HK WRAP JUNE 10 HSI -8pts China Loan Data Out Early


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%.


CONNECT 

Shanghai

Northbound RMB 26,325m Sell 13,779m : 12,546m Buy

Southbound HK$ 9,539m Sell 4,909m : 4,630m Buy

Shenzhen

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%


DATA 

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%)

COMMENT

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%).

COMMENT

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


INDEXES      

CSI 300 closed  -7 pts (-0.2%) @ 4,040 Opened lower and sold down on the weak Inflation and PPI data. Then saw choppy sideways trading between 4,046 and 4,025 for the rest of the day. Investors remain cautious the general feeling seems to be that there will be no immediate new stimulus from government and that the risk is if US/China relationship deteriorates.  

HSI Pre Market +121pts @ 25,179 vs -87pts ADR’s @ 24,970 Lead by Cathay and TECH.
An initial spike after which the market trended higher to the day high; 25,300 level with some recent shorts squeezed and Cathay Pac +19% as shorts looked to cover their positions after the Govt bail out was announced. Some buying may have been on the hope of more stimulus from China but there were no announcements and with China selling down HK followed. Market then worked 200pts towards lunch but gave sold down 80pts in the last 15 minutes before lunch.  PM saw an initial 50pt up tick and then  traded sideways for the next hour before selling increase the HSI dipped into the red.  It then trade around flat into the close but ticked 25pts lower in the closing auction.
Sentiment cautious ahead of the FOMC meeting and after a peaceful but illegal gathering in Central on Tuesday night.  HSI trading around 25,000; concerns about a lack of new stimulus in China despite obvious slowing, disappointment on the FOMC announcement and possible second waves of covid-19.  

Active Heavyweights
TENCENT (700.HK) +2.9%
HKEX (388.HK) +1.9%
HSBC (5.HK) -1.5%
AIA (1299.HK) -1%
CCB (939.HK) +0.8%
ICBC (1398.HK) +0.4%
PING AN (2318.HK) -0.1%

HSI & HSCEI Constituents on the move
WHARF REIC (1997.HK) -4.5%
SINOPHARM (1099.HK) -3.5%

HSMI & HSSI Constituents on the move
WEIMOB INC (2013.HK) +14.5%, hits new high
CH MODERN D (1117.HK) +11.1%
KASEN (496.HK) +10.6%
YADEA (1585.HK) +3.7%, hits new high
WEIGAO GROUP (1066.HK) +1.4%, hits new high
HUADIAN FUXIN (816.HK) +0.4%, hits new high

REGIONAL MARKETS 

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%


AFTER MARKET 
NTES-S (9999.HK), whose shares will be listed tomorrow, closed at $129.9 in gray market  up $6.9 or  +5.6% against the listing price of $123, on volume of 2.26 million shares and turnover of $295 million, PhillipMart data showed. Excluding the handling fees, a book gain of $690 was reported per board lot of 100 shares.
JD-SW (09618.HK), the fourth WVR to list in Hong Kong, will close its HK IPO at noon tomorrow. At around 6 pm today, 12 brokers granted over $75.6 billion of margin in total in three days for the IPO. Among which, Phillip Securities' margin increased to $18.8 billion, and BRIGHT SMART granted almost $14.2 billion.  The public offering was over-subscribed by approximately 47.2 times based on the fundraising amount of around $1.5694 billion in public offering. 
POU SHENG INT'L (3813.HK) net consolidated operating revenue in May 2020 was RMB2.39 bn, +8.1% YoY.
MACAU While the gaming operation licence contracts will expire in June 2022, Macau's Secretary for Economy and Finance Lei Wai Nong said the government is intensely making preliminary preparation for the licence rebidding, with the public consultation paper to roll out timely. 
As HKD re-hit the Strong-side Convertibility Undertaking during local trading hours, the HKMA undertook US$285 million selling orders to inject HK$2.209 billion into the market.
CHINA RES LAND (1109.HK) contracted sales month ended 31 May 2020 RMB21.22 bn, -0.4% YoY
GREATWALL MOTOR (2333.HK) has been informed by the controlling shareholder Innovation Great Wall that it had pledged 33 million unrestricted tradable A shares of the Company held by it to Baoding Branch of China Minsheng Bank. -VE
Centa-Salesman Index (CSI) last posted at 59.39. Despite lowering 0.36 pts from 59.75 in the previous week, the index maintained above the critical point of 55. Earlier on, the index had grossed 10.78-pt decline for a single week in wake of social unrest flare-ups, but the market sentiment had not exacerbated further. 
JD-SW (09618.HK) announced that its JD Supermarket and MENGNIU DAIRY (02319.HK)  plans to step up strategic cooperation.  Both sides will team up in omni-channel user operation, new product customisation, supply chain and other fields, as MENGNIU DAIRY aims to record  T/O of more than RMB20 billion in JD Supermarket in the coming three years.

MARKET HOURS 

China Academy of Information and Communications Technology announced that the domestic shipment of smartphone totalled 32.661 million devices in May, -10.4% yearly and accounting for 96.7% of the total figure in the same period.
MIIT's SME bureau, led a team to mount a study on MEITUAN-W (3690.HK) reported Chinese media. MSMEs' work resumption, having listened to the group's briefing on digital empowerment and life service consumption revival. MEITUAN-W had launched a series of promotions amid the epidemic to empower companies through digitization, cater to online consumption demand, and seek room for new market development, said Liang. The group delivered positive results from supporting work resumption.
Tencent Cloud Computing (Wuhan) Ltd was established on 4 June with a registered capital of RMB30 million, according to Tianyancha's data. The company is wholly-owned by Tencent Cloud Computing (Beijing) Co., Ltd., and its ultimate beneficiary is Pony Ma Huateng.
JD-SW (9618.HK)’s IPO will end on Thursday, BRIGHT SMART (1428.HK)CEO Edmond Hui disclosed that the brokerage has granted $10 billion so far for the IPO. As to NTES-S (09999.HK), quite a lot of customers shifted to pay cash for the IPO subscription this morning after the announcement of allotment results. Most of the customers who subscribed for NTES-S also tried their luck in JD-SW. The CEO expected the final over-subscription amount and capital freeze size of JD-SW to be similar to NTES-S', and it is unlikely for everybody to get a board lot.
GALAXY ENT (27.HK) has been actively tapping new income sources and cutting costs, Deputy Chairman Francis Lui extended his appreciation to the staff on participation, such as forgoing director's fee, senior officers' salary trims and voluntary furlough among workers. As one of the casinos with the healthiest balance sheets, GALAXY ENT will be able to navigate through the coronavirus crisis, opined Lui, anticipating the plague to fall contained as soon as possible. Revamp projects are going in full swing now when patronage is relatively low, The Macau-Hong Kong border opening which had been slated for last week was delayed on more COVID-19 cases. He wished the border will be reopened within a month, adding nothing can be done despite repercussion from Macau's casino shutoff. There is no calculating the losses for GALAXY ENT, which has been badly wounded by the pandemic, mentioned Lui.
Hong Kong Security Minister John Lee told South China Morning Post that the police force is setting up a dedicated unit, to be headed by Police Commissioner Chris Tang, to enforce the upcoming national security law. The new department will be responsible for intelligence gathering, investigation and capability training.
TENCENT (700.HK) plans to launch the "Net City" real estate project in Shenzhen and develop offices, a school, apartments, sports facilities, parks, malls, etc. with 21 million sq.ft. of area, WSJ citing NBBJ, an architecture and design firm. The project will likely kick off later this year, to be completed in three phases with apartments, offices and a transit hub opening in the first stage.
HK Express announced the extension of its temporary flight operations suspension to 11 July 2020, in response to the travel restrictions imposed by governments around Asia Pacific. The airline plans to gradually resume flight operations on 12 July 2020, subject to market developments, and will continue to provide flexibility to customers whose travel plans have been affected, or those who are booked on flights departing on or before 31 July 2020.
Overnight HIBOR last posted at 0.13583%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.69054%, down for 9 days.
TENCENT (700.HK) has invested in two Japanese game-development studios in recent months, reported Bloomberg. The giant is said to have shown interested in Japan's entertainment industry, envisioning vast revenue return on good distribution and marketing strategies. TENCENT approached Marvelous in April, hoping to tap its IP library, game development and ties to other ACG creators, according to sources. The Chinese powerhouse also invested in PlatinumGames in February.
Alibaba Cloud plans to recruit 5,000 more workers across server, network, chip, database, AI and other core technology sectors this year, Chinese media citing President Jeff Zhang.
BYD and Jaguar Land Rover are in talks about battery supply, planning to build a UK battery plant, foreign media reported. Both sides have also considered the possibility of working on an electric propulsion system.However, Jaguar Land Rover China told Chinese media that the news is merely speculation at the moment.
ZA Bank rolled out a maximum $1,000 rebate scheme to lure new account openings with the government's $10,000 cash payout. The CEO Rockson Hsu disclosed after a radio program that the number of customers is hiking because of the scheme, yet without revealing the actual figure. In two and a half months upon business opening of the online bank, the user growth expedited, the CEO said, adding the bank's mobile app was mostly downloaded in Hong Kong compared to other regions as of 9 June.
Black Spade Capital, a family office managing the private investments of MELCO INT'L DEV (200.HK) Chair and CEO Lawrence Ho, announced the investment and shareholding in My Platform, a medical technology platform.

PRE MARKET
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


COMMENT 

*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%).