward additional visa options for them.

FORTUNE REIT (778.HK) PROFIT WARNING expecting a net loss for the six months ended 30 June 2020, as compared with a profit for the corresponding period in 2019. Due to the adverse market conditions and COVID-19, the appraised value of investment properties as at 30 June 2020 was expected to be HK$2.5 billion lower than their cumulative fair values of HK$42.82 billion as at 31 December 2019, said the company.

The total number of local companies registered under the Companies Ordinance was 1.381 million as at the end of June this year, compared to 1.38 million by the end of 2019, according to the statistics released by the Companies Registry. A total of 48,800 local companies were newly registered during the first half of 2020, -19.66% vs the second half of 2019.


PRE MARKET
A majority of US enterprises in Hong Kong are attaching concerns
to the sweeping new national security law in the city, of which a third are seeking to move their assets or business in a long run, according to a survey done by American Chamber of Commerce (Amcham). More than 50% of the respondents expressed that they feel less safe about living and working in the territory, and also about half of them said that they are considering leaving here.

KINTOR PHARMA-B (9939.HK) announced that its subsidiary Suzhou Kintor and Applied Biology had entered into a clinical trial research agreement. Pursuant to the agreement, Suzhou Kintor has engaged Applied Biology to conduct research for Proxalutamide (GT0918) as a treatment for the coronavirus disease (COVID-19).

S.A.S. DRAGON (1184.HK) announced that the Stock Exchange has agreed with its proposed spin-off and separate listing of the LED Business on

GEM of the Stock Exchange.

CST GROUP (00985.HK) Trading halted with effect from 9:00 a.m. on 13 July 2020 pending the release of an announcement pursuant to The Codes on Takeovers and Mergers and Share Buy-backs which constitutes inside information of the Company.

Chief Secretary for Administration Matthew Cheung wrote in his blog that the governments of Guangdong, Hong Kong and Macau shall review the launch date of the health code pilot scheme, citing multiple COVID-19 cases of unknown origin in Hong Kong under a deteriorating epidemic. The HKSAR Government's top priority is to ease local community transmission with great effort. The cities are examining a gradual and orderly resumption of the flow of people under a joint prevention and control framework after the epidemic stabilizes, added Cheung

JD-SW (9618.HK) announced that the Joint Representatives, on behalf of the International Underwriters, have partially exercised the Over-allotment Option in respect of an aggregate of 19.9121 million Class A ordinary shares, representing approximately 14.97% of the Offer Shares initially available under the Global Offering before any exercise of the Over-allotment Option. The Company will receive additional net proceeds of approximately HK$4.5 billion for the issue of the Over-allotment Shares.

BEIGENE (6160.HK) announced a plan to place 146 million shares at the US$14.2308 (HK$110.29) per Purchased Share (equivalent to US$185 per ADS), representing a 7.6% discount to the closing price HK$119.3 last Friday. The net proceeds will be US$2.07 billion (roughly HK$16.04 billion).

SUNCITY GROUP (1383.HK) CEO Chau Cheok Wa responded via a video clip about an untrue online rumor against the company, Macao Daily News reported. He said there have been signs that Chinese Public Security is launching anti-crime investigation and that such action is taken nationwide, which is not aligned with what the rumor claimed the investigation is targeting SUNCITY GROUP. The CEO made three points in his statement to refute the online rumor.

Firstly about the company financially supporting Hong Kong's rioters, Chau blasted such rumor as ridiculous and that the company has never done anything harmful to the country.

Secondly about Chinese law enforcement body holding client information of the group, Chau clarified that the group has never received request from overseas or China to provide any client information.

Thirdly, the group's financial position is safe and sound. It has HK$18.6 billion cash at accountant for daily VIP operation, plus HK$16.5 billion deposits at two Macau banks.

YANZHOU COAL (1171.HK) has been informed by its controlling shareholder Yankuang Group that Yankuang Group and Shandong Energy are planning for strategic reorganization. The relevant reorganization plan is not yet finalised and is subject to approvals from relevant authorities after finalisation.

Macau's Novel Coronavirus Response and Coordination Centre announced that starting from 6am tomorrow (14th), all ferry and air passengers departing from Macau must present nucleic acid test (NAT) results confirming they have tested negative for COVID-19 within the past seven days. The NAT results can be displayed on Macau's Health Code.

CHINA SDHS FIN (412.HK) announced that on 12 July, the Company was informed by Shandong Hi-Speed Group, a controlling shareholder of the Company, that Shandong Hi-Speed Group and Qilu Transportation are planning a joint reorganization. The Joint Reorganization currently does not involve material asset reorganization of the Company or affect the Company's ordinary course of business.

CG SERVICES (6098.HK) clarified in an announcement that there were untrue rumours in media reports claiming that Li Changjiang, an executive director of the Company, will retire as the president and a director of CG Life Services, a wholly-owned subsidiary of the Company, and that Yang Huiyan, the chairman of the Board and a non-executive director of the Company, will retire as the chairman of CG Life Services.US Sanctions following a meeting last Thursday to discuss Hong Kong matters, the White House expects to hold another talk this week for possible sanction and moves, the Wall Street Journal citing inside sources.

VINDA INT'L (3331.HK)  Positive Profit Alert  for 1H2020 Operating Profit to be around HK$1.257 bn +100% YoY and Profit HK$913 mn, +108% yearly.

White House Trade Adviser Peter Navarro told Fox News that President Donald Trump will probably take a “strong action” against TikTok and WeChat. Even if TikTok is taken over by a US buyer, it is not going to solve the problem, furthered Navarro.

RAZER (1337.HK) told reporters that the company has indirectly been favored by a spiking work-from-home demand under the COVID-19 pandemic, given higher hardware demand when users stay indoors. Particularly, both the sales of streaming cameras and live-streaming microphones ballooned significantly, aside rising daily active users for software.  The firm mentioned its e-commerce revenue increment, citing growing usage of Razer Gold and Razer Fintech's B2B payment services as driven by the "stay-at-home economy".

BANK OF CHINA (3988.HK)'s plan to take over Irish stockbroker Goodbody has fallen through, reported RTE. The bank has terminated the deal as it is not in a position for acquisition at this time, given unprecedented global impact and uncertainty triggered by COVID-19, according to Goodbody's statement.

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