HK WRAP 17 June HSI +137pts but T/O drops for a third day


HK WRAP 17 June HSI +137pts but T/O drops for a third day


HSI +137pts (+0.6%) 24,481  HSCEI +42pts (+04%) 9,909 T/O HK$104.24bn (-9.1% DoD).   Warrants were 8.41% of the market turnover

Europe Markets opened slightly higher, rallied and eased back now moving higher again.

US futures indicating higher +188pts after earlier weakness Expiry on Friday.


INDEXES      

CSI 300 closed +3pts (+0.1%) @ 4,018 Market opened lower on news of the covid-19 outbreak continuing in Beijing, rising India/China tensions and concerns over North/South Korea. It ticked lower initially but then rallied to the morning high of 4,016 which it tested a couple of times before selling down, in steps, to the day low of 3,992.  Then it rebounded into lunch at 4,007. PM saw initial selling back to 4,000 level which it tested several times before a final rally to the day high of 4,019.  It then ticked lower into the close.
Investors will be watching for any new of todays meeting between US Sec State Pompeo and Yan’s in Hawaii.

HSI Pre Market +19pts @ 24,363 vs -60 pts ADR’s @ 24,284 with weakness in Financials but buying the major Dotcom names.  It then ticked initial lower before rebounding strongly, 200pts toi the morning high of 24,450 before revising and selling back down  250 pts to the day low 24,196. Then it rallied back to Tuesday’s closing level and traded sideways into lunch. PM saw an initial  tick higher but then sold down 100pts to the afternoon low of 24,243 before reversing and working higher for the rest of the day. First rebound to around 24,420 level and then a final rally around 3.30pm to 24,532 after which it drifted lower into the close and ticked lower in the closing auction. Turnover dropped for a third consecutive day.   Pharma and Tech in focus except Xiaomi with its India operations was -3.1%
AFTER MARKET 
RAZER (1337.HK) repurchased 1 million shares on the Stock Exchange with $1.315mn on 17 June at $1.31-1.32 per share. Year to date, the company has bought back 2.63mn shares, representing about 0.0299% of the issued shares. 
As USD/ HKD triggered the Strong-side Convertibility Undertaking at 7.75 again, the HKMA undertook US$100 million of selling orders during Hong Kong trading hours and injected HK$775 million into the market. The balance of the banking system of Hong Kong will increase to HK$126.537 billion on 19 June. 
JD-SW (9618.HK) and Kuaishou joined hands to treat users to a shopping spree, recording live-streaming sales value of RMB1.42bn yesterday, reported Chinese media. Particularly, Kitty Zhang Yuqi prompted sales of RMB223mn worth of goods in her live broadcast, which had reached 25 million views. 
Li Ka-shing and Victor T K Li acquired further the shares of CK ASSET (1113.HK) by a wholly-owned subsidiary of Li Ka Shing (Global) Foundation. They acquired a total of 1.6565 million in CK Asset at the average price of HK$46.4676, HK$45.2807 and HK$45.9537 per share on 11 June, 12 June and 15 June 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CK Asset increased from 35.12% to 35.17% and from 35.19% to 35.23%.
CHINA SHENHUA (1088.HK) said  commercial coal production in May totalled 24.70mn tonnes, -0.4% YoY;  sales amounted to 37.20mn tonnes, -10.1% YoY
Beijing Center for Disease Prevention and Control, said COVID-19 infections are still on the rise in the capital, reported Beijing Daily.  As the biggest agricultural by-product trading market, Beijing has an extensive logistics network and a high population density, thus facing grave risk of COVID-19 outspread and difficulty in plague control. They did not rule out the possibility that infections will keep ballooning in Beijing for a period of time.
Reuters earlier cited insiders that TENCENT (700.HK)  would like to acquire iQIYI stakes from Baidu, the substantial shareholder of iQIYI. Baidu clarified on social media that iQIYI is an integral part of the company's ecological strategy. Backing iQIYI's development just as always, Baidu made a call for dismissing wild guesses.
HANG LUNG PPT (101.HK) said  that it is joining forces with Mastercard to launch the year-long "ONLife" campaign, bringing a series of e-privileges to patrons that cover shopping, dining, learning and traveling.
Chinese financial watchdog has told banks to control their profit growth below 10% this year as they want the lenders to support the economy amid the steepest slide over four decades, as Bloomberg learnt from insider sources. Beijing will urge banks to extend more loans at lower rates and boost provision for credit losses over the altar of their earnings, said the report.
ByteDance, owner of TikTok, recorded revenue of around RMB40bn for Q1 +130% plus YoY, Reuters citing insiders. ByteDance fixed its 2020E revenue target at RMB200 bn, roughly half of TENCENT (700.HK)’s 2019 revenue of RMB377 billion, according to sources.
JD-SW (9618.HK), to be listed tomorrow, opened at $236.2 in gray,  +4.5% against the listing price of $226, and last traded at $238.8, +5.7% on volume of 150,000 shares, PhillipMart data showed.

Centa-Salesman Index (CSI) last posted at 59.13, -0.25 pts weekly. The market sentiment did not deteriorate further despite a latent second wave of local coronavirus outbreak, unfinished social movements and employment rate upsurge. Frontline agents remained upbeat on the property market.  CSI lingering around 60 for four weeks hinted at ongoing home price uptick.


Market and Pre Market News at bottom of page.


Short Selling HSI Wednesday 21.2% vs 21.6% Tuesday

Top Shorts Wharf REIC (1997) 56%, Bank of China (3988) 45%, Hang Seng Bank (11) 38%, Link REIT (823) 35%, China Res land (1109) 34%, HSBC (5) 31%, Country Garden (2007) 31%, Want Want (151) 31%, Hang Lung PPY (101) 29%, CK Asset (1113) 28%, MTRC (66) 28%, ICBC (1398) 27%, AIA (1299) 25%, CCB (939) 25%, Sunny Optical (2382) 25%


COMMENT 

*PETRO FIRM on expectations that supply will decrease after report of supply-cut compliance by Iraq, Nigeria and Angola, in which they have been identified by peers as failing to bring production down to target levels in May and an encouraging IEA report overnight. PETROCHINA (857 HK +1.5%) CNOOC (883 HK +0.2%) CH OILFIELD (2883 HK +1.6%).

*E-COMMERCE FIRM on strong sales recorded for the 618 shopping festival and ahead of JD.COM HK IPO to debut tomorrow with its HKPO recorded 179x subscribed. TENCENT (700 HK +0.4%) is reportedly aiming to become the biggest shareholder in video streaming rival iQIYI. Tencent has approached Baidu, which owns 56.2% of iQIYI, to buy a stake of as-yet-undetermined size, news said. Although after market Baidu said iQIYI is an integral part of the company and dismissed the rumours.

ALIBABA (9988 HK +2.1%) MEITUAN (3690 HK +0.2%)

CH LIT (772 HK+8%) after news reported that a large number of well-known online writers returned to the platform, as improved contracts for writers have been introduced.

*TECH & COMPONENTS MIXED with selective profit-taking after yesterday rally as investors work through the implications of the US amendments to the Huawei Bill. HUA HONG (1347 HK +3.3%) BYDE (285 HK +1.3%) SMIC (981 HK +1.6%) TONGDA (698 HK -4.4%) TRULY (732 HK -2.6%).

*HK PROPERTY FIRM as the one-month HIBOR. which is linked to the mortgage rate, fell for the 14th day straight; to 0.51863% yesterday.

SHKP (16 HK+1.6%) to launch this month the first phase of project Regency Bay in Tuen Mum, which offers 263 units.

CKA (1113 HK +1.3%) ready to release Sea to Sky and open the show flat.

HENDERSON (12 HK+1.5%) SINO (83 HK+1.6%).

*US EXPORTERS MIXED after strong US retail sales (the biggest increases were clothing, furniture and sports/leisure goods. Then was Electronic/ Applicances, Auto, F&B, Miscellaneous and gas stations) TECHTRONIC (669 HK +2.4%) VTECH (303 HK +2.6%) MAN WAH (1999 HK -0.6%) WH GROUP (288 HK -0.3%).

*AIRLINES WEAK as Beijing canceled 40% of outbound flights today on concern about new infections, after the capital lifted its emergency response to level two. CH EASTERN (670 HK -1.7%) AIR CHINA (753 HK -0.4%) CH SOUTHERN (1055 HK -1.1%).

*PHARMA MAKERS STRONG on vaccine speculation.

SINOPHARM (1099 HK +9.2%), after a Covid-19 vaccine candidate that is under development by Sinopharm’s subsidiary in Wuhan has shown no serious adverse reactions during phase I/II clinical trials.

CMS's (867 HK+10%) backed Tibet Rhodiola Pharm is investing in Stemirna Therapeutics to get global exclusive rights to develop, produce, commercialize Covid-19 vaccines.

SSY GROUP (2005 HK +2.9%) SIHUAN (460 HK +7.2%) ASCENTAGE (6855 HK +2.4%) SINO BIOPHARM (1177 HK +4.7%).

*OTHER 

GCL-POLY ENERGY (3800 HK -8.6%) is selling shares at HK$0.203 each to raise proceeds of HK$260m in an accelerated placement. Selling price a 17% discount to the Tuesday's closing price.

KOOLEARN TECH (1797 HK +10.2%) as online education demand is likely to increase following the latest enhanced Covid-19 response measures taken in Beijing, including shutting down of schools.


CONNECT FLOWS

Shanghai

Northbound RMB 26,352m Sell 13,548m : 12,803m Buy

Southbound HK$ 8,937m Sell 3,836m : 5,102m Buy

Shenzhen

Northbound RMB 44,713m Sell 23,345m : 21,368m Buy

Southbound HK$ 8,807m Sell 3,826m : 4,981m Buy


DATA 

CHINA no macro data.

China confirmed 44 additional COVID-19 cases yesterday (16 June), including 11 imported cases and 33 local infections (31 in Beijing, 1 in Hebei, and 1 in Zhejiang), National Health Commission announced.At a coronavirus crisis press conference, Beijing Center for Disease Control and Prevention stated that 27 new cases had on Monday (15 June) been confirmed citywide. The taskforce has thus revised up the public hygiene emergency alarm to Level 2 from Level 3 with immediate effect. The plague was caused by interpersonal contraction and contamination according to preliminary findings. While all inbound passengers to the Chinese capital shall be subject to concentrated observation and nucleic acid tests, mid-to-high risk residents and individuals related to Xinfadi market are prohibited from departure, said the local government. All primary and secondary schools shall suspend campus teaching from today (17 June).

HONG KONG 

Data no macro data

Centre for Health Protection said that as of 4pm today there were no new covid-19 cases


Active Heavyweights
AIA (1299.HK) +1.8%
HSBC HOLDINGS (5.HK) +0.8%
HKEX (388.HK) -0.7%
TENCENT (700.HK) +0.4%
CCB (939.HK) -0.2%
PING AN (2318.HK) unch

HSI & HSCEI Constituents on the move
SINOPHARM (1099.HK) +9.2%
SINO BIOPHARM (1177.HK) +4.7%, hits new high
LONGFOR (960.HK) +3%

HSMI & HSSI Constituents on the move
LIFETECH SCI (1302.HK) +13.8%, hits new high
KOOLEARN (1797.HK) +10.2%
CMS (867.HK) +10.1%
ZHOU HEI YA (1458.HK) +7.7%, hits new high
UNITED LAB (3933.HK) +4.9%, hits new high
LIVZON PHARMA (1513.HK) +3.4%, hits new high

REGIONAL MARKETS  

Japan Sold down but then rebounded and have basically traded sideways but unable to rally to yesterday’s closing level. Closed -0.56%

S Korea Rebounded from a weak start and again traded sideways in a helta skelter fashion. Kosdaq closed flat  Kospi +0.1%%  

Taiwan opened higher and traded sideways around yesterday’s closing level  Closed +0.2%


NEWS
MARKET HOURS 

Yum China, the operator of KFC, Pizza Hut and Taco Bel in China, will be in talks with investment banks for its secondary listing in Hong Kong, the Financial Times citing insiders.
Tencent Game is to upgrade protection measures for minors from today (17 June), according to its announcement on Weibo. Tencent Game noted some minors are faking their parents' identities to evade gaming regulation. In this regard, it will expand the adoption of facial recognition to screen out allegedly underage users on the basis of limited gaming time and in-game purchases as well as gaming curfew. 
Huawei has scaled down its output plan in response to the tougher export ban slammed by the US, the Nikkei citing insiders. Some suppliers disclosed the Chinese tech giant told them to shrink their order volume by 20% during the third quarter, possibly followed by a deeper trim in the next quarter.
HSBC (5.HK) is reviving the massive layoff program it had shelved for the coronavirus crisis, under which 35,000 positions will be axed over the medium term, according to an internal memo seen by Reuters. The London-based lender has to resume the plan amid profit fall and forecasts pointing to a challenging economic outlook, said Chief Executive Noel Quinn.
SKYWORTH GROUP (751.HK) trading halted with effect from this afternoon pending the release of an announcement containing inside information of the Company and pursuant to the Codes on Takeovers and Mergers and Share Buy-backs. Last traded at $2.12, up 3.9%, midday.
CHINA DONGXIANG (3818.HK) annual result ended 31 March 2020. The net profit RMB366 million, -14.7% yearly. EPS RMB6.25 cent. A final dividend of RMB0.91 cent and a final special dividend of RMB1.84 cent were declared. 
TENCENT (700.HK)'s Tencent Cloud announced its partnership with multiple Japanese giants, such as Mynet, DDM, Bushiroad and Gurunavi. By team-up ranging from games and live-streaming to e-commerce and manufacturing, Tencent Cloud expected to deliver three to five times higher revenue growth in the Japanese market this year. 
Overnight HIBOR last posted at 0.11929%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.49714%, down for 14 days, marking a 1-month low.
XIAOMI-W (1810.HK)'s Redmi K30 Pro and Mi 10 were the top-two models in JD-SW (09618.HK)'s 5G handset sales chart during 618 Shopping Festival, revealed XIAOMI-W Vice President Lu Weibing. As of 15:00 on 16 June, the sales volume of Xiaomi Air-Conditioner exceeded 20,000 sets across all platforms.
HKD strengthened this morning, as such HKMA injected $2.232 billion to the market, leading the spot USD T/T rate to 7.7503.  The balance of the banking system is expected to be $125.762 billion this Friday
The US Federal Reserve is still capable of buying additional assets with sufficient "dry powder", Dallas Fed President Robert Kaplan told Bloomberg. The Fed had trimmed interest rates to zero on tight liquidity under the pandemic, while making bond purchases to keep financial conditions easy and pushing forward lending programs.
Cheong Wa Dae (South Korean Blue House) condemned Kim Yo-jong, the first vice department director of the Workers' Party of Korea, for her rude and senseless criticism of President Moon Jae-in's speech on the 20th Anniversary of June 15 North-South Joint Declaration, reported Yonhap.  On another note, South Korea's defense ministry claimed that North Korea will pay the price for taking military action.
AIR CHINA (753.HK) and CHINA SOUTH AIR ( 1055.HK) will waive the refund charges for flights scheduled for departure between 16 June and 30 June.
The Transport Department  said today (June 17) that over $1.2 billion of the subsidy under the two rounds of the Anti-epidemic Fund has been disbursed to the transport trades, and the subsidy to taxi or red minibus (RMB) drivers under the second round of the Fund is open for application starting from today until September 30.
Canada is exerting pressures on Telus to remove Huawei gear from its 4G infrastructure in the capital region, for which the telecom carrier has reached an understanding of voluntary commitment with the government, the Globe and Mail reported
Admiral Investment Chief Investment Officer Victor Yeung, after a radio program, spoke of the bleaker retail market recently. As Hong Kong's REITs are principally engaged in livelihood-oriented malls, they shall see limited impact unless the epidemic drags on. In addition to REITs, there are a larger variety of trusts overseas which focus on data centers, towers, logistics, etc. Yeung regarded this as the direction of future development to offer investors more options other than traditional yield stocks.
BOC HONG KONG (2388.HK) said that qualified clients registered via the bank for "Cash Payout Scheme" from 21 June to 30 September and receiving $10,000 on or before 20 October will automatically sign up a lucky draw. In the first round, there will be vouchers worth as high as $100,000 (1 prize), $50,000 (1 prize), $30,000 (1 prize) and $10,000 (12 prizes).
Sinopharm's China National Biotec Group announced that it has completed two injections of an inactivated COVID-19 vaccine on 1,120 participants under the phase I/II clinical study so far.  Results showed a 100% seroconversion rate for subjects receiving two injections of neutralizing antibodies at middle dosing strength under a 28-day schedule. The vaccine is expected to hit the shelves as early as late 2020 or early 2021, reported China Securities Journal.
The PBOC announced that it will tender the sixth tranche of central bank bill for 2020 through the bond tender platform of the Central Moneymarkets Unit (CMU) of Hong Kong Monetary Authority (HKMA) next Tuesday (23 June).  The issuance amount is RMB10 billion for a term of six months with a fixed interest rate. 
HKGCC Chairman Peter Wong mentioned about the US-China trade tensions during his interview with THE BULLETIN. JUNE 2020 of HKGCC. In his opinion, there will not be clear picture until the US Presidential Election in November with so many mixed market signals nowadays. Yet, people will adopt to the environment changes, as evidenced by the adaptability of enterprises amid epidemic.  Looking ahead, businesses should be able to tap any uncharted markets if the trade tie between China and the US is constrained further. Digitalization will play more pivotal role given such backdrop. At present, new markets can be scouted without the need to visit the clients in person. Any partnership can be nailed even from a distance afar. 

PRE MARKET

Airport Authority Hong Kong (AAHK) tables to extend the issuance of $5 billion retail bond for the three-runway system (3RS) of Hong Kong International Airport until 2020/21 in wake of epidemic impact, according to the filing of AAHK at the Legislative Council.

Zhengzhou Municipal Government had held a seminar yesterday (16 June) with BABA-SW (9988.HK) for Digital Zhengzhou Industrial Ecology for 2020, and entered into a strategic cooperation agreement on deepened digital city construction, according to Chinese media.  Pursuant to which, BABA-SW will facilitate the digitalization of Zhengzhou Municipal Government in terms of governance, industrial economy and social life, harnessing its merits of cloud computing, big data, AI, IoT and so on.

Hong Kong was knocked down by Denmark, Switzerland and the Netherlands and ranked fifth globally in the latest World Competitiveness Yearbook (WCY) 2020 published by the International Institute for Management Development (IMD), down from second last year. Singapore remained at the top spot. Hong Kong was rank first globally in "Business legislation", "Legal and regulatory framework" and "Exchange rate stability", said a Government spokesperson. It is thus critical, essential and urgent to legislate for the national security law, which is conducive to business and investment, thereby safeguarding the prosperity and stability of Hong Kong.  

Funny if Hong Kong is already viewed as number one with regards to legal why we need the new national Security Law?

In response to the SFC's accusation of high concentration of shareholding, SUNSHINE 100 (2608.HK) confirmed that not less than 25% of the issued Shares were held in public hands and that it has maintained a sufficient public float as required under the Listing Rules, based on the information available and  to the best knowledge of the directors of the Company after making all reasonable inquiries.

Canadian gold miner Barrick Gold dumped a partial stake in SD GOLD (1787.HK) (i.e. 79.3 million shares) at HK$20.5 each, cashing in HK$1.626 billion (US$210 million), reported Reuters.

Following the destruction of Inter-Korean Liaison Office, North Korea announced today the deployment of military force in Mount Kumgang, Kaesong and sentry posts at non-military zones, KBS World Radio reported. Pyongyang is meanwhile reinforcing the armed force of frontline artillery soldiers along the southwest coast and moving up the frontline military alert level to "Level 1”. In a speech yesterday, Kim Yo Jong, the first vice department director of the Workers' Party of Korea, lashed out at South Korean President Moon Jae-in for his speech delivered at the Blue House on 15 June and his speech for the 20th-anniversary of June 15th North–South Joint Declaration, saying his talks nonsense and groundless remarks, cited Yonhap News Agency. She also accused Seoul of her silent consent to the anti-North Korea propaganda launched by North Korean refugees.

JD-SW (9618.HK) recorded 177.9 times of over-subscription in the public offering. One-lot (50 shares) success rate was 10% only. 10.35 times of over-subscription was recorded in its international placing. The Chinese e-commerce giant, to be listed tomorrow (18 June), was priced at $226.

As HKD re-hit the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook US$288 million  selling orders to inject HK$2.232 billion in the market. The balance of the banking system will increase to HK$125.758 billion tomorrow (18 June).

CPIC (2601.HK) determined the final price of the GDR issuance on the London Stock Exchange at USD17.6 per GDR, i.e. the lower end of the initial price range. This involves the issue of 102 million GDRs to raise around USD1.811 billion in total.

GENSCRIPT BIO (1548.HK) said that Executive Director Wang Ye had on 16 June exercised share options to subscribe for 15 mn shares and transferred the shares to Infini Capital at HK$14.16 per share, which in aggregate amounted to HK$212 million.