HK WRAP JUNE 10 HSI -8pts China Loan Data Out Early
HSI -8pts (unch) 25,050 HSCEI +22pts (+0.2%) 10,144 T/O HK$127.25bn (+2.4% DoD).
Europe Markets opened higher but sold down with caution ahead of the FOMC press conference.
US futures having opened flat now indicating -100pts, S&P weak too but Nasdaq +0.1%.
Northbound RMB 26,325m Sell 13,779m : 12,546m Buy
Southbound HK$ 9,539m Sell 4,909m : 4,630m Buy
Northbound RMB 39,196m Sell 18,770m : 20,426m Buy
Southbound HK$ 7,803m Sell 3,266m : 4,537m Buy
Short Selling HSI Wednesday 17.8% vs 16.9% Tuesday
Top Shorts Wharf REIC (1997) 46%, Hang Seng Bank (11) 44%, HK & CHINA GAS (11) 38%, China Res land (1109) 34%, CK Asset (1113) 33%, AAC Tech (2018) 32%, Sinopec (386) 30%, Hang Lung Ppty (101) 29%, Country Garden (2007) 29%, Hengan (1044) 29%, ICBC (1398) 27%, Sands China (1028) 26%, MTRC (66) 26%, Bank of China (3988) 26%, Ping An (2318) 25%
CHINA After Market
New Yuan Loans May CNY 1480bn vs 1700 bn Apr (F/cast was 1750bn)
Outstanding Loan Growth May +13.2% YoY vs 13.1% Apr (F/cast was +13.4%)
Total Social Financing May CNY 3190b vs 3090 Apr (F/cast was 3250bn)
M2 Money Supply May 11.1% vs 11.1% Apr (F/cat was 11.4%)
New Loans slightly weaker that F/cast. Household loans, mostly mortgages, rose to CNY 704.3 billion from CNY 666.9 billion in April, while corporate loans fell to CNY 845.9 billion from CNY 956.3 billion.
Other credit growth indicators suggested the central bank continued to step up efforts to support the economy hit by coronavirus pandemic. Growth of outstanding total social financing (TSF), a broad measure of credit and liquidity in the economy, quickened to 12.5% in May, from 12% in April.
Broad M2 money supply rose for a second consecutive month by 11.1 percent, the most in over three years, and outstanding yuan loans grew 13.2%, compared to April's 13.1%.
On the Market open
Inflation Rate May +2.4% YoY vs +3.3% Apr (F/cast was +2.7%)
May -0.8% MoM vs -0.9% Apr (F/cast was -0.4%),
PPI May -3.7% YoY vs -3.1% Apr (F/cast is -3.4%).
Inflation The lowest rate since March 2019. In part probably due to the oil price weakness and possibly the lack of consumer demand for many items. Food prices will be watched carefully as it is likely that Pork prices have fallen.PPI the drop in oil/coal prices likely to be a major influence. The fourth consecutive month on PPI falling which does not bode well for Chinese producers.
HONG KONG DATA
The Hong Kong Chief Executive has marked 6 September as the election date for the 7th Legislative Council (LegCo) with the nomination period from 18 to 31 July based on the related statutory provisions and usual practice, according to the letter submitted by Constitutional and Mainland Affairs Bureau to the LegCo.
Hong Kong's overall well-being index remained at 57.8 during the COVID-19 pandemic (i.e. January to April 2020), below 62.5 in global reading, according to Cigna Hong Kong's survey. The city had the lowest ranking among the eight surveyed regions. Hong Kong's financial well-being index had fallen 0.9 pts since the outbreak, where only 16% respondents were optimistic about their financial well-being. Findings pointed to Hong kongers' financial worries, as only 11% of them deemed they had enough savings for retirement. Only 16% said they were able to pay for mortgage loans/ housing expenses.
Centre for Health Protection said there were no new local COVID-19 case
JAPAN opened lower, pre market data was weak with Machinery orders missing and PPI seeing a sharp drop. But market worked higher and managed to go positive and then traded sideways to Close +0.2%
S KOREA opened flat with unemployment higher than expected Kosdaq worked slightly higher, Closed +0.6% , Kospi has traded sideways around flat; Closed +0.3%
TAIWAN opened flat but worked slightly higher then traded sideways Close +0.7%
Insurance Authority Chairman Moses Cheng, in his article, wrote that the Hong Kong national security law legislation is conducive to restoring a safe and stable social environment, and constantly luring foreign investment and professional talents. He believed stakeholders and institutions in the financial market will be staunch supporters of the bill. Under the idea of "one country, two systems", Hong Kong must give full play to its unique edges and serve the country's long-term development.
GENSCRIPT BIO (1548.HK) was informed by its controlling shareholder Wang Luquan that 5 million shares had been sold at HK$17.32 each, which in aggregate amounted to HK$86.60 million.
SFC announced the start of a two-month consultation on proposals to amend the Code on Real Estate Investment Trusts (REITs) to provide Hong Kong REITs with more flexibility in making investments. The proposed changes include allowing REITs to make investments in minority-owned properties and in property development projects in excess of the existing limit of 10% of gross asset value (GAV) subject to unitholders’ approval, as well as increasing the borrowing limit for REITs from 45% to 50% of GAV.
Hong Kong, as an international financial hub, is not only pivotal to China but also the rest of the world, stated IMF First Deputy Managing Director Geoffrey Okamoto. The city is underpinned by a resilient financial sector and a sound monetary system that is anchored to rules, and well governed and well understood by the world, Okamoto said.
China Life Insurance (Group) announced yesterday (9 June) that it had completed the share increase in ICBC (01398.HK) (601398.SH) of 5 million H shares on 3 June and notified the related Chinese authority about the matter. At present, China Life's group of companies owned 4.34 billion H shares in ICBC in aggregate with shareholding rising to 5.0001% from 4.9944%.
Xiaomi announced the official launch of Redmi's WiFi6 router AX5. The first batch, priced at RMB229 each, has started pre-sales at 10 a.m..
Aviva, one of the top 20 shareholders in HSBC HOLDINGS (5.HK) and STANCHART (2888.HK), has taken to task the two banks for supporting China’s plan to impose a new national security law in Hong Kong.Aviva feels uneasy about how the two London-based lenders voiced public support to legislation without knowing the details, stated Chief Investment Officer David Cumming, calling on them to speak out if the abuse of law denies the city democratic freedoms.
YONGDA AUTO (3669.HK) announced a top-up placing plan for 120 million shares, representing 6.11% of the enlarged issued share capital, at $8.29 per share, a 7.48% discount to the closing price yesterday. The net proceeds from the placing were estimated to be $983 million.
Airlines IATA modelled a record US$84-billion loss for airlines this year, as their revenue could plunge by half to US$419 billion due to the epidemic. Airlines will have to attract customers away from rivals with sharp fare cuts in 2021, predicted IATA Director General Alexandre de Juniac.
MENGNIU DAIRY (2319.HK) announced proposed bond issue, the proceeds from which are intended to be used for refinancing certain existing indebtedness and for general corporate purposes.
NTES-S (9999.HK), to be listed tomorrow (11 June), announced that 359.53 times of over-subscription was recorded in the public offering. One-lot (100 shares) success rate was 8% The offer price was fixed at $123, as the company expected to raise net proceeds of $20.9295 billion.
Chinese Premier Li Keqiang, at a State Council executive meeting, said RMB2 trillion of newly-added fiscal deficit and anti-epidemic special treasury bonds will be transferred directly to cities and counties. This will support local government measures for helping the hardest-hit micro, small and medium-sized enterprises, individual industries and businesses, and those citizens in plights.
HKD re-hit the Strong-side Convertibility Undertaking during New York trading hours, the HKMA undertook USD343 million selling orders to inject HKD2.658 billion in the market. The balance of the banking system will increase to HKD118.407 billion on Thursday (11 June).
CHINA COMM CONS (1800.HK) announced that it had on 9 June repurchased 9.024 million H shares, involving roughly $44.19 million, by means of centralized bidding trading
*AIRLINES WEAK. CATHAY PACIFIC (293 HK -0.5%) after opening +18% as long term shorts covered in news of a HK$39bn in re capitalisation financing by the HK govt in exchange for a minority stake in the company. The bailout package means an extension of the previously delivered US$3.5bn in the form of loans, share purchases, and new funds from issuing new stock as a plan for the carrier to stay afloat amid the current crisis. Several market analysts have downgraded the stock following the bailout plan. AIR CHINA (753 HK -18.5) CH EASTERN (670 HK -3.7%) CH SOUTHERN (1055 HK -3.2%) as IATA expects the industry to suffer losses next year.
*PHARMA/BIO WEAK on profit-taking. INNOVENT (1801 HK -0.7%) announced a strategic collaboration with Switzerland's Roche Group, to discover and develop multiple products, including cellular therapies and bispecific antibodies.
SINO BIO (1177 HK +1.1%) said its generic drug used to treat AIDS has been approved to register in the mainland.
3SBIO (1530 HK +1.7%) CANSINO (6185 HK -3.8%) GENESCRIPT (1548 HK -3.1%) as major shareholder sold 5m shares .
*AUTOS MIXED on sales data. GREATWALL AUTO (2333 HK +1.6%) Apr sales +30.92% YoY to 81,901 units, while sales for the first five months this year -27.24% to 313,061.
GAC (2238 HK -2.3%) May Vehicle Sales 165,622 Units, -0.4% MoM or +4.07% YoY.
AUTO SERVICES company YONDA (3669 HK -4.7%) after $128m placement at a 7.5% discount to last closing.
CAR INC (699 HK +10%) rallied after the head of LUCKIN COFFEE resigned as chairman of CAR INC amid recent accounting scandal involving the Chinese coffee chain.
*TECH & COMPONENTS WEAK on trade tensions and slowing shipment. SUNNY OPTICAL (2382 HK -0.7%) said the shipment volume of handset lens sets -12.3% MoM, or 8.6% YoY, to 97.47m units in May, mainly due to the impact of the pandemic.
SIM TECH (2000 HK +5.9%) May core business revenue -12.8% YoY or +34.1% MoM to HK$72.2m. The unaudited revenue of the group for the five months ended 31 May 2020 is HK$257.1mn, -31.6% YoY.
*ECOMMERCE PLATFORMS FIRM TENCENT (700 HK +2.9%) hits 52-week high after its title game “Glory of the King” increased its revenue in May by 42% YoY and 31% MoM, the largest increase in the four years since the game was launched, and has driven Tencent’s mobile game revenue to rise 15% month-on-month.
TENCENT-backed WEDOCTOR is reportedly filing for a HK IPO to raise $700m-$900m. ALIBABA (9988 HK +1.5%) MEITUAN (3690 HK +5.4%) CH LIT (772 HK +3.9%) PA GOOD DOC (1833 HK +1%).
*MACAU CASINOS FLAT as investors await border-reopening news. SJM's (880 HK unch) chief executive said the company's turnover so far this year is only 10% of that recorded in 2019, but forecasts that business would rebound strongly next year. SANDS (1928 HK +0.6%) MGM (2282 HK -0.4%) MELCO (200 HK +0.1%).