June 23 HK Wrap HSI +400pts but T/O flat with Southbound Connect closed


June 23 HK Wrap HSI +400pts but T/O flat with Southbound Connect closed


HSI +396pts (+1.6%) 24,907  HSCEI +115pts (+1.2%) 9,994 T/O HK$119.44bn (unch)  

Europe Markets opened higher and current;y working higher

US DOW futures choppy; opened and rose to +120pts sold down on Navarro’s remarks but then rallied back and now looking to open +200pts


INDEXES      

CSI 300 closed +20pts (+0.5%) @ 4,122 Market opened lower but after an initial uptick sold down on the Peter Navarro commented before rebounding and working higher to 4,116 at lunch.  PM saw an initial uptick but then sold down to 4,105 before working higher for the last hour to the day high 4,125 but then ticked lower into the close.  Sentiment remains cautious on the US/China relations and also on the economy as China’s Beige Book showed the economy contracted in the 3 months to June.
HSI Pre Market +30pts @ 24,541 vs +84pts ADR’s @ 24, 595 with HKEX and Tencent hitting a new highs, other Dotcom +VE except WeiMob -2% after Monday’s court case. Other bluechips mixed. Saw some initial selling down to 24,185 after remarks by Peter Navarro which suggested the US/China trade deal were mis interpreted but once clarified the market rallied higher to the 24,750 level and then traded sideway into lunch.  PM saw the market continue to trade sideways until the last hour when it worked higher to close at the day high.  T/O remains relatively light as investors watch to see how events over the New Security Law unfold and partly due to the closure of Southbound Connect flows ahead fo Thursday’s holiday.  Carrie Lam today said she would not select judges to preside over cases brought under the city’s new security law, an apparent attempt to assuage concerns about the controversial legislation.

AFTER MARKET 
TSE SUI LUEN (417.HK) Deputy Chairman, Chief Strategy Officer and CFO Ng Yi Kum, Estella revealed that the company has around one-third of shops that require rent renewal every year, contingent on different landlords. This year, most shops of the retailer have been granted about 20% rental cut.  Chairman and CEO Yau On Yee, Annie said the company will definitely consider any rent renewals with caution upon their expiry, taking into account of rental cost, shop requirement and so on. The CEO said only if there is a break-even will the company mull to reserve the shop.
China's Office of the Central Cyberspace Affairs Commission has recently mounted a thorough investigation on the contents of 31 key network live broadcast platforms in China, in conjunction with related departments, with a bid to deepen the ratification and regulation on such platforms.  Upon probe, ten network live broadcast platforms were found spreading indecent contents and failing to perform corporate responsibility. Such platforms included Huya's live broadcast, TENCENT (700.HK)'s Douyu live stream, B Station's Bilibili, INKE (03700.HK)'s live broadcast, ByteDance’s Xigua and NTES-S (09999.HK)'s CC Live. 
HSBC customers prefer diversified investment in wake of epidemic, pointed out Sami Abouzahr, Head of Customer Wealth, Retail Banking and Wealth Management, Hong Kong on a call. While some customers shifted their assets to the US stock market upon earlier uptrend, others redirected theirs to conservative asset types. As to the legislation of national security law in Hong Kong, Greg Hingston, Head of Retail Banking and Wealth Management, Hong Kong at HSBC, said there has not been obvious capital outflow so far, although some clients converted their currencies in hand inconsistently. 
Lee Hsien Loong, Prime Minister of Singapore, delivered a national speech today (23 June), suggesting President Halimah Yacob to dissolve the Parliament, and issue the Writ of Election for General Election 2020. The country confirmed to have the Election during the pandemic and the Polling Day on 10 July.  The PM said the alternative is await the COVID-19 pandemic, yet the government has no assurance that the pandemic will be over before this Government’s term must end next April.
Joerg Wuttke, the president of European Union Chamber of Commerce in China, voiced his concern about whether the EU-China investment agreement will be wrapped up within this year.  Expressing disappointment on the failed joint communique at the EU-China meeting, Wuttke was worried about China is drifting itself toward isolation. 
Hurun Research in the latest report about fortune changes in worldwide entrepreneurs after four months of coronavirus crisis, wrote that the fortunes of top ten entrepreneurs slid only 2% during February-May 2020. During the plague, the biggest winners went to online retailers, pharmaceutical firms and appliance retailers. In particular, Amazon's founder Jeff Bezos remained at the top spot among global billionaires, his wealth expanding from RMB150 billion to RMB1.1 trillion over the past four months. TENCENT (700.HK)'s founder Pony Ma (RMB320 billion) remained the richest in China and ranked the 22nd in world.
While Hong Kong public housing is subject to a 9.66% rental hike this year based on prevailing mechanism, Housing Authority (HA) is pondering over whether any alleviation can be implemented, sources said. 
PING AN (2318.HK) 's Lufax Holding announced that Lufax International (Hong Kong) has received an approval from the SFC and obtained Type 1 License. Meanwhile, the fintech firm announced that its online wealth management platform for Hong Kong residents expects to launch an app in August.
 

Market and Pre Market News at bottom of page.


Short Selling HSI 
Tuesday 21% vs 20.2% Monday

Top Shorts MTR (66 HK) 52%, Wharf REIC (1997) 43%, Hang Seng Bank (11) 35%, Ping An (2318) 34%, Bank of China (3988) 32%, China Unicom (762) 30%, PetroChina (857) 30%, AIA (1299) 28%, Want Want (151) 27%, Hang Lung PPT (101) 26%, CSPC Pharma (1093) 26%, CCB (939) 25%, Tencent (700) 25%.


COMMENT 

*E COMMERCE STRONG with TENCENT (700 HK +4.8%) ahead of its annual conference scheduled on June 27th, in which the cloud games are expected to be in focus.
ALIBABA (9988 HK +2.9%) JD.COM (9618 HK +1.3%) MEITUAN (3690 HK +3.2%).
WEIMOB (2013 HK +4%) rebound after being -11.8% yesterday on news that the company has been hit with complaints from merchants impacted by the service outage accident in February over its 150m-yuan compensation plan.
*TECH & COMPONETS STRONG with semiconductor makers in focus.
SMIC (981 HK +9%) as it filed for STAR Board listing today. Other semi names also traded strong on STAR Board listing speculations. HUA HONG (1347 HK +8.7%) FIT HON TENG (6088 HK +2%).
ZTE (763 HK -4.5%) as top shareholder Zhongxingxin sold 20.4m A-shares Monday at an average 39.44 each, raising 803m yuan.
*TELCOS FIRM on the latest data release.
CH UNICOM (762 HK +1.4%) May subscribers totalled 308.745m a net loss of 540k users.
CH MOBILE (941 HK +0.7%) added 252,00 mobile customers in May vs 432,000 net adds in April.
CH TEL (728 HK +1.3%) added 2.68m subscribers in May vs 1.97m in April.
*OTHER MOVERS: 
UNITED LAB's (3933 HK -7.3%) controlling shareholders sold 108m shs at HK$7.24 each, a discount of 6% to the last closing price of HK$7.70.
MICROPORT (853 HK +5.3%) sold 66m new shres at HK$23.50 a piece, ~3.5% discount to last closing price of HK$24.35, raising HK$1.54b.
SHANDONG WEIGAO (1066 HK +5%) controlling shareholder Weigao Holding Co. Ltd. entered agreement to sell 60m H shares at HK$15.07 each, ~1.5% discount to last closing price of HK$15.30.
COSCO SHIP ENERGY (1138 HK -4.6%) as the amount of crude oil held around the world on tankers that have been stationary for at least 7 days rose to 200.26m bbl recently.

CONNECT  FLOWS (Southbound closed due to HK holiday Thursday)

Shanghai

Northbound RMB 33,590m Sell 15,921m : 17,669m Buy

Southbound HK$

Shenzhen

Northbound RMB 49,351m Sell 25,173m : 24,178m Buy

Southbound HK$


DATA 

CHINA had yesterday (22 June) confirmed 22 additional cases of coronavirus infection, with 13 from Beijing, National Health Commission of the PRC reported.

HONG KONG Centre for Health Protection said that it was investigating 16 new local covid-19 cases today.


Active Heavyweights
TENCENT (700.HK) +4.9% hits a new high
HKEX (388.HK) +2.7% hit new high
AIA (1299.HK) +2.5%
HSBC (5.HK) +2%
CCB (939.HK) +1%
ICBC (1398) +0.4%
PING AN (2318.HK) +0.3%

HSI & HSCEI Constituents on the move
SINO BIOPHARM (1177.HK) +3.7%, hits new high
CITIC (267.HK) +3%
WANT WANT CHINA (151.HK) +3%

HSMI & HSSI Constituents on the move
YIXIN (2858.HK) +14.2%
SMIC (981.HK) +9.3%, hits new high
HUA HONG SEMI (1347.HK) +8.7%, hits new high

REGIONAL MARKETS 

JAPAN opened higher sold down on Peter Navarro’s comments, but rebounded to previous level after but sold off slightly into the close; Finished +0.5%.

S KOREA Markets opened higher, again sold down on Navarro’s remarks rebounded and traded sideways before a sell down into the close; Kosdaq close +0.2%, Kospi +0.2%

TAIWAN Opened higher, sold down on the Navarro comments and then traded sideways Closed +0.3%


NEWS
MARKET HOURS 

TOP SPRING (3688.HK) and Chun Wo Development have name their jointly developed Kowloon luxury residential project as "128 Waterloo," which will provide 110 units. The standard 1-4 room flats carry salable area from 300 to over 1,200 sq. ft., with twin-room flats accounting for 50% of the total supply.
People's Bank of China today successfully issued 6-month RMB10 billion central bank notes, with an interest rate of 2.21%, in Hong Kong.
Lunchtime TSE SUI LUEN (417.HK) annual results ended March 2020. Loss of $89.67mn vs  $54.161mn profit in the previous year. LPS equaled 36 cents. No final dividend was declared.
WANT WANT CHINA (151.HK) Chairman Tsai Eng-meng bought 6 million and 6,000 shares of the company successively last Wednesday (17 June) and Friday (19 June), involving over $36.54 million, as disclosed by the Stock Exchange. His shareholding in the company hiked to 50.78% from 50.73%. 
Ernst & Young issued a report, forecasting Hong Kong's stock market to hail 59 IPOs in 1H20, -20% YoY. The fundraising may reach $87 billion, +21%. The comeback of the two large Chinese-concept stocks, JD-SW (9618.HK) and NTES-S (9999.HK); due in $54.3 billion in aggregate in Hong Kong, representing 62% of the total fundraising amount in 1H20. During the period, there will be almost 60% IPOs from China, fetching 96% of total fundraising.  +VE for HKEX (388 HK)
MI MING MART (8473.HK) announced annual results ended March 2020. Net profit amounted to $15.852 million, down 42.6% yearly.  EPS was1.42 cents.
The Hong Kong Housing Authority (HA) announced one month's rent payment for its public housing tenants. Tenants (including licencees) who live in its public rental units and pay normal rent or reduced rent under the Rent Assistance Scheme (RAS) will not be required to pay rent for the month of July 2020.  The measure is not applicable to tenants who are required to pay additional rent. About 760,000 HA tenants will benefit from the measure.
White House Trade Adviser Peter Navarro told Fox News that President Donald Trump has decided to terminate the trade deal with China as his intelligence team is growing increasingly confident that novel coronavirus pandemic originated from a laboratory in Wuhan. Following Navarro's remark, US stock futures expanded the loss. Dow Jones Industrial Average futures slid 1.6% or 405 pts; Standard & Poor's 500 Index futures and Nasdaq Composite Index futures slipped 1.4% and 1.3%.  The statement was clarified about an hour later and futures rebounded but by then  Asian stocks had already sold down.
The Chinese central government is weighing an innovative way to solve the last-standing housing problem of Hong Kong people, local newspaper HK01 cited a senior pro-establishment individual.  A reclamation is suggested to be carried out at South of Lantau Island, near Guishan Island of Zhuhai City. The reclaim land will then be leased to Hong Kong to build houses, including massive scale of public homes for grass-root families.   According to measurement, shallow water area can provide at least 1,000 hectares of land; if 20% of the land is used for residential purpose, 160,000-200,000 flats can be supplied. 
Fitch says Hong Kong's rating may be impacted if foreign and domestic investors have their confidence shaken towards the city's business environment in medium term after the effectiveness of HKSAR National Security Law, said Andrew Fennell, senior director of APAC sovereigns at Fitch Ratings.  That said, Fennell opined it is now still premature to comment on any downgrade on the city while different parties are still expressing their opinions about the bill.  The rating of the former British colony is now only a notch higher than China following two downgrades since last September, reflecting it is being integrated into Chinese system incrementally.   Which refutes what Carrie Lam was saying yesterday that the new law was required to improve Hong Kong’s business position.

PRE MARKET

Moody's latest report predicts G20 to deliver 4.6% economic contraction this year, followed by 5.2% growth for the next. The ratings agency predicted China to grow 1% in 2020, the only G20 country to post growth, and 7.1% in 2021.

Worldwide Developers Conference (WWDC) on-line; Apple announced a series of system updates to iOS 14 and macOS Big Sur and new functions to watchOS 7.  The US tech giant is ending a nearly 15-year reliance on Intel chips by switching to its self-developed Apple Silicon as Mac processors.

Shenzhen Stock Exchange issued application acceptance notices to 33 enterprises under the trial registration system of ChiNext through the listing review business system. The related documents, such as IPO prospectus, were disclosed concurrently on the public website of listing review information board.

CPIC (2601.HK) (601601.SH) announced that Global Depository Receipts (GDRs) issued by it have been listed on the London Stock Exchange on 22 June (London time) with trading symbol "CPIC".

Ministry of Industry and Information Technology (MIIT) has recently issued a notice on the management of network data security in the telecommunications and internet industries for 2020. In which, the authority tabled to deepen the governance of network data security, conduct network security assessment and so on. 14 Chinese units, including China Mobile, China Telecom, China Unicom, Alibaba, Tencent, Didi Chuxing, ByteDance, Xiaomi and China Academy of Information and Communications Technology (CAICT), sent responsible persons to exchange opinions, and introduced their concerns on the notice.

Chinese State Council outlined supports on exporters to shift to domestic sales by helping them expand the domestic markets. Besides, the guidance also encouraged foreign traders to leverage on online sales, live stream sales and other new business models.

Sci-tech Innovation Board in Shanghai proposed Semiconductor Manufacturing International Corporation (SMIC) to submit a listing registration, Shanghai Stock Exchange said. The financing amount is RMB20 billion.

Chinese President Xi Jinping, At a video conference held yesterday with Arabianpolitical parties, stated his willingness to foster cooperation with Arab and the rest of the world in order to help the World Health Organization give full play to its leading role. In face of new challenges hurdles arising from the coronavirus pandemic, China will go on deepening strategic communication and sharing administrative experience with Arabian political parties on the basis of shared respect and mutual learning, furthered Xi.

HKET HOLDINGS (423.HK) annual results ended March 2020. Net profit amounted to $10.57 million, down 85.2% yearly EPS 2.45 cents Final DPS 5 cents vs 6.5 cents the previous year

NEXT DIGITAL (282.HK) annual results ended March 2020. Loss deepened to $415 million from $338 million in the previous year. LPS equaled 15.8 cents. No final dividend was declared.

CHINA RES LAND (1109.HK) announced a connected transaction that it will acquire all interest in the projects of superstructure of line 4 of the Shenyang Metro, Chaoyang District, Beijing, Yinzhou District, Ningbo and Longgang District, Shenzhen from its controlling shareholder CRH at a total consideration of RMB2.557 bn (HKD2.796 bn).


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