Aug 12 HK WRAP HSI +353pts thanks to a mid afternoon rally
HSI +353pts (+1.4%) 25,244 HSCEI +63pts (+0.6%) 10,216 T/O HK$144.07bn (+2% DoD)
EUROPE markets opened mixed UK opened flat but working higher despite weak data much as of it was better than F/cast. Germany trading sideway just in the red. CAC opened lower but working higher
US Futures opened +70pts but eased back in early trading, now drifting higher. Expect a flat open. Data due today MBA Mortgage Applications and 30 year Mortgage Rate, Core Inflation Rate, Inflation Rate, EIA Oil Report, WASDE Report.
CSI 300 Closed -34pts (-0.7%) @ 4,648 Market opened lower after the poor loans data which came out after market Tuesday. Tencent was weak ahead of results today other E commerce names were weak. Macau names still seeing interest.
Market sold down through the morning with sentiment weak on worsening US/China relations. PM saw some initial weakness but then the market worked higher in choppy trading into the close. Rotation still evident selling of Tech and Pharma and buying into Airlines, Developers and Banks
HSI Pre Market Pre market -22pts vs -122pts ADR’s Market saw choppy trading for the first 90 minutes trading between 24,890 and 24, 690. After 11am with the market around 24,850 it traded sideways into lunch. PM saw some initial weakness but basically traded sideways until 2PM when the market rallied 300pts in15 minutes to 25,132 with all the signs of team china in play; prompting widespread short covering and then worked higher to the day high 25,290 at 3:50pm before easing back into the close.
25,000 is becoming a key level, it seems one that China wants to hold to show that HK is stable and new security law is not having an impact but many are more cautious.
EARNINGS Thursday in Hong Kong include; Swire Pac (19 & 87), Galaxy Ent (27), CP Pokphand (43), Chinese Estates (127), China Everbright Int (257), PAX Global (327), Yue Yuen (551), Value Partners (806), Prosperity Reit (808), Convenience Retail Asia (831), China Mobile (941), Lenovo (992), Towngas China (1083), Ausnutria Dairy (1717), Swire Property (1972), Li Ning (2331), WuXi AppTec Co (2359), BOC Aviation (2588), Beijing Tong Ren Tang (3613), Pou Sheng (3813),
TENCENT Interim Non-IFRS NP +29% YoY to RMB57.232B, In Line but Interim NP +21% YoY to RMB62.003B, Beat Forecasts
Q2 net profit +37% YoY and +15% QoQ to RMB33.107 billion. During the period, online games revenues rose 40% yearly to RMB38.288 billion.
Waiting for the briefing more more details and the potential impact of sanctions on WeChat.
CATHAY PAC AIR (293.HK) posted a monthly loss of $1.5 billion at the moment and the company won't be sustainable if this situation persists, Chairman Patrick Healy said at a press conference. It is necessary to proceed with restructuring with the optimal operating scale and model expected to be proposed at the Board in 4Q20. The airline is not excluding any possibility though no decision has been made. Healy also believed business performance in 2H20 would be better than that in 1H20.
On cargo freight volume it saw a record high in the month of May with slight drop afterwards, said Ronald Lam, Group Chief Customer and Commercial Officer, adding that he believed strong demand for cargo freight will still be seen during the peak season. He is optimistic about the cargo yield. Chairman Patrick Healy, on another note, said the airline has not changed its hedging policy but the hedging volume has reduced along with usage reduction.
CHINA UNICOM (00762.HK) interim results ended June 2020. Profit +10.1% to RMB7.569B. EBITDA -0.1% YoY to RMB49.45 billion, in-line with RMB47.3-50.7 billion in consensus.
1H20 5G CAPEX amounted to RMB12.6 billion. The Chinese telecom carrier expected FY20 5G CAPEX to reach RMB35.0 billion.
The high-net-worth citizens in Hong Kong have already mapped out exit routes, opened offshore bank accounts and obtained overseas passports, although actual actions are yet to be taken, as Bloomberg learnt from an executive from an Asian wealth manager. Actual capital outflux from the city has been minimal since the national security law came into effect on 30 June 2020, partly because the wealthy are still assessing how are the sourer measures of Chinese government on Hong Kong going to affect the asset prices and long-term business environment of the city.
China's state-owned banks that have operations in Hong Kong are now trying to comply to sanction measures imposed by the US upon Chinese and Hong Kong officials in an effort to secure access to USD capital and ensure overseas operations won't be disrupted, Bloomberg reported. Large-scale Mainland Chinese banks that have businesses in the U.S. include BANK OF CHINA (3988.HK), CCB (939.HK) and CM BANK (3968.HK). As at the end of 2019, the four largest state-owned Chinese banks were in possession of US$1.1 trillion of USD capital, it was reported.
Sinopec Group entered into a strategic cooperation framework agreement with the People's Government of the Hubei Province yesterday (11th). The two sides are going to foster high-quality development along the regions in proximity to Yangtze River and step up investments in Hubei, with an aim to inject huge momentum into economic development in Hubei after the pandemic subsides.
Centa-Salesman Index (CSI) last printed at 44.81, +1.47 pts weekly, said Centaline Property. The 5-week losing streak for CSI came to an end. At the same time, the index stood firmly around 45 for three weeks, meaning market sentiment had stopped turning bleaker. With more vibrant second-hand deals amid easing COVID-19 situations, Wong believed CSI will bounce back to challenge 50 next week.
Market and Pre Market News at bottom of page.
JAPAN opened flat effective traded sideways after a rollercoaster morning. PM open higher and trading sideways, dipped mid afternoon as Machine Tool Orders in July were -31.1% YoY vs -32% June but the f/cast was -27% but stocks rebounded to close +0.4%
S KOREA Kosdaq opened lower and sold down 838 support level which it tested a couple of times before working back to 850 and then traded sideways but dipped lower late afternoon; found support at 840 level and then saw a small bounce at the end to close -1.7%
Kospi opened lower rallied before selling down to 2,394 where it found support and the bounced back to yesterday’s closing level. Then traded sideways for most of the afternoon above the 2,410 level before rallying at the end to close +0.6%
TAIWAN opened lower an sold down to the day low around 10am before trading sidewise for most of the afternoon, saw some late selling down to 12,650 but bounced at the end to close -0.9%
Short Selling HSI Wednesday 18% vs 17.3% Tuesday
Top Shorts Hang Lung PPTY (101) 54%, CCB (939) 42%, Ping An (2318) 41%, CLP (2) 35%, Sino Land (83) 35%, Sunny Optical (2382) 33%, WH Group (288) 32%, NWD (17) 32%, China Res Land (1109) 30%, Hengan (1044) 29%, Hang Seng Bank (11) 28%, China Mobile (941) 27%, HK & China Gas (3) 26%, Mengniu Dairy (2319) 25%.
Northbound Rmb 54,286m Sell 26,669m : 27,617m Buy
Southbound HK$ 12,885m Sell 6,310m : 6,575m Buy
Northbound Rmb 73,642m Sell 38,114m : 35,528m Buy
Southbound HK$ 14,381m Sell 7,191m : 7,190m Buy
CHINA No data
Centre for Health Protection said there were 62 additional COVID-19 cases in Hong Kong today; (vs 33 cases Tuesday). 1 imported case and 28 of unknown origin.
AIA (1299.HK) +3%
TENCENT (700.HK) +1.4%
HKEX (388.HK) +1.1%
PING AN (2318.HK) +1%
CCB (939.HK) +0.9%
HSI & HSCEI Constituents on the move
GUANGDONG INV (270.HK) +7.9%
WH GROUP (288.HK) -7.1%
CHINA RES GAS (1193.HK) +6.5%
WHARF REIC (1997.HK) +5.4%
HANG SENG BANK (11.HK) +5.2%
HSBC HOLDINGS (5.HK) +4.8%
CK ASSET (1113.HK) +4.3%
SWIRE PACIFIC A (19.HK) +4.2%
HANG LUNG PPT (101.HK) +4.1%
BOC HONG KONG (2388.HK) +3.7%
CHINA GAS HOLD (384.HK) +3.1%
HSMI & HSSI Constituents on the move
GIORDANO INT'L (709.HK) +14.8%
JS GLOBAL LIFE (01691.HK) -13.5%
HUABAO INTL (00336.HK) -11%
HUA HONG SEMI (01347.HK) -10.8%
*CHINA BANKS FIRM despite the lower-than-forecast new lending data in July weighted on the sector’s. Stocks rallied mid afternoon ICBC (1398 HK +0.2%) ABC (1288 HK +0.4%) BOC (3988 HK +0.4%) CCB (939 HK +0.7%).
*E-COMMERCE WEAK on concerns over possible US sanctions but TENCENT (700 HK +1%) rebound after news reported that China will bring up Wechat and Tiktok at the upcoming US trade talks.
CH LITERATURE (772 HK -10%) after earnings with a number of broker downgrades. Reported 1H net loss of 3.3b yuan vs a net profit of 392.72m last year. 1H revenue +9.7% YoY to 3.26b yuan, declared no interim dividend.
IGG (799 HK -4.8%) KINGSOFT (3888 HK -3.7%) KINGDEE(268 HK -4.6%) JD (9618 HK -1%).
*TECH & COMPONENTS WEAK after HUA HONG SEMI (1347 HK -11%), reported 1H net profit -58% YoY to US$38.1m.
PLUS an industry report reveals that China smartphone shipments -35% YoY in July, the 3rd straight month of declines and worse than the mid-teen drop seen in May & June.
SMIC (981 HK -2.9%) BYDE (285 HK -4.5%) AAC (2018 HK-2.5%).
SUNNY OPT (2382 HK +1.6%) rebounded in the PM after reporting July handset lens set shipments +25% YoY to 135.9m.
*PHARMA/BIOTECH WEAK after Russia announced its approved the first coronavirus vaccine, although there are still doubts over its effectiveness.
CANSINO BIOLOGICS (6185 HK -6.7%) to start trading in Shg STAR board tomorrow.INNOVENT (1801 HK -5.9%) SINO BIOPHARM (1177 HK -2.2%) CSPC PHARM (1093 HK -2.1%) HYGEIA (6078 HK -7%).
*AUTOS WEAK Despite data showing Retail sales of all vehicles +7.9% YoY in July to 1.63m units, the China Passenger Car Association said Tuesday. BUT a car dealer inventory survey shows that July car dealer inventories were +9.4% YoY and +10% MoM, which is above the warning line.
YONGDA (3669 HK -4.8%) ZHONGSHENG (881 HK -2.6%) GREATWALL (2333 HK -2.3%) BRILLIANCE (1114 HK -2.9%).
*HK PROPERTY STRONG on speculation of boarder reopening for mainland visitors. CK ASSET (1113 HK +4.7%) HYSAN (14 HK +2.5%) SWIRE PPT (1972 HK +3.1%).
NEW WORLD (17 HK +2.3%) won a commercial land parcel for 4.1b yuan in Shanghai’s Huangpu district.
*AIRLINES FIRM after CATHAY PAC (293 HK +12%) interim results were in-line and news that the Hong Kong Intl Airport “could soon resume” transfer flights to mainland China,
Cathay reported 1H net loss of HK$9.87b at lunchtime.
AIR CHINA (753 HK +3.9%) CEA (670 HK +2.7%) CSA (1055 HK +3.7%).
NEXT DIGITAL (282.HK) and other local media names saw heavy selling in the PM; Next Digital was -42% to $0.64, on turnover of $1.67 billion. I-CABLE COMM (1097.HK) was -22% and MOST KWAI CHUNG (1716.HK) -36%.
Hong Kong International Airport will soon resume transit flights to Mainland China and this is going to benefit travellers returning to China, sources quoted as saying by the Chinese Global Times. The airport has gradually resumed transit flight services from June 1st 2020.
A fund belongs to TENCENT (700.HK) has made online appointment for investment advisory services available from today, signifying an official entry into the fund investment advisory market. All fund application fees will be waived and only the standard advisory fee will be charged on an annual basis, it was reported.
Foxconn announced the Q2 results ended June 2020. Net profit rocketed roughly 34% yearly to TWD22.9 billion (about USD779 million), higher than TWD17.95 billion in consensus.
China will need 5-8 year time for a breakthrough in domestic chip technology, said Jia Kang, Director of Institute for Fiscal Science at Chinese Ministry of Finance. However, a boosted domestic circulation does not imply a return to an era of seclusion from the world, added Jia.
Starting from 2019, two Chinese government-backed semiconductor projects had been hiring over a hundred experienced engineers and managers from TSMC as China seeks to ramp up her domestic chip production capability and thus reduce reliance on foreign suppliers, as the Nikkei Asian Review learnt from insiders.
BABA-SW (9988.HK)-backed BEST Inc. is pursuing to list its delivery express and shipping arm onto Hong Kong stock market, with the IPO scale and valuation target not yet set in stone, according to Chinese media.
While China is poised to reignite the Individual Visit Scheme to Macau on 23 September, Macau Chief Executive Ho Iat Seng expressed hope that the measure could support the city's economy in 2H20, and that there is no intention to constrain the number of individual visitors for now. That said, the CE was not upbeat for the 2H20 economy in wake of looming pressure. He only wished the economy to heal progressively under the IVS resumption.
After the Chinese NPC Standing Committee had greenlighted the decision of allowing the LegCo members from the 6th session to continue performing their duties, the HKSAR government spokesman responded inquiry that the LegCo members of the current session will not have to retake the oath in performing duties in the coming year.
Ansteel Group and BYD COMPANY (1211.HK) struck a strategic partnership by inking a deal in Shenzhen yesterday (11th). Both parties decided to step up strategic cooperation in NEV light-weighting, development and adoption of new environmentally-friendly materials, etc.
At lunch CATHAY PAC AIR Interim Results Swing to $9.87B Loss, In Line with Profit Warning Interim results ended June 2020. Revenue was $27.669 billion, -48.3% yearly. Loss amounted to $9.865 billion, in-line with profit warning and against $1.347 billion profit a year ago. LPS equaled 250.8 cents. No dividend was declared.
Overnight HIBOR last posted at 0.05732%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.22589%, marking a 1-month low.
Following Chinese President Xi Jinping's advice against food waste, Wuhan catering association called on all eateries in Wuhan to switch on an "N-1" order taking model, which means 10 eaters can only order for nine servings. As for tables for 2-3, half-servings and mini-sized items shall be served. Catering associations in Xinyang, Henan and Xianning, Hubei also followed suit on the same day. Xi had yesterday commanded legislation and tougher scrutiny, as well as reinforced propaganda and education, to encourage resource saving and to curb wastage.
JD-SW (9618.HK) announced the conclusion of strategic investment in Xiamen Jianfu Chain Management which mainly operates the Fujian convenience store brand Fook.
The US smartphone shipment reached 31.9 million units in the second quarter, down 5% yearly and up 11% quarterly, reported Canalys. Apple's second-quarter smartphone shipment rose to 15 million units year-on-year in the US, hitting a record
ByteDance has suspended hiring and reassigned multiple senior management roles in India for its TikTok and Helo apps, The Indian Economic Times citing sources.
In July 2020, the top grossing mobile games worldwide went to TENCENT (700.HK)'s PUBG Mobile and Honor of Kings, whose revenue grew 10.8% and 34.8% yearly to US$209 million and US$192 million, according to a report from Sensor Tower.
Microsoft announced the debut of its next-generation Xbox Series X console in November, but the splashy blockbuster game, Halo Infinite, will be delayed for release until 2021.
GEELY AUTO (175.HK) announced in relation to a call option associated with the agreement entered into between the Company and BNP Paribas Personal Finance (BNPP PF) for the establishment of the JV Company, namely Genius Auto Finance Company Limited, to engage in the vehicles financing business in the PRC. On 11 August 2020, BNPP PF served a written notice to the Company on the exercise of the Call Option pursuant to which, subject to the agreement on the exercise price and other terms, BNPP PF will acquire from the Company such additional equity interest in the JV Company to increase its interest in the JV Company to up to 50%. So far, the exercise price of the Call Option and the exact percentage of equity interest in the JV Company to be acquired by BNPP PF have not been determined and are subject to agreement by the parties.
Mexico's foreign affairs ministry has signed MOUs with Johnson & Johnson, CANSINOBIO-B (6185.HK) and Walvax Biotechnology to help with their late-stage clinical trials for COVID-19 vaccines in the pipeline.
QILU EXPRESSWAY (1576.HK)'s trading in its H shares has been halted this morning, pending the release of an announcement pursuant to the Code on Takeovers and Mergers which constitutes inside information of the Company.
CANSINOBIO-B (06185.HK) (688185.SH) announced that the Company has completed the Issue of A Shares. The A Shares of the Company will be listed and commence trading on the Sci-Tech Innovation Board of the Shanghai Stock Exchange tomorrow (August 13).
The China Banking and Insurance Regulatory Commission's solvency watchdog has recently notified several insurers that they had during the first half of 2020 showed inadequacy in solvency disclosure, Shanghai Securities News reported. The regulator raised a basket of requirements to the insurers, such as stepping up their efforts in prompt disclosure about solvency.
XIAOMI-W (1810.HK) Chairman Lei Jun unveiled a spectrum of new products at the 10th anniversary event, including the world's first mass-produced transparent TV with see-through OLED displays. The TV set is priced at RMB49,999 each. On another note, XIAOMI-W's R&D budget will exceed RMB10 billion this year, Lei added.
Founder, Chairman and CEO Lei Jun, delivering his speech for the 10th anniversary of the company, laid out three solid principles of the company, namely orientation of technology, skeleton of price/ performance and creation of finest products. He also set three key strategies for future development, which focused on bold employment of innovative talents and encouragement of entrepreneurship. The Chairman also upheld the development strategy of gearing the manufacturing industry with the help of internet, and the value strategy of long-term deployment with strength and continuity.
CHINA DYF (612.HK) results for the six months ended June 2020. Loss narrowed to $71.25 million from $174 million a year ago. LPS equaled 5.59 cents. No interim dividend was declared.
TIMES NEIGHBOR (9928.HK) interim results ended June 2020. Net profit increased by 99.4% yearly to RMB84.17 million, with EPS of 9 fen. No interim dividend was declared.
ONE MEDIA GROUP (426.HK) announced that it had disposed on-market of an aggregate of 6.75 million MOST KWAI CHUNG (1716.HK) shares in a series of transactions conducted on 11 August 2020, at the average price of approximately HK$1.547 per share for an aggregate gross sale proceeds of approximately HK$10.4 million. The Group is expected to recognize a gain of approximately HK$7.1 million from the Disposal.
HUA HONG SEMI (1347.HK) results for the six months ended June 2020. Net profit reached US$38.14 million, down 58% yearly. EPS equaled US3 cents. No interim dividend was declared.