July 21 Wrap HSI +578pts on hopes for New Tech Index
HSI +578pts (+2.3%) 25,636, HSCEI +150pts (+1.5%) 10,445 T/O HK$161.7bn (+19.2% DoD)
EUROPE Markets opened higher in news of a deal on the EU recovery fund.
US Dow Futures opened flat (-30pts) then trended higher on news of an EU recovery fund deal and look to open +170pts with the S&P and NDX higher too.
CSI 300 Closed +11pts (+0.23%) @ 4,691 Market opened flat but spiked higher and then trended slightly higher in very choppy trading day high was around 10:30am (4,714), then sold down lot the low of 4,661 before a small bounce into lunch. PM initial selling back to the morning low and then bounced but effectively traded sideways. Sentiment mixed but with Insurance companies allowed to invest more into equities the ‘managed bull market’ has scope to run further. BUT holding back the market is the continue threat of Flooding and Flood damage which could impact the spread/containment of Covid-19. Although the floods are seen as good for infrastructure and resources plays. Also overhanging the market is the deterioration in China’s international relationships against the back drop of a slowing global economy.
HSI Pre Market HK Pre Market +369pts @ 25,427vs +105 pts ADRs @ 25,162. T/O was HK$7.38b With E commerce names in focus on the new Hans Seng Tech index and the IPO news which saw HKEX +5.7%. Market continued to work higher in choppy trading. PM saw initial selling but then rebounded currently and worked higher through to close at the day high after a 40pt up tick in the closing auction.
Increased Turnover on the announcement of a new Tech Tracker Index from Hang Seng Indexes as HSI portrays itself as a new Tech hub. Property sector, Financials and Telcos likely to see weakness as local investors rotate into the ’new’ sector.
SHK PPT (00016.HK) Having unveiled the first two price lists of Regency Bay, announced to launch the Tuen Mun residential project at 10am this Saturday (25 July). A total of 108 flats will be offered, measuring saleable area of 261-437 sq.ft each. The discounted selling prices range $4.6888-7.3004 million sq.ft., i.e. an average of $17,498 per sq.ft.
FIH (2038.HK) announced additional inside information to its Profit Warning, expecting 1H20 revenue to exceed US$3.66 billion, down 42.7% yearly, and 1H20 consolidated net loss to approximate, or below, US$105 million, against US$83.839 million for 1H19.
HSBC clarified that the layoff plan as rumoured on the social media is groundless. Netizens circulated news recently that roughly 400 workers of the bank will be notified of redundancy.
Market and Pre Market News at bottom of page.
Short Selling HSI Tuesday 18.5% vs 21.3% Monday
Top Shorts China Res land (1109) 53%, Want Want (151) 43%, China Shenhua (1088) 38%, CCB (939) 36%, Ping An (2318) 32%, Hang Seng Bank (11) 32%, BoC (3988) 29%, Citic (257) 29%, Link REIT (823) 27%, Mengniu Dairy (2319) 27%, China Life (2628) 26%, Country Garden (2007) 26%, Petrochina (857) 26%, New World New (17) 25%.
Northbound Rmb 61,510m Sell 32,605m : 28,906m Buy
Southbound HK$ 15,235m Sell 6,399m : 8,836m Buy
Northbound Rmb 77,037m Sell 38,175m : 38,862m Buy
Southbound HK$ 14,286m Sell 5,804m : 8,483m Buy
CHINA No data
Centre for Health Protection said there were 61 additional COVID-19 cases in Hong Kong today; 58 were locally transmitted.
After Market Data
Inflation Rate Jun +0.7% YoY vs +1.5% May (F/cast was +1.7%)
Lowest since March 2017. Prices slowed for food, in particular pork; housing and miscellaneous goods. Additionally, cost of durable goods dropped further while transport prices were unchanged, BUT the cost of miscellaneous services advanced at a faster pace. Also, prices declined less for electricity, gas & water and clothing & footwear. On a monthly basis, consumer prices went down
CHINA DONGXIANG (3818.HK) +31.8%, hits new high
KINGDEE INT'L (268.HK) +14.4%, hits new high
HUA HONG SEMI (1347.HK) +14.1%
TCL ELECTRONICS (1070.HK) +12.4%, hits new high
WEIMOB INC (2013.HK) +12.1%
HENGTEN NET (136.HK) +11.8%
HUIFU PAYMENT (1806.HK) +10.8%
ZHENGTONGAUTO (1728.HK) -10.7%
XD INC (2400.HK) +10.6%, hits new high
ND PAPER (2689.HK) -10.5%
*TECH & COMPONANTS STRONG as HSI Company to launch the Hang Seng Tech Index on July 27 tracking the 30 largest technology companies listed in Hong Kong that pass the three layers screening criteria; XIAOMI (1810 HK +5%) AAC (2018 HK +6%) SUNNY (2382 HK +7.5%), BYDE (285 HK +7.6%) HUA HONG (1347 HK +14%).
SMOORE (6969 HK +4.3%) +VE profit warning expects interim adjusted net profit to rise 38.1% to 42.9% YoY.
*E-COMMERCE/SOFTWARE STRONG on the HSI Index news; the "ATMX Quartet”; ALIBABA (9988 +7.3%), TENCENT (700 HK +7.1%), MEITUAN (3690 HK +8.5%) and XIAOMI(1810 HK +5%) will make up a third of the index in total. SOFTWARE names including KINGDEE (268 HK +13.5%) KINGSOFT (3888 HK +8.9%) NETDRAGON (777 HK +5.7%) jumped on inclusion speculation.
ANT's plans for an initial public stock offering on both the HKEX and Shanghai Star board also drove sector higher; HKEX (388 HK +9.8%) surged.
ALI HEALTH (241 HK +13%) PA GOOD DOC (1833 HK +10%) after China allows insurance coverage of online medical services.
CH LIT (772 HK -3.5%) to report net loss for 6 months ended June 30, affected by the non-cash impairment of goodwill and trademark rights relating to the acquisition of New Classics Media Holdings in 2018.
*PHARM STRONG on earnings speculation. WUXI APPTECH (2359 HK +6.6%) prelim 1H net income +62.5% to 1.72b yuan. Q2 Net profit Up YoY to 1.14b yuan, while revenue +29% to 4.04b yuan.
FOSUN PHARM (2196 HK +6.6%) SINO BIOPHARM (1177 HK +7%) SSY (2005 HK +7.2%).
*HK PROPERTY MIXED as the one-month HIBOR fell for a seventh consecutive trading day to a near four-year low. Also a survey showed that more than a third of Hongkongers expect home prices to pick up in the second half ALTHOUGH the survey was taken before the latest covid-19 outbreak!
HENDERSON LD (12 HK +1.9%) NWD (17 HK +1.3%) HANG LUNG PROP (101 HK +1.1%) WHARF (4 HK +1.5%).
*PAPER WEAK following yesterday's big gains on speculation paper price to fall and some broker downgrades NINE DRAGONS (2689 HK -10.5%) LEE & MAN (2314 HK -6.7%).
*RESOURCES WEAK as OIL COMPANIES traded softer on the news that SINOPEC (386 HK -0.3%) plans to cut refinery run rates at some of its coastal plants in China this month as massive flooding weighs on demand. PETROCHINA (857 HK -0.8%) CH OILFIELD (2883 HK -0.6%).
METALS mostly dropped on profit-taking following recent strong rebound as long-time laggards. ZIJIN (2899 HK +0.8%) expects its debt ratio to decline significantly after its gold and copper capacity rises. CHALCO (2600 H K-1.9%) JIANGXI COPPER (358 HK -3%) MAANSHAN IRON (347 HK -0.9%).
ZHENTONG AUTO (1728 HK -10%) misses US$100m loan payment installment.
SUNAC (1918 HK +3.4%) plans to spin off its property management business.
JAPAN Market opened higher as the Inflation was in-line. Market then traded sideways through the day Nikkei Closed +0.7%
S KOREA Markets opened higher, PPI was better than expected Kospi worked slight better to Close +1.4% and Kosdaq worked better but then eased back slightly late in the session Closed +1.1%
TAIWAN Opened higher and worked higher dipped slightly at the end Closed +1.8%
MEITUAN-W (3690.HK) announced that on July 20, 2020, 1.255 million Options were granted to certain employees of the Company pursuant to the Post-IPO Share Option Scheme. The exercise price of the Options granted was HK$195.98 per Share.
XTEP INT'L (1368.HK) -VE Profit Warning announced that the Group is expected to record an approximately 45% to 55% YoY decrease in its consolidated profit for the six months ended 30 June 2020, as compared to that for the corresponding period in 2019. Said that the core Xtep brand reported retail sell-through growth (including offline and online channels) for the three months ended 30 June 2020 at low-single digit decline year on year. The retail discount level was at 30% - 35%, and the retail
inventory turnover was 5 - 5.5 months.
A-LIVING (3319.HK) +VE Profit Alert. The consolidated net profit and the unaudited consolidated net profit attributable to the Shareholders for the six months ended 30 June 2020 are expected to record a significant increase of not less than 50% and 35%, respectively, as compared to that for the corresponding period in 2019. Also announced a proposed change of company name from “A-Living Services Co., Ltd.” to “A-Living Smart City Services Co., Ltd".
In response to the Wall Street Journal's report that Beijing is pondering over reprisal against Nokia and Ericsson, Chinese Foreign Ministry Spokesperson Wang Wenbin told Global Times that the news is groundless and malicious made-up. Instead, China remains open to inviting the two European telecom giants and other European enterprises to participate in Chinese 5G infrastructure, clarified Wang.
L'OCCITANE (973.HK) announced that total net sales amounted to EUR274 mn during the three months ended 31 December 2020, down 22.2% on both reported and constant rates. In particular, Hong Kong net sales slid 62.1% on constant rates, the gravest in all markets.
The government will launch two residential sites in Tai Po this quarter, where the tender for Tai Po Town Lot No. 243 at Ma Wo Road will close this Friday (July 24), said Alex Leung, Senior Director of CHFT Advisory and Appraisal Limited. The site is located at the end of Ma Wo Road, northwest of Classical Gardens, with a maximum GFA of roughly 782,000 sq.ft. CHFTAA expected the site to sell at $4.25-4.57 billion, with a floor selling price of $5,400-5,800 per sq.ft.
SUNAC (1918.HK) plans to spin off its property management unit for a planned US$1 billion IPO, IFR reported.
SHUANGHUA H (1241.HK) announced the resumption of trading of its shares from 1pm today (21 July). The Company received a fax from the Stock Exchange (the Review Decision Letter) yesterday notifying the Company that the Listing Committee, having considered all the submissions (both written and/or oral) made by the Company and the Listing Division, decided to allow the Company’s review application.
AlipayHK announced that both the number and amount of transactions in 1H20 of the company delivered double-digit-percentage increment on a yearly basis. The number of small-to-medium merchants joining the alliance with the company in June also surged over 44% over a year ago.
In 2020, Hong Kong's retail sales will possibly slide 19.7% yearly to $346 billion, against the early-20 forecast for a 2.5% fall to $420 billion, said Michael Cheng, Asia Pacific & Hong Kong/China Retail & Consumer Leader, Assurance Partner at PwC Hong Kong. The actual drop may turn out even bigger than 19.7% unless Hong Kong can achieve customs clearance by November-December, opined Cheng.
BABA-SW (9988.HK) announced to expand its reach to consumers by working with Starbucks' upgraded mobile ordering services, "Starbucks Now". Consumers can place online orders on "Starbucks Now" conveniently for pick-up at stores. The "Starbucks Now" services will be available via Taobao, Amap, Koubei and Alipay through the Alibaba Business Operation System.
Overnight HIBOR last posted at 0.05196%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.25964%, down for 8 days, marking a 1-month low.
US Department of Agriculture announced that China had acquired additional 132,000 tonnes of U.S. soybeans for FY20/21 shipment, cited Reuters.
GREATWALL MOTOR (2333.HK) unveiled three major tech brands yesterday, namely a global intelligent modular design platform called "Lemon", a global smart and professional off-road platform called "Tank", and a smart system for future mobility called "Coffee Intelligence”. The launch will accelerate the transformation of Chinese carmakers to globalized tech mobility companies.
TENCENT (700.HK)'s WeChat Mini Games announced an upgrade to its refund system for minors, under which their guardian may file for refund for their mistaken top-up or irrational spending.
HKTV (1137.HK)'s HKTVmall announced that it will be running four online exhibitions in August 2020, namely online book fair, electronic gadget fair, infant appliance fair and toy fair, in light of several recently postponed major exhibitions amid the deteriorating coronavirus pandemic. The online shopping mall stated that major merchants will be invited to set up online shops on its platform at privileged commission.
Hong Kong's unique position in international economy and financial system is driven by its unreplicable edges, according to S&P Global Ratings. However, these edges are at risk of erosion under higher policy uncertainty, fraying social cohesion and competition from China which makes Hong Kong less distinctive. S&P modeled the city's economy growth to slide to 1.1% for 2030E. Economic growth slowdown would be inevitable, since Hong Kong is one of the Asian regions with the fastest population ageing.
Ant Technology Group Pre listing report was founded in October 2000, with a registered capital of around RMB23.78 billion and Eric Jing as its legal representative, Securities Times' egsea cited Tianyancha. Hangzhou Alibaba is the largest shareholder of Ant Group, with a 33% shareholding. Other shareholders include China Life Insurance (Group) Company, National Council for Social Security Fund, and NCI (01336.HK)
CICC (3908.HK) announced proposed amendments to the plan and authorization for the A Share Offering. The number of A Shares to be publicly issued by the Company will be no more than 1.438 billion Shares, as compared with up to 459 million shares as previously planned.
Chinese Government is pondering over reprisal against Nokia and Ericsson if the European Union countries follow the lead of America and Britain in barring Huawei from their local 5G network contruction, as the Wall Street Journal quoted from people familiar with the matter.
MTR CORPORATION (66.HK) announced that it will temporarily adjust the non-peak hour train frequency of various railway lines starting from tomorrow. Train services during weekday peak hours will remain unchanged. Under the new arrangements, non-peak services and services on Saturdays, Sundays and public holidays on the Tsuen Wan, Kwun Tong, Island, South Island, Tseung Kwan O, East Rail and West Rail lines will be maintained at an average interval of around 3.5 to 8 minutes. Passengers may experience an extra waiting time of between about half a minute and two minutes on average during non-peak periods.
XIAOMI-W (1810.HK) Non-executive Director Liu Qin disposed of 12.2044 mn shares of the company on open market and cashed in a total of $206 mn, according to the shareholding disclosures on the Stock Exchange.
The Indian government identified at least seven Chinese firms operating locally with alleged links with People's Liberation Army (PLA) and overseas intelligence collection for the Chinese government, reported Indian media. The identified firms include BABA-SW (9988.HK), TENCENT (700.HK), Huawei and SAIC MOTOR (600104.SH). New Delhi is weighing up restrictions to reduce their involvement in the country's economy.
Pinduoduo, a Chinese e-commerce operator, was accused of inflating the gross merchandise volume (GMV) in 1Q. A Chinese media quoted Pinduoduo Strategy Vice President Jiuding's response that the data was properly disclosed, stressing that the calculation basis of the GMV aligned with those of BABA-SW (9988.HK) and JD-SW (9618.HK). The measurement is based on the total value of all confirmed orders of goods and services on the platform, including actual sales, delivery and returns, Jiuding said.
Former Federal Reserve Chairs Ben Bernanke and Janet Yellen co-wrote in an article that the central bank should look into the financial market breakdown in March and that massive hedge fund sell-off in the early days of the coronavirus outbreak had triggered the market malfunction The coronavirus crisis will possibly severely damage the economy and sharply shore up credit loss despite the strong financial presence of banks, opined the pair.
Airwallex, a global cross-border payment company, announced that Alibaba Entrepreneurs Fund had joined its round D+ financing and become a new investor. In April, Airwallex had completed round D financing of US$160 million. Its existing investors include TENCENT (700.HK), Sequoia Capital China, DST Global, ANZi Ventures, Salesforce Ventures, Horizons Ventures and so on.
BOC HONG KONG (2388.HK) announced the introduction of BOCHK iGTB MOBILE, whereby corporate users may handle payment, money receipt, payroll, deposit, trade financing through mobile gadgets and flexibly tweak and review different authorisation and empowerment online.
Chinese Embassy in the UK expressed vigorous discontent and objection against multiple moves made by the UK in regards of Hong Kong National Security Law. China deemed the UK was making mistakes in meddling with Hong Kong affairs, which are internal business of China. China called on the UK to stop any means of intervention in Hong Kong affairs immediately, and not to got herself into deeper troubles, or else the UK will only eat the bitter fruit of its own making.
CHINA LIT (772.HK) Profit Warning.The Group is expected to record a net loss for the six months ended June 30, 2020 as compared to a net profit for the corresponding period of last year. One of the reasons is that the Group expected non-cash impairment of goodwill and trademark rights of an amount ranging from RMB3.7 billion to RMB4.7 billion, relating to the acquisition of New Classics Media in 2018, a subsidiary engaging in TV series, web series and film production and distribution in China.
REGAL INT'L (78.HK) Profit Warning expecting a net loss in excess of HK$800 million for the 2020 Interim Period, while a profit of HK$379 million was recorded for the comparative six months in 2019.
CHINA RAILWAY (390.HK) announced that the aggregate value of new contracts for the first half of 2020 amounted to RMB870.34 billion, up 24.1% yearly.
CAR INC (699.HK) announced that UCAR, a substantial shareholder of the Company, has received a notice from the CSRC, it initiated an investigation on UCAR in connection with suspected violations of information disclosure laws and regulations by UCAR. The UCAR Investigation has not restricted the business and operations of UCAR.
CAR INC (699.HK) announced that UCAR, the substantial shareholder of the company, and Amber Gem terminated the transfer of 28.92% share capital of the company to SAIC HK, a wholly owned subsidiary of SAIC MOTOR (600104.SH). Meanwhile, UCAR and Amber Gem would transfer 28.91% share capital to Jinggangshan BAIC, involving approximately 613 million shares for a total consideration of $1.901 billion.