July 14 WRAP HSI -294pts T/O +4.5% Well off the day lows
HSI -294pts (-1.1%) 25,478 HSCEI -170pts (-1.6%) 10,405 T/O HK$178.94bn (+4.5% DoD)
EUROPE Markets open lower following Asia on global covid-19 concerns German Inflation data in line, UK data was mixed; GDP growth weaker than expected
US Futures opened Dow +70pts, S&P +0.25%, NDX +0.34% initially crept slightly higher then eased back but creeping higher again Dow +100pts, S&P and NDX +VE ahead of Banks reporting. Worth remembering that US Options expire this week.
INDEXES CSI 300 Closed -46pts (-1%) @ 4,807 Market opened lower following the US sell over on rising covid-19 cases and the reimposition of lockdowns. It then rallied to the day high (4,860) just above yesterday’s closing level but failed to break out. It briefly consolidated before attempting to break out again but again failed then sold down heavily. The good trade data didn’t offset the market confidence as fears of worsening US/China relations as US endorses the South China Sea ruling against China and affirmed that it would take more action to resist China’s claims. Also weighing on sentiment is the new rise in global covid-19 cases likely to impact the global recovery For China specific there are concerns that July will see the largest number of A share being unlocked. PM saw the market sell down heavily to the day low of 4,730 before rallying into the close. A number of Government backed funds announced selling or plans to sell; which could be the authorities trying to cool the market ahead of US earnings season
HSI Pre Market -109 pts @ 25,663 vs -191pts ADRs @ 25,581. Late trades were HK$1.85b and pre market activity was HK$2.62b. Weakness in E-Commerce names but Macau names +VE as it allows Mainland visitors to visit without 14 day quarantine just a negative (Nucleic Acid Test) proof. Markets then rallied to the day high (25,663) ahead of the China trade data which beat forecasts but market unable to break higher and sold down initially to just below the opening level and then then quickly down to the day low (25,254) around 10:30am. From there we saw a small 100pt rally which then eased, before another 70pt rally but without conviction and sold down into lunch. PM saw saw a number of attempts to rally but without great conviction and resistance at 25,500. Market trended lower from around 2:30pm with support at 25,350 and then saw a 100pt uptick in the closing auction. T/O remains high and I still think Team China is actively supporting the market.
Market and Pre Market News at bottom of page.
Short Selling HSI Tuesday 17.7% vs 17.9% Monday
Top Shorts Wharf REIC (1997) 44%, Want Want (151) 42%, HSBC (5) 41%, Hang Seng Bank (11) 39%, MTRC (66) 37%, China Shenhua (1088) 30%, China Res Land (1109) 29%, Sunny Optical (2382) 28%, CCB (939) 27%, Ping An (2318) 25%,
Northbound Rmb68,887m Sell 36,941m : 31,946m Buy
Southbound HK$ 19,262m Sell 7,805m : 11,457m Buy
Northbound Rmb99,322m Sell 55,855m : 43,466m Buy
Southbound HK$ 17,240m Sell 7,162m : 10,078m Buy
CHINA During trading
Balance of Trade Jun US$46.4bn vs 62.93b May (F/cast was 60b)
Exports Jun +0.5% YoY vs -3.3% May (F/cast was -1.4%)
Imports Jun +2.7% YoY vs -16.7% May (F/cast was -12%)
The trade surplus narrowed more than expected (although it widened MoM with the US).
HONG KONG Centre for Health Protection said there were 48 additional cases COVID-19 cases in Hong Kong today; including 8 imported cases, said Chuang Shuk-kwan, Head of Communicable Disease Branch at Centre for Health Protection. 16 infections were tied to previous cases, while the remaining 24 cases were of unknown origin. The disease had killed 8 patients so far, the latest victim of which was a 95-year-old female resident at Kong Tai Care for the Aged Centre, revealed Hospital Authority Chief Manager (Quality & Standards) Lau Ka-hin.
*PETROCHEMS WEAK as rising covid case put the global demand recovery in question. WTI and Brent weak overnight ahead of an OPEC+ meeting, expected to discuss plans to start tapering historic production cuts. CNOOC (883 HK -2%) CH OILFIELD SVCS (2883 HK -2%) PETROCHINA (857 HK -2.5%) SINOPEC (386 HK -1.7%).
*HK BANKS WEAK as HK increases social distancing measure as new local Covid-19 cases rise. Press reports that Trump will not seek to undermine the HK$/US$ peg, although until we see his response investors remain wary.
HSBC (5 HK -1.3%) STAN CHART (2888 HK -1.1%) BEA (23 HK -1.3%) HANG SENG (11 HK unch).
*TECH & COMPONENTS WEAK as rising covid cases could out global recovery in doubt Press reported that the U.K. is poised to ban Huawei from its 5G mobile networks under a two-step plan designed. The decision now looks largely political the initial decision to allow Huawei limited access. ZTE (763 HK -5%) AAC (2018 HK -3.3%)
SUNNY OPTICAL (2382 HK -3.5%). Q TECH (1478 HK +0.5%) June sales of camera modules fell 1% YoY to 31.9m units, sales in the month also slipped from volumes recorded in March, April and May, but sales of fingerprint-recognition modules in June +13% YoYto 6.8m units, helped by gains in market share.
*HK PROPERTY FIRM despite the Covid-19 resurgence concerns as the one-month HIBOR dropped to 0.38232% yesterday to a a 3-year low. SHKP (16 HK +0.5%) HENDERSON (12 HK +0.5%) SINO (83 HK +0.6%).
*RESTAURANTs WEAK as HK restaurants can only offer takeaways after 6pm starting tomorrow, due to the surge of local infections. The cap on customers sharing a restaurant table and social gatherings will go back to four as restaurants are thought to be behind the recent surge in cases. TAI HING (6818 HK -3.3%) CAFE DE CORAL (341 HK -2.8%) FAIRWOOD (52 HK -1.4%).
*MACAU STRONG as Guangdong province said it will stop making returnees from the city quarantine for 14 days as long as they have a clear NAT certificate. A number of brokers upgrade the sector including JPM, MS and GS.
SANDS (1928 HK +5%) MELCO (200 HK +4%) GALAXY (27 HK +6%) WYNN (1128 HK +6.6%) SJM (880 HK +11.4%) MGM (2822 HK+ 4.8%).
*RETAILERS WEAK adding the the -VE sentiment was news that ESPRIT (330 HK -10%) as a boardroom control battle is underway after major shareholder Karen Lo Ki-yan boosted her Esprit shares by another 100m. She now holds 343m shares, with her stake rising to 18.18%. Lo plans to introduce reps to the board while also removing chief executive Anders Christian Kristiansen and chief financial officer Johannes Georg Schmidt-Schultes.
SA SA INTL (178 HK -1.6%) said turnover in the HK and Macau market plunge by 74.3% to HK$406.3m in the April-June quarter. Total retail and wholesale turnover fell by 67.9% to HK$590.5m during the three months ended June 30. Same-store sales in HK and Macau market also plummeted by 71.9%. GIORDANO (709 HK- 3.2%) I.T. (999 HK -2.8%).
BYD (1211 HK -8%) after surging yesterday following positive pre-order number. COFCO MEAT (1610 HK -10%) dropped on share sales.
JAPAN Opened lower and traded sideways, Industrial production data out around lunchtime was broadly in line with forecasts Closed -0.9%
S KOREA Opened slightly lowering markets basically traded sideways; Closed Kospi -0.1% and Kosdaq -0.4% as investors await new stimulus package.
TAIWAN Opened slightly lower and traded sideways Closed flat
General Administration of Customs of the PRC (GAC), said China is still living up to her commitments under the phase one trade deal with the US. Chinese import from the US slid in a less extent than the 1.8-ppt fall of the overall import in the first half of year, indicating Beijing's efforts to execute the deal.
Apple may have to pay Samsung Display around US$950 million for failure to buy enough OLED panels to fulfill its contract, MacRumors citing filings. This could mean that Apple had failed to meet the projected iPhone sales volume.
CHINESE EST H (127.HK) former Chairman Joseph Lau declared in a statement that neither he himself or his wife, Chan Hoi-wan, has in any ways directly or indirectly supported social movements. Lau reserves the right to seek legal accountability against the purely made-up and misleading media reports and rumours covered by Hong Kong and Macau press, according to the statement. The Hong Kong billionaire called on the media to make impartial and equitable reports and refrain from spreading wrongful or malicious news.
The US will purportedly scrap a 2013 deal with Chinese auditing authorities, likely affecting China-concepts' listing position in the US.
At an online forum, Financial Secretary Paul Chan argued that the subjective gauge of National Security Law undermining investors' confidence of Hong Kong was taken out of the facts. USD/ HKD has been strong since April 2020 with the rate hitting Strong-side Convertibility Undertaking for a number of times, as a result of which the HKMA has undertaken capital inflow of over $100 billion so far. Paired with vibrant Hong Kong stocks, Chan concluded that the National Security Law has not forced capital outward, instead it invited capital, stressing the Law is a stabilizer to the city's investment environment.
TENCENT (700.HK)'s Weixin Team announced the opening of application for closed beta tests for Weixin Mini Stores and support for live-streaming sales, tech.sina.com.cn reported. Such function will facilitate more micro, small and medium merchants and individual entrepreneurs in scouting e-commerce businesses within Weixin ecosystem. So far, Weixin Mini Program has had more than 400 million daily active users, according to the official data.
Cellnex Telecom SA, Europe's largest wireless tower operator, is weighing up bidding for a minority stake in CKH HOLDINGS (1.HK) 's European wireless tower business, Bloomberg citing insiders. Both sides are purportedly in early talks on the purchase. The unit could value as much as EUR10 billion (around HK$87.91 billion) if deliberations lead to a deal.
GOLDIN FIN HOLD (530.HK)Trading halted with effect from 9:00 a.m. on 14 July 2020 pending the release of an announcement on inside information of the Company.
BRILLIANCE CHI (1114.HK) announced that having considered the financial and cash flow position of the Group, the Board resolved to declare a dividend of HK$0.41 per ordinary share of the Company. The Dividend is expected to be paid on 6 August 2020 to the shareholders of the Company whose names appear on the register of members of the Company as at 27 July 2020.
COFCO MEAT (1610.HK) A cluster of shareholders sold 440 million shares of the company at $3.0625 each, representing a discount of 7.2% to the closing price of $3.3 as quoted yesterday (13 July). The stock last posted at $3, plunging over 9%.
HSBC (5.HK)'s fintech company Serai has suspended lending from last month, Hong Kong Economic Journal reported. A spokesman of Serai was quoted by the report that the company pulled back the provision of revolving credits to companies with trading needs, however, the clients who had applied for revolving credits can still obtain the financing within the year.
Citibank lifted the H-based mortgage rate to H+1.5% from H+1.4% for new mortgages, while the rate cap remained at P-2.75%, local media reported.
MTR CORPORATION (66.HK) total local patronage in June +13.4% MoM but -19% YoY to 110 million, being the first time more than 100 million since January 2020.
US President Donald Trump reiterated at an event that the US will fulfill the phase one trade deal with China, stressing the pact is still effective and intact, reported FXStreet. China is buying American goods and it is up to China to decide her purchases, he added.
BABA-SW (9988.HK) co-founder Jack Ma cut his stake in the firm from 6.2% to 4.8% over the past year, Reuters citing a filing. While the selling price has not been disclosed, BABA-SW's price spiked 40% since Ma had revealed his 6.2% holding in the giant last year. Ma reportedly cashed out US$8.2 billion (roughly HK$63.56 billion).
China consumed 635 billion KWh of electricity in June, +6.1% YoY, as revealed by the data of National Energy Administration (NEA).