uly 31 HK WRAP HSI -115pts After hours HK Govt postpones Local Elections -VE
HSI -115pts (-0.5%) 24,595 HSCEI -57pts (-0.6%) 10,039 T/O HK$119.15bn (-7.2% DoD)
EUROPE Markets opening mixed ahead of Euro GDP numbers.
US Futures opened strongly but gradually eased back to flat during the day. Covid concerns overhang the market despite good earnings after market Thursday.
EARNINGS include Caterpillar, Merck, Exxon Mobil, Chevron, Illinois Tool Works, Colgate-Palmolive, Lazard, Booz Allen Hamilton, LyondellBasell, Weyerhaeuser, Newell Brands
CSI 300 Closed +39pts (+0.8%) @ 4,695 Market opened opened higher and rallied to day high as PMI data was slightly better but then sold down into lunch. PM market trading sideways but with a small rally around 2pm when Tech and Semi names were bought. It then traded sideways into the close.
President Xi called for a greater push on reforms to stimulate domestic demand to help the economy ride out mounting risks and challenges. But sentiment remains cautious on US/China tensions.
HSI Pre Market +36pts @ 24,747 vs -69pts ADRs @ 24,641 With TECH/Apple supply chain names strong but Financials weak. China data slight +VE but local sentiment weak due to the number of profit warnings and rising new covid cases which are running at over a 100 per day, for the past 10 days -VE.
Opened higher and rallied on China PMI data but unable to break higher and sold down to day low around 11am (24,530 level) before rebounding into the lunch. PM seeing selling pressure and traded sideways lower and ticked 50pts lower in the closing auction.
HK Administration says it is delaying the local elections by 12 months due to covid but no one is convinced. Huge -VE for public sentiment.
CHOW SANG SANG (116.HK) Profit Warning -VE . The Group is expected to record a decrease in its net profit to HK$200 million,-65% to -70% as compared to the corresponding period in 2019. Such decrease is mainly attributable to temporary closure of some stores or reduced opening hours of the Group’s jewellery retail network, a sharp decline in visitor arrivals to Hong Kong as well as weak consumer sentiment, caused by the outbreak of the coronavirus disease (COVID-19).
SINOPEC CORP (386.HK) unveiled the operational statistics for the first half of 2020. The production of oil and gas reached 226 million boe, down 0.4% yearly. The refinery throughput sank 10.5% yearly to 111 million tonnes in 1H20.
SWIREPROPERTIES (1972.HK) said that the occupancy of overall Hong Kong office reached 97% as at 30 June 2020, down 2 ppts from that in end-2019. Retail sales at Pacific Place -47.1%, Cityplaza -20.3%, and Citygate Outlets -25.6% in the first half of 2020.
The HKMA announced that as USD/ HKD triggered the Strong-side Convertibility Undertaking during Hong Kong trading hours, it undertook a selling order of US$150 million to inject HK$1.163 billion into the market. The balance of the banking system of Hong Kong will increase to HK$186.068 billion next Tuesday (4 August).
HKMA residential mortgage survey for June 2020 saw the number of mortgage applications in June -7.9% MoM to 13,829. Mortgage loans approved in June +16.3% MoM to HK$47.6 billion.
HKMA Exchange Fund total assets HK$4,195.3 billion as at June 30, 2020, HK$113.4 billion higher than that at the end of May 2020. Hong Kong dollar assets increased by HK$87.2 billion and foreign currency assets increased by HK$26.2 billion.
HKMA Total deposits with authorised institutions +1.6% in June 2020. Among the total, Hong Kong dollar deposits +2% and overall foreign currency deposits +1.2 %. Renminbi deposits in Hong Kong -7.9% to RMB639.9 billion at the end of June. The total remittance of renminbi for cross-border trade settlement amounted to RMB542.8 billion in June, compared with RMB521.5 billion in May.
CHINA DONGXIANG (3818.HK) announced to sell the Kappa Japan Trademarks and the IP Miscellaneous Assets to Basic Trademark S.r.l. con socio unico, a subsidiary of the Italian firm BasicNet S.p.A, for a consideration of US$13 million (equivalent to approximately RMB91.26 million). The Group is expected to record an unaudited estimated gain on the Disposal of approximately US$10.93 million (equivalent to approximately RMB76.73 million).
The HK Government announced its financial results for the three months ended June 30, 2020. Expenditure for the period April to June 2020 amounted to HK$176.8 billion and revenue HK$67.8 billion, resulting in a cumulative year-to-date deficit of HK$109 billion.
Centa-City Leading Index (CCL) last printed at 181.69, -0.04% WoW after a three-week rally. The reading reflected the market condition for the week following COVID-19 resurgence in early July, said Centaline Property. They expected CCL to struggle at high levels in the near term with swelling volatility.
PBoC said that at the end of 2Q20, the balance of various RMB loans at financial institutions amounted to RMB165.2 trillion, up 13.2% yearly, as revealed by the latest data of the PBOC.
Market and Pre Market News at bottom of page.
JAPAN opened lower despite good Marco data on unemployment and industrial production. It sold down on rising covid concerns and in the PM is drifting lower/sideways Currently -2.8%
S KOREA opened higher on good retail, industrial and manufacturing data. Kosdaq has opened higher, sold down rebounded sold down to day low and now working better sideways to close +0.1%. The Kospi initially sold down but rebounding and trading sideways just below flat but sold down in the PM to close -0.8%.
TAIWAN opened lower but rebounded to flat but sold down again and then worked higher to close -0.5%
Short Selling HSI Friday 18.7% vs 20.7% Thursday
Top Shorts Hang Seng Bank (11) 44%, Wharf REIC (1997) 33%, SHKP (16) 32%, HSBC (5) 32%, Power Assets (6) 32%, CLP (2) 31%, Bank of China (3988) 29%, Sino Land (83) 28%, Swire Pac A (19) 27%, Galaxy (27) 26%, HK & China Gas (3) 25%, Ping An (2318) 25%, Petrochina (857) 25%.
Northbound Rmb 54,523m Sell 28,669m : 25,854m Buy
Southbound HK$ 11,375m Sell 5,193m : 6,182m Buy
Northbound Rmb 74,544m Sell 36,816m : 37,728m Buy
Southbound HK$ 12,104m Sell 5,150m : 6,954m Buy
CHINA Pre Market
Manufacturing PMI Jul 51.1 vs 50.9 Jun (F/cast was 51)
Non Manufacturing PMI Jul 54.2 vs 54.4Jun (F/cast was 54.1)
Centre for Health Protection said there were 121 additional COVID-19 cases in Hong Kong today; 118 were locally transmitted with 56 of unknown source.
After market The Government announced its financial results for the three months ended June 30, 2020. Expenditure for the period April to June 2020 amounted to HK$176.8 billion and revenue HK$67.8 billion, resulting in a cumulative year-to-date deficit of HK$109 billion.
HKEX (388.HK) +2.1%
CCB (939.HK) -1.6%
AIA (1299.HK) -1.1%
PING AN (2318.HK) -0.7%
TENCENT (700.HK) -0.2%
HSI & HSCEI Constituents on the move
AAC TECH (2018.HK) +3.6%
HSMI & HSSI Constituents on the move
ZHENGTONGAUTO (1728.HK) +38.3%
ZHOU HEI YA (1458.HK) +11.7%
SHENGYE CAPITAL (6069.HK) +10.9%
XINYI ENERGY (3868.HK) +10.3%, hits new high
AUSNUTRIA (1717.HK) +10.2%
CHINAGRANDPHARM (512.HK) +8.3%, hits new high
HOPSON DEV HOLD (754.HK) +5.8%, hits new high
COFCO PACKAGING (906.HK) +4.1%, hits new high
JIAYUAN INTL (2768.HK) +3.4%, hits new high
*TECH & COMPONENTS STRONG after APPLE quarterly revenue beat forecasts as locked down consumers snapped up new iPhones, iPads and Mac computers to stay connected during the pandemic. AAC (2018 HK +3.6%) HUA HONG (1347 HK +2.4%) BYDE (285 HK +3.2%) SMIC (981 HK +5.9%) Q TECH (1478 HK +2.3%).
*MACAU FIRM after news reported that China authorities will resume issuing visas to allow the entry of mainland residents into the Macau SAR, with the exception of tourism visas, starting Aug. 12, which is earlier than expected. GALAXY (27 HK +1.3%) SJM (880 HK +2.3%) MELCO (200 HK +3.1%) WYNN (1128 HK +2.7%).
*CHINA PROPERTY FIRM as more developers plan spinning-off their property mgmt business for separate listing.
CHINA EVERGRANDE (3333 HK +1.6%) is reportedly hoping to spin off its property mgmt business in the mainland to raise around US$1b-US$2b.
CG SERVICES (6098 HK +1.8%) at record high on planned Ad-firm purchase.
*HK PROPERTY FIRM as supply of new units remain tight according to government data; Home builds of private residential units fell to 8,100 as of end June, while that of completed units sank to 11,400. The number of first-hand private residential units available in the coming 3 to 4 years declined by 3,000 units quarterly to 92,000 units. CKA (1113 HK +0.8%) SINO LAND (83 HK +1%) SHKP (16 HK +1%).
WHARF REIC (1997 HK -2.2%) after earnings; recorded 1H net loss of HK$4.45b. Total retail sales in HK plunged by about one-third YoY. 1H underlying net profit -26% YoY to HK$3.84b.
*RETAIL WEAK as the value of total retail sales in HK in June 24.8% YoY to HK$26.5b, slightly below market expectations. Retail sales fell for 17 consecutive months, but the decline narrowed down in June. I.T (999 HK -2%) said same-store sales in HK and Macau -49.1% YoY in the 3-months ended May. I.T also said it incurred a net loss in 1Q vs a net profit last year. BONJOUR (653 HK -7%).
*PHARMA FIRM on vaccine/drug development.
SINO BIO's (1177 HK -0.6%) Apixaban Tablet gets drug registration cert. ASCLETIS (1672 HK +3.7%) announces its all-oral HCV treatment for hepatitis C has been approved for marketing in China.
CANSINO's (6185 HK +2.4%) application for its A-shs offerings starts today. INNOVENT (1801 HK -2.5%) 3SBIO (1530 HK -1.7%).
ZHENGTONG AUTO (1728 HK +38%) after controlling shareholder Joy Capital entered MOU with Xiamen ITG Holding Group, a state-owned business group under Xiamen municipal government, to sell ~29.9% interest in the company. ZHOU HEI YA (1458 HK +12%) as investors think the worst may be over, after the company warned of a 1H loss of 42m-50m yuan vs profit a year ago.
State Council's Antitrust Committee Mulls Probe Into Alipay, WeChat Pay: Rumor. Reuters citing insiders said the committee has already been gathering information on the payment apps for over a month.
Canalys: PRC 2Q Smartphone Shipment +25% QoQ to 90M Units but -7% YoY, as the smartphone market rebounded with economic activity, according to Canalys' report.
TikTok's owner ByteDance is considering spinning off its domestic business for listing in Hong Kong or Shanghai amid rising China-US tensions, Reuters citing insiders. Said to prefer Hong Kong more, the firm is in talks with HKEX (388.HK) and Chinese regulators. A listing could value the Chinese business at over US$100 billion in Hong Kong or on Sci-Tech Board, according to the report.
TENCENT (700.HK)'s League of Legends announced to gradually enact new gaming rules on underage users from 29 July, including a gaming curfew between 22:00 and 08:00. Minors are restricted to 3 hours of game-play on statutory holidays and 1.5 hours on normal days. For in-game spending, users aged below 8 are barred from topping up their accounts. Those aged 8-16 can top up as much as RMB200 per month. Minors aged above 16 have a maximum top-up limit at RMB400 per month. Slight -VE
AUSNUTRIA (1717.HK) Positive Profit Warning; it expects a revenue of RMB3.78 billion to RMB3.87 billion for the six months ended 30 June 2019, representing an anticipated increase of 20.1% to 23% vs that of the 2019 Interim Period; and a net profit of RMB400 million to RMB420 million, representing an anticipated increase of 53.6% to 61.3% when compared with that of the 2019 Interim Period.
EVERGRANDE (3333.HK) said it is considering a possible spin-off and separate listing of the property management services and related value-added services business of the Group (Property Management Business) on The Stock Exchange of Hong Kong Limited.
Warren Buffett’s Berkshire Hathaway increased stake in Bank of America further at US$522 million. So far, he has held 11.8% stake in total in the bank.
Li & Fung announced that it will accept the US$100-million strategic investment of JD-SW (9618.HK) by way of subscribing new shares at HK$1.25 per share of Li & Fung to further explore its digital supply chain. +VE
HK Rating and Valuation Department: HK Jun Private Domestic Price Index +0.1% Higher MoM to 386.1 in June, Rising for 2 months
Transport and Housing Bureau unveiled the statistics of private housing supply in primary market as of end-June 2020. The number of private residential units commencing construction fell to 8,100 during the period, while that of the completed units sank to 11,400. The number of first-hand private residential units available in the coming 3-4 years declined by 3,000 units quarterly to 92,000 units.
CKH HOLDINGS (1.HK)'s Husky Energy announced the 2Q results. It reported a loss of CAD304 million, against a profit of CAD370 million. LPS was CAD0.31. DPS was CAD0.0125. During the period, the production dropped 7.8% yearly to 247,000 BOE per day.
ZHENGTONGAUTO (1728.HK) announced that on 29 July, Joy Capital, the controlling shareholder holding 51.29% of the Company's stake, entered into an MOU with Xiamen ITG, an independent third party, pursuant to which Joy Capital intends to sell 29.9% interests of the Company. Xiamen ITG is a state-owned business group under Xiamen Municipal Government.
HKD continued to strengthen near the Strong-side Convertibility Undertaking, and the spot USD T/T rate was last at 7.7502.
Diginex, a cryptocurrency and blockchain service company in Hong Kong, is seeking a backdoor listing on NASDAQ, local media reported. The company had reportedly scheduled to float its shares on the US market in March 2020 byacquiring a NASDAQ-listed company, 8i Enterprises Acquisition Corp. However, the plan was later delayed owing to pandemic.
MGM CHINA (2282.HK) unaudited results for the first half of fiscal 2020 of MGM Resorts International, the controlling shareholder of the company. The total revenue dropped 79.02% yearly to $2.37 billion. The adjusted EBITDA was a loss of $1.008 billion, versus a profit of $3.077 billion over a year ago.
STANCHART (2888.HK) CEO Bill Winters told Bloomberg that he believes Hong Kong dollar's peg to the US dollar is "unassailable" and underpinned by Hong Kong's robust monetary reserves. That is true from a market perspective but a change of mood politically leaves it vulnerable.