May 26 HSI +454pts T/O -18%, Shorts 21% of T/O


HSI +454pts (+2%) 23,406  HSCEI +155pts (+1.6%) 9,621 T/O HK$97.47bn (-17.55% DoD) 

Warrants were 6.94% of the market turnover.

Europe opened higher with investors reacting to +VE news from Novavax about it’s vaccine starting human trials.

US futures opened in Asian time +200pts on the Novavax vaccine news but are now +550pts

US 53 companies due to reporting tonight (for full list https://finance.yahoo.com/calendar/earnings/ )


CONNECT 

Shanghai

Northbound RMB 21,308m Sell 10,157m : 11,151m Buy

Southbound HK$ 8,279m Sell 3,422m : 4,857m Buy

Shenzhen

Northbound RMB 33,169m Sell 15,138m : 18,031m Buy

Southbound HK$ 8,364m Sell 3,051m : 5,313m Buy


Short Selling HSI Tuesday 21.2% vs 24.9% Monday 

Top Shorts Wharf REIC (1997) 50%, CLP (2) 41%, MTRC (66) 41%, ICBC (1398) 40%, Want Want (151) 38%, Hang Seng Bank (11) 36%, Geely Auto (175) 34%, CCB (939) 31%, Techtronic (669) 29%, SHKP (16) 29%, Hengan (1044) 27%, NWD (17) 26%, Tencent (700) 26%, HK & China Gas (3) 25%, Sunny Optical (2382) 25%, Hang Lung PPTY (101) 25%, BoC (3988) 25%,


DATA 

CHINA None today but industrial Profits due tomorrow (March was -36.7% YoY and F/Cast is -28%)

HONG KONG Centre for Health Protection said there were no new COVID-19 cases today.


INDEXES      

China CSI 300 +5pts (+0.1%) @ 3,829  Opened higher along with the rest of Asia following the +VE news from the US on a vaccine about to start human trials.  The markets then worked steadily higher through the day to close just off the day high.  Investors still hopeful of China announcing more stimulus measures.  PBoC outlined that it would focus on more measures to support credit provision to the real economy.  China asked the US to relent on denying 33 Chinese companies access to US technology; sanctions were put in place by the US in response to the Chinese crackdown in Xinjiang.  Tensions between US and China show no signs of easing. 

HSI Pre Market -296pts @ 23,198 no ADR’s US markets were shut but Dow futures had opened and rallied to +250pts on news of a possible covid-19 vaccine moving to human trials.  Market saw some initial short covering as Monday’s shorts had been around 25% of the market turnover.  Tencent +VE on news of acquiring a majority stake in Japanese game maker Marvelous. Local developers also saw good interest; with Wharf strong on news it had sold stakes in Amazon and Facebook. Markets traded sideways for the morning with resistance at 23,400 being tested and number of times.  PM saw markets test the 23,400 resistance and manage to break out but without conviction.  The initial break out after lunch seems to have been European short covering but it then worked higher but hit resistance approaching 23,500 and then drifted lower for the rest of the afternoon and ticked lower in the closing auction.  News of Stanley Ho’s death prompted a rally in the Macau names.
China continues to try and assure investors that the new National Security Law being imposed on HK will not affect the freedoms that HK currently enjoys.  But many companies are worried that the ability for China’s security apparatus to operate freely in Hong Kong will mean that servers and confidential company information that they currently do not store in China will now have to be moved out of Hong Kong.  Unfortunately for China past assurances have been broken which does not give investors confidence that this time they will be kept.

Active Heavyweights
HSBC (5.HK) +3.4%
AIA (1299.HK) +2.8%
TENCENT (700.HK) +2.1%
HKEX (388.HK) -0.9%
PING AN (2318.HK) +0.9%
CCB (939.HK) +0.3%
ICBC (1398.HK) +0.2%

HSI & HSCEI Constituents on Move:
BYD COMPANY (1211.HK) +5.7%
HENDERSON LAND (12.HK) +4.8%
MENGNIU DAIRY (2319.HK) +4.5%
CKI HOLDINGS (1038.HK) +4.2%
SINO BIOPHARM (1177.HK) +4%
SANDS CHINA LTD (1928.HK) + 4%
SHK PPT (16.HK) +3.9%
CITIC (267.HK) +3.9%
GALAXY ENT (27.HK) +3.8%
HANG SENG BANK (11.HK) +3.6%
SHENZHOU INTL (2313.HK) +3.5%
CHINA RES LAND (1109.HK) +3.4%
COUNTRY GARDEN (2007.HK) +3.2%
WHARF REIC (1997.HK) +3.2%
NEW WORLD DEV (00017.HK) +3%

HSMI & HSSI Constituents on Move:
SHUN TAK HOLD (242.HK) +21.9%
NEW HIGHER EDU (2001.HK) +3.9%, hits new high
WEIMOB INC (2013.HK) +3%, hits new high

REGIONAL MARKETS 

Japan opened higher and worked higher as the state of emergency is lifted and new stimulus announced. Plus +VE news from US on a vaccine moving to human trials Closed +2.6%

S Korea opened higher and worked higher through the day Closed Kosdaq +1.3% and Kospi +1.8%

Taiwan opened higher and quickly broke through 11,000 resistance but failed to hold above on late selling Closed +1.2% @ 10,997


AFTER MARKET 
KINGSOFT(3888.HK) Q1 ended March 2020 it swung into profit of RMB6.257 million vs the loss of RMB67.764 million in the same period of 2019. 
TRULY INT'L (732.HK) Q1 ended March 2020. Net profit amounted to $95.119 million, down 6.4% yearly. EPS equaled 2.9 cents. No dividend was declared.
SMARTONE TELE (315.HK) announced the launch of 5G network services today. The monthly plan, starting from $398, offers 80GB domestic data and 2GB Greater Bay Area data. Clients registered before August are entitled to extra 20GB domestic data each month, upgrades to unlimited data plans and discounts for 5G plans with phones. At this beginning stage, the telecom carrier targets at high-data-usage or data-demanding clients who frequently conduct video conferences or watch videos, CEO Anna Yip disclosed.
XIAOMI-W (1810.HK)'s Redmi today (26th) unveiled its brand-new X-series handsets, namely Redmi 10X, Redmi 10X Pro, and Redmi 10X 4G.   This year, all new Redmi cellphones priced above RMB1,500 would be 5G phones, revealed Lu Weibing, General Manager of Redmi brand.
BESUNYEN (926.HK) revenue of the Group for the six months ending 30 June 2020 is expected to reach RMB500 million to RMB600 million, and it is anticipated that the Group will continue to make profits for the six months ending 30 June 2020 and record a profit attributable to the owners of the Company of RMB5 million to RMB15 million.

MARKET HOURS 

TENCENT (700.HK) will be investing RMB500 billion in further deployment of new infrastructure in the coming five years, as Shanghai Securities News quoted from Dowson Tong, head of TENCENT's Cloud and Smart Industries Group. On another note, TENCENT will gradually build several mega-scale data centers nationwide.

Uber (Hong Kong) General Manager Estyn Chung announced a plan to shift the Asia Pacific headquarter to Hong Kong from Singapore and to build a scientific research and engineering center in Hong Kong, as the company remains upbeat on the city's long-term economic outlook despite all kinds of headwinds.  Along with the beginning of economy revival across the world, the ride hailing service provider has delivered a business turnaround in Hong Kong, where the order volume sprang back to 70% of the level before the outbreak of coronavirus pandemic. Asked if Hong Kong national security laws will erode their investment confidence, Chung disclosed that Uber is keeping its eye out for the situation and underscored that the group has to make sure there are no oversight overhangs before it makes any massive investment.

Ngong Ping 360 announced that Ngong Ping Cable Car will resume its normal Monday to Sunday operation from tomorrow (Wednesday, 27 May). Guests can enjoy the cable car ride between 10 am and 6 pm, while the indoor attractions at Ngong Ping Village will remain closed temporarily. From 27 May to 31 July, Hong Kong residents will be able to purchase half-price round-trip cable car tickets for weekday trips (except public holidays). A limited number of discount tickets will be made available daily, on a first-come-first-served basis.

Country Garden Venture Capital and Poly Capital had teamed up to establish a RMB5-billion fund for the real estate industry chain, contributing RMB1 billion of capital in the first installment as cornerstone investors, reported Chinese media. Many other professional investment institutions had been introduced as cornerstone investors as well.

CATHAY PAC AIR (293.HK)'s business restructuring was hindered by China's civil aviation regulation, who viewed it as an expansion and may ask the carrier to relinquish 20 mainland routes flown by Cathay Dragon. The Cathay Pacific brand is now flying to Beijing and Shanghai only; Reuters reported.

HK Politics and Covid Policy Chief Executive Carrie Lam, said that the Employment Support Scheme received over 48,000 applications from employers and it is hopie the grant of subsidies can be processed in 3-4 weeks.

Also announced to relax the operation ban on karaoke lounges, bathing houses, party rooms and night clubs can be reopened. Plus flight transfer services at Hong Kong International Airport will be resumed moderately from 1 June. Regarding the enactment of National Security Law she Said that untrue remarks made by foreign politicians, accentuating the unwavering decision of the Chinese government is not to be doubted and the enactment does not violate the Basic Law.

GEELY AUTO (175.HK) CEO Gui Sheng Yue said the automaker had no intention to revise its annual auto sales target of 1.41 million units, citing a gradual revival in China's auto market and work resumption across Europe. Equally, the group was set to launch six new models this year.

China Banking and Insurance Regulatory Commission (CBIRC) said China recorded overall stable individual housing loans, consumer loans and credit card loans for the first quarter of 2020, with relatively steady asset quality. Particularly, individual housing loans added around RMB1 tn during the period, with the growth rate easing by 2.4%YoY.China's year-to-date 5G buildout had gained momentum, opined Miao Wei, Minister of Industry and Information Technology. Despite COVID-19 impact between January and March, all companies were beefing up efforts in 5G construction to make up for lost time. China was adding some 10,000 5G base stations per week, revealed Miao. The size of 5G users increased by over 7 million in April, taking the tally to over 36 million.


PRE MARKET 

MEITUAN-W (3690.HK) CFO Chen Shaohui, emphasized the firm's long-term philosophy and priority of business scale-up. Having a far lower food delivery monetization rate than some other global rivals did, however, MEITUAN-W can offer more economical takeaway options riding on its scale and efficiency.  He also said it had no plans to boost its monetization rate in the short run.

AKESO-B (9926.HK) said the National Medical Products Administration of the PRC has accepted the new drug application of Penpulimab, an anti-PD-1 monoclonal antibody (mAb) drug co-developed and commercialized by the Company with SINO BIOPHARM (1177.HK) for the treatment of patients with classical Hodgkin’s lymphoma (cHL) that has relapsed or refractory (r/r) after two or more lines of systemic chemotherapy (r/r cHL)

XIAOMI-W (1810.HK) Founder, Chairman and CEO Lei Jun, on his Weibo, disclosed there will be a significant press conference for Redmi at 2 pm today which will display a series of new products, including Redmi 10X smartphone, AMOLED camera, Redmi X TV series and so on.

I.T. (0999.HK) provided supplementary information for its profit warning. Due to the negative impacts from the social unrest since last year on Hong Kong and Macau, and the impairment provision of goodwill, property, furniture and equipment and right-of-use assets made in the fourth quarter of the financial year ended 29 February 2020, the Group expected net loss attributable to Shareholders to be not less than HK$700 million.



COMMENT
*HK BANKS FIRM
  HSBC (5 HK +3.5%) FT reported the bank may be looking at more drastic restructuring including the possible sale of its US and French businesses as well as a number of it borderline operations.  HANG SENG (11 HK +3.2%) rebound from yesterday's selling due to dividend concerns. STAN CHART (2888 HK +4.5%) on stimulus speculation in Europe.

*MACAU CASINOS STRONG  Around 1:30pm today, it was reported that Stanley Ho has died prompting speculation that there could be changes at SJM (880 HK +7.8%) and some of the other operators; MELCO INTL (200 HK +4.8%) MGM (2282 HK +4.4%) and SHUN TAK (242 HK +22%).

*E-COMMERCE PLATFORMS STRONG after MEITUAN DIANPING (3690 HK +9%), earnings after market Monday beating market expectations.

TENCENT (700 HK +2.4%) on news had acquired a 20% stake in Japanese video games developer Marvelous for 500m yuan.

LIBABA (9998 HK +1.7%) continue to see support amid index inclusion speculation.

KINGSOFT (3888 HK +4.5%) ahead of earnings out after market.

*TECH & COMPONENTS FIRM  Chinese official's comment at the NPC that the development of 5G and new energy sectors is a key area of growth and MITT outlines to growth in 5G base stations.  ZTE (763 HK +2.7%) TRULY (732 HK +4%) BYDE (285 HK +3.2%).

*PHARMA/MEDICAL MIXED. CANSINO BIO (6185 HK -11%) reported its trial of a genetically-engineered coronavirus vaccine candidate on 108 healthy young male and female adults in Wuhan between March 16 - 27, caused an adverse reactions. The vaccine warrants further investigation. INNOVENT (1801 HK +3.8%) CSPC (1093 HK +3%) SINO BIOPHARM(1177 HK +4.2%).

*HK PROPERTY FIRM  a -VE article in the FT’s Lex and news of some deposit forfeitures was off-set by news the Kwok family where buying SHKP (16 HK +3.9%) shares (1m shares for HK$90.87m average price of HK$90.8692 per share on May 22). Some view the Property Developer valuations attractive at close to 5 year lows.

WHARF (4 HK +3.7%) gains from US share disposals; a surplus of ~US$199m from selling Amazon shares and from US$50m Facebook shares.

*CHINA PROPERTY FIRM  investors hope China will announce looser monetary and housing policies. VANKE (2202 HK +2.4%) EVERGRANDE (3333 HK +4.7%) CHINA SUNAC (1918 HK +2.2%) SHIMAO (813 HK +2.9%).

*HK RETAILERS MIXED +VE sentiment as Asian economies gradually re-opening but -VE sentiment from the return of violent protests in HK over the past 2 days Also a Profit Warning update from  I.T. (999 HK -0.9%) ahead of its results on Wednesday. It expects to record a net loss of at least HK$700m. Its headquarter in CWB were attacked by rioters on Sunday during an illegal protest. SASA (178 HK -0.8%) LIFESTYLE (1212 HK +2.9%) CHOW TAI FOOK (1929 HK +3.3%).


I hope you found it useful, feedback and comment welcome.