July 23 HK WRAP HSI +205pts as investors watch for China's response

27 Jul

July 23 HK WRAP HSI +205pts as investors watch for China's response

HSI +205pts (+0.8%) 25,263  HSCEI +82pts (+0.8%) 10,325  T/O HK$140.57bn (-9.6% DoD)  

EUROPE Market opened higher but investors watching covid cases, earnings and deteriorating US/China relations.
US Futures Opened DOW -15pts with S&P and NDX little changed but worked higher through the day to +153pts with the S&P and NDX also higher.

CSI 300 Closed +2pts (-0.04%) @ 4,713
A weak open in reaction to the news of the Chinese consulate in Houston being forced to close. But market rallied into the green in early trading hitting the day high 4,731in the first 30 minutes but unable to hold and sold down 124pts to the day low of 4,607. It then rallied into lunch. PM swathe market work higher but with resistance at yesterday’s closing level which was tested several time but unable to break out.

HSI Pre Market +177pts @ 25,235 vs +8pts ADRs @ 25,064 E-commnerce names were mixed. Component makers were strong on news that AAC TECH introduced Xiaomi and OPPO as strategic investors for its optical business.With an initial spike as shorts covered followed by what looked to be making selling. Market found support at 25,000 and bounced into lunch. PM saw the market trade sideways slightly higher with an up tick in the closing auction.

ICBC (1398.HK)'s new RMB loans in 1H 2020 carry average interest rates of 4.31%, 
down 45 bps yearly and below the market average, said President Gu Shu at CBIRC's press conference. During the period, the bank delivered additional inclusive loans of RMB168.4 billion, up 35.7%, added Gu.
HKT-SS (6823.HK) announced the launch of HEYPARK, a one-stop digital food ordering platform for dine-in and takeaway that accepts mobile payments. From now until August 31, HKT-SS is offering a promotion to support SMEs. Those who register now can enjoy free set-up and a 4-month waiver on monthly subscription fees.
ZDDC (600633.SH) stated that it had during 1H 2020 confirmed intended partnership with BABA-SW (9988.HK) over a new batch of data centre cabinet leasehold, Securities Times reported. By which, the company will also foster business ties with Huawei and TENCENT (700.HK) on marketing and e-sports business.
GREATWALL MOTOR (2333.HK) announced preliminary financial data for the interim period of 2020 prepared in accordance with the China Accounting Standards for Business Enterprises. Net profit -24.02% yearly to RMB1.153 billion. EPS equaled RMB0.12495.
China is going to consider BNO as an invalid passport and reserves her right to take further actions as Britain has breached her promise, said Chinese Foreign Ministry Spokesperson Wang Wenbin. London has broken her word and violated international laws by politically manipulating BNO matters despite Beijing's solemn negotiation, stated Wang.
Eu Yan Sang, HUNGFOOKTONG (1446.HK) and HKBN (1310.HK) announced a strategic partnership. With this partnership, they will gain exposure at each other’s extensive customer touchpoints, to further expand their sales channels and customer reach. Customers and employees of Eu Yan Sang, HUNGFOOKTONG and HKBN will get to enjoy exclusive membership/customers and employee discounts on a diversified range of product offerings at all three companies, starting from the end of July.
Centa Valuation Index (Major Banks) (CVI) last printed at 48.18 this week, +2.08 pts from 46.09 in the previous week. Centaline Property, elaborated that the index did not move itself deeper to the lower end of the critical point at 40 after breaking below 50, despite epidemic flare-up in Hong Kong. The turnaround of the index reversed the seven-week downswing, signaling a stabilization.

Market and Pre Market News at bottom of page.

Short Selling HSI Thursday 20.2% vs 16.9% Wednesday
Top Shorts 
Hang Seng Bank (11) 34%, Want Want (151) 34%, HSBC 95) 32%, Mengniu Dairy (2319) 31%, Ping An (2318) 31%, Hengan (1044) 29%, CCB (939) 29%, China Res land (1109) 28%, BoC (3988) 28%, Petrochina (857) 27%, Citic (267) 26%, CNOOC (883) 26%, HK & China Gas (3) 25%, Henderson Land (12) 25%.

Northbound Rmb 59,338m Sell 31,217m : 28,121m Buy
Southbound HK$ 14,293m Sell 6,315m : 7,977m Buy

Northbound Rmb 81,828m Sell 41,193m : 40,635m Buy
Southbound HK$ 15,237m Sell 6,639m : 8,598m Buy

CHINA No data
Centre for Health Protection 
said there were 118 additional COVID-19 cases in Hong Kong today; 111 were locally transmitted.

Active Heavyweights
HKEX (388.HK) +4%
TENCENT (700.HK) +3.3%
AIA (1299.HK) +1.3%
CCB (939 HK) -0.7%
PING AN (2318.HK) -0.3%

HSI & HSCEI Constituents on the move
AAC TECH (2018.HK) +12.9%
BYD COMPANY (1211.HK) +7.4%
CHINA RES BEER (291.HK) +6.2%, hits new high
SINOPHARM (1099.HK) +5.6%
SINO BIOPHARM (1177.HK) +4.4%
SUNNY OPTICAL (2382.HK) +3.5%
WHARF REIC (1997.HK) -3.4%
WH GROUP (288.HK) -3.3%

HSMI & HSSI Constituents on the move
WISDOM EDU INTL (6068.HK) +14.5%, hits new high
FOSUN PHARMA (2196.HK) +10.1%, hits new high

despite deteriorating Sino-US relation, led by a jump in AAC TECH (2018 HK +12%) and optimism on the Hang Seng Tech Index. AAC TECH says investor group buying 9.5% stake in subsidiary AAC Communication for 1.15b yuan. Investors include firms controlled by smartphone makers XIAOMI (1810 HK +2%) and Oppo.
SUNNY (2328 HK +3.5%) BYDE (285 HK +7%) HUA HONG (1347 HK +3.6%) QTECH (1478 HK +3.4%).
*E-COMMERCE FIRM after yesterday's profit-taking, as investors remain optimistic on the new economy sector.
MEITUAN DIANPING (3690 HK +3.5%) will collaborate in a digital venture with Coca Cola (China), after the signing of a strategic coop agreement on July 21.
ALIBABA (9988 HK -0.5%) NTES (9999 HK +0.5%) ALI HEALTH (241 HK +3.2%).
*HK PROPERTY WEAK on amid surging Covid-19 cases. Empire Group and HK FERRY released 123 flats in their first price list of Seacoast Royale in Tuen Mun, with the cheapest flat worth just HK$2.91m. The average price was HK$13,578 psf after discounts, about 21% cheaper than the first price list of Regency Bay in the same district, developed by SHKP (16 HK -1.2%). HENDERSON (12 HK -0.3%) NWD (17 HK -0.3%) KERRY (683 HK -1.4%).
*PHARMA/MEDICAL FIRM on vaccine speculation.
INNOVENT BIO (1801 HK +2.8%) and shareholders together place a total of 78m new and existing shares at HK$50, representing a discount of 5% to closing price of HK$52.45 on Wednesday.
FOSUN PHARM (2196 HK +10%) jumped after its partner BioNTech SE reached a deal with the U.S. for supply of coronavirus vaccine. The US agreed to pay $1.95 bn for 100 million doses of a vaccine made by Pfizer and BioNTech
SINO BIOPHARM (1099 HK +4.4%) CSPC PHARM (1093 HK +1.3%) CANSINO (6185 HK +0.6%).
Other medical names also traded strong amid demand speculation. WEIGAO (1066 HK +6.4%) ASCENTAGE (6855 HK +3.6%).
*EDUCATION PROVIDER STRONG on news WISDOM EDUCATION (6068 HK +14.5%) will increase the tuition and boarding fees of certain new students enrolled in the group's schools, ranging from approx 9% to 38%, effective for the upcoming 2020/2021 school year. VIRSCEND EDU (1565 HK +12%) CH EAST ED (667 HK +5%).
DATANG POWER (991 HK+3%) expects 1H net profit to increase by about 83.3b yuan to 100.5b yuan, which translates to an increase of 97-117% YoY.
CR BEER (291 HK +6.2%) on Citi's upgrade to a fresh all-time high amid speculation its 1H results due in August, should reflect firm’s accelerated efforts to monetize its acquisition strategy.
BYD (1211 HK +7.4%) rallied on the news it has received US315m worth of mask order from California.

Market Closed re-opens Monday
S KOREA Kosdaq opened flat but worked higher through the day to close +0.8%, Kospi opened lower and drift lower in the morning and then sideways in the PM. A slightly bounce late afternoon sold back down closed 0.6%
TAIWAN Opened lower and traded sideways just below Wednesday’s closing level. Finished -0.5%

TAO HEUNG HLDGS (573.HK) announced a temporary suspension
of all branches from 26 July in order to protect both customers and employees amid the epidemic. The restaurants are set for reopening on 5 August.
The Government announced that the special work arrangement for government employees will be extended for one week until August 2. Save for those involved in the provision of emergency services and essential public services, all other government employees will continue to work from home. Picturing the local epidemic situation as severe, the Government appealed to employers of private organisations to allow their staff members to work from home as far as possible according to their operational needs so as to reduce the flow of people and social contacts in the community.
MEITUAN-W (3690.HK) is running tests on "Pinhaofan", which is embedded in the Meituan Waimai (food delivery) app and its mini-programs.This function is known as Meituan Waimai's special offer edition, featuring budget group ordering, free delivery and free packaging.
Hong Kong Housing Authority is to postpone applications for the new round of Home Ownership Scheme (HOS) and White Form Secondary Market Scheme (WSM) slated for this month due to the covid-19 pandemic The authority will keep close tabs on the epidemic update and the government's anti-plague measures to decide on the new application period.
Starting from 24 July, the Hospital Authority will designate Lei Yue Mun Park Holiday Camp for community quarantine purposes, providing 350 beds for novel coronavirus patients in a stable condition. The patients to be admitted to the camp shall be aged below 50, capable of self-care, free of fever symptoms and in no need of oxygen supply, said the authority.
China issued RMB5 billion treasury bonds to institutional investors in Hong Kong by way of tender on 23 July, announced the Information Office of Ministry of Finance.
MAN WAH HLDGS (1999.HK) Chairman placed 106 mn shares of the company at a 9% discount to cash in over $800 million. Market sources rumored that the buyers include BlackRock and Hillhouse Capital.
UBS Wealth Management published the latest quarterly Investor Sentiment study, polling over 4,000 rich investors and business owners across 14 markets from late June to early July. As the COVID-19 pandemic eased, investors were more optimistic about the economy and the equity market.
Particularly, 46% of the respondents were upbeat on the global economy for the coming 12 months, up from 40% three months earlier. 38% were bearish on the world economy, down from 45%.
Those being optimistic on the regional economy for the next 12 months rose from 46% to 52%. Equally, 53% were positive on the regional economy in the coming 6 months, up from 45%.
WHEELOCK (20.HK) announced that the Scheme was sanctioned without modification by the High Court on 15 July 2020. The reduction of its share capital involved in the Scheme was also confirmed by the High Court on the same day. The listing of its shares on the Stock Exchange will be withdrawn at 9:00 a.m. on 27 July 2020.
US Secretary of State Mike Pompeo said India has the ability to move supply chains away from China and cut back reliance on Chinese telecoms and medical supplies. He believed India is in this position due to the trust of many countries, including the US, it has earned.
California State Governor Gavin Newsom announced an agreement extension with BYD COMPANY (1211.HK) for additional purchase of 420 million masks worth of US$315 million.
MIIT says: China Delivers 86.23M 5G Smartphones this year
Overnight HIBOR last posted at 0.04625%, logging a 1-month low, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.26875%.
The Lands Department posted notices in accordance with the Lands Resumption Ordinance, the Roads Ordinance and the Land Acquisition Ordinance for the resumption of land for the implementation of the First Phase Development of Hung Shui Kiu/Ha Tsuen New Development Area (HSK/HT NDA). A total of 195 private lots with an area of about 12 hectares and land involving 10 graves and 42 urns with an area of about 359.36 square metres will be resumed.
In a letter to US Treasury Secretary Steve Mnuchin, the US Rail Security Alliance, the United Steelworkers and others called for immediate, meaningful and permanent sanctions on CRRC (1766.HK) by invoking the International Emergency Economic Powers Act, in order to protect US economy and national security. The US Defense Department had unveiled a list of 20 firms, including CRRC, allegedly owned or controlled by the People's Liberation Army.
China constructed a total of 410,000 5G base stations as of the end of June, as Ministry of Industry and Information Technology (MIIT) announced on a press conference.
Nvidia, a US graphics chipmaker, will be in talks with SoftBank for proposed takeover of the latter's semiconductor design house ARM, as Bloomberg learnt from inside sources. The transaction, if realized, will become the largest acquisition in chip's history. It will be interesting to watch considering the current impasse over the ARM China operations and suggests that SoftBank does not expect the situation to be resolved in the near future.
China Banking and Insurance Regulatory Commission accentuated the baseline to refrain from systematic financial risks by making early deployment against sharply growing non-performing assets across all banks and lawfully dealing with illicit financial groups and fundamental risks. The Chinese watchdog also stressed the need to go on brushing up the internal governance of banks and insurers and to strictly monitor the stake management of shareholders, as well as to optimise the insurance scrutiny mechanism.
BANK OF E ASIA (23.HK) has fully disposed of Shops G16, G39 and G40 at Eldo Court, Tuen Mun for $134 million, Hong Kong Economic Journal citing market sources. The shops, of salable sales area of roughly 3,515 sq. ft., were sold to Kai Bo Food Supermarket's founder Lam Hiu-ngai and associated parties, said insiders.
China Foreign Exchange Trade Center announced, on 23 July, the central parities in the interbank forex market of transaction currencies, including the dollar against CNY, are as follows: USD/CNY = 6.9921, down 203 bps from yesterday's central parity.

CK ASSET (1113.HK): Looking At GOLDIN FIN HOLD (530.HK)'s Financial, Debt Position
Asked if the group is going to act as the white knight to rescue GOLDIN FIN from the plight, CK ASSET (1113.HK)'s Gerald Ma, Member of Executive Committee & General Manager, Corporate Business Development Department, stated that they are reviewing the financial and debt position of GOLDIN FIN HOLD who announced that Ma has been appointed as the Vice Chairman of the company with immediate effect.
Wheelock Properties' KOKO HILLS has sold 86 flats since the first launch, cashing in nearly $1.04 billion. The developer announced to debut the second batch of 88 units.  With a maximum discount of 21.5%, the selling prices of the second log would be $7.872-17.42 million, i.e. $20,770 per sq.ft. on average. The batch is expected to cash in roughly $1.2 billion.
BABA-SW (9988.HK) announced that Alibaba Cloud will provide clients in flooding areas with online financial services under a free "cloud banking counter" solution. Individual and small merchants in dire need of funds can make credit applications directly through video calls with customer service officers, in order to resume normal production and operations.
The PBoC has today started 7-day RMB50-billion reverse repos on open market, said foreign press. It also says it sees no immediate need to relax monetary policy further in a short run, as it does not want side-effects triggered by excessive stimulus, Reuters citing insider sources. However, this does not mean that the Chinese central bank is going to re-tighten policies, said the insiders.
ELEC & ELTEK (1151.HK) TRADING HALT with effect from 9:00 a.m. on 23 July 2020, pending the release of an announcement pursuant to the Code on Takeovers and Mergers of Hong Kong and the Singapore Code on Take-overs and Mergers, in relation to the voluntary cash offer made by GF Securities (Hong Kong) Brokerage Limited on behalf of Elec & Eltek International Holdings Limited having become unconditional on 22 July 2020.
INNOVENT BIO (1801.HK) said that it proposed to place 56.2 million new shares, representing 4.02% of the share capital of the company as enlarged. The placing price was $50 per share, being 4.67% discount to the closing price as quoted yesterday. The net proceeds amounted to $2.788 billion. On another note, Chairman cum CEO De-Chao Michael Yu planned to place 36.8 million shares at $50 per share to cash in $1.84 billion. The share cut represented 2.74% of the issued share capital of the company.
The French government told local telcos that their licences for purchasing Huawei's 5G equipment and components will be not renewed after expiry, Reuters citing 3 insiders. France's cybersecurity agency said it would allow local operators to use gear from Huawei under licenses of 3-8 years.
MAN WAH HLDGS (1999.HK) said that Chairman Wong Man Li plans to place up to 106 million shares at $7.68 each, representing 9.6% discount to the closing price yesterday, to cash in $814 million.
TENCENT (700.HK)'s AI Lab, together with Zhong Nanshan, the team leader of senior experts of National Health Commission of the PRC disclosed the research results of AI forecast on COVID-19 patient disease progression and critical probability, Shenzhen Special Zone Daily reported. The results can facilitate forecast on critical probability in 5, 10 and 30 days, assisting phased diagnosis for patients at early stage.
The research was published on Nature Communications, a sister magazine of Nature, dated 15 July.
The EC and the High Representative of the European Union for Foreign Affairs and Security Policy wrote in a joint report that the "One Country, Two Systems" had over the past one year been repeatedly eroded and that relevant concerns had been worsened by the legislation of Hong Kong National Security Law.  HKSAR Government wrote in a statement that it cannot agree with the remarks in the European Report about the implementation of the "One Country, Two Systems" in Hong Kong, and that the concerns about the erosion of HKSAR's high degree of autonomy and the legitimate rights and freedoms enjoyed by the people of Hong Kong are totally unfounded.
SANDS CHINA LTD (1928.HK)'s controlling shareholder, Las Vegas Sands Corp. announced its financial results for the fiscal Q2 ended June 30, 2020. On a US GAAP basis, total net revenues for SANDS CHINA LTD -98.1% yearly to US$40 million. Net loss was US$549 million, compared to net income of US$511 million in the same period of 2019. Its adjusted property EBITDA loss was US$312 million for the second quarter of 2020, compared to an adjusted property EBITDA of US$765 million for the same period of 2019. The Group's optimism about an eventual recovery, coupled with its financial strength, enables it to continue the execution of capital investment programs in both Macao and Singapore.
Macau's Novel Coronavirus Response and Coordination Centre stated that the quota of nucleic acid tests available to Macau residents has been boosted from 7,500 to 11,000 per day.
President Xi Jinping has recently hosted an entrepreneur forum in Beijing, reported CCTV News. Sinopharm Group has received green light to start the phase III international clinical trials of its COVID-19 vaccine at end-June, revealed Chairman Liu Jingzhen, a participant of the forum. The vaccine may be launched at the end of 2020.
ZHONGDI DAIRY (1492.HK) on 15 July, the shareholder Liu Dai completed the transfer of his controlling interest in Tai Shing to Marvel One. Before the transfer, Liu Dai held 6.76% of the share capital of the Company through his holding company, Tai Shing. After the completion, Liu Dai is no longer a shareholder of the Company under the Concert Parties Arrangement. The Company believes that the aforementioned Shareholder Disputes and Share Transfer are not relevant to the financial condition or normal operation of the Group at the current stage. The company applied for a trading resumption with effect from Thursday (23 July).
CIMC (2039.HK) connected transaction to acquire 63.4934 million CIMC VEHICLES (1839.HK) shares from Tai Fu Xiang Zhong at a consideration of RMB432 million.

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