Aug 31 HK WRAP HSI -245pts , T/O +1-% DoD
HSI -245pts (-1%) 25,177 HSCEI -191pts (-1.9%) 9,992 T/O HK$181.77bn (+10% DoD)
EUROPE Market opened higher following the US. UK closed today so expect lighter trading volumes. Only German inflation data due today. May see some end of month window dressing
US Futures opened +106pts and have traded higher to +123pts but then eased back to +41pts , S&P and NDX also higher. Dallas Fed Manufacturing Data due. Remember Apple and Tesla trade post stock split today and DOW index changes are effective; ExxonMobil, Pfizer and Raytheon are out and Salesforce.com, Amgen and Honeywell are in. Watch for end of month window activity.
CSI 300 Closed -28pts (-0.6%) @ 4,816 opened and has trended higher in the AM session after the PMI data was in line. PM saw the market sell down Currently +0.6%
Market saw increased selling with profit taking going into the close, especially from Mutal Market Access stocks with net foreign sales exceeding 8bn Yuan; with Banks, Property and Tech leading the declines.
Shanghai Composite Index -8pts (-0.2%) 3,395
Shenzhen Component Index -93 pts, (-0.7%) 13,758;
ChiNext Index -29 pts (-1.1%) 2,728.
HSI Pre market opened +310pts @ 25,732 vs +85pts ADR’s @ 25,505 with E Commerce names strong along HK EX, HSBC and AIA . GEELY was +5% post results.
After opened higher with shorts being squeezed HSI then traded sideways through the morning session between 25,700 - 25,800. Market started selling down heavily in the PM on month end profit-taking/ cash raising ahead of forthcoming IPO’s, MSCI rebalancing. I think also some caution as earnings season ends and Asset Allocators start re-organisation portfolios taking into consideration recent earnings, global trends and forthcoming IPO’s. Expect more rotational trading through September before the start of the next quarter.
EARNINGS OUT After market
CHINA HUARONG (2799.HK) interim results for the period ended June 2020. Turnover -19.6% year-on-year to RMB45.688 billion. Net profit RMB210 million, -91.7% yearly. EPS. was RMB0.01. No dividend was declared.
TA YANG GROUP (1991.HK) interim results for the period ended June 2020. Turnover +68.9% year-on-year to HK$261 million. The loss narrowed from HK$37.199 million in the corresponding period of previous year to HK$27.513 million. LPS was HK3.16 cents. No dividend was declared.
GOME RETAIL (493.HK) interim result ended June 2020. The loss widened to RMB2.623 billion from RMB380 million in the corresponding period of the previous year. LPS was 13.1 fen. No dividend was declared.
EVERGRANDE (3333.HK) interim result ended June 2020. Net profit RMB6.54 bn, -56.2% yearly. EPS. was RMB0.495. No dividend was declared.
BEIJING ENT (392.HK) interim result ended June 2020. Net profit HK$3.568 billion, -4.8% yearly. EPS was HK$2.83. An interim dividend of HK40 cents was declared, flattish year-on-year.
AFTER MARKET NEWS
BANK OF CHINA (3988.HK) Chief Risk Officer Liu Jiandong said during the results conference that the bank's exposure to credit risk was expected to linger into 2H20 in wake of the complicated market environment, for which the bank will reinforce resolution to non-performing assets and size of provisions. Yet, he estimated the asset quality to remain sturdy and credit risk to be manageable overall. Vice President Zheng Guoyu separately projected the future NIM to stay under narrowing pressure. As such, the bank will cushion the market shock to the NIM through continued optimization of asset structure, improvement of capital utilization efficiency and so on.Chinese Ministry of Commerce resolved to mount an anti-dumping investigation from today on monoalkyl ethers of ethylene glycol and propylene glycol imported from and manufactured by the US.
EVERGRANDE (3333.HK) Vice Chairman and CEO Xia Haijun said various interim data notched new highs, mainly due to the rigid demand nature of the group's products coupled with proper cost control. He complemented that the internal sales target of the year was set at RMB800 billion with saleable resources of 90 million sq.m. in 2H20. The CEO was confident of meeting the target based on a sale-through rate of about 54%.
Shanghai Stock Exchange announced that the companies listed on Sci-tech Innovation Board (STAR Mkt) manifested a total net profit of RMB12.417 billion in 1H20, +42.29% yearly.
CHINA RES LAND (1109.HK) announced the proposed spin-off and separate listing of Mixc Lifestyle, a subsidiary of the Company, on the Main Board of the Stock Exchange. On August 31, CHINA RES LAND submitted a listing application to the Stock Exchange.
ICBC (01398.HK) in 1H20, COVID-19 pandemic provided Mainland banks with an opportunity to manage and control credit risk and the relevant work has reaped promising progress and outcome, said their chief risk officer cum vice president Liao Lin said during a teleconference. The company will try to maintain loan growth and strike a balance in 2H20 while stepping up support for strategical and emerging products.
As USD/ HKD triggered the Strong-side Convertibility Undertaking, HKMA undertook a USD150 million selling order to inject HKD1.163 billion into the market.
The balance of the banking system of Hong Kong will increase to HKD194.19 billion on 2 September.
Li Ka-shing and Victor T K Li, through Li Ka Shing Foundation Limited, acquired a total of 3.331 million shares in CK ASSET (1113.HK) at the average price of HK$42.4884, HK$42.3609, HK$41.8516 and HK$41.9248 per share on 25 August, 26 August, 27 August and 28 August 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CKA increased from 35.4% to 35.49%, and from 35.47% to 35.56% respectively.
PA GOODDOCTOR (1833.HK) announced that the group continued developing in the field of online medical services by setting up a renowned doctors studio, which will provide quality healthcare services to patients. Currently, the studio covers various specialist services including dermatology, pediatrics, and obstetrics and gynecology, etc. The studio provides one-stop services from pre-consultation, consultation and post-consultation.
ABC (1288.HK) saw a rally in non-performing loan ratio and balance, mainly driven by the COVID-19 pandemic and economic downturn, said Executive Vice President Zhan Dongsheng. Zhan believed there will still be an NPL rebound, especially for plague-inflicted sectors like catering and tourism industries, and export-reliant sectors.
JAPAN opened strongly bouncing back from the sell off on Friday and rose slightly through the morning after mixed data pre market. Retail Sales were worse than forecast but Industrial Production MoM was better. After lunch the market has drifted lower despite Consumer Confidence being better but Housing starts missed and Construction orders missed. Closed +1.1%
S KOREA Kosdaq market opened higher and saw a small uptick before trading sideways. Investors concerned about the rising number of covid cases. Around midday the market saw selling pressure, sold down to Friday’s closing level before rebounding Closed +0.8%
Kospi opened higher but has sold down through the session currently, went through Friday’s closing level without pausing. Did see a brief bounced in the PM but then sold down again to close -1.2%
News of the extension to the short selling ban having no impact but leaving the hedge funds smarting no doubt.
TAIWAN opened higher and saw an initial uptick for the first 20 minutes but then sold down to the 12,670 level then traded sideways/lower for the rest of the session; to close -1.1%
CONNECT FLOWS (Up DoD)
Northbound Rmb 64,030m Sell 33,722m : 30,308m Buy
Southbound HK$ 15,280m Sell 6,524m : 8,756m Buy
Northbound Rmb 75,409m Sell 40,011m : 35,399m Buy
Southbound HK$ 14,205m Sell 5,772m : 8,433m Buy
Manufacturing PMI Aug 51 vs 51.1 Jul. (F/cast was 51.3)
Non Manufacturing PMI Aug 55.2 vs 54.2 Jul. (F/cast was 54)The slowing in manufacturing would be in line with the erratic global demand cause by renewed outbreaks of covid 19.
Non manufacturing is a positive trend as the rest of the Chinese domestic economy continues to recover albeit at a slow pace.
Tomorrow we get the Caixin Manufacturing data which is forecast to see a slight fall too.
Then on Thursday the Services and Composite data, both of which are forecast to show a slight weakness MoM
Centre for Health Protection said there were 9 additional COVID-19 cases in Hong Kong today; (vs 15 cases Sunday).
Government announced today (August 31) its financial results for the four months ended July 31, 2020. Expenditure for the period April to July 2020 amounted to HK$289.8 billion and revenue HK$106.1 billion, resulting in a cumulative year-to-date deficit of HK$183.7 billion.
Rating and Valuation Department said the Private Domestic Price Index -0.5% MoM and 2-.2% YoYto 384.8 in July 2020, setting a three-month low. During the month, the rental index was +0.6% MoM but -8.7% YoY.
Agents expect the index to dip again as the third wave of covid cases impacts.
CCB (939.HK) -2.8%
HKEX (388.HK) +2.8% hits new high
TENCENT (700.HK) -1.9%
AIA (1299.HK) -1.1%
PING AN (2318.HK) -0.9%
HSI & HSCEI Constituents on the move
PSBC (1658.HK) -8.5%
ANTA SPORTS (2020.HK) -6.7%
CHINA RES BEER (291.HK) -4.5%
SHIMAO GROUP (813.HK) -4.3%
CPIC (2601.HK) -4.2%
GEELY AUTO (175.HK) +4.1%
CHINA UNICOM (762.HK) -4%
CHINA TELECOM (728.HK) -3.8%
CM BANK (3968.HK) -3.6%
ICBC (1398.HK) -3.6%
GUANGDONG INV (270.HK) -3.5%
ABC (1288.HK) -3.4%
CITIC (267.HK) -3.2%
SINO BIOPHARM (1177.HK) -3.1%
BANKCOMM (3328.HK) -3.1%
CHINA VANKE (2202.HK) -3%
HSMI & HSSI Constituents on the move
COSMOPOL INT'L (120.HK) +23.7%
TIANNENG POWER (819.HK) -14.4%
BYD ELECTRONIC (285.HK) +11.5%
JINCHUAN INTL (2362.HK) +7.1%, hitting new high
KINGBOARD HLDG (148.HK) +4.2%, hitting new high
JS GLOBAL LIFE (1691.HK) +4.2%, hitting new high
C&D INTL GROUP (1908.HK) +1.7%, hitting new high
*PETROCHEMS MIXED saw support amid speculation fuel consumption will rise as China's economy recovers, following Aug PMI data release.
SINOPEC (386 HK +3.1%) posted its first half-year loss ever, with a net decline of 21.7b yuan, compared with a profit of 32.2b yuan a year ago, after demand cratered. PETROCHINA (857 HK +1.1%) CNOOC (883 HK +1.5%).
*BANKS WEAK after disappointing interim results with Loan loss provisions jumping between 27% and 97% at the four big lenders. Prompting a number of broker downgrades BOC HK (2388 HK -1.1%) 1H net income -12% YoY to HK$15.21b.
BOC (3988 HK -1.6%) 1H NP -12% YoY to 100.9b yuan.
ICBC (1398 HK -4%) 1H net income -11% YoY to 148.8b yuan.
CCB (939 HK -2.5%) 1H net income -11% YoY to 137.6b yuan.
ABC (1288 HK -4%) 1H net income -10.4% YoY to 108.83b yuan.
*E-COMMERCE MIXED. ALIBABA (9988 HK +2.5%) JD.COM (9618 HK +1%) firm ahead of Ant Group's listing.
As the sale of TikTok now requires Beijing approval outlook less certain, NTES (9999 HK -1%) TENCENT (700 HK -1.9%).
Profit-taking seen in MEITUAN (3690 HK -5%) ZA ONLINE (6060 HK -2.2%) KINSOFT (3888 HK -6.1%).
NETDRAGON (777 HK- 5.6%) slumped following last week's results missed.
Expect more trimming ahead of the ANT listing
GREAT WALL AUTO (2333 HK +6.7%) 1H net income -24.5% to 1.146bn yuan.
GAC (2238 HK -8.5%) 1H net income -53% YoY to 2.32b yuan and a 40% cut to interim dividend.
BYD (1211 HK -0.2%) 1H net income +14.3% YoY to 1.66bn yuan.
GEELY (175 HK +4%) jumped on speculation it may become the first auto stock on the mainland science and technology board.
*PHARMA/BIOPHARM WEAK on results and not being included in the connect
SINO BIOPHARM (1177 HK -3.1%) net profit of 1.21b yuan for the first half, -16% YoY. INNOVENT BIO (1801 HK -9.4%) reported an interim loss of 608b yuan last week, and its total overall expenses reach 600m yuan during the period.
*AIRLINES MIXED recovery hopes for domestic players less certainty for international
CEA (670 HK +2.5%) reported 1H loss of 8.54b yuan.
CSA (1055 HK +1.7%) reported 1H loss of 8.174b yuan.
AIR CHINA (753 HK -0.9%) reported 1H loss of 9.44b yuan.
BYDE (285 HK+11%) reported 1H net income more than quadrupled from a year earlier to 2.47by uan thanks to its upstart mask business.
MINTH (425 HK +6.6%) reported 1H net profit decline less than expected 59% YoY.
MARKET HOURS NEWS
Moody's moved up its outlook for Chinese property sector to "Stable" from "Negative" for contracted sales growth recovery, stable inventory levels and smooth onshore and offshore funding access for financially robust property players. The ratings agency predicted Chinese developers to report property sales up by 0%-5% yearly over the next 6-12 months.
CHINA LIFE (2628.HK) , SPIC and other companies established an equity investment partnership enterprise for clean energy in Tianjin. CHINA LIFE and SPIC respectively own 89.57% and 9.99% stakes of the joint venture.
GREAT WALL MOTOR (2333.HK)'s annual sales target of 1.06 million vehicles remained intact, said investor relations manager Li Hong Qiang. Li believed model launches next year and the new platform will be conducive to raising auto ASP and the firm's competitiveness.
RONSHINE CHINA (3301.HK) interim result ended June 2020. The net profit amounted to RMB908 million, down 54.1% yearly. EPS. was RMB0.53. No interim dividend was declared.
NISSIN FOODS (1475.HK) interim results ended June 2020. Net profit reached HK$178 million, up 34.3% yearly. EPS equaled HK16.61 cents. No dividend was declared.
Overnight HIBOR last posted at 0.28298%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.37262%, marking a 1-month high.
SINOPEC CORP (386.HK) is capable of holding its dividend constant and maximising shareholder interest as it may hopefully achieve better operating performances on a full-year basis this year, said Chairman Zhang Yuzhuo at an interim results conference. The Chinese oil supplier plans to cut its capital expenditure by 10% this year, which will mainly reduce expenses on maintenance work with insignificant impacts on operation, low-return investment and key projects where drastic market changes are noted, disclosed President Ma Yongsheng. Vice President cum Board Secretary Huang Wensheng revealed that the sales branch of the company, after completing the shareholding reform in 2018, is now expediting a fresh reform and brushing up its business quality and profitability. As to the listing of the sales branch, it will be dependent on market changes, regulatory requirement and future development strategy, Huang said, who yet did not disclose any listing timetable for the branch.
Hang Seng Indexes Company announced that since the Southbound Stock Connect eligibility of the listed Biotech Companies has yet to be confirmed,
INNOVENT BIO (1801.HK), VENUS MEDTECH-B (2500.HK), BEIGENE (6160.HK), CANSINOBIO-B (6185.HK), AKESO-B (9926.HK), ALPHAMAB-B (9966.HK), INNOCARE-B (9969.HK) and PEIJIA-B (9996.HK) will not be added to the Stock Connect-related indexes on 7 September 2020.
SJM HOLDINGS (880.HK) Executive Director Angela Leong foresaw the Macau gaming industry not to be necessarily favored much by Chinese National Day Golden Week despite progressive relaxation of customer clearance with Guangdong, Macao Daily News reported. As to opinion that the bidding of casino licences of 2022 should be postponed, Leong said she did not hear any of such news, adding it is the government policy after all. She voiced confidence of winning a licence.
CCB (939.HK) quickly disabled its digital wallet after launching the service last Friday (28 August), reported Chinese media. The lender replied that it was merely running tests on the service and such tests ceased.
China Foreign Exchange Trade Center announced, on 31 August, the central parities in the interbank forex market of transaction currencies, including the dollar against CNY, are as follows: USD/CNY = 6.8605, up 286 bps from the central parity on the last trading day, setting a new high since 2 July 2019.
CICC and Huatai United Securities completed the pre-listing guidance of GEELY AUTO (00175.HK) earlier, and the latter will pick a date to file a prospectus with Sci-Tech Innovation Board, Chinese media citing Zhejiang Supervision Bureau of China Securities Regulatory Commission. In other words, GEELY AUTO is striving to be the first carmaker on Sci-Tech Board.
80 new homes were transacted at the weekend given a lack of new project launches, down 61.9% weekly according to market sources. Seacoast Royale, co-developed by HENDERSON LAND (12.HK), Empire Group and HK FERRY (50.HK), sold 31 units. EVERGRANDE (3333.HK)'s Emerald Bay tracked 9 sales.
Huawei Founder Ren Zhengfei, in appearance at a university seminar, said Huawei has shifted its investment to Russia ever since the US put the company on the Entity List. The company increased the investment, scientific team size and scientist wages in Russia.
PRE MARKET NEWS
Not in this mornings report
As at 6pm yesterday, more than 420,000 people have successfully registered for the Universal Community Testing Programme that will begin on September 1, the Government announced.
Shenzhen Stock Exchange announced TIGERMED (3347.HK) was included in the Shenzhen-Hong Kong Stock Connect , effective today.
TSINGTAO BREW (168.HK) interim result ended June 2020. The net profit amounted to RMB1.855 billion, up 13.8% yearly. EPS was RMB1.373. No dividend was declared.
HUANXI MEDIA (1003.HK) announced that it had on 30 August entered into a Subscription Agreement with Bilibili, pursuant to which it will allot and issue to Bilibili 347 million Subscription Shares at the Subscription Price of $1.48 per Subscription Share, representing a 2.63% discount to the closing price last Friday. The estimated net proceeds from the Subscription will amount to $512 million.
Warren Buffett's Berkshire Hathaway (BRK.A.US) announced acquisition of over 5% shareholdings in five large Japanese trading houses. The investment magnate acquired stakes in Itochu Corp, Marubeni Corp, Mitsubishi Corp, Mitsui & Co and Sumitomo Corp.
At a Chinese State Council meeting, Premier Li Keqiang stated that Beijing will mount serious scrutiny into unscrupulous tax charges and credit arbitrage as it seeks to facilitate the relief measures for enterprises, cited Xinhua News Agency. While charge cuts and tax trims have added to the financial pressures on local governments, they should refrain from imposing an extra levy or illicit charges on the market, underscored Li, and additional credit subsidies should focus on helping the troubled enterprises, especially medium, small and micro enterprises and individual merchants.