HSI -83pts (-0.4%) 23,301 HSCEI -28pts (-0.3%) 9,567 T/O HK$110.88bn (+13.7% DoD)
Europe opened higher but US/China tensions overhang the market.
US futures rising currently +300pts with stocks that benefit from the easing of lockdown looking to open strongly. US/China tensions largely ignored.
US 69 companies due to reporting tonight; including Toll Brothers, Regis Corp, Ralph Lauren, Plantronics and others
(for full list https://finance.yahoo.com/calendar/earnings/ )
Investors wondering what Trump has planned. Sanctions are possible on Tech companies but that is hardly likely to be weighty enough for Trump. Huawei and ZTE showed his penchant for the dramatic, even if he subsequently unwound some of that impact. I would not be surprised by further weaponising of US pension money, not just government money, with more restrictions on where and which companies it can be invested in. He wouldn’t worry about the impact on HK listed companies because he views them as Chinese (As seen in CKH losing out on the Israeli desalination plant) It would further appeal to Trump because as a proportion of the total US pension fund money it is relatively small (circa US$161bn in 2018 with the Total US retirement and pension assets of US$19.tn in Dec 2016). Moreover his hope would be that that money would, if barred from China, come back to the US and boost the domestic market, which could help his re-election campaign. It would certainly go down well with America First fans.
China's response would likely be to make things difficult for US companies but that is only likely to hurt Chinese jobs and reinforce their need to get out of China at a time when China needs jobs. Retrictions on rare earth, again would hurt the Chinese markets are US has already started looking for alternative supplies. It could look at dumping USD holdings but that would undermine its own investments, exports and imports. With the USD Trump really does have the trump card (sorry couldn't resist it).
Just a thought, like everyone else we’ll have to wait until the end of the week.
Northbound RMB 24,668m Sell 11,380m : 13,288m Buy
Southbound HK$ 9,780m Sell 5,033m : 4,747m Buy
Northbound RMB 33,000m Sell 16,810m : 16,191m Buy
Southbound HK$ 7,181m Sell 3,168m : 4,013m Buy
Short Selling HSI Wednesday 22.4% vs 21.2% Tuesday
Top Shorts Country Garden (2007) 61%, Wharf REIC (1997) 57%, HK & China Gas (3) 49%, MTRC (66) 48%, Petrochina (857) 40%, Geely Auto (175) 39%, Hang Lung PPTY (101) 38%, Hang Seng Bank (11) 37%, ICBC (1398) 37%, SHKP (16) 33%, CCB (939) 30%, NWD (17) 30%, Mengniu Diary (2319) 30%, China Overseas (688) 30%, Henderson Land (12) 29%, Hengan (1044) 29%, Techtronic (669) 27%, BoC (HK) (2388) 26%, Power Assets (6) 25%.
CHINA Industrial Profits Apr 27.4% YoY vs -36.7% March (F/Cast was -28%)
HONG KONG Centre for Health Protection said there were no new local COVID-19 cases and 1 imported case.
China CSI 300 -27pts (-0.7%) @ 3,846 Opened slightly lower with investors cautious; US markets closed higher but US/China tensions fraught with many expecting sanctions and still waiting in hope for Beijing to announced further stimulus. NPC ends tomorrow. Industrial Profits were in-line with expectations and continue to show an improvement. Market initially saw a small uptick but failed to regain Tuesday’s closing level and trended lower for most of the morning with a small rally into lunch. News of escalating protests in HK -VE for sentiment and markets trended lower hitting the day low (3,838) around 20 minutes before the close. A small rally into the close.
HSI Pre Market +130pts @ 23,595 vs -190pts ADR’s @ 23,195 A small initially rally lead by HKEX, MOBILE, HSBC and AIA. Chinese Industrial profits were in-line slight +VE. But then market sold off down 350pts in 40minutes as Trump was reported as saying that they are doing something regarding Hong Kong and it will be announced by the end of the week. Support was at 23,163 and then the market bounced around 175ts into lunch. News of more protests over lunch -VE for sentiment and market sold off, down to the day low 23,134. Small bounced before retesting that level which held and the market then worked higher into the close with a 40pt uptick in the closing auction.
TENCENT (700.HK) -1.3%
HSBC (5.HK) +1.2%
AIA (1299.HK) -0.4%
CCB (939.HK) -0.3%
ICBC (1398.HK) +0.2%
HKEX (388.HK) +0.1%
PING AN (2318.HK) -0.1%
HSI & HSCEI Constituents on Move:
CSPC PHARMA (1093.HK) +6.7%
CHINA TELECOM (728.HK) +4.1%
CKI HOLDINGS (1038.HK) +3.3%
POWER ASSETS (6.HK) -3.2%
HENGAN INT'L (1044.HK) -3.1%
HSMI & HSSI Constituents on Move:
VCREDIT (2003.HK) -16.3%
MICROPORT (853.HK) -12.4%
C-MER EYE (3309.HK) +8.5% hits new high
Japan Nikkei opened weakly but has traded higher building on yesterday’s close that was at a three month high. Closed +0.7%
S Korea is mixed the Kospi (closed +0.1%) traded sideways in the green while the Kosdaq (closed -0.6%) trended lower in the red.
Taiwan trading sideways but is holding above 11,000 although upside capped on concerns over China’s intentions. Closed +0.2%
CHINA SOUTH AIR (1055.HK) said it received the “Approval on the Non-Public Issuance of Shares of China Southern Airlines Company Limited issued by the China Securities Regulatory Commission (CSRC). Under which, the non-public issuance of not more than 2.453 billion new A shares by the Company was approved.
CK ASSET (1113.HK). Li Ka-shing and Victor T K Li further acquired shares through a wholly-owned subsidiary of Li Ka Shing (Global) Foundation, they acquired a total of 4.46 million shares in CKA at the average price of HK$46.8140, HK$43.1890, HK$41.4146 and HK$42.5361 per share on 21 May, 22 May, 25 May and 26 May 2020 respectively. As a result, the deemed interests of Li Ka-shing and Victor T K Li in CKA increased from 34.92% to 35.04% and from 34.99% to 35.11%.
TVB (511.HK) had gone through quite a number of plights during 2H19 despite a normal advertising business environment in 1H19, said CEO Mark Lee Po On after the AGM. However, he was unsurprised by a sharp year-on-year advertising volumeslide for 1H20, given the COVID-19 impact on various industries. Separately, Lee projected three times higher "big big shop" sales this year on an annual basis. Regarding its investment in SMI Holdings' bonds was an exceptional cas. Always conservative, however, the broadcaster did hope to cushion interest expenses with interest income incurred by bond investment back in 2017. Though in hindsight, Lee admitted this was a wrong decision.
DYNAM JAPAN (6889.HK) result FY ended 31 March 2020. The net profit amounted to JPY12.748 billion, +1.2% YoY and EPS was JPY16.6. A final dividend of JPY3 was declared.
The Shanghai Stock Exchange was weighing up its first overhaul of the benchmark index over three decades to better reflect China's high-tech economy, Bloomberg citing sources. Once completed, the overhaul would boost weightings for technology and new economy stocks while lowering those for financial services and energy players. The SSE was also considering whether to add firms listed on the tech-heavy STAR Market to the index, and establish a separate gauge for the STAR board, a source said.
Chinese Foreign Ministry Spokesperson Zhao Lijian said, with respect to the report that the US is posted top respond vigorously by this week over China’s enactment of a national security law for HKSAR, that it is part of China, and hence safeguarding the national security of the place has always been within the sovereignty of the Chinese government, Huanqiu.com reported. It is an internal affair of China free from any external inferences, Zhao said, stressing China will launch retaliation when necessary if external forces meddle with Hong Kong's affairs.
Centa-Salesman Index (CSI) last stood at 57.90, -10.77 pts from 68.67 in the previous week. The front-line agent sentiment was fazed briefly by the flare-ups of social movement in Hong Kong, causing the CSI uptrend to be constrained and snapped after seven weeks. But they did not observe any signal of housing price downtrend as he assumed the index to tread around 60 in coming few weeks if it maintains the critical point of 50.
SHK PPT (16.HK)'s chairman and managing director Raymond Kwok cited the problems that Hong Kong people may face in property purchases in Greater Bay Area, for example the cross-border capital flow between Guangdong and Hong Kong and varying mortgage costs. Kwok suggested to mildly loosen the financial and forex restrictions on Hong Kong people in buying houses in Greater Bay Area. One one hand, China can open "green channel" for remittance of home purchases in the area, freeing Hong Kong residents from the maximum $80,000/ day remittance cap in mainland China. One the other hand, more convenience can be offered to Hong Kong residents in applying housing mortgages in China with options for settlement in HKD and RMB.
WING TAI PPT (369.HK) late afternoon unveiled the 5th price list of "OMA by the Sea" today (27 May), with 88 more units to be launched on Sunday (31 May). Based on the maximum discount, the entry price of this log would start from around $4.39 million. The 5th price list covers a variety of flats measuring 338 to 886 sq.ft.
Bloomberg reported that Funds were flowing into Hong Kong's equities from Mainland at an unprecedented pace, providing support to the market in the heart of China-US tensions. Mainland traders' top-three targets were ICBC (1398.HK), PA GOODDOCTOR (1833.HK) & CCB (00939.HK).
HK EX (388) CEO said Global IPO markets were increasingly indicative of the new economy, where loads of fair Chinese and US firms were looking for funds, in a conference call. As Hong Kong had been advocating liberalization, Li hoped the strategy or business decisions made by companies will be untouched by political factors. Some US-listed China-concept stocks may stage a comeback to Hong Kong. Li would welcome these players provided that they were qualified for listing here, believing their existing or future challenges could be resolved soon. He also said the deal with MSCI to launch a series of MSCI Asia and Emerging Markets Futures and options in the next decade was an important step forward for the Stock Exchange's global connection and internationalization strategy. Additionally, there will be a more dazzling array of products in Hong Kong's capital market, offering global investors an increased abundance of investment and risk management tools. SGX shares closed -12.3% on the news it has lost the MSCI relationship.
At lunch CSPC PHARMA (1093.HK) Q1 result ended March 2020. Total revenue +11.5% YoY to RMB6.125 billion. Net profit RMB1.159 billion, +21.8% YoY. EPS was RMB18.59 cents. No dividend was declared. The group said the nationwide implementation of closed-off management amid the novel coronavirus outbreak has affected both the outpatient visits and hospitalization rates, and hindered marketing activities and drug distribution. As a result, sales of the Group’s finished drug products have been affected to various degrees. In the three years ahead, the Group is expected to launch more than 50 new products, over 15 of which will be key products with a market potential exceeding RMB1 billion each, providing strong support for the high quality growth of the Group in the future. It announced the Board approved a preliminary proposal for the possible issue of RMB Shares or Chinese Depositary Receipts and listing on the Sci-Tech Board. The Proposed Domestic Issue shall be conditional upon and subject to market conditions, the approval of the Shareholders at the general meeting of the Company and the necessary Regulatory Approval(s).
National Security Law EU diplomat, Josep Borrell said that China’s efforts to tighten its grip on Hong Kong pose a threat to the rules- based international order, also weighted on investors' confidence.
PBOC Launches RMB120B Reverse Repos today to hedge against government bond issue and safeguard liquidity in the banking system.
NDC The four major property developers listed in Hong Kong have declared their stances in support of the national security law to be applied to HK tomorrow; one after another. (CKH, Henderson Land, SHKP and NWD)
TIANNENG POWER (819 HK) Halted trading at 10.59am the stock was -7.3% with 18.73m shares traded, after Short-seller CloudyThunder Research accused it of severe financial fraud with almost zero stock value. Saying TIANNENG POWER overstated its profits by severely downplaying rebates to distributors. The firm understated around RMB600-700 million (around 60%) of accrued rebates liabilities to distributors last year, with a similar distributor rebate system to a Ponzi scheme. Its rebate system could collapse when business started to shrink, CloudyThunder opined.
Press reported of growing protests in various areas of Hong Kong and a large police presence; reporting continued through the day.
LI & FUNG (00494.HK) privatization proposal had been approved earlier at the Court Meeting and the SGM, the company expected the listing of the Shares on the Stock Exchange will be withdrawn with effect from 4:00 p.m. today (27 May).
*PETROCHEMS FIRM as oil price rose WTI+3.4% BRENT+2.2% on signs that demand for physical crude continues to recover as lockdown easing continues. PLUS US output will reach a low point of about 10.7m barrels a day in June, the lowest in two years. CNOOC (883 HK +1.2%) CH OILFIELD (2883 HK +1%) SINOPEC (386 HK +0.3%).
*CHINA BANKS FLAT as PBOC injected 10b yuan yesterday through 7-day reverse bond repurchase agreements, breaking a near two-month's halt and launched Revers Repos’s today. PBOC Govenor Yi Gang said China will strengthen its economic policy and continue efforts to lower interest rates on loans, though banks may face pressure on disposing of bad loans. The central bank kept the borrowing cost on seven-day reverse repos unchanged at 2.2%. ICBC (1398 HK +0.2%), CMB (3968 HK +0.2%), BOC (3988 HK unch), ABC (1288 HK -0.3%).
*FINANCIALS/BROKERAGES FIRM as HKEX (388 HK +0.14%) signed a license deal with MSCI to offer initially 37 futures and options contracts based on MSCI equity indexes in Asia and emerging markets. HAITONG (6837 HK +1%) CITIC SEC (6030 HK +1.6%) HTSC (6886 HK +1.7%). SGX was -12.3%.
*E-COMMERCE/INTERNET WEAK on rising tension between China and the US. TENCENT (700 HK -1.3%) to invest 500b yuan over the next five years in technology infrastructure, including cloud computing, artificial intelligence and cybersecurity.
KINGSOFT (3888 HK -7.4%) reported after market Tuesday 1Q net profit +32% YoY to 6.26m. Its online games business in the period increased 30% YoY to 781m yuan, revenue from office software business +36% YoY to 391m yuan. ALI HEALTH (241 HK -5.2%) ahead of earnings.
*TECH & COMPONENTS WEAK on fears the US may impose more sanctions on Chinese tech companies given rising trade tensions. TRULY INTL (732 HK -2.5%) after market Tuesday said 1Q net profit -6.4% YoY to HK$95m, no quarterly dividend was declared. FIT HONG TENG (6088 HK -3.4%)BYDE (285 HK -2.4%) ZTE (763 HK -1.4%) Q TECH (1478 HK -1.5%) .
*HK PROPERTY FIRM as developers' valuations remain attractive, trading around 5 year lows.
SHKP (16 HK +0.2%) released 155 flats in the fifth price list at Wetland Seasons Park Phase 2 in Tin Shui Wai, at an average price of HK$12,783 psf after discounts, about 12% higher than the first price list.
The overall Hong Kong Interbank Offered Rate saw a pullback on Tuesday. The one- month Hibor, which is linked to the mortgage rate, dropped to 0.96369%.
HENDERSON LAND (12 HK +0.4%) CKA (1113 HK +0.12%) SINO LAND (83 HK +0.11%).
*PHARMA/MEDICAL MED DEVICE MAKERS WEAK after recent outperformance. MICROPOT (853 HK -12%), AK MEDICAL (1789 HK -6%) VENUE MEDTECH (2500 HK -4%).
PHARM names weak except CSPC (1093 HK +7.3%), at lunch reported 1Q net income +22% YoY at 1.16b yuan, beating estimates
SINO BIOPHARM (1177 HK -0.2%) and AKESO (9926 HK -4.2%) yesterday announced to jointly developed and commercialized the anti-PD-1 monoclonal antibody drug for relapsed or refractory classic Hodgkin lymphoma treatment, which has already received State Admin approval.
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