HK WRAP 9 June HSI Closes above 25k T/O -4% DoD, Shorts drop to 17%
HSI +280pts (+1.1%) 25,057 HSCEI +112pts (+1.1%) 10,121 T/O HK$124.25bn (-4% DoD).
Europe Markets opened lower as investors turn cautious after World Bank cuts forecasts and German trade data comes in worse than forecast.
US futures having opened flat and eased back during the day sold down and indicate DOW opening -350pts. S&P and NDX also guiding lower
Northbound RMB 27,413m Sell 12,460m : 14,953m Buy
Southbound HK$ 9,979m Sell 5,051m : 4,928m Buy
Northbound RMB 37,653m Sell 17,759m : 19,894m Buy
Southbound HK$ 8,741m Sell 3,950m : 4,791m Buy
Short Selling HSI Tuesday 16.9% vs 18.9% Monday
Top Shorts Hang Lung Ppty (101) 36%, Wharf REIC (1997) 35%, Ping An (2318) 33%, Hang Seng Bank (11) 31%, ICBC (1398) 29%, MTRC (66) 25%.
CHINA None but tomorrow on market open Inflation and PPI data.
Govt announced support package for Cathay Pac
Centre for Health Protection said there were no new local COVID-19 case
JAPAN opened flat but initially trended lower and then traded sideways for the morning and worked slightly higher in the PM. Pre market April Average Cash Earnings came in much lower than expected at -0.6% YoY vs +0.1% March (F/cast was +0.5%). Closed -0.38% Out Wednesday PPI and Machinery orders.
S KOREA opened higher but again the markets had trended lower initially after 7 days of gains; news it's top 100 companies posted a 10% QoQ decline in their overseas earnings Jan-Mar, period due to covid-19 impact on industries did not help neither did news that North Korea has pulled the plug on all communication channels with South Korea, including the hotline between the Central Committee of the Workers' Party of Korea headquarter and the Blue House. Markets bounced back to flat mid morning but then trended lower again but saw a rally at the end back to +VE Kosdaq +0.1%, Kospi +0.2%. Unemployment data out Wednesday
TAIWAN opened lower but worked into the green and then traded sideways around flat for the day. Closed +0.23%
SJM HOLDINGS (880.HK) after the shareholders' meeting, Chairman Daisy Ho told reporters that the entire group is disheartened over the decease of the founder Stanley Ho and that his spirit will linger on. Amid the coronavirus pandemic, losses were expected sector-wide for the first half of 2020 as the turnover now only accounted for 10% of last year's, CEO So Shu Fai disclosed, who remained downbeat on the full-year performance despite anticipation to regain business momentum in the second half. Daisy Ho made no comment as to her sister Deborah Ho's filing at the court for a caveat about Stanley Ho's will.
A survey of broker forecasts JD-SW (9618.HK), to carry a higher PE ratio valuation than BABA-SW (9988.HK). JD-SW is set to leverage on its self-operating model and benefit from the rapid growth in tier-3 cities or below, whose future EPS growth may outstrip BABA-SW’s.
Brokers highlighted C2M business with relatively higher gross margin (i.e. tailor-made manufacturing), whose CAGR may reach 21% from 2020 to 2023.
The Government, in order to solidify Hong Kong's presence as an aviation hub, is pumping $27.3 billion into CATHAY PAC AIR through the exchange fund capital under Land Fund, said Financial Secretary Paul Chan. It is making the investment in hopes for reasonable return, rather than long-term stake holding in the flagship carrier or involvement in its daily operation. The investment, according to advisory feedback, carries an internal rate of return as high as 4%-7.5%, added the financial secretary.
CATHAY PAC AIR (293.HK) said no prospects for a return to normal international travel arrangements any time soon. In the first four months of 2020, the number of passengers carried was -64.4% with capacity -49.9% and revenue passenger kilometres was -59.1% YoY. Although it is the Cathay Pacific Group’s intention to increase slightly its passenger flight capacity from 3% in May to 5% in June of total capacity, this is still subject to a potential relaxation in government health measures. Furthermore, in the first four months of 2020, the tonnage carried by the Cathay Pacific Group fell by 26.6% against a 25.4% drop in capacity and a 20.6% decrease in revenue freight tonne kilometres, as compared to the same period in 2019. Despite all measures, the drop in passenger revenue to around only 1% of prior year levels has meant that Cathay Pacific has been losing cash at a rate of HK$2.5 to 3.0 billion per month since February 2020. In the short term, the Board intends to implement a further round of executive pay cuts and a second voluntary special leave scheme for employees. In the longer term, all aspects of the Cathay Pacific Group’s business model will be re-evaluated. By the fourth quarter of 2020, Cathay Pacific’s management team will recommend to the Board the optimum size and shape of the Cathay Pacific Group to meet the air travel needs of Hong Kong while keeping Cathay Pacific’s
financial status at a healthy level and meeting its responsibilities to Shareholders. Inevitably this will involve rationalisation of future planned capacity compared to the pre-crisis plans, taking into account the market outlook and cost structure at that time.
SWIRE PACIFIC A (19.HK) announced that it fully supported CATHAY PAC AIR (293.HK)’s proposed recapitalisation. In wake of unprecedented challenges in the global market, the company said the related proposal may maintain the group's competitiveness and operation. The company will fully subscribe for the allotted shares. The subscription price payable by Swire Pacific in respect of its subscription for the Cathay Pacific Rights Shares is expected to be HK$5.3 billion, which Swire Pacific intends to fund with its internal resources. Assuming full exercise of the warrants proposed to be issued by Cathay Pacific, Swire Pacific’s percentage holding of shares in Cathay Pacific would reduce to 42.26% from 45%.
Ren Huichuan has recently joined TENCENT (700.HK) as a senior adviser to explore the internet insurance business after he had earlier stepped down as Vice-Chairman from PING AN (2318.HK), Chinese media citing insiders.
Overnight HIBOR last posted at 0.16214%, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.7856%, down for 8 days.
HKD remained near the Strong-side Convertibility Undertaking this morning (9 June), and the spot USD T/T rate was last at 7.7503, after the HKMA had undertaken USD selling orders for two times during New York trading hours and injected over HKD5 billion into the market. The balance of Hong Kong's banking system was expected to increase to HKD113.817 billion this Wednesday
LINK REIT (823.HK) oriented its development in China in four tier 1 cities, namely Beijing, Shanghai, Guangzhou and Shenzhen, where the company owns properties, said Chief Strategy Officer Eric Yau after radio interview. The company's team is now looking at any more potential projects, regardless of commercial buildings or shopping malls.
New Oriental Education & Technology Group and TAL Education Group, the Chinese online educators listed in the US, are pondering to stage a second listing in Hong Kong, and exploring the relevant possibility with investment banks, while the final decisions remain unsettled, Reuters' IFR cited sources. Both New Oriental and TAL declined to comment on the matter. Their respective market caps are approximately US$21 billion and US$39 billion, totaling approximately HK$468 billion.
Folli Follie has tapped Deloitte to be in charge of its voluntary liquidation due to insolvency in Hong Kong businesses, local media reported. The winding-up will affect at least five physical stores and 60 workers of the FOSUN INTL (656.HK)-backed Greek jewelry brand. -VE
NTES-S (9999.HK) was blasted by its players of "率土之濱", a mobile game of country battle of the Three Kingdoms. They complained about the new game system of selling expensive treasures, sparking extensive protests among players who declared to lodge complaints at the State Administration for Industry and Commerce. They also claimed to petition online when CEO William Ding runs live broadcast on Hong Kong's stock debut. The official site of the mobile game apologized for the matter, saying the incident will be settled by way of system ratification.
SWIRE PACIFIC A (19.HK), SWIRE PACIFIC B (87.HK), AIR CHINA (753.HK) and CATHAY PAC AIR (293.HK) Trading halted with effect from this morning, pending release of an announcement relating to the inside information.
MENGNIU DAIRY (2319.HK) PROFIT WARNING It expected to record a growth in revenue in the first half of 2020 compared to the same period in 2019 (excluding the impact of disposal of JLB and acquisition of Bellamy). However, the Group expected to record a decrease of between 45% to 60% in profit attributable to owners of the Company in the first half of 2020 compared to the same period in 2019, mainly attributable to an increase in the costs incurred from additional expenses on epidemic prevention and control to safeguard the health and safety of the employees, and to ensure the resumption of work and production. That was smaller than expected; Slight +VE
China Passenger Car Association disclosed that the nationwide sales volume totaled 1.609 million vehicles in May, +1.8% YoY marking the first positive growth since the coronavirus outbreak. Looking into June, the association expected the recovery to go on along with the reopening of vehicle exhibitions across the country.
As HKD re-hit the Strong-side Convertibility Undertaking, the HKMA announced that it undertook the USD selling orders for two times during New York trading hours with the amounts of USD184mn and USD472 mn, equivalent to HKD1.426 bn and HKD3.658 bn. The balance of banking system was expected to increase to HKD113.817 billion this Wednesday (10 June).
CST GROUP (985.HK) said on 8 June it acquired a total of 3.0975mn CHINA SHENHUA (1088.HK) shares on the open market at an aggregate consideration of $40.70 million.Q TECH (1478.HK) said sales volume of camera modules totaled 34.128 million units in May, -5.3% YoY and -12.9% MoM.