June1 WRAP HSI +771pts, regains May's loses
HSI +771pts (+3.4%) 23,733 HSCEI +273pts (+2.9%) 9,834 T/O HK$150.75bn (-15.7% DoD)Europe
opened higher encouraged by the further easing of lockdown arrangements but selling down on rumours that China will pause some US farm imports. Germany is closed today.US futures
opened -200pts but quickly rebounded to +65pts in the pm but then sold off after Bloomberg had cited insiders that China is telling state-owned Cofco and Sinograin to pause imports of some US farm goods.
US 40 companies due to reporting tonight; (for full list https://finance.yahoo.com/calendar/earnings/ )CONNECT
Northbound RMB 33,800m Sell 14,905m : 18,895m Buy
Southbound HK$ 9,925m Sell 4,985m : 4,940m Buy
Northbound RMB 49,708m Sell 21,606m : 28,102m Buy
Southbound HK$ 9,634m Sell 3,919m : 5,715m BuyIPO
YEAHKA (9923.HK) closed at $17.66 vs listing price of $16.64.Short Selling HSI
Monday 18.3% vs 19.5% Friday
Top Shorts Geely Auto (175) 55%, Wharf REIC (1997) 50%, CCB 9939) 33%, Hang Seng Bank (11) 31%, MTRC (66) 30%, Want Want (151) 29%, Country Garden (2007) 27%, Swire Pac A (19) 27%, Galaxy Ent (27) 26%, HSBC (5) 25%.DATA CHINA Today
Caixin Manufacturing PMI May vs 49.4 Apr (F/cast was 49.5)Out Sunday
Manufacturing PMI May 50.6 vs 50.8 Apr (F/cast was 50.5)
Non Manufacturing PMI May 53.6 vs 53.2 Apr (F/cast was 52.5)HONG KONG After market
Retail Sales Apr -37.5% YoY vs -44% Mar (revised from -43.8%)(F/cast was -45%) better than expected, so expect the sector to see selective rebounds tomorrow; Jewellery remained very weak. It was the fifteenth month of declines:-
Department stores (-18.8% vs -44% in March)
Food, alcoholic drinks & tobacco (-21.4% vs -27.8%);
Other consumer goods, not elsewhere classified (-27.7% vs -28.2%);
Electrical goods & other consumer durable goods, not elsewhere classified (-19.1% vs -21.7%);
Wearing apparel (-62.1% vs -66.1%);
Medicines & cosmetics (-63.7% vs -65.4%);
Jewelry, watches & clocks, and valuable gifts (-78.2% vs -77.2%);
Motor vehicles & parts (-20.8% vs -21.4%);
Fuels (-10.1% vs -9.6%);
Books, newspapers, stationery & gifts (-41.1% vs -49%);
Footwear, allied products & other clothing accessories (-50.8% vs -55.8%);
Optical shops (-41.1% vs -44.1%).Centre for Health Protection
said there were at least 3 new COVID-19 cases today; raising concerns after 10 days of no new local cases.INDEXES
China CSI 300 clsoed +104pts (+2.7%) @ 3,971 Opened higher after Trump didn’t announce any specific measures against China over the imposition of a National Security Law on Hong Kong. Also helped the PMI data out Sunday & today and hopes regarding China spending on its priorities (employment, basic livelihood, companies, food and energy security, stable supply chains and smooth operation of government). It is estimates that China could spend up to US$2tn to help the market recovery. Market worked gradually higher through the day. Sentiment encouraged by possible restructuring/fine turning of the Star Board.
Shanghai Composite Index +63pts (+2.2%) @ 2,915 T/O Rmb307.4 bn
Shenzhen Component Index +356 pts, (3.3%) @ 11,102. T/O Rmb 454.2bnChiNext Index +71 pts (+3.4%) @ 2,158
HSI Pre Market +578pts @ 23,539 vs +174pts ADR’s @ 23,135 with a huge increase in early volumes; mainly short covering (Techtronics +8.6% in the pre market) and some MSCI re-weight late trades. Then the market effectively traded sideways. Today’s initial rally regained all the losses seen in May. But the overhang regarding the details of the National Security Law and possible US sanctions on Hong Kong are likely to limit the upside in the short term. T/O remained higher with HK$34bn of turnover in the first 10 minutes much of it was short covering and and some late trades from Friday’s MSCI re-weight.
AIA (1299.HK) +5.2%
HKEX (388.HK) +4.7%
TENCENT (700.HK) +4.5%
CCB (939.HK) +3.3%
HSBC HOLDINGS (5.HK) +2.1%
ICBC (1398.HK) +2%
PING AN (2318.HK) +1.2%
HSI & HSCEI Constituents rose by up to 8.6%
HSMI & HSSI Constituents on Move:
FIT HON TENG (6088.HK) +23.2%
C-MER EYE (3309.HK) +15.6%, hits new high
TIANNENG POWER (819.HK) +13.3%
HENGTEN NET (136.HK) +12.6%
JS GLOBAL LIFE (1691.HK) +11.3%
TIMES CHINA (1233.HK) +10.9%
GUORUI PPT (2329.HK) +10.7%
WEIMOB INC (2013.HK) +8.5%, hits new high
KINGDEE INT'L (268.HK) +6.6%, hits new high
opened higher as Trump didn’t make any unexpected announcement on Friday and China didn’t announced any retaliation.JAPAN
pre market as positive with capital spending rising and markets rose through the morning but saw some weakness in the PM before bouncing up at the end Closed +0.8%S KOREA
Balance of Trade recovered helped by cheaper imports and PMI was inline; Markets worked higher through the day to Close Kosdaq +3.1%, Kospi +1.8%. GDP growth and inflation data due out pre-market tomorrow.TAIWAN
Opened higher but PMI was a little weak and the after the initial hike the market traded sideways. To Close +1.3% at 11,079, still concerns about increase military tensions with China.
Credit Suisse announced the completion of the transaction to become a majority shareholder in its China securities joint venture, Credit Suisse Founder Securities Limited (CSFS). With the transaction completed, Janice Hu has been appointed Chairwoman of CSFS. Credit Suisse has successfully closed the increase of its shareholding in CSFS from 33.3% to 51%.
Hong Kong General Chamber of Commerce (HKGCC)’s survey on the impact of a National Security Law for Hong Kong, a majority of respondents (61%) believed that the law will either have a positive impact or no impact at all on their businesses over the long-term. Due to the controversy over the law, slightly over half of respondents (54%) said it would inevitably have a negative impact on their business operations in the short-term. HKGCC concluded that the business community in general is positive about the law in the long run.
Gartner Reported Q1 Global smartphones sales -20.2% with demand was dented by economic uncertainty and consumers reduced spending on non-essential items. All top-five smartphone vendors posted sales decline in the first quarter, except for XIAOMI-W (1810.HK) where sales grew 1.4% to 27.817 million units and market share rose to fourth place at 9.3%.
US Republican lawmakers, Mike Gallagher, Jim Banks and Doug LaMalfa, are preparing legislation that will keep Americans from investing in foreign defense enterprises with ties to Chinese military, Reuters reported.
Singapore anticipates to have 80% of its economic activities back on track by June, where retail and catering sectors will be reopened by the end of the month, Trade Minister Chan Chun Sing told CNBC.
President Xi Jinping made a pivotal instruction on the Hainan Free Trade Port construction, stressing the need to put a spotlight on innovation with systems integration and to build a free trade port of high quality, cited by Xinhua News Agency. China will establish a free trade port system highlighting trade and investment liberalization and facilitation by 2025, which will be the high ground for its open economy by 2035, underscored Xi. By mid-21st century, the Hainan Free Trade Port will be completed with international influence and at high standards.
HSBC (5 HK) China officially announced the sales of QDLP fund asset management plans to further enrich the global investment portfolio of qualified investors through a brand-new overseas investment channel. The bank is the first foreign bank successfully commissioned in China to act as the sales agent for this type of investment products to facilitate the mutual market access between domestic and overseas financial markets. Covering multiple types of assets, QDLP can better satisfy investor demands of diffusing risks and diversifying global asset portfolio, said the bank.
Macau GGR -93.2% YoY in May 2020 to MOP1.76 bn, the eighth successive monthly decline; slightly worse than some were expecting. Talking to staff at the casino’s there is an obvious lack of visitors. Many have been put on force holidays and warned about potential job losses. -VE for sentiment.
At Lunchtime TIANNENG POWER (819.HK) issued a POSITIVE profit alert expecting to record an increase of not less than 30% YoY in its profit for the six months ended 30 June 2020 (which was Rmb564bn in the six months ended 30 June 2019).
BG BLUE SKY (6828.HK -2.3%) Trading Halt with effect from 11:36 a.m., pending the release of an announcement relating to inside information.
Xinhua News Agency, in its commentary, depicted the western attack on China by intervening Hong Kong's affairs as "standard moves" of some politicians, who aimed to suppress Chinese development by playing "Hong Kong card". Going against justice and humanity, such moves were groundless and fated to futile, which even highlighted stronger the rationality, necessity and urgency of enacting National Security Law in Hong Kong, the Chinese state newspaper slammed.
XIAOMI-W (1810.HK) had basically cleared inventory of 4G cellphones at end-2019, as Co-founder and Chairman Lei Jun told Chinese reporters. It is now focused on 5G buildout, the firm has debuted five 5G handset models year-to-date. XIAOMI-W is also engaging in 6G planning and will conduct massive research in this regard, he added.
Paul Chan: Tremendous Retail Sales Plunge Expected for Apr; To Unveil PM. In wake of city lockdowns, social distancing globally due to the covid-19 outbreak which impacted the supply chain of Asia, Hong Kong’s GDP shrank 8.9% YoY in real term in 1Q20, being the worst on record, Financial Secretary Paul Chan said at the Panel on Financial Affairs at the Legislative Council. For retail sales, Hong Kong suffered a sharp plunge of 36.9% in 1Q20, logging the steepest single-quarter fall on history, as wide range of industries were dealing a severe blow, especially when tourism was frozen and cross-border logistics were cordoned off immensely.
CAR INC (699.HK) Q1 results ended 31 March 2020. Loss of RMB188 mn from a net profit of RMB390 mn in the same period last year. LPS equaled RMB0.089.
China is going to accelerate legislation of Hong Kong National Security Law, according to the report of Standing Committee of the National People's Congress posted on Xinhua News Agency. Chief Executive Carrie Lam wrote on social media that it is of utmost importance and necessity to enact laws to uphold national security.
US President Donald Trump stated that he is going to postpone G7 summit, originally scheduled next month, until September or later and that Australia, Russia, South Korea and India may be added to the list of invite. May view it as a way of trying to further isolate China.
NetEase second listing in Hong Kong to pursue US$2-3 billion ( HK$15.5-23.25 bn), and kick start the related operation today (1 June). It plans to fix the upper end of offer prices at $126, indicating an of $12,726.97 per board lot of 100 shares. The public offering will be conducted within this week and may list next Thursday (11 June)
China may cut back agricultural imports from the United States if the latter issues a severe response to the national security laws for Hong Kong, Reuters citing insiders. However, these measures would be unlikely to affect trade if they are mild.
The Centre for Health Protection (CHP) of the Department of Health announced that as of 4 pm May 31, it was investigating two additional confirmed cases of coronavirus disease, taking the number of cases to 1,085 in Hong Kong so far (comprising 1,084 confirmed cases and one probable case). The newly reported cases involved a married couple, a 34-year-old female patient and a 56-year-old male patient, who have no outbound travel record.
*CHINESE BROKERS FIRM as it's reported that regulators are studying T+0 and possibly introducing a market-making system to the STAR board at the appropriate time. HAITONG (6837 HK +5.6%) CITIC SEC (6030 HK +3.7%) HTSC (6886 HK +4.5%).
HKEX (388 HK +4.4%) as major IPO’s are announced (Netease and JD.com) and its expected to benefit if the U.S. impose tougher listing rules on Chinese companies.
*HK PROPERTY FIRM on good weekend sales and a lack of local protests although it was reported that the US govt is doing a sale and leaseback of some of its HK property worth circa HK$10b. Stocks are trading around 5 year lows and for funds committed to HK offer attractive valuations and with the major developers supporting China’s imposition of a National Security Law in HK they are expected to be allowed to operate normally. Also helped was the fact the Trump did not outline any specific measures that would directly impact HK at this stage.
SHKP (16 HK +6.5%) sold 290 out of 298 units at the Wetland Seasons Park project at the weekend.
CKA (1113 HK +3%) SWIRE PROP (1972 HK +4%) HENDERSON LAND (12 HK +4.7%) NWD (17 HK +5.4%) KERRY (683 HK +10%).
LINK REIT (823 HK +5.8%) FY net property income -6.9% YoY to HK$8.22b.
*CHINA PROPERTY STRONG as PBOC said financial policies for the property sector will remain stable. Moody's report said the declines in China’s national property sales are slowing as the impact of the coronavirus eases.
EVERGRANDE (3333 HK +6%) bought back 5.6m shares at HK$16.14-HK$16.64 on May 29; the company has bought back HK$1.65b worth of shares since May 4.
SUNAC (1918 HK +8.1%) CIFI (884 HK +9.7%) COUNTRY GARDEN (2007 HK +6.9%) POLY PROP (119 HK +5.2%).
*E-COMMERCE PLATFORMS STRONG Media reported that Tmall's 618 shopping spree pre-sale is being very well received ‘Red Hot’; showing a T/O growth of 74% YoY as at 2pm. The company saying it shows consumers demand has returned as the pandemic eases; I suspect its more about the special offers.
TENCENT (700 HK +4.5%)’s on news its set to invest US$200 million to subscribe for Warner Music's shares before its slated IPO also YEAHKA (9923.HK) which its backed debuted today ands closed slightly higher.
NETEASE is expected to debut in HK on June 11 with the IPO kicking off this week, and JD.COM's listing is expected on June 18.
ALIBABA (9988 HK +4.6%) MEITUAN (3690 HK +2.2%) on hopes of index inclusion in August.
CH LIT (772 HK +4.4%) amid optimism after CEO change.
*PHARMA STRONG SINO BIOPHARM (1177 HK +6.7%) on brokers' upgrades as a recovery play following satisfactory 1Q results. A Covid-19 vaccine candidate being developed in China is expected to be available as soon as the end of this year, according to the state-owned Assets Supervision and Admin Commission.
INNOVENT (1801 HK +10%) CANSINO (6185 HK +4.8%) 3SBIO (1530 HK +5%) GENSCRIPT (1548 HK +5.9%).
*AIRLINES FIRM on hopes that the travel lockdown may end soon. Singapore and China agreed to allow essential travel for business and official purposes from early June, starting with six Chinese provinces or municipalities directly under the central government; the plan is to gradually expand to other Chinese provinces or municipalities. CEA (670 HK +4.6%) CSA (1055 HK +4.7%) CATHAY PAC (293 HK +3.7%).
*US EXPORTERS STRONG having been shorted ahead of Trump’s speech as shorts covered. TECHTRONIC (669 HK +3.5%) but was up +8.6% in pre market; stock is approaching its 12 mth high and I still think lockdowns and staycations will result in more DIY sales which should be positive for the stock.
MAN WAH (1999 HK +4.3%) MINTH (425 HK +3.5%) YUE YUEN (552 HK +2.7%).
*MACAU CASINOS FIRM on recovery hopes, despite May GGR -93.2% YoY to 1.76b patacas. Taking to some of the staff visitors remain obviously low and the casino’s are considering layoffs;
SJM (880 HK +3.8%) as Patsy Ho looks to be in control after Stanley Ho’s death.
MELCO (200 HK +4%) GALAXY (27 HK +4.6%).
CAR INC (699 HK +23%) despite 1Q net loss of 188m yuan vs profit a year earlier. It said BAIC is likely to take a 21.26% stake in the company. BAIC Group has signed a strategic cooperation agreement with one of CAR Inc.'s substantial shareholders, UCAR Inc., to buy not more than 450.79m shares. +VE
ZTE (763 HK +9.2%) jumped on 5G optimism. releases the new Wi-Fi 6 route together with CH MOBILE (941 HK +2.6%) as XIAOMI-W (1810.HK +1%) announces its focusing on 5G and 6G planning
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