May 21 HSI -119pts T/O +22% as NPC and CPPCC start

HSI -119pts (-0.5%) 24,280 HSCEI -48pts (-0.5%) 9,850 T/O HK$124.26bn (+22.2% DoD) Europe opened lower on Eurozone manufacturing and services PMI whilst weak showed activity contracted less dramatically. A number of minor markets closed for Ascension Day

US futures currently indicating lower Dow -127pts S&P and NDX also lower.

US 80 companies reporting today (for full list https://finance.yahoo.com/calendar/earnings/ )

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Shanghai

Northbound RMB 24,392m Sell 11,116m : 13,274m Buy

Southbound HK$ 11,168m Sell 4,996m : 6,171m Buy

Shenzhen

Northbound RMB 36,894m Sell 18,461m : 18,434m Buy

Southbound HK$ 9,982m Sell 5,523m : 4,459m Buy

Short Selling HSI Thursday 20.5% vs 20.1% Wednesday

Top Shorts Wharf REIC (1997) 45%, SHKP (16) 42%, Hang Seng Bank (11) 38%, Mengniu Dairy (2319) 35%, Want Want (151) 33%, Galaxy Ent (27) 32%, BoC HK (2388) 32%, CLP (2) 30%, NWD (17) 30%, Techtronic (669) 29%, ICBC (1398) 29%, Hengan (1044) 27%, CCB (939) 27%, BoC (3988) 27%, MTRC (66) 25%.

DATA

CHINA None

HONG KONG After Market

Inflation Rate Apr +1.9% vs +2.3% Mar (F/cast was +1.3%)

Netting out the effects of all Government's one-off relief measures, the year-on-year rate of increase in the Composite (ie the underlying inflation rate) in April 2020 was 2.3%, smaller than that in March 2020 (2.6%), mainly due to the smaller increases in private housing rentals and the decreases in the fuel cost variation charge for towngas. Looking ahead, inflationary pressure is likely to ease further in the near term, said a Government spokesman. Centre for Health Protection said there were 8 new imported COVID-19 cases today.

RESULTS This Week: Thursday Parkson Retail (3368), Alibaba (9988).

INDEXES

China CSI 300 -21pts (-0.54%) @ 3,914 China's opened slightly higher but with caution ahead of the NPC/CPPCC meetings with concerns that Beijing’s stimulus package may disappoint. Tension with US and Taiwan raised after US Sec of State referring to Taiwan's leader Tsai Ing-wen as President (although she is) and congratulating her on her second term. Beijing vowed to take countermeasures. Pompeo then called the Chinese government "brutal and authoritarian," renewed attacks on its pandemic handling, and said the US is reviewing Hong Kong's status. Investors aware that Beijing has limited options for retaliation that do not harm itself more than the US. With Trump weaponising US Federal Pension money it will be aware that if HK losses its special status that could hurt trade and possibly investment flows just when China needs them most.

HK Pre Market opened +128pts @ 24,528 vs +59pts ADRs as recent shorts covered but then sold down to the morning low (24,208) round 10:10am before climbing back to yesterday’s closing level and trading sideways into lunch. PM saw the market drift lower with caution seen in the increased T/O ahead of the NPC and CPPCC meetings. Dotcoms saw weakness along with the Tech equipment makers.

Concerns are that China’s stimulus may disappoint and I think be more focused on job creation and domestic consumption. Comments from US Sec State Pompeo over local protests and HK’s special status not helping plus rumours circulating in the PM about the HK Administration trying to push Article 23 forward usually mentioned around the China national meetings by pro Beijinger’s but this time with more reason if they don’t get if into the Legco calendar it is unlikely to be considered this session. That means unlikely to be considered before the next Legco elections which are going to be tightly contested with the potential the pro Beijing camp loses its majority. I don’t think many see Article 23 as a vote winner!

Active Heavyweights
HKEX (388.HK) +2%
TENCENT (700.HK) -1.5%
ICBC (1398.HK) -0.8%
PING AN (2318.HK) -0.2%
AIA (1299.HK) +0.1%
CCB (939.HK) unchanged

HSI & HSCEI Constituents on Move:
SHENZHOU INTL (2313.HK) -3.7%
CHINA MOBILE (00941.HK) + 3.2%

HSMI & HSSI Constituents on Move:

COSMOPOL INT'L (120.HK) +11.4%
VIVA BIOTECH (1873.HK) +7.5%, hits new high

REGIONAL MARKETS

Japan opened higher but drifted lower and traded sideways around flat Closed -0.21%

S Korea opened higher and traded sideways but in the green Kosdaq +1%, Kospi +0.4%

Taiwan opened higher and worked higher to test 11,000 in early trading but failed to break out, it consolidated lower but worked higher and retested late afternoon to Closed +0.9% at 11,0008

AFTER MARKET

Li Ka-shing and Victor Li through a wholly-owned subsidiary of Li Ka Shing (Global) Foundation acquired a total of 8.089 million shares in CK ASSET (1113.HK) on 15 May, 18 May, 19 May and 20 May 2020. As a result, the deemed interests of Li Ka-shing and Victor Li in CK Asset respectively increased from 34.70% to 34.92% and from 34.77% to 34.99%.
Robin Li, a member of the CPPCC National Committee as well as Baidu's Chairman, expressed deep concern over the US government's incessantly tighter control on China-concept companies. In this regard, Baidu is constantly exploring and discussing on what can be done, for instance, a secondary listing in Hong Kong or other places.

TONGCHENG-ELONG (00780.HK) Q1 results ended March 2020. Loss was RMB55.633 million, against RMB97.322 million in profit a year ago. Adjusted profit plunged 82.6% yearly to RMB78.075 million.

Wheelock Properties named its Lam Tin residential project as "KOKO HILLS", which will be launched in three phases, said Managing Director Ricky Wong Kwong-yiu at a press conference.The developer is applying for the pre-sale consent of "KOKO HILLS" phase one, anticipating to debut the project as early as next month.

HYSAN DEV (00014.HK) has rolled out its first live-work space project Bizhouse. The units carry monthly rents in a range of $19,000-40,000.

KINTOR PHARMA-B (9939.HK), whose shares will be listed tomorrow, opened at $24 in grey market, up 19% against the listing price of $20.15, PhillipMart data showed. The stock last posted at $21.3, up 5.7%.

EVERGRANDE (3333.HK) Chairman Hui Ka Yan, a standing committee member of CPP CC, said the group owns 1,023 projects in total, with more than 780,000 employees getting back to work.

Centa Valuation Index (Major Banks) (CVI) last printed at 70.31 this week, up 3.52 pts weekly,

The index surpassed 70, up 30.86 pts in three weeks with a clear upturn. This reflected that second-hand deals had remained vibrant with more upbeat mortgage stance among banks, which foretold a resurgence of home prices after slide

MARKET HOURS

CPPCC Chairman Wang Yang said at the Two Meetings today (21 May) in Beijing that the organization will hold on tight to ensure the smooth and long-term successful practice of the "one country, two systems" policy in the coming year, strengthen the political accountability and mission responsibility of officials in Hong Kong and Macau, and support adamantly the enhancement of systems and mechanisms related to the Constitution and Basic Law implemented in the Special Administrative Regions.

Hisense announced that it has entered into a strategic cooperative agreement with AliExpress, the B2C e-commerce platform of BABA-SW (9988.HK) , to expand their overseas online retailing markets through cooperation. Currently, Hisense and AliExpress have struck partnership in Russia, France and Spain.

SMIC (981.HK) clarification for a minute of its conversation with Taikang circulated on the internet, as well as relevant inaccurate reports. The chipmaker distanced itself from any one-on-one conversation with Taikang or relevant hosts as rumored online, for which it reserves the right to seek legal accountability.

China plans to pour over US$1 trillion into all infrastructure across wireless network to artificial intelligence as she is speeding up her efforts to overtake the US' leadership in key technologies, Bloomberg reported. Under the scheme backed by Chinese President Xi Jinping, Beijing will make around US$1.4-trillion investment by 2025.

EMPEROR INT'L (00163.HK)'s "Central 8" unveiled the first price list of 30 units, covering open studios with furniture and other types of flats measuring 181-311 sq.ft.each. The entry price was 5.2 million. Based on the maximum discount of 6%, the prices would be $4.89 million, with an average discounted price per sq.ft. of $29,820.MACAU under the tightened quarantine measures for arrivals in Macao in late March 2020, number of visitor arrivals in April tumbled by 99.7% year-on-year to 11,041; the figure also represented a month-to-month decline of 94.8%.

XIAOMI-W (1810.HK) Founder Lei Jun tabled four proposals at the National People's Congress (NPC), touching issues of satellite internet, disaster warning, perfection of financing services for small and micro enterprises, and the introduction of international high-level talents. One of the proposals is to integrate "satellite internet" industry into the 14th Five-year Plan of the PRC, making the commercial aerospace enterprises as the integral part national aerospace industry.

China Banking and Insurance Regulatory Commission (CBIRC) is launching a probe into BANK OF CHINA (3988.HK)'s "Crude Oil Bao" saga. CBIRC has recently sent officers to the bank and started a special investigation into the whole story, including product design, sales management, risk control, contingency mechanism, etc. of the product, as Chinese media learnt from regulators.

CALC (1848.HK)announced the official signing of a strategic cooperation agreement with Moutai Leasing and CCB (939.HK). The three parties will establish a close-knit cooperative partnership for the long term in the aviation industry chain, facilitating development of the aviation finance industry in China.

Baidu Chairman Robin Li submitted four proposals for the "Two Meetings" this year, involving new infrastructure, smart transport, continuing education support, and personal information protection, reported Shanghai Securities News. Particularly, Li suggested the construction of new A.I. infrastructure and drew up a blueprint for smart economy buildout. He believed China should speed up the establishment of world-leading A.I. infrastructure, while taking the lead in promoting open-source and in-depth learning platforms across various sectors.

TikTok-parent ByteDance’s valuation has risen to over US$100 billion in latest round of private equity transfer, people familiar with the matter were quoted as saying by Bloomberg.

PRE MARKET

Wuhan City published a notice regarding prohibition of consuming, hunting and trading wild animals for a term of five years. The municipal government said it will beef up the investigation in illegal wildlife-related activities at trading markets, restaurants, hotels, e-commerce platforms, food processing factories and so on.

SANDS CHINA LTD (1928.HK) said the company had thought about whether it should adjust the performance bonus and salary of its staff since the coronavirus outbreak, confessing every decision was hard to make, reported Macao Daily News. Yet his final decision was to hike wages by 2%-4.7% this year, with 99% employees to benefit from 1 March. was uninterrupted despite a quiet market, reported. The group was renovating The Londoner project, with a total investment of MOP17.5 bn for 2020-21 Regarding a YoY GGR slide in recent months, it compared SANDS CHINA LTD's operation to long-distance running, saying every participant (including the group) ought to be responsible for contributing their strength to Macau's continuous development..

WHEELOCK (20.HK) said that it had received a proposed privatization from the major shareholder Peter Woo. Relevant resolution will be made on 11-16 June, while the expected last day of trading in shares is scheduled on 18 June. The withdrawal of the listing of the shares will be effective on 27 July The market value in existing state attributable to the group aggregated $4.647 billion, according to its property valuation report.

WUXI BIO (2269.HK) Biologics Holdings, one of the controlling shareholders, entered into a block trade agreement with the placing agent to place 60 million shares (representing 4.61% of the issued share capital of the Company) held by Biologics Holdings at a price of HK$127.18 each, involving HK$7.63 billion.The placing price represented a 4.9% discount to WUXI BIO's closing price on Wednesday (20th).

CHINA TELCOS For 4M20, China's total revenue from telecom sector of RMB456.2 billion, +2.3% YoY, with the growth rate accelerating by 1.6 ppts yearly, according to the MIIT. At end-April, the total number of 4G users reached 1.273 billion, representing 80% of the total number of mobile users, sliding 0.2 ppts from the end-March. 4G users shifted to 5G more quickly, MIIT disclosed.

COMMENT

*PHARM/BIO WEAK as WUXI BIO's (2269 HK -0.5%) parent sold 60m existing shares at HK$127.18/shr, a 4.9% discount to Wednesday’s closing price. Vaccine names plunged across the board on profit-taking and amid speculations on vaccine development. CANSINO (6185 HK -13%) after surging 16% intraday, INNOVENT BIO (1801 HK -9.1%) 3SBIO (1530 HK -5.8%) SINO BIO (1177 HK -3%).
*TECH & COMPONENTS WEAK despite XIAOMI's (1810 HK -0.8%) results which saw the stock open higher as its profit beat estimates, posted 1Q adjusted net profit +10.6% YoY to 2.3b yuan on a non-IFRS basis. It got half its revenue from outside its home market for the first time and global shipments grew by 6.1% in the past quarter even as total worldwide volume shrank 11.7%, according to IDC. Sector weak as uncertainties of China-US trade tensions hurt investors' confidence, especially after the US recently added restrictions on Huawei. SMIC (981 HK -7%) AAC (2018 HK -3.5%) TONGDA (396 HK -4%).
*E-COMMERCE PLATFORMS WEAK saw selling on tightening liquidity given a number of major upcoming IPO launches in the sector. NetEase, Chinese second largest game company, is planning a secondary listing in Hong Kong as soon as June to raise US$1b (HK$7.8b) to US$2b. JD.com is also looking to kick off book building for its US$3b HK IPO on June 5 or June 8, the report said. TENCENT's (700 HK -1.5%) backed YEAHKA's (9923 HK) HK IPO is reported to be 130 times oversubscribed on the retail side, according to local news. ALIBABA (9988 HK -2.3%) after recent rally on index-inclusion bets.
*TELCOS MIXED after April's data. CH MOBILE (941 HK +2.8%) reported new mobile customers in April fell nearly 90% MoM to 432,000. 5G subscriber totals of CM reached 43.75m. It entered an agreement with state-owned cable TV operator China Broadcasting Network for 5G network construction and sharing. CH TEL (728 HK +0.4%) saw a net increase of 1.97m mobile subscribers in April, and said as at the end of April, its 5G subscriber totals is 21.70m. CH UNICOM (762 HK -1%) reported 1.81m new 4G subscribers in April, did not reveal a 5G figure.
*HK PROPERTY WEAK on home prices concerns, after VANKE PROP (HK) launched the first batch of units at The Campton in Cheung Sha Wan, offering 94 flats at an average price of HK$16,411 psf foot after discounts, the lowest in Kowloon in nearly four years. SHKP (16 HK -0.9%) HENDERSON LD (12 HK -1.3%) CKA (1113 HK -1.4%).
*AUTOS WEAK as market awaits stimulus policies from the policy meeting. GREAT WALL AUTO (2333 HK +1%) vice chairman commented that industrywide vehicle sales in China may rebound in the second half and reach the level they were a year earlier. He urged government to offer tax rebates, subsidies on compact electric vehicles. DONGFENG (489 HK -2%) GEELY (175 HK -2%) GAC (2238 HK -1.1%) BYD (1211 HK -1.6%).

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Andrew

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