JUNE 8 WRAP HSI Flat T/O -4% DoD, Shorts @ 19%

HK WRAP 8 JUNE HSI Flat T/O -4% DoD, Shorts @ 19%

HSI +6pts (flat) 24,777 HSCEI -57pts (0.6%) 10,009 T/O HK$129.29bn (-4% DoD).

Warrants were 6.23% of the cash market

Europe Markets opened lower and initially worked higher but DAX and CAC failed to break above Friday’s closing levels but the FTSE managed to break above and now trading sideways in the green

US futures have had a choppy day, opened +100pts rallied up another 90pts before reversing and are now indicating a higher open +194pts with the S&P and NDX +VE too

CONNECT

Shanghai

Northbound RMB 31,165m Sell 14,815m : 16,350m Buy

Southbound HK$ 10,315m Sell 5,352m : 4,963m Buy

Shenzhen

Northbound RMB 42,458m Sell 21,689m : 20,769m Buy

Southbound HK$ 9,683m Sell 4,403m : 5,280m Buy

Short Selling HSI Monday 18.9% vs 14% Friday

Top Shorts Wharf REIC (1997) 40%, Hang Lung Ppty (101) 38%, Hengan (1044) 38%, Ping An (2318) 36%, Bank of China (3988) 30%, Want Want (151) 29%, CLP (2) 29%, China Res Land (1109) 27%, Hang Seng Bank (11) 27%, ICBC (1398) 26%, Country Garden (2007) 25%.

DATA

CHINA General Administration of Customs of the PRC said during the first five months this year:China had RMB1.61 trillion in trades with the European Union, -4.4%YoY Trades with the U.S. totaled RMB1.29 trillion, -9.8%.It had RMB275.65 bn in cellphone exports, -5.6% yearly and Textile exports (including masks) totaled RMB406.66bn +25.5%.

HONG KONG Govt announced applications for the HK$10k can payout would start 21 Jun with the money being paid out from 8 July.

Also said some directors or executives of certain companies listed on HKEX (388.HK) who can meet the eligibility criteria may apply for exemption from the compulsory quarantine arrangement when they arrive at Hong Kong from the Mainland, subject to a pre-determined quota.

Centre for Health Protection said there were was 1 new COVID-19 case on Sunday and 1 new imported case on Monday

Financial Secretary Paul Chan wrote on his blog that negative speculations have been flooding in although the details about Hong Kong National Security Law are yet to finalize. Amid US-China grapples, the US resorted to the so-called sanction on Hong Kong in an attempt to meddle in the legislation work, of which the actual impacts will turn out to be very limited, opined Chan. Any attempt to crush Hong Kong financial system may in turn send global financial markets into a havoc or even undermine market confidence in using USD and holding US financial assets. The financial secretary remained optimistic and confident of the city being able to retain both "financial presence" and "professional talents" and to remain as an international financial hub.

INDEXES

CSI 300 closed +21pts (+0.5%) @ 4,022 Opened higher and saw a small squeeze higher in the the first 30 minute in choppy trading to the day high 4,050. Then sold down 27pts before a bounce but only to the opening level which it tested a could of times before selling down into lunch (4,024). PM saw the market trade sideways in choppy trading around the 4,020 level, with a small uptick into the close. Sentiment helped by the good trade data out on Sunday and the good US jobs reports. But the war of words between the US and China seems to be intensifying which is a worry for local investors.

Shanghai Composite +6 pts (+0.2%) to 2,937; T/O RMB 274.6bn

Shenzhen Component Index +35 pts (+0.3%) to 11,215. T/O RMB 409.7bnChiNext Index -12 pts (0.6%) to 2,153."Stall economy" concept stocks pulled back notably. BAIDA GROUP (600865.SH), Wuika Times (603101.SH), Yindu (603277.SH) and Maoye Commercial (600828.SH) hit the day limits.

HSI Pre Market +247pts @ 25,018 vs +279pts ADR’s @ 25,049 With internet names +VE along with HK Financials and Techtronics. Profit Warnings from Foxconn, Hang Lung, Shangri land others over the weekend -VE for sentiment and heightens expectations of more to come.

That was the day high, as I wrote at the weekend a crucial level. There was not short squeeze but it should be noted the shorts on Friday has eased back to 14%. After that the market initially sold down 150pts before bouncing but was unable to regain the 25,000 level and traded sideways for about an hour before trending lower into lunch (24,800 level). PM saw initial selling down to the day low 24,680 level before bouncing but only to the lunchtime level, which it test a few times but each time with less success. Sold down into the close and would have closed in the red except for a 45pt uptick in the closing auction. Sentiment remains wary with the National Security Law in focus and the government getting as many prominent locals to express their support for the bill whilst union and student leaders threaten a boycott referendum this week. There were no protests at the weekend, due in part to the torrential rain and the fact that there are still no detail about the new law. Which rather undermines the endorsements. What they really as expressions of allegiance to Beijing.

Netease’s IPO in focus and JD.Com’s secondary listing too but I am concerned about Trump seeing to weaponise more of the US pension money.

Active Heavyweights

CCB (939.HK) -1.6%
ICBC 9A1398.HK) -1.3%
HSBC (5.HK) +1.2%
TENCENT (700.HK) -1%
AIA (1299.HK) +0.9%
PING AN (2318.HK) +0.6%
HKEX (388.HK) -0.5%

HSI & HSCEI Constituents on the move

SHIMAO PROPERTY (813.HK) -4.8%
CPIC (2601.HK) +4%
HENGAN INT'L (1044.HK) -3.4%
HANG SENG BANK (11.HK) +3.4%
CHINA LIFE (2628.HK) +3.3%
TECHTRONIC IND (669.HK) +1.1%, hits new high
SINO BIOPHARM (1177.HK) +0.7%, hits new high

HSMI & HSSI Constituents on the move

FIRST PACIFIC (142.HK) +22.7%
NEXTEER (1316.HK) +16.3%
JNBY (3306.HK) +12.6%
PACIFICTEXTILES (1382.HK) +11.1%
MMG (1208.HK) +10.5%
GOME RETAIL (493.HK) +9.9%, hits new high
HOPSON DEV HOLD (754.HK) +6.2%, hits new high
HUADIAN FUXIN (816.HK) +0.4%, hits new high

REGIONAL MARKETS

JAPAN opened higher initially drifted slightly lower as GDP was better or inline with forecasts. Around midday the market saw an uptick as the Eco watchers survey came in better than expected and then the market traded sideways and ticked higher at the end. Closed +1.4%

S KOREA Opened higher but initially sold off and briefly dipped into the red before bouncing back and trading sideways around flat for the rest fo the day Kosdaq +0.5%, Kospi +0.1%

TAIWAN opened higher and trended higher in the morning then drifted lower in the PM closed +1.1%

AFTER MARKET

HKD re-hit the Strong-side Convertibility Undertaking, the HKMA injected HKD4.263 billion into the banking system. As such, the balance of the banking system was expected to hike to HKD108.7 billion this Wednesday (10 June).

JD-SW (09618.HK)'s HK IPO, As at 6pm ten brokers granted over $41.7 billion margin for the IPO. Based on the fundraising amount of approximately $1.5694 billion from public offering, the stock was over-subscribed by roughly 25.6 times.

Li Ka-shing, Victor Li Add Total of 1.6285M CKA (1113 HK) Shrs bought between 2-4 June

DICKSON CONCEPT (113.HK) annual results ended March 2020. Net profit $646mn, +57% YoY. EPS equaled 162.9 cents. Final DPS was 27 cents, together with special DPS of 20 cents, totaling 47 cents.

MARKET HOURS

Ericsson stated that its second-quarter results will take roughly SEK1.0 billion (around USD110 million) hit from product inventory write-downs in China. The gross margins in the Chinese market will fall to negative due to higher initial costs for new products, said the Swedish telecom gear manufacturer.

IDC wrote in a research report that Taiwan's 1Q20 tablet market shrank 46.3% yearly to 130,000 units; FY20 market was expected to slide 24% to 760,000 units. During the quarter, Taiwan's smartphone market totaled 1.35 million devices, down 18.6% yearly; FY20 market was expected to fall 11.4% to 5.72 million devices.

BABA-SW (9988.HK)'s South China Morning Post saw a revenue slide of around 50% in the first quarter, dragged by advertisers' budget cuts amid social unrest and the pandemic, Bloomberg reported. In an interview, SCMP CEO Gary Liu said advertising sales could start recovering as early as mid-summer as the epidemic is easing.

HENDERSON LAND (12.HK) online conference, Co-Chairman Lee Ka Shing said that the overall rental income slid around 10% as rental break had been offered to tenants from February until present in the spirit of solidarity in face of the pandemic hard times. The developer hopes for a stable and prudent dividend policy, subject to the business development for the year being and future business forecasts, added Lee.

EVERGRANDE (3333.HK) subsidiary bought a piece of residential/ commercial land parcel in Taicang City, Suzhou Province at the reserve price, involving RMB305m, mainland media reported.

Overnight HIBOR last posted at 0.18512%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.80375%, down for 7 days.

XIAOMI-W (1810.HK)'s Xiaomi Finance announced the launch of "Xiaomi Mutual Aid" (literal translation of "小米互助") on 15 June, offering up to RMB500,000 worth of mutual aid fund assurance. The scheme is free of charge, covering 92 serious diseases and professional medical consultation services.

CANSINOBIO-B (6185.HK) noticed the price movement of the shares of the Company and certain media reports related to manufacture of the Recombinant Novel Coronavirus Vaccine (Adenovirus Type 5 Vector) (Ad5-nCoV) in Guizhou. The company clarified that the Company has all the rights to manufacture and commercialize the Ad5-nCoV; and a manufacturer of vaccines shall have sufficient capacity and qualification for manufacturing vaccines and is regulated by the National Medical Products Administration. The safety and efficacy of Ad5-nCoV are subject to

confirmation by clinical trials and the company cannot guarantee that it will ultimately develop or market Ad5-nCoV successfully.

GENSCRIPT BIO (1548.HK) said that the spin-off of Legend Biotech and its listing on the Nasdaq Global Market took place on 5 June 2020 (New York time) at a final offer price under the Offering of US$23 (equivalent to approximately HK$178.25) per ADS.

JUNSHI BIO-B (1877.HK) announced that the first subject has been dosed in the Phase I clinical study of JS016 injection (project code: JS016), which has been approved by the National Medical Products Administration recently. JS016 is the first SARS-CoV-2 neutralizing antibody that has entered the clinical stage in China, with a leading position in terms of leading development speed across the globe. The study is designed as a randomized, double-blind and placebo-controlled study, aiming at evaluating the tolerability, safety and pharmacokinetic and immunogenicity of JS016 among the Chinese population, which provide a basis for the subsequent clinical studies of JS016.

ICAC filed a lawsuit against a senior officer at a subsidiary of CHINA RAIL CONS (1186.HK) and three others, on 16 charges. Four defendants will sit for a trial on 9 June. Regarding them lodging false instruments at DBS, involving $1.75 million in bribes and money laundry.

Civil Aviation Administration of China (CAAC) announced that China's air passengers numbered 1.037 million on 5 June 2020, recovering 61.5% of the level a year ago. The intraday passenger traffic exceeded 1 million for the first time since 28 January 2020.

Zhong Nanshan, the team leader of senior experts of National Health Commission of the PRC, told a live broadcast that China-made COVID-19 vaccine is expected to come as early as this fall, or not, at the end of the year, for contingency application, People's Daily's Weibo reported. China has six COVID-19 vaccines undergone clinical trial, the expert added.

China has recently restarted soybean purchase from the U.S. due to BRL appreciation, which rendered U.S. exports more competitive, S&P Global Platts reported.

The SFC has filed a lawsuit at the High Court, requesting suspended TIANHE CHEM (1619.HK) and its Chief Executive Wei Xuan for the time being to pay back to the public shareholders and to pay for latent losses, foreign media reported.

CHINA TOWER (788.HK) Deputy General Manager Zhang Quan revealed that the company has built 258,000 5G base stations in aggregate since a year ago, citing over 97% construction demand is satisfied with excess inventory. Meanwhile, 416 out of 1,346 ground-level 5G base stations are newly built with social resources, effectively supporting the rapid 5G network with low cost at business scope.

PRE MARKET

US President Donald Trump threatened to slap tariffs on European Union vehicles if the bloc does not lower levies on American lobsters, appointing White House trade adviser Peter Navarro in negotiations. Trump also asked Navarro to shortlist Chinese goods to hit with tariffs unless Beijing removes its duties on American lobsters.

JINMAO HOTEL-SS (6139.HK) Trading halted with effect from 9:00 a.m. on 8 June 2020 pending the release of an announcement of Jinmao Hotel and Jinmao (China) Hotel Investments and Management Limited pursuant to the Code on Takeovers and Mergers, which is inside information in nature.

Mainland China will by the end of this year build more than 600,000 5G bases in cities at the prefecture level or above, People's Daily citing MIIT.

NTES-S (9999.HK) said final offer prices for Hong Kong Public Offering have been set at HK$123 per Share, by taking into consideration the closing price of the ADSs on Nasdaq on June 4, 2020 (the latest trading day before the Price Determination Date). The gross proceeds to the Company from the Global Offering, before deducting underwriting fees and the offering expenses, are expected to be approximately HK$21.092 billion.

HKMA said Hong Kong has seen many big IPOs recently, while HKMA had undertaken HKD selling orders for three times since last Friday. HKD was close to the Strong-side Convertibility Undertaking, and the spot USD T/T rate was last at 7.7505.

HSBC HOLDINGS (5.HK) Chairman Mark Tucker warned Britain that the bank may be subject to reprisals in China if the Government bans Huawei kits, the Telegraph reported. Tucker had explained the issue in private representations to British Prime Minster Boris Johnson's adviser, said the report.

MS CONCEPT (08447.HK) PROFIT WARNING. The Group was expected to record an unaudited consolidated loss of approximately HK$3.1 million for the year ended 31 March 2020, as compared to a profit of approximately HK$8.2 million in last year.

SOMERLEY CAP (8439.HK) PROFIT WARNING For the year ended 31 March 2020, the Group was expected to record an after-tax loss in the range of HK$7 million to HK$8 million (2019: after-tax profit of HK$9.5 million).

GRAND MING (1271.HK) annual results for the year ended 31 March 2020. Net Profit for the year $33.83 million, -77.3% yearly, with an EPS of 4.8 cents. Final dividend of 4 cents per share was recommended. Bonus issue of one new share credited as fully paid for every one share held was proposed. SINO-OCEAN GP (3377.HK) said that it transferred 50% stake in JV Company Sino-Ocean Bangbang Real Estate to the substantial shareholder Dajia Life Insurance. It was expected that the Consideration shall be no more than RMB50 million. Upon completion of the Disposal, the Group will no longer hold any equity interest in the JV Company.

VEEKO INT'L (1173.HK) PROFIT WARNING expecting the Group to record a loss of approximately HK$230-300 million for the year ended 31 March 2020 as compared to a loss of approximately HK$79 million recorded last year.

FULLSHARE (607.HK) said it placed up to 422 million shares of ZALL SMARTCOM (2098.HK) at $0.78-0.82 per share, a 1.3%-6.49% premium over the closing price as quoted on the last trading day (5 June). Assuming all the Zall Placing Shares are placed out at the maximum Placing Price, the maximum gross proceeds of the Placing will be $346 million. It is estimated that an unaudited gain before taxation of approximately $24.6 million will be recorded in respect of the Placing.

SUNAC (1918.HK) May 2020, Group contracted sales value RMB45.18 billion, +1.8% yearly.

LUEN THAI (00311.HK) PROFIT WARNING. For the four months ended 30 April 2020, it recorded a loss of around US$10.7 million as compared to a profit of around US$1.8 million for the four months ended 30 April 2019. This is mainly attributable to the impacts of the COVID-19 outbreak.

SHANGRI-LA ASIA (69.HK) PROFIT WARNING expecting that the Group may report a loss for the six months ending 30 June 2020, as compared to a profit attributable to equity shareholders of USD115 million for the corresponding period in 2019, due mainly to the severe business disruptions caused by the COVID-19 pandemic to the operations of the Group’s hotel properties.

SUGA INT'L (912.HK) PROFIT WARNING expecting the profit attributable to owners of the Company for the year ended 31 March 2020 to decrease between 40% to 60% as compared to approximately HK$55.6 million for the year ended 31 March 2019.

GEELY AUTO (175.HK) announced May Group total sales volume was 108,822 units, +20% YoY (+3% MoM)

DONGFENG GROUP (489.HK) May production 265,536 (+12.5% YoY) and sales 264,523 (+17.6%) vehicles volume.

SJM Deborah Ho, the daughter of Stanley Ho and his first wife Clementina Angela Leitao, filed a Caveat at the Probate Registry of Hong Kong High Court Friday. That may mean the division of Probate has not obtained consensus among Ho's families, which may spark a probate lawsuit as a result.

COMMENT

*PETROCHEMS STRONG Oil jumped WTI +5.7% BRENT +5.8% ahead of OPEC+ weekend meeting which agreed to extend current curbs but only for a month; as a number of countries are keen to see the price rise. Crude led a recovery in China’s energy imports, rising to a record and fuelling hopes of a rebound in industrial and consumer activity in China. CNOOC (883 HK +2.1%) CH OILFIELD (2883 HK +8.8%) ANTON OIL (3337 HK +3.3%).

*INSURERS STRONG after PING AN (2318 HK+0.6%) signed a strategic cooperation agreement with the Shenzhen govt to participate in the city's public housing construction until 2035.

CHINA LIFE (2628 HK +3.3%) NCI (1336 HK +2%) CHINA TAIPING (966 HK +2.7%) CPIC (2601 HK +4%).

*HK PROPERTY FIRM Good weekend sales (despite the awful weather). Centaline recorded 13 secondary transactions at ten blue-chip housing estates over the weekend, +18% WoW with secondary home prices rising now for four consecutive weeks. SHKP (16 HK+0.7%) this weekend sold 192 units and so far has collected about HK$4.5b after selling 680 out of 699 units of Wetland Seasons Park Phase 2. It hopes to get pre sale consent for phase 3 shortly.HENDERSON (12 HK +1.6%) NWD (17 HK +1.5%) CKA (1113 HK +1.3%).

HANG LUNG GROUP (10 HK -1%) and HANG LUNG PROP (101 HK -0.1%) issued a profit warning.

*CHINA PROPERTY MIXED following more fund-raising moves.

CIFI (884 HK +6%) following a 185m new shs placement at HK$6.28 or 1.26% discount to previous closing.

VANKE (2202 HK -1.5%) SHIMAO (813 HK -4.8%) LONGFOR (960 HK -1.7%). SUNAC CHINA's (1918 HK -0.14%) May contracted sales +1.8% YoY to 45.18b yuan.

*E-COMMERCE WEAK ahead of this year's biggest e-commerce HK listing, JD.COM, seeking to raise US$4.1b; HK trading is expected to start on June 18thNETEASE (9999 HK) to raise US$2.7b in HK stock offering, priced at HK$123/shr, to begin trading on June 11.MEITUAN (3690 HK -3.2%) TENCENT (700 HK -1.3%) ALIBABA (9988 HK unch) CH LITERATURE (772 HK -2%). Would suggest investor rotating rather than all new money coming into the sector.

*TECH & COMPONENTS MIXED after FoxConn (2038 HK -3.2%) sees 1H net loss bigger than $83.8M loss year ago. profit warning and that China/US tensions that may disrupt global supply chains, but optimism on China's 5G development offers some support to the sector.

ZTE (763 HK +1.1%) TONGDA (698 HK -2.1%) AAC (2018 HK +1.5%) HUA HONG (1347 HK +3.5%).

*AUTOS FIRM following sales data.

BYD (1211 HK +1.5%) sold a total of 124,903 units of vehicles during the first five months this year, a YoY drop of 34%. The company's total mobile sales last month was 31,821 units, with 11,325 new energy vehicles and 20,496 oil-fueled vehicles.

DONGFENG MOTOR (489 HK +0.2%) May vehicle sales +17.6% YoY to 264,523 units.

GEELY (175 HK+1.7%) May vehicle sales +20% YoY to 108,822 units.

DEALERSHIPS MIXED selective interest amid recovery optimism. YONGDA (3669 HK +4.2%) BAOXIN (1293 HK +1%) ZHONGSHENG (881 HK +0.75%).

*PHARM/BIOPHARM WEAK profit-taking from the vaccine rallies. CANSINO BIO (6185 HK -6.5%) says has rights to make, commercialize Ad5-nCoV, refuting recent media reports which said the COVID-19 vaccine Ad5-nCoV, that the company jointly developed with a research team led by top epidemiologist Chen Wei will be put into mass production.GENSCRIPT (1548 HK -7.3%) declares special dividend of HK$114.9m. 3SBIO (1530 HK -3.1%) INNOVENT (1801 HK -1.4%).

*EXPORTERS FIRM on the surprisingly strong US jobs report and China trade numbers: YUE YUEN (551 HK +6.3%) NEXTEER (1316 HK +16%) VTECH (303 HK +3.8%).

GOME (493 HK +10%) jumped to the highest since Nov 2015, after Gome and Gree co-hosted a live-stremaming event Saturday which reportedly generated sales of more than 450m yuan.

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