July 2 HK WRAP HSI +697pts, T/O +44%, Shorts +19%

09 Jul

July 2 HK WRAP HSI +697pts, T/O +44%, Shorts +19%

HSI +697pts (+2.9%) 25,124  HSCEI +298pts (+3%) 10,057 T/O HK$176bn (+43.7%)  

EUROPE opened higher on vaccine hopes and rallied but coming off into lunchtime.

US Futures Opened flat but rallied through the day current +200pts with S&P and NDX also indicating higher.


CSI 300 Closed +88pts (+2.1%) @ 4,336.  Markets opened flat but worked higher through the morning. Investors encouraged on news of a potential vaccine from Pfizer.  That outweighted concerns about deteriorating relations with US, UK, EU and others over HK, the border incident with India and a number of other nations.  PM saw the market continue to work higher with resistance at 4,340 around 30 minutes before the close. Having failed to break above it eased back slightly. Market closed at a 6 month high.  Brokers strong on rumours of consolidation within the sector.  Property also firm and consumption names continue to see interest on recovery hopes.

HSI Opened +137pts @ 24,564 vs -73pts ADRs and -102pts futures lead by Financials and Developers prompting more short covering and then basically traded sideways through the morning.  PM saw a further rise as Europe came in and the market worked higher through the afternoon.  There was a little hesitation at 25k but it tested the level for about 15 minutes before breaking above.  Market ticked higher in the closing auction.   
Some are saying the move reflects investor confidence that the new Security law with quell the protests in Hong Kong. But I think this was Chinese money being put to work to demonstrate the China’s control.  The protests have had little impact on HSI in the past.  Again a covid-19 vaccine is +VE but has little impact on the Chinese banks or the HK tech sector.  I think HK now has its own ’Team China’ to provide market support. I am not convinced that global fund allocators decided to significantly up their weightings in Hong Kong. 

HYGIEIA GROUP (1650.HK), to be listed tomorrow, opened at $0.37 in gray market, up 48% against the listing price of $0.25, and last traded at $0.235, down 6% against the listing price, on volume of 18 million shares, PhillipMart data showed.
Li Ka-shing and Victor T K Li further acquired shares of CK ASSET (1113.HK). Through a wholly-owned subsidiary of Li Ka Shing (Global) Foundation, they acquired a total of 2.6045 million shares in CK Asset at the average price of HK$47.5525, HK$47.3462, HK$46.6933 and HK$46.1828 per share on 24 June, 26 June, 29 June and 30 June 2020 respectively.
Wheelock Properties news conference, The first price list of KOKO HILLS was unveiled, involving 83 units (one- to three-bedroom flats and specialty flats), said Wheelock Properties Managing Director Ricky Wong. Pricing in all discounts, the prices would be $7.872-16.027 million, with an average floor price of $19,264-21,596 per sq.ft..  Chairman Stewart Leung stated that at least three new projects are coming in the second half of the year after the company had during the first half generated roughly $8.2 billion in sales revenues.  Leung assumed the property market to grow at least 5% during the second half of the year.
BABA-SW (9988.HK) built China's first digitalized organic fresh corn base in Wanquan District, Zhangjiakou City, aiming to exclusively sell at least RMB100 million of corn per year, reported Chinese media.  
Centa Valuation Index (Major Banks) (CVI) last printed at 56.12, -4.56 pts WoW Resurgent social unrest had brought CVI down from its peak of 90 to around 50, down 33.98 pts in five weeks.  They believe the index will struggle aloft 50 in near  term, foretelling an unchanged uptrend development. 
Patent Protection Association of China reported that a total of 3,924 blockchain-related patents had been authorized globally as of 14 May, with the US accounting for the biggest share (39%), followed by South Korea (21%) and China (19%), cited by Chinese media.   Alibaba's Alipay owned 212 authorized blockchain patents during the period, taking top spot worldwide. It was followed by IBM (136) and Coinplug (107).

Market and Pre Market News at bottom of page.

Short Selling HSI Thursday 18.9% vs 17.5% Tuesday

Top Shorts Hang Seng Bank (11) 45%, Ping An (2318) 35%, China Shenhua (1088) 35%, Galaxy (27) 34%, Hang Lug PPT (101) 33%, Sunny Optical (2382) 32%, Wharf REIC (1997) 32%, CLP (2) 30%, CCB (939) 30%, HKEX (3887) 27%, Petrochina (857) 26%, Bank of China (3988) 25%, Country Garden (2007) 25%.


*CHINESE BANKS FIRM China will allow local governments to use money from special local bond sales to help smaller banks replenish their capital, according to a state council meeting. Local government can use part of the special local government bonds to buy convertible bonds issued by smaller banks. +VE for the large banks as it reduces the chances of small banks failing BUT it’s also an admission that there are problems in the rural banks. ICBC (1398 HK +3.4%) BOC (3988 HK +2.8%) CCB (939 HK +2.9%) CMB (3968 HK +4.6%).

*BROKERS FIRM on hopes of sector consolidation in order to be able to compete with the banks being granted licences and the CBIRC unveiled policy on derivatives, national bonds and stock index futures for insurers.CITIC SEC (6030 HK +10.5%) CGS (6881 HK +11.5%) HTSSC (6886 HK +8.1%).

*TECH & COMPONENTS FIRM semiconductor makers in focus as SMIC (981 HK +17%) ahead of the company’s mainland offering tomorrow which is expected to see strong interest. Reference price ranges by bookrunners would put A-share’s price-to-book ratio above 4. H-shares trade at 2.8 times 2020’s estimated figure. HUA HONG (1347 HK +10.8%) FUDAN (1385 HK +11.4%) SOLOMON SYSTECH (2878 HK +9.6%). ZTE (763 HK -1%) as the US FCC designated Huawei Technologies and ZTE Corp as national security threats.

*CHINA PROPERTY STRONG on recovery hopes. COUNTRY GARDEN (2007 HK +5%) contract sales for June of +0.93% to 60.96b yuan. CH EVERGRAND's (3333 HK +14%) aggregate contracted sales hit a record high for the first half of 2020, amounting to 348.84b yuan, an increase of 23.8% YoY. SUNAC (1918 HK +14%) CH JINMAO (817 HK +13.7%) VANKE (2202 HK +7.5%) CIFI (884 HK +13.7%). CH AOYUAN (3883 HK +12.3%) announced it is to join with GUDOU HOLDINGS (8308 HK) to further develop hot spring resorts in the Guangdong province.

*HK RETAILERS MIXED Poor retail sales data out after market Tuesday and uncertainly of protests and covid-19 SASA (178 HK +0.7%) I.T. (999 HK unchg) CHOW TAI FOOK (1929 HK +3.3%) LUK FOOK (590.HK -3.5%). ESPRIT (330 HK +3.6%) announced a restructuring plan that includes laying off 1,200 staff globally, with 1,110 in Germany and 100 employees in Hong Kong.

*INFRASTRUCTURE/CONSTRUCTION STRONG speculation of June’s likely big  sales gains amid loose monetary policy and booming construction. SANY (631 HK +10.3%) WEICHAI POWER (2338 HK +10.5%) CNBM (3323 HK +6.3%) CONCH CEMENT (914 HK +6.1%).



Northbound Rmb67,468m Sell 28,154m : 39,315m Buy

Southbound HK$ 19,155m Sell 8,759m : 10,396m Buy


Northbound Rmb81,701m Sell 37,873m : 43,828m Buy

Southbound HK$13,774m Sell 5,039m : 8,735m Buy


CHINA No data

HONG KONG No data Centre for Health Protection said there were no new local covid-19 cases today

Active Heavyweights
HKEX (388.HK) +6.1% hits new high
TENCENT (700.HK) +4% hits new high
ICBC (1398) +3.4% 
AIA (1299.HK) +3.3%
PING AN (2318.HK) +3.2%
HSBC (5.HK) +3%
CCB (939.HK) +2.9%

HSI & HSCEI Constituents on the move
Closed up between 3% and 14.5% 

HSMI & HSSI Constituents on the move
Closed up between 10% and 24%


JAPAN Opened higher, initially traded down but tested yesterday’s closing level a couple of time and traded sideways around that level Closed +0.1%

S KOREA Opened higher, initially traded down testing yesterday’s closing level a couple of time and then working higher to close near highs Kosdaq +2.1%, Kospi +1.4%

TAIWAN Opened flat but worked higher closed around highs +0.9%


China Life Insurance (Group), Wang Bin, Chairman lectured cadres on contributing to the country's plague prevention and economic and social development. Firstly, the group shall ensure its coordination and facilitation of anti-epidemic works and business growth are truly effective, said Wang. Beyond that, the group has to magnify technological innovation and expedite its transformation and development.
China Banking and Insurance Regulatory Commission announced that in order to facilitate insurers' participation in government bond futures transactions and to effectively control relevant risks, it has recently issued guidance to government bond futures transaction for insurers and meanwhile amended the guidance to financial derivatives transactions and stock market index futures transactions for insurers.
BABA-SW (9988.HK)'s Alibaba Cloud disclosed that it had during the previous financial year served 38% of the top 500 enterprises on Fortune. Based on this achievement, the cloud service unit plans to expedite its globalization strategy and targets at becoming a globally-leading intelligence data backbone within three years.
OCUMENSION-B (1477.HK) has recorded $80.97 billion of margin subscription and 520 times of over-subscription, said local media.
SMOORE INTL (6969.HK) recorded $27.5 billion 31.18X over-subscription
IMMUNOTECH-B (6978.HK) recorded  $7.73 billion of margin subscription, 69.2 times of over-subscription. 
XIAOMI-W (1810.HK)'s Mi TV introduced its first flagship television product, the Xiaomi Mi TV Master Series. The 65-inch OLED television, priced at RMB12,999, will start sales at 10 am tomorrow.
The State Council appointed Eric Chan Kwok-ki as the secretary-general of the Committee for Safeguarding National Security of the HKSAR according to the Law of the PRC on Safeguarding National Security in the HKSAR, and upon the nomination of Chief Executive Carrie Lam, reported Xinhua. Chan is currently the Director of the Chief Executive's Office.
In a statement, Lao Gan Ma denied having worked with TENCENT (700.HK)  or authorized other parties to strike a partnership with TENCENT in relation to the chili sauce brand. Lao Gan Ma has never had any business cooperation with TENCENT.  Three suspects had forged Lao Gan Ma's company seal to obtain TENCENT's online game gift package codes and then resold them for profit, according to Guiyang Municipal Public Security Bureau.
Apple has frozen updates on thousands of mobile games on its App Store in China, reported Financial Times. Roughly 60,000 mobile titles on China's App Store are paid for or involving in-app purchases, according to AppinChina. However, Chinese regulators have issued only over 43,000 game licenses since 2010, meaning thousands of mobile games have failed to comply with Chinese rules.
HYGIEIA GROUP (1650.HK), to be listed tomorrow, was priced at $0.25, the lower limit of the offer price range $0.25-0.3. 18.92 times of over-subscription was recorded in the public offering. One-lot (8,000 shares) success rate was 20%.
BRILLIANCE CHI (1114.HK) announced that a meeting of the Board will be held on 13th July for the purposes of, among other things, considering and approving the declaration and payment of a dividend.
TENCENT (700.HK)'s PUBG Mobile and Honor of Kings were the the top-two highest-grossing games in the first half of 2020, respectively garnering US$1.3 billion and US$1 billion (+24.5% YoY) globally, announced by Sensor Tower.  The giant derived over US$2 billion of revenue from the two chart-toppers.
In the first half of the year, Tinder remained the top-grossing non-gaming app and generated US$433 million, down 19% yearly, followed by YouTube (US$431 million) and TikTok (US$421 million), according to Sensor Tower's report. During the period, TikTok ranked as the top non-gaming app by installs with 626 million downloads, followed by WhatsApp and ZOOM.
Housing Authority The two-month rent concession proposal will be discussed at next month's meeting, said Stanley Wong, Chairman of Subsidised Housing Committee of Housing Authority, after a radio program. Wong attributed the public rental housing (PRH) rent increase to a biennial review under the PRH rent adjustment mechanism, which suggested a 9.66% possible rental hike given higher average income for PRH households.  
A-LIVING (3319.HK)  announced that, a formal approval from China Securities Regulatory Commission (CSRC) on the application submitted by the Company to the CSRC regarding the H share full circulation and the issue of additional overseas listed foreign shares had been received on 1 July 2020.
The British Foreign Office updated its foreign travel advice on 1 July, stating that a new national security legislation had entered into force in Hong Kong. Mainland authorities could under certain circumstances detain "offenders" under the terms of this law, with maximum penalty of life imprisonment. There is therefore an increased risk of detention, and deportation for a non-permanent resident of Hong Kong.  Due to a latent increase in protests and violence, British citizens were advised against protests and demonstrations.

TENCENT (700.HK)'s
The Strongest Demon Fighter (最強魔鬥士) and NTES-S (9999.HK) 's For All Time (時空中的繪旅人) were on the approval list from China amongst a batch of 56 domestic game edition numbers for July

India is considering a ban on Huawei, ZTE (763.HK) and other Chinese telecom carriers from taking part in local 5G network construction, Indian press citing inside sources. The local government had at a senior-level meeting debated whether to allow Chinese telecom carriers to participate in their 5G infrastructure.

Macau Gaming Inspection and Coordination Bureau (DICJ) announced that gross revenue from games of fortune (GGR) amounted to MOP716 million in June 2020, down 97% yearly and 59.4% monthly, as compared with MOP1 billion in Citigroup's forecast.

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