May 29 HSI -171pts (-0.7%) 22,962 HSCEI +10pts (+0.1%) 9,561 T/O HK$178.93bn (+34.8% DoD on MSCI reweight on the close)


HSI -171pts (-0.7%) 22,962  HSCEI +10pts (+0.1%) 9,561 T/O HK$178.93bn (+34.8% DoD on MSCI reweight on the close)


Europe opened lower and trading sideways waiting to see what Trump says on China

US futures currently flat again waiting for Trump’s press conference.

US 38 companies due to reporting tonight; (for full list https://finance.yahoo.com/calendar/earnings/ )


Good article on the threat to HK’s currency peg

https://www.scmp.com/comment/opinion/article/3016015/how-extradition-bill-crisis-threatens-hong-kongs-currency-peg-us


CONNECT 

Shanghai

Northbound RMB 35,925m Sell 17,422m : 18,503m Buy

Southbound HK$ 6,627m Sell 3,262m : 3,365m Buy

Shenzhen

Northbound RMB 46,642m Sell 21,308m : 25,334m Buy

Southbound HK$ 6,462m Sell 2,712m : 3,750m Buy


Short Selling HSI Friday 19.5% vs 23.9% Thursday 

Top Shorts Geely Auto (175) 58%, China Res Land(1109) 43%, HSBC (5) 36%, Galaxy Ent (27) 34%, WH Group (288) 29%, HK & China Gas (3) 29%, CLP (2) 28%, Sino Land (83) 28%, BoC HK (2388) 28%, Ping An (2318) 27%, Hang Seng Bank (11) 27%, Country Garden (2007) 26%, MTRC (66) 25%.


DATA 

CHINA No data

HONG KONG Centre for Health Protection said there were 13 new imported COVID-19 cases today

The Government announced today (May 29) its financial results for April 2020, the first month of the current financial year. Expenditure was HK$45.5 billion and revenue HK$29.4 billion, resulting in a deficit of HK$16.1 billion. They said the deficit in April was mainly due to the fact that some major types of revenue including salaries and profits taxes are mostly received towards the end of a financial year.

Hong Kong Monetary Authority, published that April’s total deposits with authorised institutions +0.8%.

Among the total, Hong Kong dollar deposits +0.5% and overall foreign currency deposits +1.1%. Renminbi deposits in Hong Kong -1.5% to RMB654.3 bn at the end of April.


INDEXES      

China CSI 300 +11pts (+0.3%) @ 3,857 Opened lower with concerns over US/China relations and concerns over what Trump may say at today's press conference regarding policy to China. Markets worked higher through the morning to the day high 3,972 around 11am but then sold down into lunch, at yesterdays closing price.  PM saw some initial weakness but then the markets worked higher in chopping trading. Sentiment remains fragile, the onshore Yuan weakened to a 9 month low. Investors worried about the fact that the Govt so far is only providing tax cuts and cost savings to help businesses recover.  Whilst it says it is targeting jobs it is not at this stage providing debt financed spending to pump prime the economy.  

HSI Pre Market -351pts @ 22,781 vs -107pts ADR’s @ 23,025 with broad based selling of blue chip Financials and Property. Market then worked higher for the 30 mins to break above 23k and then traded sideways for an hour (hit day high 23,090) before easing lower into lunch (22970).  PM saw the market trade sideways in a range +/- 80pts around 22,960 and a small tick lower in the closing auction.  Sentiment fragile ahead of Trumps press conference and the expectation of more anti government protests over the weekend.
Increased turnover due mainly to the MSCI reweighs on the close.  

Active Heavyweights
AIA (1299.HK) -2.9%
CCB (939.HK) -1.5%
ICBC (1398.HK) -0.6%
TENCENT (700.HK) +0.5%
HKEX (388.HK) +0.2%
PING AN (2318.HK) unchanged

HSI & HSCEI Constituents on Move:
GEELY AUTO (175.HK) -9.6%
SINO BIOPHARM (1177.HK) +7.4%
CHINA RES GAS (1193.HK +5.8%
WH GROUP (288.HK) +4.2%
WHARF REIC (1997.HK) +3.7%
CHINA GAS HOLD (384.HK) +3.6%
HSBC HOLDINGS (5.HK) -3.1%

HSMI & HSSI Constituents on Move:
FIRST CAP GP (1269.HK) -14%
JINCHUAN INTL (2362.HK) +12%
REGAL INT'L (78.HK) +10.9%
MOBVISTA (1860.HK) +10.6%, hits new high
LANDING INTL (582.HK) -10.4%
VPOWER GROUP (1608.HK) +9.7%, hits new high
MEIDONG AUTO (1268.HK) +9.1%, hits new high
CHINA KEPEI (1890.HK) +6.4%, hits new high

REGIONAL MARKETS 

Japan opened lower and has traded sideways; it had mixed economic data out today; unemployment better than f/cast, Tokyo CPI better but Retail Sales and Industrial Production worse. Consumer Confidence, Housing and Construction slight better than forecast but still weak. Tested breaking above yesterday’s close in the PM but failed closed -0.2%

S Korea opened lower and has traded sideways around flat for most of the day but rallied into the close Kospi closed +0.05% and Kosdaq +0.7%

Taiwan opened lower and has traded sideways/slightly higher and just crept into the green mid session but then eased back, a small rally into the close finished -0.2% at 10, 942. 11,000 remains a resistance.


AFTER MARKET 
GLOBAL BIO-CHEM (809.HK) issued a profit warning, expecting that the Group will recorded significant decreases in revenue by circa 79.9% and gross profit by circa 53.7% for the three months ended 31 March 2020 as compared to the corresponding period in 2019. -VE
YANZHOU COAL (1171.HK) said that the Company implemented 14 Share Repurchases in May 2020 so far. The aggregate number of the H shares repurchased is 52.016 mn, representing approx 1.06% of the total issued share capital of the Company as at the Repurchase Mandate Date. The aggregate consideration for the Share Repurchases is HK$310 million.
YEAHKA (9923.HK) to debut Monday (1 June), opened at $17.46 in gray, +4.9% vs listing price of $16.64, PhillipMart data showed. The stock last posted at $17.14, +3% on volume of 1.76 m shares.
The Lands Department site at Sha Tin Town Lot No. 613 at the junction of Tsung Tau Ha Road and Kwei Tei Street,  New Territories, listed in the 2020-21 Land Sale Programme will be disposed of by public tender. The tender invitation for the lot will commence on June 5 and close on July 3.  It has a site area of about 9,178 square metres and the permissible uses are industrial. 
The Insurance Authority today (29 May 2020) released provisional statistics of the Hong Kong insurance industry for Q1 2020, show a growth of total gross premiums by 10.9% YoY to $165 bn.
New office premiums in respect of policies issued to Mainland visitors were $5.4 billion (-57.7%), constituting 15.5% of total individual business. Restrictions imposed on cross-boundary passenger traffic to contain the COVID-19 outbreak caused premiums to contract by 27% on a quarterly basis. Critical illness 48%, whole life 37% and medical products 4% of new policies taken out by Mainland visitors respectively. About 98% of policies were settled at regular intervals, i.e. non-single premiums.
Centa-City Leading Index (CCL) last printed at 178.54, a 14-week high, +0.56% weekly. 
CCL Mass last posted at 181.92, a 26-week high, +0.65% weekly. 
CCL (small-and-medium units) last stood at 179.46, a 23-week high, +0.48% weekly. 
CCL (large units) was last at 172.79, a 7-week high, +0.52% weekly.
They  expect a continual CCL upswing after housing prices had ticked up post-Labor-Day holiday. Prices of Hong Kong Island and Kowloon outshone, registering the sharpest surge and shoring up the overall prices. 

MARKET HOURS 

XIAOMI China Banking and Insurance Regulatory Commission (CBIRC) in Chongqing approved the application of business establishment of Chongqing Xiaomi Consumer Finance Co., Ltd., according to the CBIRC information. The company has a registered capital of RMB1.5 billion, the announcement revealed.

MEITUAN-W (3690.HK) said the launch of "Meituan Monthly Pay" today (29 May), a credit payment product of the company. Users can complete payment with the given credit quota under "Meituan Monthly Pay" first upon consumption via any Apps of Meituan series, before collective repayment in the following month. The longest interest-free period is 38 days. The new function also allows deferred bill payment and bill installment payment. The company said the orders made by Meituan monthly users gained over 20% on average during trial with average transaction amount increasing over 15%.

CATHAY PAC AIR (293.HK) said the free ticket refund arrangements will be extended to cover flights departing on or before 31 July. The carrier will continue its skeleton passenger flight schedule for the first three weeks of June 2020. However, it intends to operate additional passenger flights from 21-30 June. This will increase the operating capacity in June to approximately 5% across the passenger network.

TIANNENG POWER (819.HK) made a clarification announcement to refute the false allegations or comments in an article released by CloudyThunder Research. The company clarified the assertion that its rebate system shares similar features of a Ponzi scheme is purely an irresponsible subjective speculation. An application has been made for the resumption of trading in the shares with effect from 1:00 p.m..

PROPERTY The coronavirus crisis had hindered the property market, which grew even more overshadowed amid rising US-China tussles in late-May and June, said Derek Chan, research head of Ricacorp Properties. Home buyers were advised to keep a close watch at the market. In light of the coming legislation of Hong Kong National Security Law, Chan modeled drastic changes in the market due to political and economic environments and US-China tensions, and the rosy outlook will potentially turn uncertain again.

BABA-SW (9988.HK)'s "6.18 Shopping Festival" reported overwhelming pre-sales, the group's e-commerce platform Tmall decided to shower customers with RMB4 billion more cash coupons, which will be distributed by batches from 1 June, the Group Vice President Jia Luo was quoted as saying by Chinese media.

NetEase confirmed and JD.com rumoured to have passed the listing hearing at Stock Exchange . Rumoured that NetEase will start its IPO as soon as next week, going public on 11 June. JD.com is said to be starting IPO on 8 June and listing on 18 June. Both companies will separately raise as much as US$3 billion (around HK$23.4 billion).

National Security Law The US and the UK have called for the UN Security Council to hold a non-official meeting on Friday (29 May, local time) for discussion on the Chinese plan to impose national security law in Hong Kong, AFP cited diplomatic sources.  China had on Wednesday (27 May) refused the US request to talk about the issue at the official meeting of the UN. Sources said the meeting on Friday, which China cannot oppose in principle, will be conducted closed door, allowing any member to raise various issues.

Rating and Valuation Department announced that Private Domestic Price Index printed at 376 in April, -0.1% MoM and -0.8% YTD. On a yearly basis, the index declined about 4.2%. During the month, Private Domestic Rental Index stood at 180, -1.4% MoM to the trough since April 2017. The index fell about 7.3% YoY.

The People's Bank of China  conducted seven-day RMB300 billion of revers repo's by way of interest rate tender today, with a flattish interest rate at 2.2%.

MEITUAN-W (3690.HK) post Q1 earnings co-founder Wang Huiwen disposed of 2 million class-B shares, involving almost $274 million, according to the shareholding disclosures on the Stock Exchange; Wang's B-shareholding decreased to 0.42%.

PING AN (2318.HK) said its fintech and health tech investment platform, Ping An Global Voyager Fund, has completed the investment in digital dentistry platform PlusDental in its EUR32-mn Series C funding. The investment was made to spur innovation in digital dentistry across Europe.


PRE MARKET 

China Foreign Exchange Trade Center announced, on 29 May, the central parities in the interbank forex market of transaction currencies, including the dollar against CNY, are as follows: USD/CNY = 7.1316, down 39 bps from yesterday's central parity, hitting the trough since late February 2008.

GEELY AUTO (175.HK) announced that before trading hours today, the Company planned to place 600 million shares, representing 6.11% of the share capital as enlarged. The placing price of HK$10.8 per share represented a discount of approximately 7.85% to the closing price yesterday.

CHINA COMM CONS (1800.HK) said the Company repurchased 3 million H shares at HK$4.77-4.84 per share last trading day (28 May), involving HK$14.4081 million.

SINO BIOPHARM (1177.HK) Q1 results ended March 2020. Net profit RMB862 mn, +0.6% YoY. EPS equaled 6.85 fens. Dividend was HK2 cents.

SINOTRANS (598.HK) said that on 28 May, the actual controlling shareholder of the Company, China Merchants Group, increased the shareholding in 10 million H shares of the Company by way of trading through price bidding in the secondary market for the total amount of HK$15.77 million.


COMMENT 

*PETROCHEMS FIRM stronger oil price overnight WTI +2.7% BRENT 1.8% as more easing on lock-downs increases demand and hopes OPEC+ will adhere to the planned supply cut. CNOOC (883 HK -2%) CH OILFIELD (2883 HK +2.7%) SINOPEC (386 HK -0.3%) PETROCHINA (857 HK +1.1%).

*HK BANKS WEAK on worries of possible currency risk to the HKD if Trump removes HK’s special trading status in response to China imposing a national security law on HK. HSBC (5 HK -3%) STANDARD CHARTERED (2888 HK -4.8%) HANG SENG (11 HK -3.2%).

*AUTOS WEAK  on fund-raising concerns, after GEELY AUTO (175 HK -9.5%) is selling 600m new shares in an accelerated placement at HK$10.8, representing a discount of 7.9% to Thursday’s price. DONGFENG (489 HK -1.2%) GAC (2238 HK -3.7%) BYD (1211 HK -1.4%).

*E-COMMERCE FIRM after yesterday's weakness considered one of the less exposed sectors regarding US/China deteriorating relations.

Helped by TENCENT (700 HK +0.5%) who saw good interest in its off-shore USD 6bn long term debt financing.

MEITUAN (3690 HK +7%) despite exchange data shows a co-founder Wang, who will resign in December, sold 2m shares of the company at an average price of HK$136.89, cashing in HK$274m on Tuesday.

ALIBABA (9988 HK+0.4%).

*PHARM FIRM  after recent weakness on pricing concerns and vaccine speculation bubble.

SINO BIOPHARM (1177 HK +7%) 1Q net profit +0.6% YoY to 862m yuan, and declared a 2 HK cents quarterly dividend.

WUXI BIO (2269 HK +0.7%) inspire of Li Ge, the chairman selling 369,900 shares for a total price of HK$47.46m on Tuesday, lowering his stake by 0.03% to 27.01%.

CANSINO BIO (6185 HK +11%) 3SBIO (1530 HK +5.7%).

*HK PROPERTY MIXED concerns over impact of losing HK special status and potentially the USD peg; a number of brokers see the sector having significant risk.  The Real Estate Developers Association of Hong Kong, (represents key Hong Kong’s property developers) says the national security bill proposed by the Chinese government will guarantee stability and prosperity, even as critics say it could harm the city’s freedom. The weakness was despite a number of developers announcing new releases were already over subscribed.  The potential for weekend protests could upset sales and the major developers having supported the National Security Law for HK at the NPC could face action from local protesters. HENDERSON LD (12 HK -1.8%) SHKP (16 HK -3%) NWD (17 HK -1.7%)

SINO LAND (83 HK +1.5%).

CKA (1113 HK +0.5%) won a European court appeal over its proposed UK telco merger.

*HK CONSUMERS MIXED after a pre market profit warning from BOSSINI INTL (592 HK -7%) said that its net loss for the ten months ended April 30 widened to HK$195m (from HK$94m) as the Covid-19 outbreak affected operating conditions. I.T. (999 HK -1.6%) CHOW TAI FOOK (1929 HK -1%) BUT BONJOUR (653 HK +5.6%) CAFE DE CORAL (341 HK +1.1%).

*LUXURY BRANDS FIRM, after PRADA's (1913 HK +8%) co-CEO said sales in China rose “significantly” more than 10% in May +VE

SAMSONITE (1910 HK +6.5%) L'OCCITANE (973 HK +8.3%).

*WHITE GOODS FIRM, led higher by HISENSE (921 HK+16%), after Qingdao govt approves ownership reform; it will seek capital increase to attract strategic investors.GOME (493 HK +5.5%) HAIER (1169 HK +2.9%).


I hope you found it useful, feedback and comment welcomed