July 20 HK WRAP HSI -31pts T/O +5% Shorts @ 21%


22 Jul

July 20 HK WRAP HSI -31pts  T/O +5% Shorts @ 21%


HSI -31pts (-0.1%) 25,058, HSCEI +92pts (+0.9%) 10,295 T/O HK$135.61bn (+4.7% DoD)


EUROPE Markets opened lower as EU leaders failed to reach agreement over the EU recovery fund. Dax rebounded into the green but drifting lower. FTSE hit resistance at Friday’s close. CAC recovered into the green but dipped back into the red

US Dow Futures opened flat +45pts but have edged slightly higher in the morning but have since dipped and are currently indicating -50pt, with the S&P and NDX also indicting lower. Caution over the covid impact on the economy and the fact that earnings season is underway.


INDEXES      CSI 300 Closed  136pts (+3%) @ 4,680. Market opened higher and saw initially selling at China left its Loan Prime Rate unchanged as expected.  Market found support at Friday’s closing level and the then worked higher through the morning to close at 4,660 at lunchtime.  Market then trade sideways for the next hour with support at 4,640 before working higher into the close.  Signs of a rebound last weeks sell-off with rotation out of recent favourites like Pharma and BioTech into Financials and Industrials.  Which is strange considering the Govt took over a number of Financial institutions from theTomorrow Group at the weekend but the PBoC did announce linking its bonds markets.  But the overall action suggest Team China remains the main player.


HSI Pre Market HK HK Pre Market -70pts @ 25,020 vs +20prs ADRs @ 25,109  T/O HK$1.7b with E-Commence names mixed, Handset Components +VE There was a 150pts spike before selling down 400pts in the first 20 mins to the day low 24,766. Market then worked higher in choppy trading to the day high just before lunchtime 25,222. After lunch some initial selling but this time it found support at Friday’s closing level. Then traded sideways until 3pm when further selling came in taking. The market down to 24,990 level before it climbed back above 25,000 into the close. Sentiment cautious with a number of profit warnings over the weekend along with increased covid cases and a reimposition of social distancing requirements; all -VE. Despite the low pre market volume the morning recovery for the HSI suggests that Team China is back to support the market. Local sentiment is weak on the threat of sanctions overhanging the market combined by renewed strict social distancing measure. Worth noting that whilst the administration is saying nothing will change due to the US enacting the HK Autonomy Bill the HKMA was discussing with banks alternatives in case it loses its special status.


AFTER MARKET
Didi Chuxing, a ride-hailing company in China, plans to ignite an IPO in Hong Kong 
as fast as this year, according to the sources of chinastarmarket.cn. The company is now in talks with investment banks for the IPO with a target valuation of approximately US$80 billion, equivalent to over HK$600 billion, which is likely to become one of the biggest IPOs in Hong Kong in recent years.

CHINA TELECOM (728.HK) June, the mobile subscribers numbered 343.47 million with a net increase of 2.27 million, among which 5G package subscribers had a net increase of 7.79 million, slackening from 8.35 million in May.

MIRAMAR HOTEL (71.HK) -VE Profit Warning, expecting that the revenue and profit attributable to shareholders during the six months ended 30 June 2020 will be significantly reduced as compared with the corresponding period in the year of 2019.

ADTIGER CORP (1163.HK) +VE Positive Profit alert. The Group is expected to record an increase in adjusted net profit (which is a non-HKFRS measurement and is calculated by excluding the effect of one-off listing expenses) of not less than 40% as compared with the adjusted net profit for the six months ended 30 June 2019 (which is a non-HKFRS measurement and is calculated by excluding the effect of one-off listing expenses).

FULUM GP HLDG (01443.HK) has been notified by Centre for Health Protection that four patients diagnosed with novel coronavirus had on 11 July been to Fulum Restaurant at Tuen Mun Central Square. In order to guarantee the health and safety of staff and customers, the eatery group has shut down the said branch for four days with immediate effect for throughout disinfection and sterilisation until 24 July.

Macau's Statistics and Census Service (DSEC) indicated that there were 22,556 visitor arrivals in June 2020, a decline of more than 90% YoY. Same-day visitors and overnight visitors totalled 13,205 and 9,351 respectively. In the first half of 2020, number of visitor arrivals reduced by 83.9% YoY to 3.2689 million.

Alipay's owner Ant Group (formerly known as Ant Financial) today announced to kick-start the simultaneous IPO plan on the Main Board of HKEX (388.HK) and Sci-Tech Innovation Board of Shanghai Stock Exchange. Under which, Ant Group looks to ramp up domestic consumption by underpinning digital upgrades for the service industry. The group also seeks sustainable development through stronger global team-up and support for its technological R&D and innovation. +VE for HK EX (388 HK)

WUXI APPTEC (2359.HK) +VE PROFIT WARNING total operating revenue for the first half of 2020 was expected to grow around 22.68% yearly to RMB7.23 billion. Net profit was expected to rise roughly 62.49% yearly to RMB1.72 billion, and basic EPS up by about 63.04% yearly.

CHINA UNICOM (762.HK) aggregate number of mobile billing subscribers amounted to 309.5 million in June 2020, representing net addition of 783,000 for the month. During the month, the aggregate number of 4G subscribers neared 261 million, representing net addition of 2.503 million for the month vs 1.905 million for May.

Hang Seng Indexes Company announced that it will launch the Hang Seng TECH Index on 27 July 2020 (Monday). This new index will track the 30 largest technology companies listed in Hong Kong that pass the index’s screening criteria.

Rankings|Stocks|Weightings

1 |BABA-SW (9988.HK |8.53%

2 |TENCENT (700.HK) |8.52%

3 |MEITUAN-W (3690.HK) |8.33%

4 |XIAOMI-W (1810.HK) |8.11%

5 |SUNNY OPTICAL (2382.HK) |8.02%

6 |SMIC (981.HK) |5.96%

7 |ALI HEALTH (241.HK) |5.08%

8 |JD-SW (9618.HK) |4.84%

9 |KINGDEE INT'L (268.HK) |4.47%

10 |PA GOODDOCTOR (1833.HK) |3.98%


SMOORE INTL (6969.HK) -VE Profit Warning the Group expects that the profit and total comprehensive income for the six months ended 30 June 2020 will decrease by approximately 89.1% to 94.0% compared to that of the six months ended 30 June 2019. On an adjusted net profit basis, the Group expects to record a profit in the range of approximately RMB1.286 billion and RMB1.331 billion for the Period compared to a profit of approximately RMB931 million for the Comparable Period, representing an increase ranging from approximately 38.1% to 42.9%.

HSBC Insurance, CEO said online insurance applications have indeed burgeoned during the COVID-19 epidemic, citing a sharp increase in online applications for insurance coverage in the first three months of 2020 and the first half of year. The insurer believed this trend should persist even after the pandemic eases.


Market and Pre Market News at bottom of page.


Short Selling HSI Monday 21.3% vs 22.3% Friday

Top Shorts CCB (939) 43%, Hang Seng Bank (11) 38%, Sands China (1928) 38%, Ping An (2318) 38%, Mengniu Dairy (2319) 34%, Sunny Optical (2382) 33%, HSBC (5) 33%, MTRC (66) 32%, Galaxy (27) 30, China Shenhua (1088) 30%, New World New (17) 29%, BoC (3988) 28%, Wharf REIC (1997) 25%


CONNECT FLOWS 

Shanghai

Northbound Rmb 66,944m Sell 32,300m : 34,644m Buy

Southbound HK$ 16,624m Sell 6,929m : 9,695m Buy

Shenzhen

Northbound Rmb 83,475m Sell 45,859m : 37,616m Buy

Southbound HK$ 15,855m Sell 7,047m : 8,808m Buy


DATA
CHINA

Loan Prime Rate 1 year 3.85% no change as expected

Loan Prime Rate 5 year 4.65% no change as expected


HONG KONG Centre for Health Protection said there were 73 additional COVID-19 cases in Hong Kong today; 66 were local transmission -VE

After Market Unemployment Jun 6.2% vs 5.9% May (F/cast was 6.3%)

The unemployment rate (not seasonally adjusted) increased across almost all the major economic sectors, with more distinct increases observed in the decoration, repair and maintenance for buildings sector; import and export trade sector; and warehousing and support activities for transportation sector.

As to the underemployment rate, increases were mainly seen in the transportation sector and education sector.

Commenting on the latest unemployment figures, the Secretary for Labour and Welfare, Law Chi-kwong said the labour market continued to deteriorate for the second quarter of 2020 as a whole, but the pressure faced by the labour market showed signs of easing towards the end of the quarter as the local epidemic situation abated in May and June. The launch of the Employment Support Scheme also helped counter the headwinds facing the labour market. WORTH noting that was before the latest wave of Covid cases -VE


Active Heavyweights
PING AN (2318.HK) +1.7%
CCB (939 HK) -0.5%
TENCENT (700.HK) +0.3%
AIA (1299.HK) -0.3% 
HKEX (388.HK) -0.2%

HSI & HSCEI Constituents on the move
BYD COMPANY (1211.HK) +12.2%
CHINA LIFE (2628.HK) +8.3%
CONCH CEMENT (914.HK) +7.9%
CITIC SEC (6030.HK) +6.9%
WHARF REIC (1997.HK) -5.9%
SUNAC (1918.HK) +5.3%
CHINA TAIPING (966.HK) +5.2%
SHIMAO GROUP (813.HK) +5.2%
GALAXY ENT (27.HK) -3.9%
CPIC (02601.HK) -3.9%
CHINA VANKE (02202.HK) +3.6%
CONCH VENTURE (00586.HK) +3.4%
CHINA RES BEER (00291.HK) -3.1%
TECHTRONIC IND (00669.HK) -3%

HSMI & HSSI Constituents on the move

COMEC (317.HK) +22.4%

HUABAO INTL (336.HK) +15.8%

CNBM (3323.HK) +13.9%

PANDA GREEN (686.HK) +13%

NCI (1336.HK) +10.8%

AVICHINA (2357.HK) +10.7%

WISDOM EDU INTL (6068.HK) +10.6%

WESTCHINACEMENT (2233.HK) +10.3%

ZOOMLION (1157.HK) +10.1%, hits new high

CHINAGRANDPHARM (512.HK) +8.3%, hits new high

SINOTRUK (3808.HK) +7.8%, hits new high

CHINA LESSO (2128.HK) +5.8%, hits new high

CHINA EDU GROUP (839.HK) +4.7%, hits new high


COMMENT

*CHINA BANKS FIRM after China took a further step in integrating its fragmented bond markets. The PBOC said on Sunday China to integrate trading of US$14t local bond markets. The regulators will allow market intermediary agencies for the two venues to connect issuance, trading & settlement. CMB (3968 HK +2.3%) ICBC (1398 HK +0.4%) BOC (3988 HK +0.4%) ABC (1288 HK +0.7%).

Largely ignoring the news of the Govt taking over more of the Tomorrow Group’s companies.

*CHINA INSURERS STRONG as CBIRC announced that insurers are allowed to increase equity investment up to 45% from 30%, some expect more industry reform ahead. Also means more ammunition for Team China to support the rally. CH LIFE (2628 HK +8.3%). NCI (1336 HK +10.8%) CH TAIPING (966 HK +5.2%) CPIC (2601 HK +3.9%).

*E-COMMERCE FLAT. Australia is considering an investigation into social media platforms such as TikTok, according to local newspaper. The probe will not be a formal public inquiry, but will look at the security threats posed by TikTok, as well as WeChat and Weibo; TENCENT(700 HK +0.3%). ALIBABA (9988 HK +0.3%) traded within range after SoftBank quiet sold another US$2.2b of Alibaba stake via options with 2024 expiry.

*HK PROPERTY WEAK as the third wave of Covid-19 infections continued to weigh on the property sector; secondary market transactions at 10 blue-chip housing estates were -28% WoW to 10 over the past weekend, said Centaline.

Also news that purchasers walking away from deposits of HK$250m +10% YoY

CKA (1113 HK -1.3%) NWD (17 HK -0.5%) HENDERSON LD (12 HK -0.9%). SHKP (16 HK -1.3%) released 50 flats in the second price list of Regency Bay in Tuen Mun yesterday, at an average price of HK$17,991 psf after discounts, 4% higher than the first price list. SHKP has received around 1,000 checks for the 138 units in the first 2 price lists, making them together 6X oversubscribed.

*MACAU CASINOS WEAK after the Macau Gaming Inspection and Coordination Bureau announced that gross gambling revenue -83.39% QoQ (-95.59% YoY). The second-quarter gross gambling revenue was 3.23b Macau pataca. Revenue from the VIP rooms -89.85% QoQ or -95.65% YoY.

SANDS (1928 HK -2.5%) GALAXY (27 HK -3.9%) WYNN (1128 HK -2.6%).Taking with a friend in Macau over the weekend they said there are still more staff that guests.

*BUILDING MATERIALS & EQUIP STRONG As I mentioned investors expect increased demand following the recent flooding. ASIA CEMENT (743 HK +9.4%) despite expecting Jan-June profit to fall 40%-45% YoY due to declines in sales volume and selling prices amid virus outbreak.BBMG (2009 HK +8.7%) CONCH CEMENT (914 HK +7.8%) BBMG (3323HK +14%).SANY (631 HK +4.2%). ZOOMLION (1157 HK +11%) WEICHAI POWER (2338 HK +4.6%)

*AIRLINES FIRM as Chinese domestic travel gradually picks up. AIR CHINA (753 HK +1%) June Passenger traffic -64.9%. CH EASTERN (670 HK +1.4%) June passenger traffic -61.5%. CHSOUTHERN (1055 HK +1.1%) June passenger traffic -53.3%.

*COMMODITIES STRONG as material prices advanced amid optimism on Chinese economic recovery. CHALCO (2600 HK +9.5%) ANGANG (347 HK +2.4%) JIANGXI COPPER (358 HK +5.1%) MAANSHAN IRON (323 HK +4.3%).

*AUTOS STRONG BYD (1211 HK +12.2%) on the news that China is pushing automakers to improve fuel economy of combustion vehicle while promoting electri vehicles. DONGFENG (489 HK +3.6%) GREATWALL (2333 HK +3.3%) BRILLANCE (1114 HK +3.5%).FT reports Volkswagen to focus its EV car production on China


REGIONAL MARKETS 

JAPAN Market opened slightly higher but has trended lower. Pre market data was not as good as had been hoped for and combined with increased covid cases sentiment remains weak. Market dipped to just below Friday’s close then worked higher to Close +0.1%

S KOREA Markets opened higher but trended lower for the first hour before staging a bounce back but failed to break above Friday’s closing level Closed Kosdaq -0.2% and Kospi -0.1%

TAIWAN Opened higher but initially sold down in the first 15 minutes but worked its way back and traded just below flat for the rest of the day. Closed -0.1%



NEWS
MARKET HOURS
Nestle has started exploring the best option for its Chinese bottled water business
which may involve a potential disposal, according to China Business Network. Nestle's Chinese bottled water arm is formed by local brands like Nestle Pure Life, and premium brands like Perrier and S.Pellegrino.

In 1H20, the number of registered equitable mortgages of residential properties reached 3,528, plunging 4,187 from 2H19, said Centaline Property. The figure was an all-time now HoH since 2017.

The Buildings Department approved 19 building plans in May, with five on Hong Kong Island, five in Kowloon and nine in the New Territories. Of the approved plans, nine were for apartment and apartment/commercial developments, three were for commercial developments, three were for factory and industrial developments, and four were for community services developments.

JLL said the coronavirus crisis is hurting the Asia-Pacific property market deeper in 2Q20 than 1Q20. In 1H20, Asia-Pacific property investment shrank 32% yearly. 2Q20. turnover slid 39% yearly, steeper than 1Q20's 26%.

Large global banks' wealth management divisions are examining if their clients are tied with pro-democracy movements in Hong Kong, in an attempt to shun troubles as a result of the new national security law, Reuters citing people with knowledge of the matter. Such banks include Credit Suisse, HSBC (5.HK), Julius Baer Gruppe and UBS.

Beijing Automotive Group (BAIC Group) intended to rekindle the proposed acquisition over CAR INC (699.HK), Cailian Press reported. On 1 June, CAR INC had announced it had nailed a non-legally binding strategic cooperation agreement with BAIC Group. Later in the afternoon, just before the close Ucar announced that it intended to transfer no more than 443 million shares of CAR INC (699.HK) to Jiangxi Jinggangshan BAIC Investment Management Co., Ltd. or other designated third party. Upon completion, the company will no longer hold any shares in CAR INC.

Today, SAIC announced that it ceased the acquisition of CAR INC's shares.

SAIC MOTOR (600104.SH) announced that its wholly owned subsidiary SGMW (HK) had earlier entered into an acquisition offer with Ucar and Amber Gem for the proposed acquisition of not more than 613 million shares of CAR INC. However, new condition came up during the course of negotiation of subsequent equity transfer agreement. Both parties failed to reach consensus on condition precedents to completion within the planned time frame. SGMW (HK) decided to terminate the deal to protect the company's interest. Trading in the shares of CAR INC (699.HK) has been halted at 1:00 p.m. today (20 July). The stock last traded at $2.93, slumping 4.9%, before trading halt.

Standard Chartered announced that it is setting up a Standard Chartered Greater Bay Area Centre in Tianhe District, Guangzhou, with a total investment of US$40 million (approximately HK$310 million). It is expected to be put into operation this quarter and the number of its employees will exceed 1,600 by the end of 2023. It will be located in Guangzhou International Commerce Center (Guangzhou ICC), a new landmark for Guangzhou's main axis.

Overnight HIBOR last posted at 0.05024%, logging a 1-month low, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.275%, down for 7 days, marking a 1-month low.

CHINA MOBILE (941.HK) June total mobile customers amounted to 946.7 million; down 240,000 monthly. Cumulative net loss of customers for the Year was 3.538 million. During the month, 5G package customers amounted to 70.199

Inland Revenue Department announced that from July 20, the department will suspend the provision of all of its services, except Central Enquiry Counter, Central Telephone Enquiry, Business Registration Office and Stamp Office. The department further announced that deadlines for tax payments, lodgement of objections and holdover applications, and submission of tax returns and information that fall between July 20 and July 26 will be automatically extended to July 27.

Japan confirmed 477 new COVID-19 cases Sunday, taking the tally to 26,100 (including those on the Diamond Princess ship), reported Kyodo. The death toll reached 999. Of which, Tokyo confirmed 188 infections.

Hong Kong Monetary Authority and sector representatives discussed the US elimination of special treatment and possible sanctions on Hong Kong at their regular meeting, Sing Tao Daily citing sources. HKMA may timely guide the banks to develop contingency plans in case Washington lays out concrete sanction details, according to a source.

China's one-year loan prime rate (LPR) remained unchanged at 3.85% in July, according to data from the People's Bank of China. The five-year LPR remained intact at 4.65%. Both readings were consistent with street forecasts.
HSBC announced that effective today, 20 July, banking hours at all its retail branches will be shortened
from 9:00 a.m. to 4.00 p.m. on Mondays to Fridays. Saturday banking hours will remain unchanged from 9:00 a.m. to 1:00 p.m. The Bank’s three mobile branches will be suspended until further notice.

Standard Chartered (Hong Kong) stated that banking hours at all its retail branches will be shortened to 9:30 a.m. - 4:30 p.m. on Mondays to Fridays, and Saturday banking hours to 9:30 a.m. - 12:00 p.m.

Social Distancing As a result of over 100 additional confirmed coronavirus cases yesterday, Chief Executive Carrie Lam announced tightened anti-pandemic measures, including extending the coverage of the mask-wearing order from public transport to indoor public premises and stretching the ban on dinnertime dine-in services by seven days. Harsh social distancing may be coming back unless the plague goes less rampant, furthered the city leader. Regarding Legislative Council Election, slated for 6 September, as a solemn matter, Lam stated that there is no change to the schedule up to now.



PreMarket
China confirmed 22 additional COVID-19 cases yesterday
(19 July), including 5 imported cases (in Sichuan, Inner Mongolia and Shandong) and 17 local infections (all in Xinjiang), National Health Commission reported.

BOC HONG KONG (2388.HK) notified its customers and the general public that in view of the current novel coronavirus outbreak, 11 branches in Kowloon and New Territories will be suspended from 20 July 2020 (Monday) until further notice. More than 180 BOCHK branches across the city will maintain normal services and the bank will continue to fully support the community efforts against the outbreak and adopt necessary sanitisation practices in all branches.

BABA-SW (9988.HK) recorded agricultural product transaction value of around RMB200 billion last year, where Tmall sold over 250,000 tonnes of unsalable farm goods in more than four months, revealed by a report from AliResearch and the Center for Agricultural and Rural Development

ALI HEALTH (241.HK) stated on Weibo that reports on BABA-SW (9988.HK)'s stake cut to 67.51% by dumping about 154 million shares of the Company were merely fake news. The healthcare service provider called on the market to clarify the truth.

Paul Chan in response to concerns from certain financial firms about National Security Law, wrote on his blog that the legislation only targets four kinds of behaviour and activities in extreme erosion to national security and that their business will be running as usual as long as they operate under the existing local statutory framework. The so-called sanctions from the U.S., despite doubts triggered thereby, have limited impacts on Hong Kong economy, added Chan. However, Washington's behaviour has seriously breached international law and basic principles of international relation and fallen into double standard and hegemony.

Canalys wrote in a report that smartphone shipments in India fell 48% yearly to 17.30 million devices in the second quarter of 2020, as the nation economy was stalled by epidemic in 2Q. In terms of brands, XIAOMI-W (1810.HK)remained at the top spot, whose shipment however sank 48% yearly to 5.3 million units.

SHOUGANG RES (639.HK) said that a conditional cash offer will be made by the Company, subject to the fulfilment of the Conditions, to buy-back for cancellation up to the Maximum Number of Shares, being 250 million Shares, representing approximately 4.72% of the total issued Shares at the Offer Price of HK$2 per Share. The deal will involve HK$500 million which will be funded by internal resources. The company applied for a trading resumption with effect from today.

Macau Novel Coronavirus Response and Coordination Centre announced that the city extends quotas for COVID-19 testings to 7,500 from 5,000 per day from today as Macau-Guangdong custom has been running smoothly after residents have been familiar with the conversion of health codes between the two cities, Xinhua News Agency reported.

China Passenger Car Association predicted a monthly seasonal decline in China's auto retail sales for July 2020. However, the figures may deliver a slight growth due to lower base in July 2019. The July auto retail sales is estimated at 1.53 million units.

RICI HEALTH (1526.HK) announced that it acquired a 30% equity interest in each of the 7 medical examination business subsidiaries from a connected person, Shanghai XDWYS, at a total consideration of RMB155 million.

TESSON HOLDINGS (1201.HK) announced the audited annual results for 2019. The loss amounted to HK$104 million, against a net profit of HK$59.16 million. LPS equaled HK8.77 cents. No final dividend was declared.

AMBER HILL FIN (33.HK) to place up to 223 million new shares, representing 16.67% of the share capital of the Company as enlarged. The gross proceeds will be HK$23.5 million.

E-COMMODITIES (1733.HK) announced that the Company on 17 July repurchased an aggregate of 1.584 million shares of the Company at $0.196-0.201 per share, involving approximately $316,000.

TOWN HEALTH (3886.HK) expected to record a loss of not less than HK$80 million for the six months ended 30 June 2020, as compared with the profit for the six months ended 30 June 2019 of HK$26.9 million.

CH DISPLAY OPT (334.HK) expected to record a net loss of over RMB120 million for the 6 months ended 30 June 2020, compared to the net profit of RMB10.6 million for the 6 months ended 30 June 2019.

LIFESTYLE INT'L (1212.HK)  expected to record a loss of HK$280 million for the six months ended 30 June 2020, as compared to a profit of HK$1.286 billion recorded in the corresponding period last year.

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