June 26 HK WRAP HSI -232pts on light T/O and Shorts dropped to 14.7%


June 26  HK WRAP HSI -232pts on light T/O and Shorts dropped to 14.7%


HSI -232pts (-0.9%) 24,550  HSCEI -84pts (-0.8%) 9,853 T/O HK$96.11bn (-16.7%)  


EUROPE opened higher despite the US bank stress test results, rising covid cases and the IMF warning.

US Futures back to flat having been -175pts earlier after the US Bank stress tests and news of share buyback being banned and dividend payments at current levels. Also poor results from Nike!


INDEXES      

CSI 300 closed re-opens on Monday 

HSI Pre Market -83pts @ 24,697 vs -159pts ADR’s @ 24,622  with weakness in the e-commerce names however the wider market initially rallied to the day high of 24,757  but lacked momentum to recover Wednesday’s closing level. T/O light with China closed until Monday and some HK investors taking a long weekend. News of poor results after US markets closed from Nike also weighing on investors minds ahead of the next US earnings season.  Plus news that the US Govt has prepared a list of Chinese companies under the control of the PLA for possible sanctions a concern. AND restrictions on US Banks doing business with those the US thinks responsible for the imposition of the National Security Law on Hong Kong (wonder who Carrie Lam banks with?) THE NPC will vote on Sunday regarding the law, the details of which have not been released for fear ti would cause unrest in Hong Kong which did not help sentiment.   ALSO a increase in local covid-19 cases locally and in the US.

AFTER MARKET 
CKH HOLDINGS (1.HK) stated that Vodafone Hutchison Australia (VHA) has welcomed the announcement that the Supreme Court of New South Wales today made orders approving the scheme of arrangement between VHA and TPG Telecom (TPG). The Scheme is to be implemented on 13 July 2020.
LUK FOOK HOLD (590.HK) annual results ended March 2020. Revenue -29.2% yearly to HK$11.234 billion. Net profit HK$866 million, -42% yearly. Basic EPS equaled HK$1.48. Final DPS was HK$0.5, vs HK$0.6 a year ago. Full-year DPS was HK$1 vs HK$1.15 in the previous year.
Christine Lagarde: World Probably Passes Worst Days of Coronavirus Crisis The world should have sailed past the worst of the coronavirus crisis, said European Central Bank President Christine Lagarde, who predicted economic recovery to be "incomplete" and probably "transformational”.  I think a bold statement considering how little we know about covid-19.
Michael Wong: To Sell announced the Land Sale Programme for the second quarter of Year 2020/21, when the Government plans to sell two commercial sites situated in New Central Harbourfront and Tung Chung, measuring 267,000 sq.m. in total. In particular, the 150,000-sq.m. New Central Harbourfront site is to be developed as a landmark, which will provide large-scale public open space and landscaped decks on top of offices and commercial facilities, and be sold in a "two-envelope" tendering approach. Land disposal income is not the only concern for the Government when it comes to strategic commercial sites, furthered Wong.
Also he announced Sai Kung, Tai Po Residential Sites by Tender in 2Q of 2020/21, Involving 160 Units.  MTR to Sell Lohas Park Phase 13 by Tender in 2Q of 2020/21, Involving 2,550 Units
CHINA GAS HOLD (384.HK) annual results ended March 2020. Net profit HK$9.188 bn, +11.7% yearly. EPS was HK$1.76. Final DPS was HK40 cents. Full-year DPS was HK50 cents, up 13.6% yearly.
HKMA: Retail Banks' 1Q Pre-tax OP Slips 7.7% YoY; No Notable Fund Outflow from Banking System. The aggregate pre-tax operating profit of retail banks declined by 7.7% year-on-year in the first quarter of 2020, according to Hong Kong Monetary Authority's quarterly report. Total deposits remained stable in the first quarter. Among the total, both Hong Kong dollar deposits and US dollar deposits only edged down by 0.1%. Fluctuations during the period were within normal ranges, and there was no noticeable outflow of funds from the banking system.

HYGEIA HEALTH (6078.HK), to be listed next Monday, opened at $22 in

gray market, up 19% against the listing price of $18.5, and last traded at $23.55, up 27% against the listing price, on volume of 560,000 shares, PhillipMart data showed.

KANGJI MEDICAL (9997.HK), to be listed next Monday, opened at $24 in gray market, up about 73% against the listing price of $13.88, and last traded at $24.4, up nearly 76% against the listing price, on volume of 3.12 million shares, PhillipMart data showed.

Centa-City Leading Index (CCL) last printed at 181.12, a 30-week high, up 0.21% weekly. 

CCL Mass rose 0.13% weekly to 184.96. 
CCL (small-and-medium units) climbed 0.13% weekly to 182.33. 
CCL (large units) lifted 0.65% weekly to 174.73.
The four major CCL indices rallied for two weeks to set new highs,
 

Market and Pre Market News at bottom of page.

Short Selling HSI Friday 14.7% vs 17.5% Wednesday

Top Shorts Hang Seng Bank (11) 44%, MTR (66 HK) 34%, Wharf REIC (1997) 31%, Mengniu Dairy (2319) 27%, China Shenhua (1088) 245, Shenzhou Int (2313) 24%, Country Garden (2007) 24%.


COMMENT 

*PETROCHEMS WEAK Despite a rally in oil overnight, WTI +2.9% BRENT +3% after Russia slashed its crude exports, but sector traded under pressure on concern of slowing demand in China as the nation's economic growth remained depressed. CNOOC (883 HK -1.3%) CH OILFIELD (2883 HK -2.6%) PETROCHINA (857 HK -1.9%) SINOPEC (386 HK -1.2%).

*TELCOS WEAK After US disclosed a list of firms allegedly backed by the Chinese military, opening up the businesses to possible sanctions. CH TEL (728 HK -3.5%) CH MOBILE (941 HK -2.6%) CH UNICOM (762 HK -2.5%).

*E-COMMERCE WEAK consolidation after recent gains. TENCENT (700 HK -1.2%) despite it and Pokemon announcing a jointly-developed new game for smartphones and Nintendo's Switch console. Pokemon Unite, created partly by Tencent's Timi Studios, allows players to compete in five-versus-five battles, using the powers and attacks of Pokemon creatures, pending release date.

ALIBABA (9988 HK -3%) News that Softbank’s Son left the board was by mutual agreement as Jack Ma left Softbank’s board. Softbank is still entitled to nominate a member to Alibaba’s board

MEITUAN (3690 HK -2.6%) JD (9618 HK -0.3%).

PA GOOD DOC (1833 HK +3.6%) Haitong Sec. initiated with an "outperform".

*TECH & COMPONENTS MIXED as APPLE closed 14 stores in Florida due to rising covid-19 cases, bringing the number shut to 32 after recently reopening

AAC (2018 HK -1.3%) TONGA (698 HK -3%) TRULY (732 HK -4.7%)

SUNNY (2382 HK +5.4%) jumped after a broker's upgrade.

Selective semiconductor names continued to see support on STAR Board listing speculation. HUA HONG (1347 HK +5.7%) SMIC (981 HK +3.3%).

COWELL (1415 HK +5.3%) Annoucned +VE profit alert, expects a significant improvement in the group's profit for the six months ending 30 Jun 2020 vs the same period in 2019.

*HK PROPERTY WEAK concerns over impact of the national security law on HK is raising concerns on the city's autonomy for some investors. Plus HSBC raised its Hibor mortgage rate and reduced the cash back offer on concerns for the outlook for Hong Kong Property BUT subscriptions for the first batch of Sea To Sky flats ends today and were 25.3 times oversubscribed as of yesterday, with more than 11,700 checks submitted. Which shows the strength of local resident demand and some mainland Chinese demand. CK ASSET (1113 HK -0.7%) will launch sales of another batch of 462 units at Sea To Sky tomorrow, at an average of HK$16,275 psf.

LKS Foundation bought 1.33m CK ASSET (1113 HK) shares June 18-23, avg price from HK$46.9328-HK$47.2822/shr.

HENDERSON (12 HK -1.1%) SHKP (16 HK -0.4%).

*CHINA PROPERTY MIXED focus on developers that have spin-off plans.

KWG's (1813 +11%) property management arm KWG Living has filed an IPO application in the HKEX to raise more than US$200m.

AGILE GROUP (3383 HK +4%) plans to spin off A-City Group, which provides ecological landscaping and interior decoration in HK.

BUT POLY PROP (119 HK -2%) despite expecting to record a 75%-85% YoY decrease in interim net profit ending 30 June 2020.

*SPORTSWEAR MAKERS WEAK after NIKE reported its Q4 loss per share of 51 cents after US markets closed which was substantially worse than the consensus for profit of 10 cents. The company said results "were significantly impacted" by store closures, and shipments to wholesalers fell by half.

XTEP (1368 HK -1.9%) LI NING (2331 HK -1.2%) ANTA SPORTS (2020 HK -1.2%) POU SHENG (3813 HK -1.7%). I think you will see more US companies reporting significantly lower than expected in the forthcoming earnings -VE for sentiment

*HK RETAILERS WEAK as Victoria's Secret shut HK flagship store yesterday, seven years ahead of its 10-year lease’s expiration in August 2027. It may cost the brand about HK$600m to terminate the lease early. ALSO -VE implications for HK Property Investors like Hysan (14 HK +0.8%) in my view.

CHOW TAI FOOK (1929 HK -1.3%) GIORDANO (709 HK -6.3%) I.T. (999 HK -2.5%) LIFESTYLE (1212 HK -2.7%).

* OTHER MOVERS:

TIANNENG POWER (819 HK +20.4%) renewed hopes for spinoff, after the company gave an update on the planned listing of its batteries operation on Shanghai’s Star Board.

TRAIN/RAILWAY companies CRRC (1766 HK -2.5%) and CH RAIL CONS (1186 HK -2.6%) on possible sanctions by the US for company’s controlled by the Chinese military.

CONNECT  FLOWS (No flows with China on holiday resumes on Monday)    

DATA 

CHINA No data but confirmed 13 additional COVID-19 cases yesterday (25 June), including two imported cases (all in Shanghai) and 11 local infections (all in Beijing), National Health Commission reported.

HONG KONG Centre for Health Protection said there were 3 new local covid-19 cases today. It also announced earlier that there were 14 new cases yesterday. -VE for sentiment.


Active Heavyweights
AIA (1299.HK) +0.9%
TENCENT (700.HK) -1.3% 
ICBC (1398) -1.4%
PING AN (2318.HK) +0.1%
CCB (939.HK) -0.6%
HKEX (388.HK) -0.7

HSI & HSCEI Constituents on the move
SUNNY OPTICAL (2382.HK) +5.4%
CSPC PHARMA (1093.HK) +4.9%
CHINA TELECOM (728.HK) +3.5%

HSMI & HSSI Constituents on the move
TIANNENG POWER (819.HK) +20.5%, hits new high
KWG GROUP (1813.HK) +10.8%, hits new high
ZA ONLINE (06060.HK) +8.9%, hits new high
HUA HONG SEMI (01347.HK) +5.7%, hits new high
VPOWER GROUP (01608.HK) +5.4%, hits new high

REGIONAL MARKETS  

JAPAN Opened higher and traded slightly higher through the day. Tokyo Core CPI was in-line although CPI missed. Close +1.13%

S KOREA Markets opened higher but Kosdaq sold off initial and then worked its way back into the green but sold down to close +0.03% The Kospi initially sold down but not as much and then worked higher into lunch before trading sideways to close +1.1%

Taiwan Market closed


NEWS
MARKET HOURS 

Transport Department announced that the "Central-Hung Hom" ferry service will commence operation from June 28. The first sailing will depart from Hung Hom at 7.30am. The adult fare is $9 per trip. The ferry operator will provide fare concessions for children, the elderly and persons with disabilities as well as monthly ticket concessions. 
BABA-SW (9988.HK)'s Lazada announced that the co-founder cum CEO Pierre Poignant is stepping down, to be replaced by Chun Li, Co-president and Head of Indonesia operations. The Southeast Asian e-commerce platform is looking at possible re-branding or shutdown of LazMall, said insiders.
Bank of Japan is ready to ramp up its stimulus measures as a second spike of coronavirus pandemic may “considerably” hurt the Japanese economy, said Governor Haruhiko Kuroda. While there is no immediate need for interest rate cuts, the bank may instead focus on corporate funding strain relaxation and market stabilization by means of facility tools and bond purchase, added Kuroda.
HSBC HOLDINGS (5.HK), STANCHART (2888.HK) and other lenders have a slim chance of recouping repayable loans from Hin Leong, who has only US$257 million in assets but US$3.5 billion in liabilities, foreign media citing the court filings in Singapore.
XIAOMI-W (01810.HK) Anti-China sentiment in India has no material impact yet, while the firm's product and R&D teams are based in the country, Xiaomi India's Managing Director Manu Kumar Jain told CNBC. He added its seven Indian plants are seeing a shortage of manpower in manufacturing, warehousing and delivery under India's shutdown measures,
HSBC has revised its HIBOR-based mortgage rate higher, taking the rate to H+1.5% for property worth below $6 million, and to H+1.45% for property worth $6 million to $20 million, local media reported. The cash rebates were also reduced from 0.5% to 0.2%.
Geely announced that Volvo has entered into a global strategic partnership with Alphabet's Waymo. Waymo will become the exclusive autonomous driving technology partner of Volvo, Polestar and Lynk & Co.
NTES-S (9999.HK) entered into a strategic partnership agreement with Kweichow Moutai Group to collaborate in brand marketing, cultural communication and big data by leveraging their own edges.
TENCENT (700.HK)'s TiMi Studios has teamed up with Nintendo to launch Pokemon Unite, a free multiplayer online battle arena game similar to Honor of Kings, the flagship title of TENCENT. Pokemon Unite will arrive on both mobile platforms and Nintendo Switch.
GALAXY ENT (27 HK) hotelier arm of  clarified via Facebook that unusual room rates were noted at a third-party online booking platform, which came in different with the price levels provided by the group due to technical glitches. Came as Macao netizens circulated at social media that they were asked to check out from Galaxy Hotel despite successful check-in after reserving a hotel room at around MOP10 a night, while some others reflected that they had made room booking at similar price levels.
Shenzhen Municipal People's Government and XIAOMI-W (1810.HK) yesterday (25 June) signed an economic development and cooperation deal for the latter's headquarters, reported Shenzhen Press Group. XIAOMI-W is set to build its international headquarters in Shenzhen, while planning to invest RMB7.76 billion in the project.
Canadian Prime Minister Justin Trudeau stated he would not set Huawei Deputy Chairwoman Sabrina Meng Wanzhou free in exchange for the release of the two detained Canadians in China.  The Prime Minister said the "prisoner swap" will set a bad precedent that could imperil Canada. China has admitted the direct link between the arrest of Michael Kovrig and Michael Spavor and Canada's detaining of Meng, Trudeau added. 
Beijing will unveil details of the cross-boundary wealth management connect scheme for the Greater Bay Area as early as next Monday (29 June), in a bid to support Hong Kong and accentuate the city's sturdy position, reported Hong Kong Economic Journal. The south-bound and north-bound quotas for the scheme will be RMB150 billion each, according to sources.
FOSUN PHARMA (2196.HK) Fosun Pharmaceutical Industrial, a subsidiary of the Company, has received the Acceptance Notice regarding its licensed RT002 for the treatment of moderate to severe glabellar (frown) lines. The clinical trial, registration and review of the drug were accepted by the National Medical Products Administration.
Sino Group stated that Tmtplaza, Olympian City, Citywalk, China Hong Kong City and Gold Coast Piazza will from 13 July to 4 October launch the "S+ REWARDS Lucky Draw". Over 30,000 prizes and nearly $2 million of shopping and dining coupons will be available, involving more than $3 million. Along with muted coronavirus situation and class resumption, there has been a rallying patronage in its shopping malls, said the group.
Indian is finishing its draft onat least 370 products to ensure items which can be manufactured locally are not imported, while Indian Government internally plans to impose higher tariffs on furniture, air conditioner compressors and auto parts to push for domestic production and reduced use of Chinese goods, Bloomberg citing inside sources. India has suspended the clearance of made-in-China products of US enterprises at her ports and airports, as Reuters quoted from sources. -VE for China 

PRE MARKET

HYGEIA HEALTH (6078.HK), to be listed next Monday, was priced at $18.5, the upper limit of the offer price range $17-18.5. Roughly 607.56 times of over-subscription was recorded in the public offering. One-lot (200 shares) success rate was 8.8%.

KANGJI MEDICAL (9997.HK), to be listed next Monday, was priced at $13.88, the upper limit of the offer price range $12.36-13.88. 988.22 times of over-subscription was recorded in the public offering. One-lot (500 shares) success rate was 9% only.

XIAOMI-W (1810.HK) in response to Indian residents launching a boycott against Chinese goods as the border disputes between the two nations rendered their relationship in tension has subsequently put up "Made in India" banners outside its branches in India in attempt to counter the boycott China campaign, Indian press reported.  I think it will be interesting to see if it’s the Chinese ownership or the place of manufacture that works.  I suspect that its the ownership that matters as the Indian nationalist have been seeking to damage Chinese interests.

HK Government spokesman said yesterday that the Employment Support Scheme (ESS) received a total of 259,900 applications for the one-off lump-sum subsidy of $7,500 for self-employed persons (SEPs) during the application period.  Of these, about 140,000 applications have not been approved due to ineligibility. The ESS Secretariat or the processing agent are sending notifications to these applicants.

TENCENT (700.HK) is set to acquire the content, technology and resources of iflix, a Kuala Lumpur-based streaming platform, to extend its reach into the region, Bloomberg citing insiders. The purchase does not cover iflix's debts

The US Senate unanimously approved the "Hong Kong Autonomy Act", which could sanction individuals or companies undermining the territory's autonomy. The bill will be submitted to the US House of Representatives for review and hence be signed into law by President Donald Trump. The act would require US Secretary of State Mike Pompeo to submit a report to the Congress 90 days within legislation and once a year in the future.

GOME RETAIL (493.HK) said regarding the increase in the price and trading volume of the shares of the Company on 24 June and media articles reported that Wong Kwong Yu, the controlling shareholder of the Company, has been released from prison; it noted from the information released by the Beijing High People’s Court on its official Wechat public account “Beijing Law Network” that the Beijing First Intermediate People’s Court has ruled to release Wong on parole, with the parole probation period from the date of parole to 16 February 2021.

NATIONAL ELEC H (213.HK) results for the year ended 31 March 2020. Net profit -45.5% yearly to $121 million with EPS of 12 cents. A final dividend of 3 cents was declared.

MONGOLIA ENERGY (276.HK) annual results ended March 2020. Revenue was $1.125 billion, +44.8% yearly. Net profit amounted to $1.442 billion, vs $44.425 million in loss in the previous year. EPS equaled $7.66. No final dividend was declared.

BEST MART 360 (2360.HK) FY results to 31 March 2020. Net profit -79.7% YoY to  $12.1 million with EPS of 1.2 cents. No final dividend was declared, against a dividend of 6 cents a year ago.

GEELY AUTO (175.HK) announced a preliminary proposal for the possible issue of RMB Shares and listing on the Sci-Tech Board, involving not more than 1.731 billion RMB Shares.

CHUANG'S CHINA (298.HK) announced the results for the year ended 31 March 2020. The loss was $192 million vs the net profit of $168 million from a year ago. LPS was 8.19 cents. No final dividend was declared.