11 JUNE WRAP HSI -570pts, T/O +12%, Shorts rise to 19%


HSI -570pts (-2.3%) 24,480  HSCEI -199pts (-2%) 9,945 T/O HK$142.43bn (+12% DoD but relatively low considering todays IPO was HK$7.28b so ex that T/O was +8%).


Europe Markets opened lower and have trended lower

US futures have sold down sharply on worries of a second wave of covid-19 that was warned of emerging, currently indicating -900pts as initial claims miss forecasts although PPI data slightly better but still weak.


CONNECT 

Shanghai

Northbound RMB 29,469m Sell 15,677m : 13,792m Buy

Southbound HK$ 10,564m Sell 5,389m : 5,175m Buy

Shenzhen

Northbound RMB 44,760m Sell 21,365m : 23,395m Buy

Southbound HK$ 8,704m Sell 4,023m : 4,681m Buy


Short Selling HSI Thursday 19.3% vs 17.8% Wednesday

Top Shorts Hang Lung Ppty (101) 54%, Hang Seng Bank (11) 36%, HK & China Gas (11) 35%, China Res land (1109) 35%, ICBC (1398) 33%, MTRC (66) 29%, Bank of China (3988) 29%, HSBC (5) 28%, Country Garden (2007) 28%, China Unicom (762) 27%, Want Want (151) 27%, Ping An (2318) 25%, Shenzhou (2313) 25%


DATA 

CHINA Vehicle Sales May +14.5% YoY vs +4.4% Apr (F/cast was +12%)The second straight month of increase, as lockdowns eased. Sales of new energy vehicles (NEVs), which include battery-powered electric, plug-in hybrid and hydrogen fuel-cell vehicles, fell for a eleventh straight month to 82,000 units. Considering the first five months of the year, car sales -22.6% vs -13% drop a year earlier.

HONG KONG
Centre for Health Protection
said there were no new local COVID-19 case


INDEXES      

CSI 300 closed  -44 pts (-1.1%) @ 3,996 Opened lower and trended slightly higher through the morning to flat at lunchtime but PM saw the market sell down to a low of 3,980 before a small rebound in the last 40 minutes.  Sentiment weakened after the poor loans data out after market yesterday.  Increased concerns about defaults in manufacturing, retailing and services sectors as borrowing costs continue to climb. All sectors were weak but lead lower by Consumer Staples, Energy, and Insurance names.

HSI Pre Market -51pts @ 24,997 vs -35pts ADR’s @ 25,015 with Netease (9999 HK) +8% on debut and other internet names strong but Financials were weak.  Market initial tested the support at 24,900 before attempting to regain 25k but failed to breakout.  It then sold back down to 24,900 before working slightly higher and then sideways but around around 11:20 increased selling pressure saw the market sell off into lunch.  The weakness continued though the PM to close at the day lows with a downtick into the closing auction.
T/o relatively light considering the selling pressure and todays IPO.  But a lot of margin money tied up in IPO’s.  Expect margin selling in the morning.  Sentiment weakened by news of increased covid-19 cases in the US as lockdowns ease.  The FOMC’s decision to announce no new measure prompted a ’tantrum’ in the US but in the light of the recent market moves I think was the right decision.  25k remains a key level, with European markets trading lower and the US set to open lower the outlook is likely to remain cautious. 

Active Heavyweights
HSBC HOLDINGS (5.HK) -4.8%
AIA (01299.HK) -2.9%
CCB (00939.HK) -1.7%
PING AN (02318.HK) -1.3%
TENCENT (00700.HK) -0.9%
HKEX (00388.HK) -0.7%

HSI & HSCEI Constituents dropped unto 5.5%.

HSMI & HSSI Constituents on the move
TOPSPORTS (6110.HK) -12.1%
HENGTEN NET (136.HK) -10.1%
YADEA (1585.HK) +3.5%, hits new high

REGIONAL MARKETS 

JAPAN opened lower pre market data was weak BSI Large Manufacturing Q2 -52.3 vs  -17.2 Q1  market initially worked slightly higher then sideways before selling off around lunchtime to close on the lows Closed -2.8%

S KOREA Markets Kospi opened lower but quickly rallied into the green Kosdaq opened higher and trended higher but both then reversed from mid morning and trended lower to close on the lows Kosdaq -0.21% Kospi -0.9%

TAIWAN opened slightly higher but trended lower thought the day, ended on the day low Closed -1.6% @ 11,535


AFTER MARKET 
CHINESE EST H (127.HK) Chairman Lau Ming-wai sold his Century Frontier Limited, which held 476 mn shares of CHINESE EST H, to Solar Bright Ltd. under CHINESE EST H Executive Director Chan, Hoi-wan (Kimbee) on 11 June, according to the disclosure of the Stock Exchange.  Upon completion, Lau Ming-wai will cease to hold long position in the company; while Joseph Lau Luen-hung and Kimbee will continue to hold 74.99% stake in the company in the capacity of their child below 18 years old. au Ming-wai's entire shareholding in the company will be taken over by three other children of Joseph Lau Luen-hung, including Josephine Lau Sau-wah and Lau Chung-hok, according to market sources. 
EVERGRANDE (3333.HK) repurchased 3 million shares through the Stock Exchange today (11 June) at $18.64 per share, involving $55.92 million
CHINA AOYUAN (3883.HK) executive director Chan Ka Yeung Jacky bought  350,000 shares of the company on 11 June at an average price of HK$8.371 each, involving around HK$3 million.
CHINA SDHS FIN (412.HK) said that it has been allocated with 620,000 NTES-S (9999.HK)  Shares at HK$123 per Share. The total subscription monies paid are HK$77.0285 million.
NWS HOLDINGS (659.HK is applying for a licence to manage non-performing assets in Mainland China, Bloomberg citing sources. The group has purportedly established and registered a Hainan firm to submit the application to China Banking and Insurance Regulatory Commission, expecting to obtain the approval soon.
CHINA registered spiking imports of crude oil and soybeans in May based on international market changes, domestic production demand and market principles, reported Ministry of Commerce. Meanwhile, the devaluation of BRL and stronger intention of Brazil exporting soybeans also boosted the soybean import growth of China.  Between January-May 2020, China recorded imports of crude and soy at growth of 5.2% and 6.8%, according to General Administration of Customs of the PRC (GAC). In May alone, respective imports increased 19.3% and 27.7%.
CHINA LIFE (2628.HK) accumulated premium income for the period from 1 January to 31 May 2020 was about RMB369.8 bn, +14.99% yearly
PICC GROUP (1339.HK) aggregate premiums income as derived from the operating subsidiaries for the first five months of 2020 were PICC P&C RMB200.632 bn, PICC Health RMB18.109 billion and PICC Life RMB61.986 bn.  The total premiums income was RMB280.727 bn, +3.3% YoY.
PICC P&C (2328.HK) original insurance premium income for the period from 1 January 2020 to 31 May 2020 aggregated RMB200.632 billion, +3.5% yearly.
NCI (1336.HK) accumulated gross premium income for the period between 1 January 2020 and 31 May 2020 was RMB79.009 billion, +32.1% YoY
CHOW TAI FOOK (1929.HK) annual results ended March 2020. The revenue -14.9% YoY to HK$56.751 bn. The net profit HK$2.901 bn, -36.6% YoY EPS HK$0.29. Final DPS was HK$0.12; full-year DPS was HK$0.24.
NTES-S (09999.HK) closed at $130, up $7 or 5.7% against the listing price of $123, on of 54.54 million shares and T/Oof $7.228 billion. Excluding the handling fees, a book gain of $700 was reported per board lot of 100 shares.
Cheung Kong Real Estate Director William Kwok stated that the group has reserved $1bn as standby mortgage capital for potential buyers of 3- or 4-room flats under SEA TO SKY. The LTV ratio can be as high as 85%. Starting from next week, show flats will be open to the public on the 9th floor at Fortune Metropolis, Hung Hom, disclosed Kwok, expecting a detailed price list to be made public very soon.
Centaline said the US Fed stated that it will put the low rate on hold until 2022, meaning Hong Kong's low interest rate environment will be prolonged by at least two years. The city has a clear direction to keep rates constant, favoring the property market. They expected the Centa-City Leading Index (CCL) to hit the historical high (190.48) before Christmas.
Centa Valuation Index (Major Banks) (CVI) last printed at 82.03, -6.9 pts weekly.  The index slumped by 8.07 pts in two weeks from 90 to around 80 amid the re-emergence of social movements. The steeper slide this week meant banks were turning less proactive on mortgages. -VE

MARKET HOURS 

XIAOMI-W (1810.HK) launched the Mi Band 5 today. The standard version is priced at RMB189, and the NFC version at RMB229. Public sales will start from 10 a.m. on 18 June.
W. Kowloon Lai Ying St. Project Named as 'Grand Victoria’ being developed by the consortium of Wheelock Properties, Sino Land, K. Wah International, Shimao Property and Sea Holdings. The project is applying for pre-sale consent now and will be launched in the fourth quarter if all goes smoothly, said Wheelock Properties Managing Director Ricky Wong Kwong-yiu. He also said low US interest rates and economic stimulus around the world, will favor the Hong Kong property market. He mentioned the utmost importance of social stability, which supports the economy, businesses and home market. The easing plague and better fundamentals are also conducive to the home market development. Seeing recent home price rally, Wong expected the correction period to almost come to an end.
LINK REIT (823.HK) reportedly in talks to acquire The Cabot for GBP390 mn, Chinese media citing British press. The Cabot, the office tower situated in London’s Canary Wharf, is currently owned by Hines, a US REIT.
Bytedance and BABA-SW (9988.HK) have executed leases to expand their office space in the city, Bloomberg reported. Bytedance has entered into a three-year leasehold for around 3,000-sq. ft. offices at Times Square, Causeway Bay, said insiders, and BABA-SW is occupying one more floor of 17,000 sq. ft. In the same office building.
XIAOMI-W (1810.HK) said that Xiaomi cellphones have notched the top spot in terms of sales  volume as of noon on JD-SW (09618.HK)'s 6.11 shopping day, when its products seized the top six spots in terms of sales volume across all Android smartphones.
CHINESE EST H (127.HK) Chairman Lau Ming-wai's entire shareholding in the company will be taken over by three other children of Joseph Lau Luen-hung, including Josephine Lau Sau-wah and Lau Chung-hok, according to market sources.
CHOW SANG SANG (116.HK) With 95% or above shops having reopened in mainland China at the end of March; sales in May-June have considerably recouped, said CFO and Company Secretary Morison Chan Chi Kong.  As to shop rents, the company was offered an approximate 20% cut in Hong Kong and Macau regions between February-April. Given epidemic tapering off in May, landlords yet set out their tough line again. Around one-third of about 70 shops in Hong Kong and Macau need to have rent renewals every year. Entering 2020, roughly half of shops have rent renewed with 30-40% rental trims.  CFO and Company Secretary Morison Chan Chi Kong said the retailer had applied for Retail Sector Subsidy Scheme and Employment Support Scheme under Anti-epidemic Fund of the Government. Under the Retail Sector Subsidy Scheme, the company obtained a maximum of $3 million subsidy; while application for the Employment Support Scheme is still underway. Since last year end, the group has circa 10,500 employees. It has not taken action on layoff and wage cut so far, or asked their staff to furlough. The group will not dismiss staff unless the economy is aggravating further.
HSBC announced that it maintained the best lending rate at 5% unchanged.The previous adjustment of the rate by the bank happened on 1 November 2019 when a 12.5-bp cut was made.  
Overnight HIBOR last posted at 0.09464%, logging a 1-month low, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.56071%, down for 10 days, marking a 1-month low.
Ricacorp Properties doesn’t see the need to fire staff as front-line agents incapable of meeting the standard in the  gloomy market will leave themselves organically, said CEO Willy Liu. As developers have been pacing up in project launches since May, Liu foresaw a surge in the number of new projects in the second half of the year and modeled 5-6% growth in 2H20 home prices, and 6-8% for FY20’s. Asked about latent impacts from Hong Kong National Security Law legislation, the CEO confessed that the real estate agency has recently been receiving many more inquiries about investment migration, but the number of finalized cases are not as sharp as the early 80's.
Airstar Bank, a virtual bank in Hong Kong co-established by XIAOMI-W (1810.HK) and AMTD Group, officially opens for business today.At the initial stage of operation, Airstar Bank renders services of current deposits, time deposits and loan services. The first  $20,000 current deposits will be given an interest rate of 3.6% p.a.. 
TENCENT (700.HK)  ran the whole show of the world's top-grossing mobile games in May. The giant's PUBG Mobile took the top spot, revenue +41% YoY to US$226 mn, announced by Sensor Tower. Roughly 53% of the user spending was from China, followed by 10.2% from the US and 5.5% from Saudi Arabia. Honor of Kings came in second in the global chart, grossing US$205 million in revenue (+42% YoY). 
TRAVEL Hong Kong government will unveil details of the health code system as early as this week, aiming to resume quarantine-free travel amongst Guangdong, Hong Kong and Macao, Ming Pao citing sources.  Eight accredited testing institutes will be partaking in this stage, including five private hospitals and three private laboratories.
CPIC (2601.HK) announced that it had received the Approval for the Issuance and Admission of the Global Depositary Receipts (GDRs) on the London Stock Exchange (LSE) granted by China Securities Regulatory Commission (CSRC). The intended use of 70% or more of the net proceeds received from the Issuance will be for gradually developing the Company and its subsidiaries’ businesses overseas, in the form of equity investments, partnerships and alliances, and mergers and acquisitions in both developed and emerging markets, supporting core insurance business growth.
MENGNIU DAIRY (2319.HK) announced the issuance of US$500 million 1.875% bonds due 2025 and US$300 million 2.5% bonds due 2030.

PRE MARKET

TOPSPORTS (6110.HK) has been informed by its controlling shareholder Belle Sports that it had entered into a block trade agreement with Merrill Lynch (Asia Pacific), pursuant to which the Placing Agent has agreed to place 277 million existing shares of the Company held by Belle Sports to parties independent of and not connected with the Company at a price of HK$10.50 each (9% discount to the closing price yesterday). The Sale Shares represented approximately 4.46% of the total issued share capital of the Company and involved HK$2.916 billion  in total.

As HKD re-hit the Strong-side Convertibility Undertaking, the HKMA undertook USD195 million selling orders during New York trading hours to inject HKD1.511 billion in the market.  The balance of the banking system will increase to HKD122.127 billion tomorrow (12 June).

DINGYI GP INV (508.HK) about the unusual share price and trading volume movements. On 10 June, there was a forced sale of approximately 263million shares held by Chairman Li Kwong Yuk, arising from partial enforcement of share charges and/ or margin financing by certain securities brokers, and as a result of the above forced sale, the shareholding interest held by Li was reduced from 53.27% to 49.68%.

MGM CHINA (2282.HK) announced proposed issue of USD denominated senior notes, the net proceeds from which were intended to repay a portion of the amounts outstanding under the Revolving Credit Facility and for general corporate purposes.

TRAD CHI MED (570.HK) entered into a cooperative agreement with Ping An Smart City to jointly build a traceable traditional Chinese medicine ("TCM") product quality control and traceability management platform, and the Project has officially launched.

SINOTRANS (598.HK) Sinotrans Shipping, a subsidiary of the actual controlling shareholder of the Company, China Merchants Group, increased 47.725 million H shares between 28 May and 10 June, involving around $80.9642 million.

HEC PHARM (1558.HK) repurchased H Shares on 8 occasions from 29 April to 29 May, involving an aggregate of 4.4088 million shares for $128 million.

SINO BIOPHARM (1177.HK) announced proposed bonus issue of shares on the basis of one new Share for every two existing Shares, under which a total of 6.291 billion new Shares were expected to be allotted.


COMMENT 

*CHINA BANKS WEAK after the latest credit data that came out after market Wednesday.  I wonder if knowing it was bad they put it out to coincide with the Fed announcement in the hope the Fed announcement was good and so it wouldn’t be so noticeable?  Or am I overthinking it?  Anyway it was weak CCB (939 HK -1.3%) ICBC (1398 HK -1%) CMB (3968 HK -3.4%) ABC (1288 HK -2.5%).

*INSURERS WEAK as CPIC (2601 HK -5%) on concern its planned GDR issuance could be a drag on the stock. Citi put the stock on a 30 day negative watchCH LIFE (2628 HK -3.5%) CH TAIPING (966 HK -5.1%) NCI (1336 HK -3.6%) PICC GROUP (1339 HK -3.6%).

*AUTOS WEAK despite good Vehicle Wholesale data from CAAM and Shenzhen to widened its New Energy Vehicles (NEV) applications and it also plans to provide financial subsidy to NEV buyers. GEELY (175 HK -1.5%) BYD (1211 HK +1.7%) GAC (2238 HK -3%).

*E-COMMERCE MIXED  NETEASE's (9999 HK) debut, stock closed at HK$130 vs listing price of HK$123. MEITUAN DIANPING (3690 HK +3.4%) jumped on broker's upgradeand is reportedly invested in Hualala.com, that provides digital-management services forcatering companies. JD.COM (9618 HK) has attracted at least HK$70b retail orders through margin financing for its HK IPO,thats at least 43 times covered, it's priced its listing at HK$226. ALIBABA (9988 HK -1.2%) TENCENT (700 HK -0.8%).

*TECH & COMPONENTS WEAK  SEMICON’s weak as global chip supply is becoming more critical due to US sanctions and as major supplier Arm and its Chinese venture clashed publicly over the dismissal of the Chinese Chairman/CEO. Huawei failed to convince suppliers to move its supply chain to the mainland, while Apple is expected to announce using its own chips (-VE Intel).

FIT HON TENG (6088 HK +1.9%) HUA HONG (1347 HK -3.7%) SMIC (981 HK -0.4%) ASM (522 HK -3.8%).

APPLE plans to launch production of the iPhone 12 in July or August, which is ahead of the pre-planned line up this year for other phone units. AAC TECH (2018 HK -1%) SUNNY (2382 HK -1.7%) BYDE (285 HK -3.2%) TONGDA (698 HK -2.3%).

*SPORTSWEAR WEAK after POU SHENG (3813 HK +3.9%) reported net consolidated operating revenue in May to 2.39b yuan,  +8.1% YoY. YUE YUEN (551 HK -3.2%) reported net consolidated operating revenue -24% YoY to USD692,589.

BELLE is offering 222m shs in TOPSPORTS (6110 HK -12%) in a block trade at HK$10.50/shr, represents a discount of 9% to last close.

*OTHER

EVERGRANDE HEALTH (708 HK +9.3%) said Mini Minor has agreed to subscribe to its subsidiary NEVS new shares worth HK$439m, and make a payment in cash or in assets to NEVS worth HK$22.3b, according to a company filing by Evergrande Health.

CHINESE ESTATE (127 HK +3.8%) after media reported that Joseph Lau's son Lau Ming-wai, who is the chairman of the company, transferred his entire equity stake to three half siblings, children of Chan Hoi-wan.