July 7 HK WRAP HSI -364pts T/O HK$240bn HK rising new covid-19 cases


09 Jul

July 7 HK WRAP HSI -364pts T/O HK$240bn  HK rising new covid-19 cases


HSI -364pts (-1.4%) 25,976  HSCEI -126pts (-1.2%) 10,600 T/O HK$240bn (-4.3% DoD)  


EUROPE 
opened lower and drifting lower; German Industrial Production was weak and French trade data was weak also concerns about rising US covid-19 cases.

US Futures opened flat but have trended lower Dow currently -260pts with S&P and NDX also looking at opening lower


INDEXES      

CSI 300 Closed +28pts (+0.6%) @ 4,698. Market opened higher but immediately saw selling pressure and sold off to the day low (4,688) in the first 15 minutes before rallying back to slightly above the opening level only to sell back down again but more gradually.  It then worked higher into lunch.  PM saw an initial rally to the day high 4,796 but unable to break above the then sold down for the rest of the session in stages.  Ticked lower into the close but finished just above the day low. Another up day but at a much slower pace and on slightly reduced T/O which may suggest momentum in waning and some investors are preferring to look in recent gains.  Signs of increase buying of HK stocks which trade at a discount to mainland ones; which may be ill-timed as Hong Kong closed at its lows.  Diplomatic tensions with many countries remain a concern along with covid-19.  The US response to the new HK security law has yet to be seen.   

HSI Pre Market  Pre market +232pts (+0.9%) @ 26,572 vs +127pts ADR's at 26,465. T/O was HK$6.56b vs HK$2.15bn Monday. Which suggests long term shorts have decided that Hong Kong is no longer about fundamentals but liquidity and Team China.  
Pre market saw Alibaba rally but Tencent and Meituan remain weak; Chinese Financials saw good interest and Geely strong on sales numbers.  After a small initial squeeze the market then sold down, initial support at yesterday’s closing level but then dipped below and traded sideways into lunch.  PM saw further selling pressure through the afternoon to close at the day low.  T/O dropped slightly but still at multi year highs.  I get the impression that a number of investors are now using the liquidity to de-risk in Hong Kong as concerns over the new security law increase.
HKMA injected US$700m as HKD approached the upper band which suggests more money coming into HK and I think it's from the mainland as there are no major IPO’s on the books at the moment.  Sentiment hurt by mews that social media  franchises were refusing government requests for data and the popular Tik Tok which has seen a number of clips about the recent protests being posted said it was withdrawing from Hong Kong due to the new security law.  That is likely to increase the resentment from the youth and  increase the opposition to pro Beijing candidates at the September local elections. Also afternoon news of more covid-19 cases locally including at a care home and school -VE for sentiment.

AFTER MARKET 
TENCENT (700.HK) Executive Director cum President Lau Chi Ping Martin unloaded 300,000 and 200,000 shares of the company respectively on 30 June and 3 July to cash in approximately $254 million in aggregate, as disclosed by the Stock Exchange. Upon completion, Lau's shareholding dropped to 0.57% from 0.58%.
AGILE GROUP (3383.HK) June 2020, the aggregated pre-sale value RMB14.89 billion with corresponding gross floor area (GFA) of 1.306 million sq.m.. The average selling price is RMB11,405 per sq.m..
REGINA MIRACLE (2199.HK)  announced that Chairman Hung Yau Lit had on 6 July purchased an aggregate of 2 million shares, involving approximately $4.4928 million.
The Lands Department issued seven pre-sale consents for residential developments in the second quarter of 2020.  The seven pre-sale consents for six residential developments (of which four are phased developments) involve a total of 1,314 residential units.
As USD/ HKD triggered the Strong-side Convertibility Undertaking during Hong Kong trading hours, the HKMA undertook a selling order of US$1.05 bn to inject HK$8.138 bn in the market.  The balance of the banking system of Hong Kong will increase to HK$146.933 billion this Thursday (9 July).
CHINA OVERSEAS (688.HK) contracted property sales for June 2020 amounted to RMB57.561 billion,  +32.3% YoY From January to June 2020, the accumulated contracted property sales amounted to RMB172.013 billion, +4.2% YoY
MTR (66 HK) Profit Warning Estimates Interim Loss to Range $200-700M. It expected a net loss of approximately HK$400 million (representing the midpoint of the estimated loss range of between HK$200-700 million) for the six months ended 30 June 2020, compared to a net profit of HK$5.5 billion for the same period in 2019. 

The expected loss is mainly due to the significant adverse impact of the COVID-19 pandemic and the deterioration of the general economic environment on the Group’s Recurrent Businesses; and the revaluation loss on the Group’s investment property portfolio which is expected to be around HK$6 billion for the six months ended 30 June 2020.  On another note, the Group said its Recurrent Businesses are continuing to be significantly adversely affected as a result of the COVID-19 pandemic and the deterioration of the general economic environment. Various measures have been implemented in Hong Kong and globally to address the outbreak of COVID19 such as, in the case of Hong Kong, the closure of several boundary crossings between Hong Kong and the Mainland of China (including the crossings at Lo Wu, Lok Ma Chau and Hong Kong West Kowloon stations, as well as the Intercity through train control point at Hung Hom Station), travel restrictions, social distancing, work-from-home and school closure measures. These measures, coupled with the deterioration of the general economic environment, have had a significant adverse impact on the Group’s Recurrent Businesses, which has led to a substantial reduction in patronage on the Company’s services as previously disclosed by the Company.

The patronage of the group in Hong Kong for 6M20 was 637 million, down 37.7% yearly. 

HANG SENG BANK (11.HK)  has introduced a youngsters-targeting fund investment platform, where seven investment funds will be available. No monthly fee will be collected from accounts with net asset value below $5,000.
Cushman & Wakefield reviewed the 2Q20 performance of grade A office and shop leasing markets in Hong Kong, pointing out a steeper office rent decline. Of which, the availability of grade A offices rose to 10.7%, continuously weighing on office rent for 2H20. They projected the overall office availability to climb to around 12% at end-2020. Overall rent will edge down by roughly 8% in 2H, with a 20% slide at Central District for FY20.
MBV INTL (1957.HK), to be listed tomorrow, opened at $0.8 in the gray market, flattish with the listing price, and last stood at $0.405, down 49% against the listing price, on
volume of 2.10 million shares, PhillipMart data showed.
HEPALINK (9989.HK), to be listed tomorrow, opened at $20.25 in gray market, up 10% against the listing price of $18.4, and last stood at $18.42, up 0.1% against the listing price, on volume of 1.54 million shares, PhillipMart data showed.
RSUN SER (1971.HK) debut today closed at $4.4, up 25 cents or +6% vs listing price $4.15, on volume of 70.21 million shares and turnover over $325 million. Excluding the handling fees, a book gain of $250 was reported per board lot of 1,000 shares.

Market and Pre Market News at bottom of page.


Short Selling HSI Tuesday 17.5% vs 18.9% Monday

Top Shorts Wharf REIC (1997) 52%, Ping An (2318) 36%, MTRC (66) 36%, China Res Land (1109) 35%, Hang Lung PPT (101) 35%, Henderson Land(12) 34%, Galaxy (27) 32%, CK Asset (1113) 25%


COMMENT 

*CHINA FINANCIALS MIXED relative market valuations remain attractive but some deciding to lock in recent gains; CH LIFE (2628 HK -0.5%) having surged 30% since end of June.

PING AN (2318 HK +1.2%) NCI (1336 HK -0.2%).

BANKS WEAK Modest profit-taking, CCB (939 HK +0.3%) ABC (1288 HK -3.1%) BOC (3988 HK -2%) ICBC (1398 HK -1.3%).

BROKERS saw the biggest losses have been the major gainers in the past 3 days CITIC SEC (6030 HK -6.6%), HAITONG SEC (6837 HK -5%) CGS (6881 HK -8%).

*TECH & COMPONENTS WEAK after the strong rally on STAR Board listing optimism.SMIC (981 HK -8.7%) HUA HONG (1347 HK -13%) FIT HON TENG (6088 HK -4.6%).

*HK PROPERTY WEAK Concerns as new details are revealed about the ability of security agents to confiscate assets under the HK national security law and new covid-19 cases.

Li Ka Shing and Vitor Li bought continue to buy CKA (1113 -2.7%) their combined stake must raise questions about a possible privatisation.

SHKP (16 HK -3%) HENDERSON LAND (12 HK -3.1%) SINO LAND (83 HK -4%).

*CHINA PROPERTY MIXED saw rotation from the DEVELOPERS who have been very strong over the past 2 days into PROPERTY MGMT companies. Worth noting that Developers are also looking to raise money

SUNAC CHINA (1918 HK -4.5%) to raise US$1b via issuance of two senior notes,

SHIMAO (813 HK -4.4%) to raise US$300m via issuance of a senior note,

EVERGRANDE (3333 HK -7.7%) CIFI (884 HK -5.8%).

TIMES NEIGHBOR (9928 HK -0.3%) despite raising HK$787m in top-up placement, selling 77m shs at HK$10.22 each, its a 7.4% from last closing of HK$10.98 but the stock is trading at a 5 year high.

REDSUN SERVICES (1971 HK +4%) closed above IPO price of HK$4.15. EVERSUNSHINE (1995 HK +5%) GC SERV (6098HK +12.5%).

*AUTOS MIXED. GEELY (175 HK +2.3%) off initial highs as June total sales +21% YoY to 110129 units, but 1H total sales volume -19% to 530446 units. That is 38% of its full-year sales target.

GREATWALL (2333 HK +0.4%) but DONGFENG (489 HK -4.3%) BRILLIANCE CHINA (1114 HK -5.3%).

*OTHER MOVERS: 

TIANNENG PWOER (819 HK +3.8%) received approval from the Shanghai Stock Exchange for the spin-off of its batteries business, approved the issue and listing of A- shares by the spinoff company.

KB LAMINATES (1888 HK -8%) Warns interim net profit drop of 25%-30%.



CONNECT FLOWS 

Shanghai

Northbound RMB92,164M Sell 42,751M : 49,413M Buy

Southbound HK$32,773M Sell 15,255M : 17,518M Buy

Shenzhen

Northbound RMB98,994M Sell 47,906M : 51,088M Buy

Southbound HK$27,228M Sell 12,686M : 14,542M Buy


DATA 

CHINA AFTER MARKET 

Foreign Exchange Reserves Jun $3.112tn vs 3.102tn May (F/cast was 3.12tn)

Slightly below forecasts amid a stronger yuan and an increase in asset prices. Meanwhile, the value of gold reserves increased to USD 110.76 bn from USD 108.29 bn in May.

HONG KONG AFTER MARKET 

Foreign Exchange Reserves Jun $445.9b vs 442.4b May (F/cast was 448.8b)

Centre for Health Protection said there were 14 Confirmed COVID-19 Cases today, including 9 Local Cases. Five of the nine additional local COVID-19 cases were of unknown origin, revealed Chuang Shuk-kwan, Head of Communicable Disease Branch at Centre for Health Protection (CHP). Some patients had either dined at Bun Kee Congee & Noodle Foods in Ping Shek Estate, or Sun Fat Restaurant in Man Ying Street, Ferry Point. CHP Controller KH WONG suggested this could be an example of community outbreak, as those five patients were of different occupations and living in different districts.


Active Heavyweights
HSBC (5 HK) -1.7%
HKEX (388.HK) -1.6%
PING AN (2318.HK) +1.3%
ICBC (1398 HK) -1.2%
AIA (1299.HK) -1% 
TENCENT (700.HK) -0.8%
CCB (939.HK) +0.6%

HSI & HSCEI Constituents on the move
DOWN between 6.2% and 3%
Only positive names were ANTA (2020 HK) + 3.7% and GEELY (175 HK) +3.3% hit a new high.

HSMI & HSSI Constituents on the move
HUABAO INTL (336.HK) +26.6%, hits new high
YADEA (1585.HK) +21.8%, hits new high
CITIC RESOURCES (1205.HK) +17.2%
HUA HONG SEMI (1347.HK) +13.5%
VIVA BIOTECH (1873.HK) +13.4%, hits new high
CG SERVICES (6098.HK) +13%, hits new high
CRRC TIMES ELEC (3898.HK) -12.6%
CSC (6066.HK) -12%
SWHY (6806.HK) -11.4%


REGIONAL MARKETS 

JAPAN opened lower after weak Household spending and average cash earnings data pre market. It bounced but failed to hold above Monday’s close, and then sold down to the day low just before lunch. PM saw the market trade sideways. Closed around the lunchtime level thanks to a late rally. Final -0.4%

S KOREA market’s opened higher but have tracked lower into the red. Kosdaq after the initial sell-off rebounded and sideways just below yesterday’s closing levels; Final -0.1%. Kospi drifted lower through the day to finish at on its lows Closed -1.1%

TAIWAN opened higher but sold down initially into the red before rebounding and then traded flat Closed -0.2%


NEWS
MARKET HOURS
 

Chinese media reported the upcoming exodus of TikTok from Google Play Store and Apple's App Store in Hong Kong.  ByteDance's China CEO Kelly Zhang Nan responded that Douyin, the Chinese version of TikTok, will continue to serve the great number of Hong Kong users. It is TikTok, rather than Douyin, that will be exiting the Hong Kong market, according to insiders.

EVERGRANDE (3333.HK) plans to sell some of its commercial properties, which should be a normal disposal according to people familiar with the matter, cited by Chinese media.  It is mapping out a sale of offices, hotels and commercial properties measuring aloft 1,000 sq.m. across the country, revealed by several group employees.

US Secretary of State Mike Pompeo told Fox News that the government is "looking at" a ban against Chinese social media apps, including TikTok.  US politicians have repeatedly accused TikTok of latent submission to and cooperation with Chinese intelligence agencies.

CITIC RESOURCES (1205.HK) announced an inside information, involving a potential disposal of the equity interests in CITIC DAMENG (1091.HK) held by the Company.  Citic Dameng rallied strongly on the news, Citic Resources also traded higher

Chief Executive Carrie Lam told reporters this morning that some people have misinterpreted the law by accusing the Government of expanding police power through detailed rules for Article 43 under Hong Kong security law. As a matter of fact, the police can apply those actions only in case of four kinds of behavior that jeopardizes national security. Regarding Britain's potential offer of citizenship to BNO holders, Lam stated that BNO is deemed a travel pass following the handover to facilitate holders' return to their homeland and that Beijing may solemnly respond and react should London unilaterally change the policy.

United Airlines announced to further expand its international schedule by resuming flight service between Chicago and Hong Kong and Los Angeles and Sydney from September. Meanwhile, nonstop flights between Chicago and Tel Aviv will be added

Samsung Electronics assumed the Q2 operating profit to grow 23% to KRW8.1 trillion (about USD6.8 billion), way higher than KRW6.4 trillion in consensus.

COSCO Shipping inked a third-party strategic cooperation deal with BABA-SW (9988.HK) and Ant Financial to facilitate the collaboration and application of Blockchain technology for shipping and logistics. The parties will commence an in-depth cooperation in global shipping and logistics network going ahead.

CSC (6066.HK) announced in relation to purported merger with CITIC SEC (6030.HK), that Central Huijin, CSC’s second largest shareholder, had on July 5 sent it a written reply that there is no disclosable information of significance in relation to it which has not been disclosed at this moment.

Government spokesman said the Cash Payout Scheme yesterday (July 6) started effecting payment in batches to eligible people who have registered electronically through banks on or before June 30. The first batch of about 3.15 million people have received payment through their specified bank accounts yesterday. The remainder will receive payment in the coming one to two days.


PRE MARKET

Multiple social media platforms and instant messaging software, including Facebook, Google and Twitter, suspended processing Hong Kong government requests for user data. Facebook stated that it was freezing reviews of data requests pending further assessment of the Hong Kong National Security Law. Google claimed it immediately halted data request reviews from Hong Kong authorities after the law had taken effect. Twitter expressed grave concerns about the legislation's implication.

MBV INTL (1957.HK), to be listed tomorrow, was priced at $0.8, the lower limit of the offer price range $0.8-0.88. 22.5 times of over-subscription was recorded in the public offering. One-lot (2,500 shares) success rate was 65.01%.

CAFE DE CORAL H (341.HK)'s annual report showed that discretionary bonuses to CEO Lo Tak Shing, Peter for the year ended 31 March 2020 amounted to HK$1.44 million, -75% YoY Fees, salaries and allowances, and discretionary bonuses to Lo shrank by 38.8% annually to HK$6.308 million. His fees remained at HK$50,000, while salaries, allowances and benefits in kind burgeoned by 11.9% yearly to HK$4.8 million.

TIMES NEIGHBOR (9928.HK) announced a planned top-up placement of 77 million shares at $10.22 per share, representing 6.92% discount to the closing price yesterday. The net proceeds from the Subscription are expected to approximate $780 million.

The Indian government is looking at 50 investment proposals involving Chinese enterprises under the new screening policy announced in April, inside sources were quoted as saying by Reuters.

Sina announced that it had yesterday (6 July) received a preliminary non-binding privatization offer from New Wave MMXV Limited, effectively controlled by Sina chairman Charles Chao, at US$41 per share, representing a 11.8% premium over its closing price last Thursday (2 July). The offer values the US-listed Chinese internet firm at around US$2.7 billion.

US President Trump is weighing multiple executive orders on China, manufacturing and immigration issues, said White House Chief of Staff Mark Meadows, who refused to offer details.

The Centre for Health Protection (CHP) of the Department of Health announced that as of 4pm yesterday (July 6), the CHP was investigating 17 additional confirmed cases of coronavirus disease 2019 (COVID-19), taking the number of cases to 1,286 in Hong

Chinese Vice Premier Liu He and US. Trade Representative Robert Lighthizer plan to hold a call conference in mid-August to discuss the compliance progress of the phase one trade deal between the two countries, the Wall Street Journal citing insiders. In a letter addressed to Liu and Lighthizer, over 40 US business chambers called on Beijing and Washington to step up their efforts on implementing the deal.

HKTV (01137.HK) announced that Gross Merchandise Value on Order Intake amounted to $431 million in June 2020, up 91.6% yearly.

KINGBOARD HLDG (148.HK) and KB LAMINATES (1888.HK) profit warning, expecting to record 25%-30% and 30%-35% year-on-year decrease in net profit for the six months ended 30 June 2020.





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