July 9 HK WRAP HSI +81pts T/O 207bn Shorts rise to 20%

13 Jul

July 9 HK WRAP HSI +81pts T/O 207bn Shorts rise to 20%

HSI +81pts (+0.3%) 26,210  HSCEI +34pts (+0.3%) 10,782 T/O HK$206.83bn (+5.4% DoD)  

EUROPE opened mixed.
FTSE flat but now trading in lower in the red. CAC opened higher but sold downed trading around flat. DAX opened higher and trading sideways. Concerns over the rise in Covid-19 cases globally off-setting optimism on re-opening. As the EU reported has soured deals with Merck and Roche for experimental treatments.

US Futures opened flat but were drifting lower after the NDX hit a new record close Wednesday.


CSI 300 Closed +67pts (+1.4%) @ 4,841.  Market opened lower with caution ahead of the Inflation and PPI data which was worse than expected but the market worked higher to the morning high of 4,815.  It tried to break above but without conviction and then sold down to the day low of 4,757. It then worked higher into lunch 4,827.  PM saw the market try to work higher but resistance at 4,854 the day high. But having tried several times to break higher the market sold down to support 4,800 before a rally into the close.  Concerns over rising covid-19 cases, the relations with US, India, UK and others all being ignored as Team China tried to orchestrate a manageable bull market.
HSI Pre Market +222pts @ 26,351vs +209pts ADR’s @ 26,338.  Pre market T/O dropped to HK$5b from HK$6bn yesterday, still historically high and suggests Team China still active. Ecomernce and Tech names led the gains.  An initial dip on the China data, then a rally to the day high 26,375 it tired to break out a couple of times without success and then sold down with support just below yesterdays close. It then worked higher in choppy trading into lunch (26,252).  PM saw an initial 70pts sell-off and rebound but then more selling, dropping 230pts to the day low (26,016) before climbing back to 26,150 and then saw a Puch higher in the last 15 minutes of trading but only to the lunchtime level. Market then dropped 40pts in the closing auction.  TECH names like Alibaba, NTES and Meituan all hit new highs.
Market being supported by liquidity not fundamentals and with Q2 earnings due to start soon the there could be a nasty correction.  I also expect a strong response from the US shortly as evidenced by the US administrations letter to Railroad Retirement Board.
Some were saying the +VE sentiment from rumours of ANT TECH listing (denied by the company) and the proposed launch of a new Tech index in HK but I still believe this is a managed rally, which means its ending could be at any moment.  

CHINA GAS HOLD (384.HK)'s Executive Chairman Liu Ming Hui had on 7 July further acquired 621,200 shares, involving $15.907 million, according to shareholding disclosures at the Stock Exchange.
As USD/ HKD triggered the Strong-side Convertibility Undertaking during Hong Kong trading hours, the HKMA undertook a selling order of US$1.73 billion to inject HK$13.408 billion into the market.  The balance of the banking system of Hong Kong will increase to HK$178.297 billion next Monday (13 July).
WULING MOTORS (305.HK) CFO Lai Shi Hong, Edward revealed at a press conference that the company's street-stall trucks were extremely desirable driven by the heat of street-stall economy in China, with enormous orders flooding in within a short period of time.  Nevertheless, the popularity has been calmed, for which the CFO perceived to be a positive as competition may be fiercer if the response gets too overwhelming.
At World Artificial Intelligence Conference 2020, BABA-SW (9988.HK) founder Jack Ma stated that the coronavirus pandemic is rewriting the worldwide social and economic development during the first half of 2020. While bettering the living standard as it did in the past, digital technology will in future help people improve survival, furthered Ma, who did not deem the coronavirus crisis a derailer to the trend of technological reform, instead a driver to the reform of digital technology, as plights usually press the world to go innovative. Looking ahead, Ma anticipated the digitalization process to complete within 1-2 decades, as compared with 3-5 decades in the original blueprint.
FAST RETAIL-DRS (6288.HK) announced that, for the first three quarters ended May 2020, net profit -42.9% annually to JPY90.64 billion. The company applied for a trading resumption with effect from tomorrow (10 July).
PICC GROUP (1339.HK) said that National Council for Social Security Fund of the People’s Republic of China (NSSF), the second largest shareholder of the Company, has recently informed the Company that due to the need for asset allocation and investment business, it plans to sell down not exceeding 885 million unrestricted A shares (representing not exceeding 2% of the current number of total issued shares of the Company) by way of call auction or block trade transfer within a six-month period commencing from 15 trading days after 9 July.
KERRY PPT (683.HK) PROFIT WARNING said that the Group expects that there will be a substantial year-on-year decrease, between 70% and 75%, in profit attributable to its shareholders for the six months ended 30 June 2020.
The Group expects a lower contribution from sales from development properties for the first half of year; significantly reduced income from the hotel assets held by the Group in the first six months of 2020 as compared to that of the first six months of 2019; and the absence of revaluation gains for the Group as compared to a net gain of HK$452 million during the same period in 2019.
Savills: Retail Shop Rent Stabilizing, HSI Rebound Spurs Commercial Building Demand The 2004-2013 retailing golden period no longer exists, as shop rents have been stabilizing and property prices continue to recede, opined Sharon Fong, Savills' Senior Director of Investment - Retail Sales. She saw room for further correction in the third quarter.  Hong Kong bourses surged 3.5% in the second quarter, aside multiple IPO filings. Fong expected this to shore up office demand in the short run.
SMOORE INTL (6969.HK), to be listed tomorrow, opened at $15.06 in the gray market, +21.45% vs the listing price $12.4, and last stood at $22.4, +80.6%, on volume of roughly 13.80 million shares, PhillipMart data showed.
OCUMENSION-B (1477.HK), to be listed tomorrow, opened at $28 in
gray market, up 91% vs the listing price $14.66, and closed at $43.9 in up $29.24 or 199.5% against the listing price of $14.66, on volume of 7.65 million shares, PhillipMart data showed. Excluding the handling fees, that  would equate to a book gain of $14,620 was reported per board lot of 500 shares.
IMMUNOTECH-B (6978.HK), to be listed tomorrow, closed at $13.4 in

gray market, up $2.4 or 21.8% against the listing price, on volume of 6.11 mn shares, PhillipMart data showed. Excluding the handling fees, a book gain of $2,400 was reported per board lot of 1,000 shares.

ZHENRO SERVICES (6958.HK), to be listed tomorrow, opened at $5.37 in
gray market, up 18.02% against the listing price $4.55, and last stood at $5, up 9.89% against the listing price, on volume of around 2.88 million shares, PhillipMart data showed.
GREENTOWN MGMT (9979.HK), to be listed tomorrow, closed at $2.7 in

gray market, up $0.2 or 8% against the listing price, on volume of 6.35 million shares, PhillipMart data showed. Excluding the handling fees, a book gain of $200 was reported per board lot of 1,000 shares.

ADTIGER CORP (1163.HK), to be listed tomorrow, opened at $0.86 in
gray market, flattish the listing price, and last stood at $1.1, +27.9% against the listing price, on volume of 397,000 shares, PhillipMart data showed.
Empire Group, HK FERRY (HOLD) (50.HK) and HENDERSON LAND (12.HK) named their phase 1 residential project at Castle Peak Road (Castle Peak Bay) as "Seacoast Royale”.  It will offer 611 units in total, measuring 185-1,267 sq.m. each. Thomas Lam, General Manager of Sales (1) Department at HENDERSON LAND, said the sales brochure may be made available as soon as next week, and the project could be launched this month.
Centa Valuation Index (Major Banks) (CVI) last printed at 52.99, -3.13 pts WoW and  -37.11 pts in six weeks.  Hong Kong saw resurgent local COVID-19 cases this week, facing a crisis of another community outbreak, they suggested  paying attention to next week's CVI, which will reflect the epidemic impact on banks' mortgage stance.  The index has not busted below the range of 40-60, implying lenders' conservative stance towards mortgage valuation without turning bearish on the market. +VE
The Legislative Council has at the Third Reading cleared the bill that extends statutory maternity leave to 14 weeks by a vote of 54 to 2, which may be put into practice by the end of the year. The definition of "miscarriage" shall be shortened to "24 weeks" from "28 weeks" of pregnancy, so that female employees suffering miscarriage at the 24th week or beyond may be entitled to maternity leave, proposed the bill.
Macau Chief Executive Ho Iat Seng forewarned that the city's economy will still be under grave pressure in 2H20 in wake of intensified external uncertainties, reported Radio Macau (TMD). While the epidemic is relatively contained in the city, driving economic recovery becomes a pivotal task of the SAR government at present.  The CE furthered that the epidemic exposed again the casino-dominant industry structure of Macau with inadequate economic resilience. The government should expedite the mapping of its economic direction and initiatives to better the situation.

Market and Pre Market News at bottom of page.

Short Selling HSI
Thursday 20.5% vs 19.6% Wednesday

Top Shorts MTRC (66) 50%, Wharf REIC (1997) 38%, Ping An (2318) 34%, China Res Land (1109) 33%, CCB (939) 32%, HSBC (5) 29%, Hang Lung PPT (101) 28%, Want Want (151) 27%, AIA (1299) 26%, SunnyOptical (2382) 26%, Henderson Land(12) 25%.



Northbound Rmb66,792m Sell 31,732m : 35,060m Buy

Southbound HK$ 24,770m Sell 10,376m : 14,394m Buy


Northbound Rmb93,018m Sell 44,198m : 48,821m Buy

Southbound HK$ 21,364m Sell 8,966m : 12,398m Buy

CHINA On market open

Inflation Jun +2.7% YoY vs +2.4% May (F/cast was +2.5%) [Jun -0.1% MoM vs -0.8% May F/cast was 0%)]

Govt said with work resumption and market reopening in June, local authorities carefully implemented measures to guarantee supply and stabilize prices. The market operation was overall stable,

PPI Jun -3.0% YoY vs -3.7% May (F/cast was -3.1%).

Govt said PPI climbed 0.4% monthly in June, up from a 0.4% fall in May. The index was -3% yearly, with a 0.7-ppt narrower slide from last month.

HONG KONG Centre for Health Protection said there were 42 new COVID-19 Cases today, 34 by local transmission and 8 imported. Hong Kong will see a fluctuating epidemic for a period of time under rebooting economic activity and population movement, said Secretary for Food and Health Sophia Chan. The emerging local infection was well-expected and inevitable on the partial resumption of economic and social activities, she added. The Government will tighten social distancing measures for 14 days starting from Saturday (11 July), where eateries must operate at a seating capacity of as much as 60% with no more than eight customers per table. Bars will have a maximum of four people for each table. Gym, Karaoke Lounge Max. Pax Tightened from 16 to 8.

Active Heavyweights
TENCENT (700.HK) +3.7% hits new high
HKEX (388.HK) +3.5% hits new high
CCB (939.HK) -0.9%
PING AN (2318.HK) +0.4%
AIA (1299.HK) -0.4% 
HSBC (5 HK) +0.3%

HSI & HSCEI Constituents on the move
ENN ENERGY (2688.HK) +4.8%
HANG LUNG PPT (101.HK) +4.6%, hits new high
WHARF REIC (1997.HK) -3.6%
AAC TECH (2018.HK) +3.5%
BOC HONG KONG (2388.HK) -3.1%

HSMI & HSSI Constituents on the move
HENG TEN NET (136.HK) +74.3%, hits new high
51 CREDIT CARD (2051.HK) +49%
PANDA GREEN (686.HK) +28.7%
CRRC TIMES ELEC (3898.HK) +22.4%
TRULY INT'L (732.HK) +21.1%
COMEC (317.HK) +17.8%, hits new high
LEGEND HOLDING (3396.HK) +17.1%
CHINASOFT INT'L (354.HK) +16.3%, hits new high
HUIFU PAYMENT (1806.HK) +15.9%
IGG (799.HK) +14.8%
HUA HONG SEMI (1347.HK) +14.2%
CHINA DONGXIANG (3818.HK) +12.8%
HUABAO INTL (336.HK) +12.7%
ASM PACIFIC (522.HK) +12.4%
TONGDA GROUP (698.HK) +11.5%
KOOLEARN (1797.HK) +10.9%
CR MEDICAL (1515.HK) +10%


JAPAN opened higher and traded sideways during the morning but rallied in the PM only to sell back down on news of 224 covid-19 cases in Tokyo today. Closed +0.4%

S KOREA market’s opened slightly higher and traded sideways Kospi Closed +0.4%. Kosdaq Closed +0.9%

TAIWAN opened higher but drifted lower in the morning and then traded sideways Closed +0.2%


Tokyo reported 224 confirmed COVID-19 cases today, hitting an intra-day high and topping 200 cases a day for the first time since 17 April. The daily tally for Tokyo had been rising in a week or so, but the local government attributed this to more people getting tested.

Hang Seng Indexes Company is now seeking to launch a new index tracking tech giants, referencing to Nasdaq and other international indices, said Daniel Wong, Director & Head of Research and Analytics at Hang Seng Indexes Company.  The recently-outperforming new economy and biotech stocks have become investor darling, added Wong. While international investors may now directly invest in particular tech firms, the launch of a new index may expand their choices and help them diverse risks.

FAST RETAIL-DRS (6288.HK), for the first three quarters ended May 2020, net profit -42.9% YoY to JPY90.6 billion.  the Group expected that the full-year net profit will amount to JPY85 billion,  -47.7% YoY

UBS Research announced the launch of its new thematic research product, China 360. China 360 will connect the dots across macro and industry themes to navigate a rapidly-evolving landscape. The research products will complement the deep local expertise of UBS's #1 ranked China research business among international banks. China 360 seeks to build on the unique position UBS has developed in China over the past two decades and will translate not only in to written product but also bespoke access in the form of high-touch expert access and bespoke tours, said Damien Horth, Global Head of New Business Initiatives at UBS Global Research.

Australian Prime Minister Scott Morrison will on 9 July (local time) declare measures to help Hong Kong residents, ranging from visas to changes of the extradition deal, Reuters citing government sources. Australia is making this decision after Foreign Minister Marise Payne discussed Hong Kong issues at a teleconference with the U.S. and other Five Eyes counterparts, said the insiders.

White House Economic Adviser Larry Kudlow told Fox News that Phase 1Trade Deal remains in place despite the tensions between the US and China.  While Washington is holding Beijing accountable for the legislation of Hong Kong National Security Law, the trade deal will go on, furthered Kudlow.

HONLIV HEALTH (9906.HK), scheduled to go public on Main Board tomorrow, announced a delay in the listing timetable as additional time is necessary to finalize the final Offer Price, the level of indication of interest in the International Offering, the level of applications in the Hong Kong Public Offering and the basis of allocation of the Hong Kong Offer Shares and to obtain clearance from the regulators.

Vitasoy Founder Descendant Karen Lo Adds Esprit Shrs at $120M, Turns into Biggest Shareholder. She bought 150 million shares off-market last Friday (3 July), involving roughly $120 million, according to HKEX. Following, Lo's shareholding rose from 4.93% to 12.89%, becoming the largest shareholder of ESPRIT HOLDINGS.

The catering industry announced that a dinnertime promotional offer will be beginning from mid-July. Starting from 15 July, customers will be entitled to a 30% discount after 18:00, and a 20% discount in August, at participating restaurants, subject to no minimum spending requirements. Over 1,000 eateries are joining the program, said Tommy Cheung, a catering constituency lawmaker.


Shenzhen Stock Exchange announced that NEW WORLD DEV (17.HK) has been included into Southbound Trading with Hong Kong, effective today. +VE

GEELY AUTO (175.HK) announced the disposal of 100% equity interests in three subsidiaries, namely Chengdu Automobile, Ningbo Beilun and Ningbo Jining, to its parent company Geely Holding, respectively involving RMB76.3 million, RMB729 million and RMB30.5 million. +VE

TRADNG HALT for ESPRIT HOLDINGS (330.HK) with effect from 9:00 a.m. on 9 July 2020 pending the release of an announcement relating to inside information of the Company.

CHINA FEIHE (6186.HK) issued another clarification notice. Blue Orca Capital yesterday (8 July) published a report on the Company’s financial performance. The relevant allegations in the report are groundless or untrue statements. The Company refuted the allegations by explaining its logistics company and revenue recognition, operating expenses, cash position, and so on.

BABA-SW (9988.HK)'s Alibaba Cloud IoT and Tmall Genie announced the joint setup of an AIoT innovation center to integrate the technological capability of the group, including Alibaba DAMO Academy. With three innovation laboratories and a quality control center, the AIoT innovation center will initiate the experimental base mapping in cities and industrial zones. +VE

The US Government is seeking to block the Chinese government’s efforts to steal US citizens’ private information by means of telecommunication and social media, said Secretary of State Mike Pompeo. The communication infrastructure in the century ahead has to be built based on the Western ideal of private property and information protection, furthered Pompeo, accusing Chinese hardware and software developers of not sticking to this model.

Google had in May shelved Isolated Region, a new cloud service project, in China and other political sensitive countries, likely related to intensifying geopolitical tensions and coronavirus pandemic, said Bloomberg. Yet Google claimed the shutdown has nothing to do with the plague and political landscape, nor is the US tech giant weighing any plan to roll out cloud platform services in China.

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