July 28 HK WRAP HSI +170pts T/O -10%. HSBC hits new low


30 Jul

July 28 HK WRAP HSI +170pts T/O -10%. HSBC hits new low

HSI +170pts (+0.7%) 24,773  HSCEI +76pts (+0.8%) 10,152  T/O HK$112.41bn (-10.5% DoD) 

EUROPE Markets opened higher but sold down on covid fears and concerns over the next US covid relief stimulus package. Gold continues to rally
US Futures opened flat but now -120pts after weaker than expected McDonald and 3M earnings S&P and NDX also weak.

INDEXES
CSI 300 Closed +40pts (+0.9%) @ 4,568
Market opened higher and traded sideways in choppy trading. Opened higher and tested higher in early trades but then sold down to morning low (4,545) in first 30 mins. Rebounded and tested 4,590 level a couple of times before selling down into lunch. PM saw initial selling to 4,540 before bouncing, then sold down to day low 4,538 before rallying into the close. Team China working hard to support the market. Signs of rotation as investors remain wary as covid cases surge globally. Monday’s Industrial number suggest recovery but that was before the latest surge in covid cases. Data shows over 50% money going into Emerging Market ETF’s went to those focused on Chinese stocks and bonds. Earnings in focus with traders watching for the bellwether KWEICHOW MOUTAI's 1H results, in which should give some insight into domestic consumption/recovery

HSI Pre Market +339pts @ 24,942 vs +115pts ADRs @ 24,718 With E commerce names strong along with Dongfeng Motor on news of possible ChiNext IPO and Powering after +VE profit warning.Market initially squeezed higher to day high (24,943) as recent shorts covered and then trended lower for the 40 mins with some margin selling and covid concerns. Then rallied back but failed to regain the opening level and trended lower to 24,680 before a small bounce into lunch. PM saw market trend lower to day low (24,640 around 2pm) then traded sideways for a while before working higher from 2:30pm but only to 24,780 level. Then drifted sideways into the close. Turnover light and back to levels seen prior to the imposition of the new security law which suggests that Team China is now being refocused on the mainland markets. Sentiment slight +VE as the number of local covid cases dropped although the new stricter measures start tomorrow. Gold saw profit taking.


AFTER MARKET
SJM HOLDINGS (880.HK) interim result ended June 2020.
Net gaming revenue -74.4% YoY to HK$4.272 bin. The profit swung into loss of HK$1.412 billion. LPS was HK24.9 cents. No dividend was declared, versus HK8 cents over a year ago. For 1H20, adjusted EBITDA loss was HK$984 million, against adjusted EBITDA of HK$2.078 billion over a year ago. Following completion of construction work on the Grand Lisboa Palace in late 2019, the Group began the inspection and application process with the Macau Government. Subject to obtaining the necessary operating permits, the project is expected to open by the end of 2020.
The Hong Kong Housing Authority (HA)'s Subsidised Housing Committee (SHC) today approved the new arrangements for the sale of recovered Tenants Purchase Scheme (TPS) flats and additional incentives to encourage sitting TPS tenants to purchase the flats in which they reside. Currently, sitting tenants of the 39 TPS estates may still opt to purchase the flats in which they reside and will enjoy a special credit during the first two years of their tenancies. In order to encourage sitting TPS tenants to buy the flats in which they reside, the SHC approved to provide an additional discount of 17.5 per cent for one year starting from September 1, 2020, to sitting TPS tenants who no longer enjoy any special credit.
The Subsidised Housing Committee of Housing Authority approved a two-month rent waiver for public rental housing (PRH) tenants to offset the 9.66% rent hike. Equally, the Committee decided to waive PRH rents in September 2020 and September 2021. Well-off tenants can also enjoy a basic rent waiver.
CATHAY PAC AIR (293.HK) and its airlines will transfer their jetliners this week to Alice Springs, Australia for parking, as Apple Daily learnt from rumours. The Hong Kong flagship airline is set to transfer around a third of its passenger planes outside the city over the coming few months, as it replied to the press. It has decided to park some planes at desert area to minimise the impacts of humidity and storms thereon, said the report, and the decision may involve over 50 planes.
TSMC once led its market cap to over US$410 billion and became one of the most valuable companies in world +9.9% intraday and peaking at TWD466.5. The stock narrowed its gain at close and finished the day at TWD435, +2.5%.
Worldwide investment in 5G network infrastructure will nearly double this year to US$8.1 billion, accounting for 21.3% of the overall wireless infrastructure, said Gartner in a report.
Huawei has already completed its global 5G deployment, with sector application and unlocking 5G profit as its focuses in the next phase, said Rotating Chairman Guo Ping at the Huawei Better World Summit 2020, cited by Chinese media.
India’s Q2 PC shipments -33% YoY to 2.9 million units, according to Canalys' report. Of which, desktops (including workstations) underperformed the market, with shipments halving to 440,000 units. Canalys attributed this to consumers' preference for notebooks.
Asian airlines carried 724,000 passengers in June, -98% YoY due to suppressed air travel demand, according to the Association of Asia Pacific Airlines (AAPA). The average passenger load factor hit 36.3% only.
Chinese Foreign Ministry stated that HKSAR Government will suspend extradition and other mutual assistance in criminal matters with Britain, Canada and New Zealand and that these countries have seriously meddled in China's internal affairs by halting their extradition treaty with Hong Kong.

Market and Pre Market News at bottom of page.

Regional Markets
JAPAN
opened flat an initial worked better. Around midday is sold back to flat and trading around yesterday’s close before selling down at the end to Close -0.3%.
S KOREA Market opened higher and initially rallied but then trended lower from around 11am. Kosdaq dipped down to flat before rallying at the end to Close +0.8%. The Kospi was better all day and whilst it dipped slightly from mid morning it traded sideways in the PM and closed +1.8%.
TAIWAN Market opened higher but traded lower through the day to finish flat, Closed -0.01%

Short Selling HSI Tuesday 23% vs 21.5% Monday
Top Shorts 
MTRC (66) 49%, Ping An (2318) 42%, Wharf REIC (1997) 42%, Mengniu Dairy (2319) 41%, China Shenhua (1088) 39%, China Res Land (1109) 38%, Bank of China (3988) 38%, CCB (939) 31%, Sinopec (386) 31%, Hang Seng Bank (11) 30%, HK & China Gas (3) 29%,
Galaxy (27) 29%, CK Asset (1113) 29%, Country Garden (2007) 28%, CNOOC (883) 26%, Swire A (19) 25%.

CONNECT FLOWS (lower again after significant reduction Monday)
Shanghai
Northbound Rmb 46,488m Sell 25,110m : 21,377m Buy
Southbound HK$ 12,351m Sell 5,070m : 7,280m Buy

Shenzhen
Northbound Rmb 66,921m Sell 32,710m : 34,211m Buy
Southbound HK$ 11,260m Sell 4,804m : 6,456m Buy


DATA
CHINA None
HONG KONG
Centre for Health Protection said there were 106 additional COVID-19 cases in Hong Kong today; 98 were locally transmitted.

Active Heavyweights
TENCENT (700.HK) +4.5%
HKEX (388.HK) +2.7%
CCB (939 HK) -0.7%
AIA (1299.HK) +0.6%
PING AN (2318.HK) -0.2%

HSI & HSCEI Constituents on the move
MENGNIU DAIRY (2319.HK) +5.6%, hits new high
ENN ENERGY (2688.HK) +4.3%
BYD COMPANY (1211.HK) +3.6%

HSMI & HSSI Constituents on the move
HAICHANG HLDG (2255.HK) +22.2%
DONGFENG GROUP (489.HK) +13.5%
ZHAOJIN MINING (1818.HK) -12.1%
BYD ELECTRONIC (285.HK) +11.9%, hits new high
CHINA EDU GROUP (839.HK) +11.4%, hits new high
XINYI GLASS (868.HK) +4.3%, hits new high
CG SERVICES (6098.HK) +3.4%, hits new high

COMMENT
*GOLD MINERS WEAK
after recent rally in gold prices to record highs on Monday as US dollar weakened and expectations rise that central banks would continue pumping out stimulus. Spot gold +1.9% to US$1,937.73/ounce after hitting a record of US$1,944.71. ZIJIN (2899 HK -4.8%) ZHAOJIN (1818 HK -11.6%) CHINAGOLD (2099 HK -5.3%).
*ENERGY PROVIDER MIXED. OIL companies traded softer amid worries of oversupply given slowing demand due to a prolonged global recovery. PETROCHINA (857 HK-1.8%) plans to use some of the US$38b it will receive for selling its pipelines to start new businesses focusing on wind and solar power. The money will also go toward dividends, debt repayment and spending on its oil & gas biz, it said.
GAS DISTRIBUTORS FIRM amid speculation that setting up of the pipeline company would improve the industry's profitability. ENN (2688 HK +4.2%) CR GAS (1193 HK +1%) CH GAS (385 HK +0.8%).
*HANG SENG TECH INDEX FIRM For the further development of HSTI, HSI Company said it will discuss with HKEX the launch of tech index derivatives and ETF tracking the index. TENCENT (700 HK +4.5%) led the gainers, offers to buy remainder of SOGOU for US$9.00 per ADS. Proposed purchase price represents a premium of ~56.5% to the July 24 closing trading price of the ADSs, and a premium of 84.9% to the volume-weighted average price during the last 30 trading days, Tencent said.
*INSURERS FIRM on the news that PING AN (2318 HK -0.2%) and pharma company Shionogi HK Co. sign agreements to start JV's in Shanghai and HK, namely Ping An-Shionogi Co. and Ping An-Shionogi HK, according to a statement. Total investment is ~RMB2.94b. AIA (1299 HK +0.8%) CH TAIPING (966 HK +0.9%) NCI (1336 HK +0.2%).
*AUTOS STRONG DONGFENG MOTOR (489 HK +14%) plans A-shr listing on the ChiNext board, stock jumped as much as 25% intraday.
MEIDONG AUTO (1268 HK +9%) on a broker's upgrade amid earnings optimism.
State Grid Electric Vehicle, fully owned unit of State-owned electricity utility State Grid, has forged an agreement with carmaker BAIC GROUP (1958 HK +1%) to further cooperation on EV support facilities and help the energy and transportation industry's economic revival efforts.
EVERGRANDE HEALTH (708 HK +6%), plans to rename itself as CH EVERGRANDE NEW ENERGY VEHICLE, or simply EVERGRANDE AUTO. It runs NEV research and development globally, said it "strives to become the world's largest and most powerful new EV group within 3-5 years."
*F&B STRONG DAIRY/BABY FORMULA advanced as raw milk prices are expected to remain stable. CH MENGNIU (2319 HK +5.6%) posted a record high amid 1H earnings speculation. WANT WANT (151 HK +0.8%) H&H (1112 HK +1.2%). BREWERIES saw support ahead of MOUTAI's results, which is expected to be positive. CR BEER (291 HK +1.3%) TSINGTAO (168 HK +3.4%).
*OTHER MOVERS: 
HUOBI TECH (1611 HK +8%) surged after Bitcoin climbs as much as 4.8% after a 10% jump yesterday to the highest since August 2019.
CH BLUECHEM (3983 HK +3.5%) amid positive 1H profit-alert.
HSBC (5 HK -1.5%) but off intraday lows to a new record low, it is reportedly studying the option of selling related businesses in the US and Europe, given rising China/US tensions.

NEWS
MARKET HOURS
The first meeting of the Assessment Committee for the Funding Scheme to Support Transitional Housing Projects
by Non-government Organisations, chaired by the Under Secretary for Transport and Housing, was convened via video conferencing this morning (July 28). The Assessment Committee agreed to subsidise three transitional housing programmes, including a transitional housing development at Kong Ha Wai, Kam Tin, Yuen Long, by Pok Oi Hospital. With total funding of $1.099 billion, it is expected to provide about 1,998 units.
The ECB extended its recommendation that euro zone banks should not pay dividends until the end of 2020, while allowing the lenders to eat into capital and liquidity buffers amid the coronavirus pandemic.
Trip.com (TCOM US), also known as Ctrip, is in talks with potential investors for a privatization deal and delisting from Nasdaq, Reuters citing sources. The Chinese online travel giant declined to comment.
The PBOC has recently issued an urgent notice regarding an investigation on joint online consumption loans. By which, it will gather statistics on the related information of such operation, Chinese media quoted the banking sector. Joint online consumption loan generally refers to an internet loan jointly granted by a bank and a financial institution to an eligible borrower based on the joint loan conditions and contribution proportion. The investigation may reportedly affect the joint loan operations of Ant Group, WeBank, Ping An Puhui, JD Finance and so on. Slight -VE
Mapletree North Asia Commercial Trust announced that Festival Walk delivered gross revenue of SGD43.40 million, -33% YoY during Q1 ended 30 June 2020. During the quarter, the shopping mall's retail sales -38.6% YoY and footfall -44.9% YoY.
HKRMA In an open letter addressed to local shop landlords, the Hong Kong Retail Management Association wrote that the retail sector has been dealt by dual blows from social movements and coronavirus pandemic for more than a year. All struggling players are on verge of collapse. The association thus floated two appeals to retail landlords. First, it implored for suspension of legal actions or attempts to recover shops from tenants who fail to pay rents at this moment for no less than nine months. Second, landlords were asked to scrap upset rents and to receive rents based on tenants’ turnover for a term of 9-12 months. Over 60,000 local retail shops will be exposed to liquidation risks unless landlords are willing to spare a helping hand, said the letter. By then, more than 260,000 retail workers, as well as their families, will suffer livelihood difficulties.
Fitch Ratings confirmed China's Long-Term Foreign-Currency Issuer Default Rating at "A+", with a Stable Outlook. China's rating is underpinned by strong external finances, a track record of robust macro-economic performance, and its status as the world's second-biggest economy. However, the rating is constrained by structural vulnerabilities in the financial segment, relatively low per capita income, and softer governance metrics.
Overnight HIBOR last posted at 0.04643%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.25107%, marking a 1-month low.
For 1H20, China produced gold of 217.80 tons nationwide, -7.3% yearly, China Gold Association revealed. It consumed gold of 323.29 tons, -38.25% yearly.
GAVI vaccine alliance is looking at the range of potential prices for coronavirus vaccines, the highest level may be set at US$40 per dose, said the chief executive officer Seth Berkley.
Moderna and Pfizer announced one after another for the phase three clinical trial of COVID-19 vaccine in large scale, representing the first two related researches in the US that entered phase three trials. Two trials will involve 30,000 people, aiming to launch a vaccine by the year end with extensive use. Moderna's shares spiked 9.2% to US$79.91 yesterday (27 July). Pfizer shot up 1.9% to US$38.24 during extended trading hours.
Ahead of HSBC HOLDINGS (5.HK)'s interim results announcement slated for 3 August, Chairman Mark Tucker is reviewing the Europe and US segments, where business disposal is possible instead of ongoing rebooting, as Bloomberg learnt from inside sources. As US-China grapples, the London-based lender is also studying the possibility of a failed linked exchange system between HKD and USD, said the insiders.

PRE MARKET
XIAOMI-W (1810.HK) plans to roll out an international version reader
, Mi Ebook Reader, in overseas market, foreign media gizmochina reported. Certified by Bluetooth on 23 July, the product appears in the data bank of Bluetooth SIG.
VICTORY CITY (539.HK) announced that the Department of Commerce of the United States made a decision to sanction against a group of 11 Chinese entities for alleged involvement in human rights violations in Xinjiang Uyghur Autonomous Region (XUAR) in the PRC. Nanjing Synergy Textiles Limited, a subsidiary of the Company. The Sanction resulted in Nanjing Synergy facing new restrictions on access to US-origin items, including commodities and technology. The Group is of the view that there will not be any material impact on the Group’s operation since the Sanction is targeted at Nanjing Synergy in particular; and Nanjing Synergy has already ceased its production business in late 2019.
India has flagged 275 Chinese apps to examine if they pose any latent risks to her national security, according to the local press. TENCENT (700.HK)'s PUBG Mobile, XIAOMI-W (1810.HK)'s Zili and BABA-SW (9988.HK)'s AliExpress are on the examination list.
GOLDIN FIN HOLD (530.HK) Trading halted at 9:00 a.m. today (28 July), pending release of reasons.
SINO BIOPHARM (1177.HK) on 24 July Vice Chairwoman Cheng Cheung Ling acquired 2.38 million shares, involving $24.27 million.
SUNWAY INT'L (58.HK)   announced that it had on 15-24 July acquired a total of 105,000 SMOORE INTL (6969.HK) shares on the open market at an average price of $34.39 per share.

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