July 15 HK WRAP HSI -47pts T/O -20% Lots of China data Thursday


17 Jul

July 15 HK WRAP HSI -47pts  T/O -20%  Lots of China data Thursday


HSI -47pts (-0.2%) 25,431 HSCEI -30pts (-0.3%) 10,375 T/O HK$142.92bn (-20.1% DoD)


EUROPE Markets 
opened higher on the Moderna news and trending higher.

US Market opened higher on Moderna’s vaccine news and stella results from Goldman Sachs. Worth remembering that in addition to results US Options expire this week.


INDEXES      CSI 300 Closed -62pts (-1.3%) @ 4,745 Market opened higher but immediately sold down 50pts and then rebounded but failed to break above and then sold down in a series of steps to the day low of 4,723 just before lunch.  A small bounce into lunch.  Market then rebounded into positive territory, just, but unable to regain the initial highs and then sold down for the final hour into the close.  Market action suggests Team China still looking to support the market.  

Shanghai Composite Index -1.6% to 3,361 T/O Rmb674.7bn

Shenzhen Component Index -1.9%, to 13,734. T/O Rmb896.8b

ChiNext Index _1.6% to 2,813.

BUT sentiment weak after a number of China State funds reported selling as government tries to manage the ‘bull market’. Also overhanging the market are Trump's signing of the Hong Kong Autonomy Act which gives him more tools with which sanction China. Also the decision to scrap the 2013 Auditing of Chinese Companies agreement which will put more pressure on Chinese companies with a US listing. Also the prospect of Chinese company shares being unlocked and key Macro data due tomorrow; House Price Index, GDP Growth Rate, Industrial Production, Industrial Capacity Utilisation, Retail Sales, Unemployment Rate, NDS Press Conference, Fixed Asset Investment (YTD)


HSI Pre Market +410pts @ 25,888 vs +159pts ADR's @ 25,636 but on thin volume only HK$2.1b traded if you exclude late trades of HK$2.1b. E Commerce names strong along with handset equipment makers. Insurers were +VE after recent premium news and the rising market. Market then traded lower through the morning to the day low (25,300) just before lunch. PM saw the market work higher but only to yesterday’s closing level and around 2:30 saw renewed selling; but basically traded sideways for the remainder if the afternoon to closed effectively flat.Sentiment weak on the prospect of more US sanctions that could hurt HK as Trump signed the HK Autonomy Bill and said he didn’t think that HK was going to be able to compete as an international finance centre. There are also worries that Beijing will not recognise the Legco election in September if it's candidates don’t win and about the new security law in general as the HK and Macau Affairs office said that the pro-democracy camp's primaries, held last weekend, were an "illegal manipulation" of the upcoming Legco elections. It said that law professor Benny Tai, is an agent of foreign forces and one of those hurting Hong Kong having earlier accused him of trying to seize power in Hong Kong and launch a colour revolution. It said any attempt by opposition lawmakers to seek to control of the legislature to oppose and paralyse the government would amount to subversion.

We also have the important Chinese Macro Data due tomorrow.


AFTER MARKET
BANKCOMM (3328.HK) intends to increase the capital
of Bank of Communications (Hong Kong) Limited by phases with a total amount of not more than HK$30 billion. The capital injection plan had been reviewed and approved at the shareholders' meeting.EASYKNIT INT'L (1218.HK) said that it had through its subsidiary Ace Winner acquired on market a total of 220,000 shares of BABA-SW (9988.HK) for an aggregate purchase price of approximately HK$53.752 million.

WHEELOCK (20.HK) the privatisation scheme was sanctioned without modification by the High Court. The reduction of the share capital of the Company involved in the scheme was also confirmed by the High Court on the same day. Subject to the scheme becoming effective on Thursday, 23 July, the listing of shares on the Stock Exchange is expected to be withdrawn at 9:00 a.m. on Monday, 27 July.

ANTA SPORTS (2020.HK) retail sales (in terms of retail value) of ANTA branded products for the second quarter of 2020 recorded low single-digit negative growth compared to the same period of 2019. -VE

Thailand's largest mobile carrier Advanced Info Service (AIS) disclosed that Huawei is one of the five firms bidding for its 5G core network project. The other bidders included Ericsson, Nokia, ZTE (00763.HK) -0.800 (-3.131%) Short selling $29.37M; Ratio 6.166% and Samsung.

JLL's Chairman and Head of Capital Markets for Hong Kong, expected property prices to fall by 5-10% this year following a 2.2% rise in 1H20, which was driven by an easing epidemic and market excitement under a tighter project launch schedule. However, he noted the hiccups in Hong Kong's economy, where home prices will be dented by an ongoing jobless rate surge. Tsang found it challenging for developers to launch projects in 2H20. Some developers may debut their projects at discounted prices to boost transactions, he added. JLL's Head of Retail & Leasing, said at an online conference that the new spike of coronavirus outbreak will erode market confidence in a mid-to-long term despite its short-run impacts on shop market. On a full-year basis, the shop rents at prime streets were expected to go down by 35-40% this year, whereas that of grade A offices may plunge 20-25% with those in Central under the highest pressure.

Google, Amazon Web Services, and Microsoft have turned down a proposal giving Hong Kong's Securities and Futures Commission (SFC) access to customer banking records, reported Financial Times. Since 2019, these tech firms have been in talks with the SFC on providing access to financial data stored on their cloud platforms. However, the national security law has made signing up to the proposal "politically impossible", given potential sanctions from the US Congress, an insider said.


IPO’s
TOMORROW
CBHB (09668.HK), to be listed tomorrow, opened at $4.8,
flattish with the listing price, and closed at $4.79 in gray market, down 1 cent or 0.2% against the listing price of $4.8, on volume of 10.8 million shares, PhillipMart data showed.

JIAXING GAS (9908.HK), to be listed tomorrow, opened at $12, up 20% against the listing price $10, and last stood at $15.5, up 55% against the listing price, on volumeof 51,000 shares, PhillipMart data showed.

FENGXIANG CO (09977.HK), to be listed tomorrow, opened at $3.5, up 5.1% against the listing price $3.33, and last stood at $3.65, up 9.6% against the listing price, on volume of 1.94 million shares, PhillipMart data showed

TODAY’s IPOs
TENCENT-backed ARCHOSAUR GAMES (9990.HK) closed at $20.3, 
up $8.7 or +75% against the listing price of $11.6, on volume of 144 million shares and turnover of $2.582 billion. Excluding the handling fees, a book gain of $8,700 was reported per board lot of 1,000 shares.

CATHAY EDU (1981.HK) closed at $4.92, up $1.82 or 58.7% against the listing price of $3.1, on volume of 227 million shares and turnover of $1.035 billion. Excluding the handling fees, a book gain of $1,820 was reported per board lot of 1,000 shares.

DASHAN EDU (09986.HK) closed at $1.12, down 13 cents or over 10% against the listing price of $1.25, on volume of 35.85 million shares and turnover of $40.18 million. Excluding the handling fees, a book loss of $260 was reported per board lot of 2,000 shares.

GANGLONG CHINA (6968.HK) closed at $3.92, down 1 cent or less than 0.3% against the listing price of $3.93, on volume of 18.38 million shares and turnover of $71.48 million.

CHINANEWENERGY (1156.HK) closed at $0.7, down 28 cents -28.6% against the listing price of $0.98, on volume of 128 million shares and turnover of over $132 million. Excluding the handling fees, a book loss of $1,120 was reported per board lot of 4,000 shares.


Market and Pre Market News at bottom of page.


Short Selling HSI Wednesday 20.3% vs 17.7% Tuesday

Top Shorts Wharf REIC (1997) 56%, Hang Seng Bank (11) 47%, MTRC (66) 40%, BoC HK (2388) 34%, China Shenhua (1088) 33%, CCB (939) 33%, HSBC (5) 30%, China Res Land (1109) 29%, CITIC (267) 28%, PetroChina (857) 28%, HK & China Gas (3) 28%, NWD New (17) 28%, SHKP (16) 27%, Mengniu Dairy (2319) 26%.


CONNECT FLOWS 

Shanghai

Northbound Rmb67,460m Sell 34,467m : 32,993m Buy

Southbound HK$ 19,380m Sell 9,439m : 9,941m Buy

Shenzhen

Northbound Rmb90,510m Sell 45,871m : 44,639m Buy

Southbound HK$ 15,614m Sell 7,200m : 8,414m Buy


DATA
CHINA No data

HONG KONG Centre for Health Protection said there were 19 additional COVID-19 cases in Hong Kong today; but may see 37 later.


Active Heavyweights
TENCENT (700.HK) +3.4%
CCB (939.HK) -1.3%
HSBC (5 HK) +0.9%
PING AN (2318.HK) -0.8%
AIA (1299.HK) -0.7% 
HKEX (388.HK) +0.2%

HSI & HSCEI Constituents on the move
AAC TECH (2018.HK) -5.9%
SHENZHOU INTL (2313.HK) +4.7%
BYD COMPANY (1211.HK) -4.3%
ANTA SPORTS (2020.HK) +4%
CPIC (2601.HK) -3.4%
SUNNY OPTICAL (2382.HK) -3.1%
TECHTRONIC IND (669.HK) +2.8%, hits new high
CHINA RES BEER (291.HK) +2.6%, hits new high

HSMI & HSSI Constituents on the move

IMAX CHINA (1970.HK) +16.1%

VPOWER GROUP (1608.HK) -13%

HUABAO INTL (336.HK) -12.8%

JOHNSON ELEC H (179.HK) +12.6%

FOSUN PHARMA (2196.HK) +10.6%, hits new high

PANDA GREEN (686.HK) +10.3%

TIANNENG POWER (819.HK) +9.5%, hits new high

CHINA LESSO (2128.HK) +9.1%, hits new high


COMMENT

*TECH & COMPONENTS WEAK  China's SMIC (981 HK -7%) following a 3-

month strong rally, as it starts trading on Shanghai Star Board tomorrow July 16;

HUA HONG (1347 HK -7.5%) sentiment hurt as HUAWEI TECH will be banned from providing equipment for Britain's 5G mobile networks from the end of this year. Boris Johnson announced that operators will not be able to add any new Huawei components to their 5G networks after Dec 31. And all equipment made by Huawei that has already been installed will need to be removed from 5G infrastructure by 2027.

ZTE (763 HK -3%) AAC (2018 HK -5%) TRULY (732 HK -3.8%) QTECH (1478 HK -4.8%).

*E-COMMERCE FIRM MEITUAN (3690 HK +1.5%) as PBOC plans to

test its digital currency on platforms operated by TECENT-backed Meituan. Meanwhile, TECENT (700 HK+3.8%) launches WeStore, its new e-shop offering on WeChat.

ALIBABA (9988 HK +1%) NETEASE (9999 HK +1%) KINGDEE (268 HK +2.5%).

*INSURERS WEAK following premium data.

CH LIFE (2628 HK -0.5%) reported 1H premium income increased 13.2% YoY to 428b yuan.

PING AN (2318 HK -0.6%) said 1H premium income dropped 0.2% YoY to 301b yuan.

*PHARMA STRONG on vaccine/drug speculation.

SINO BIOPHARM's (1177 HK +1%) Iopamidol gets cina nod for drug registration.

LIVZON (1513 HK +3.7%) expects 30%-40% higher 1H profit due to disposal gain and strong virus-product sales.

INNOVENT (1801 HK +1%) CSPC PHARM (1093 HK +2%) GENSCRIPT (1548 HK +2.6%).

* WATCH & JEWELLERS MIXED,  Colliers International forecast shop rents

for tier-one streets in Hong Kong TO DROP 33% this year.

CHOW TAI FOOK (1929 HK +5.5%) reported a 73% YoY plunge in same-store sales in the quarter ending in June. Its retail sales value during 2Q shrank by 20.2% YoY, with that from Hong Kong, Macau and other markets, which accounted for 11.4% of the total, plunging 69% YoY.

Swatch Group yesterday said it has accelerated plans to shut stores definitively in Hong Kong.

LUK FOOK (590 HK -2%) ORIENTAL WATCH (398 HK -4.7%).

*AIRLINES FIRM the Ministry of Culture & Tourism published notice that allows travel agents to restore business of inter-province travelling and tourism under the consent of local government. CEA (670 HK +0.7%) CSA (1055 HK +1%) AIR CHINA (753 HK+0.6%) TONGCHENG-ELONG (780 HK +5.7%).

*PROFIT-ALERTS: 

MINTH GROUP (425 HK-0.4%) expects 1H net profit to drop as much

as 60% YoY due to Covid-19 and prodice reduction of old products.

JOHNSON ELECTRIC (179 HK +13%) said the group's sales 1Q sales were US$517m vs US$767m for the same quarter in 2019, -33%. Excluding FX movements, sales -31% to US$527m.

ZOOMLION (1157 HK +6.8%) expects 1H net profit to rise as much as 63% YoY +VE


REGIONAL MARKETS 

JAPAN Opened lower but worked higher through the day to Close +1.6%

S KOREA Opened higher as New Deal package announced. Kospi trended lower for most of the day but reversed in the afternoon to close +0.84%. The Kosdaq opened higher, saw an initial drop but then traded sideways around flat to close +0.4%

TAIWAN Opened higher but sold down mid session and then traded sideways around yesterday’s closing level. Closed -0.05%


NEWS
MARKET HOURS 

China plans to tax Chinese citizens working outside the territory based on her own tax rate, which may force Mainlanders working at Hong Kong banks to leave the city and return to China, Bloomberg citing senior officers at Chinese banks.

Shenzhen's Ministry of Housing and Urban-Rural Development (MOHURD) announced that local residents are not allowed to purchase homes until their residencies are registered for three years. Meanwhile, non-Shenzhen residents need to pay personal income tax and NSSF for more than five years before purchasing any flats.

TENCENT (700.HK) declared the launch of government administration upgrades at a 2020 strategic event. Tencent Cloud vice president Luo Chaoliang unveiled the Tencent Government Administration Cloud 2.0 at the event. The new service will provide support for digital upgrades of infrastructure, comprising of a government cloud for internal use and a public cloud to propel integration and innovation.

People's Bank of China's Digital Currency Research Institute plans to work with MEITUAN-W (3690.HK) and Bilibili, backed by TENCENT (700.HK) and BABA-SW (9988.HK) to explore the digital currency's adoption in different realms, Bloomberg citing insiders. The central bank, MEITUAN-W and Bilibili declined to comment on the report.

Secretary for Labour and Welfare Law Chi-kwong said at a Legislative Council meeting that the Government plans to introduce 30,000 termed positions in both public and private sectors within two years and that it may take 12-18 months to discuss relevant introduction

with professional institutes and private organisations.

PVH Corp, the owner of Tommy Hilfiger and Calvin Klein, announced a plan to cut 450 positions in North America and shutter 162 retail branches that house Van Heusen, IZOD and other brands, due to the havoc the coronavirus crisis had wreaked on the apparel industry, Reuters reported.

Despite escalating China-US tensions, the US Agriculture Department said China had bought 1.7 million tonnes of corn for delivery in the marketing year beginning 1 September. The purchase notched the intra-day sales record since December 1994.

After the US President Trump signed the Hong Kong Autonomy Act, Laurence Li Lu-jen, chairman of Financial Services Development Council (FSDC), commented that Hong Kong will have to weather with bigger headwinds as a bridge between the world and China, yet it will also embrace opportunities, amid complications and frictions in the world. He said the market has remained calm on the effectiveness of the Act since the signing had been rumored, demonstrating the solid position of Hong Kong as an international financial hub. The chairman viewed panic is unnecessary.

Tokyo is weighing up raising its COVID-19 alert to the highest of four levels given a rise in caseload as Tokyo reported over 200 cases in four of the past six days. Tokyo Governor Yuriko Koike will hold a meeting with experts today on the recent case spike.

Overnight HIBOR last posted at 0.10429%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.3297%, marking a 1-month low.

HSBC announced that it will now provide basic banking account service for Hong Kong residents without fixed abode or living in subdivided flats without access to postal services, making it the first bank in the territory to serve this vulnerable group of customers. To ease financial burden of these customers, the Bank will waive the usual charges for selected services, such as, the issue of paper statements and account history report.

National Development and Reform Commission (NDRC) and 12 other authorities published an opinion on backing the development of new business models and modes, and boosting employment by spurring consumer markets. Under which, Beijing will proactively support a diversity of self-employed jobs in e-commerce and live-streaming fields.

The Bank of Japan has decided to leave the monetary policy unchanged as expected and to leave the interest rates unchanged at -0.1% The central bank forecast the nation's economy to contract 4.7% during fiscal 2020 in spite of recent signs of gradually resurgent economy.

Offices of Ministry of Industry and Information Technology (MIIT), Ministry of Agriculture and Rural Affairs (MoA) and Ministry of Commerce (MOC) announced to pay the countryside visits for the development of new energy vehicles (NEVs). Ten automakers and car models join the event, with the duration between July and December 2020.

The HKSAR Government will not further prompt the mutual recognition of health code among Hong Kong, Macau and Guangdong until the local epidemic cools off, said Matthew Cheung, Chief Secretary for Administration, at the LegCo meeting. The arrangement was scheduled to announce early last week, yet community outbreak is happening in Hong Kong with more than 300 COVID-19 cases confirmed in last two weeks, Cheung said.

US President Trump made an order to end Hong Kong's preferential treatment, signing the Hong Kong Autonomy Act to slap sanctions against Chinese officials implementing the national security law. The Chinese government firmly opposed and strongly condemned the Act, as the Ministry of Foreign Affairs said it its statement.

Apple On 1-7 July, more than 2,500 mobile games were removed from China’s App Store as Beijing requires all titles to receive a regulatory license before release to make sure they meet rules in terms of content, according to a report from Sensor Tower. During the seven days, close to 660 games were added to the Chinese marketplace, said the researcher.

CHINASOFT INT'L (354.HK) said the Company has recently signed a strategic cooperation agreement with Shenzhen Smart City. Both sides of the cooperation will carry out a comprehensive and in-depth cooperation in areas such as smart city construction, industrial cloud operation, software project lifecycle management, and digital talent training.

TENCENT (700.HK) plans to bid for a roughly 20-25% stake in Voodoo at US$568 million (around HK$4.4 billion), Bloomberg citing sources. However, other firms like Ubisoft and Zynga are also interested in acquiring the French mobile game developer.



PRE MARKET
Hong Kong Tourism Board announced that the preliminary number of visitor arrivals in June reached 14,600,
an average of 500 visitors daily, -99.7%YoY. Visitor arrivals plunged 90% annually to 3.52 million for the first half of year, dented by the COVID-19 pandemic.

MTRC (66.HK) has filed a lawsuit against Metro Daily, local press reported. Under the 2016 deal, the local press shall pay to MTR CORP a monthly license fee of 7% of its monthly income or a fixed amount, whichever is higher, for exclusively distributing its newspaper at MTR stations, said MTRC; The railway operator claimed Metro Daily had defaulted on payment since March 2019. The arrears topped $3.11 million even after deducting $6 million in paid deposit.

HK Banks Start Work From Home, Shift Duty Arrangements:

Gosuncn (300098.SZ) announced that it has entered into a strategic cooperation framework deal with Tencent Cloud. Pursuant to which, both parties have struck a strategic partnership for intelligent connected vehicles for new infrastructure, smart mobility, smart transport and other fields. On another note, Gosuncn predicted a 1H20 net loss of RMB53-58 million, against earnings of RMB185 million in the same period of 2019.

SMIC (00981.HK) (688981.SH) shares of the Company will be listed on the Sci-Tech Board of the Shanghai Stock Exchange tomorrow (16 July).

CHINA TAIPING (966.HK) the gross premium income of Taiping Life Insurance Company Limited and Taiping General Insurance Company Limited for the period from 1 January 2020 to 30 June 2020 added 0.4% and 2% yearly to RMB90.955 billion and RMB13.939 billion.

ZA ONLINE (6060.HK) aggregate gross written premiums of the company for the period from January 1, 2020 to June 30, 2020 were approximately RMB6.763 billion, up 14.6% yearly.

PING AN (2318.HK) accumulated gross premium incomes of the four subsidiaries of the Company for the period from January 1, 2020 to June 30, 2020 amounted to RMB445.245 billion, down 0.2% yearly.

ANGANG STEEL (347.HK) PROFIT WARNING  expecting Net Profit -64.9% YoY for the six months ended 30 June 2020 to circa RMB500 million.

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