HSI +12pts (+0.1%) 24,400 HSCEI +15pts (+0.2%) 9,898 T/O HK$101.69bn (-19.3% DoD)
Warrants were 6.9% of market turnover (vs 6.7% Tuesday)
European markets saw a weak open but are trending higher, DAQ & FSTE in the green, CAC almost flat
US futures bounced from being slightly +VE to open +300pts with S&P and NDX +VE too
US 72 companies reporting today (for full list https://finance.yahoo.com/calendar/earnings/ )
Northbound RMB 24,712m Sell 11,973m : 12,738m Buy
Southbound HK$ 9,773m Sell 4,807m : 4,966m Buy
Northbound RMB 40,917m Sell 19,822m : 21,096m Buy
Southbound HK$ 8,462m Sell 3,902m : 4,560m Buy
Short Selling HSI Wednesday 20.1% vs 19.9% Tuesday
Top Shorts Wharf REIC (1997) 55%, CCB (939) 44%, Hang Seng Bank (11) 39%, HSBC (5) 36%, Country Garden (2007) 34%, SHKP (16) 32%, Techtronic (669) 32%, CNOOC (883) 31%, CLP (2) 29%, MTRC (66) 28%, BoC (3988) 26%,
CHINA PBOC Prime Loan Lending rate unchanged 1 yr 3.85 and 5 yr 4.65%
HONG KONG Centre for Health Protection said there were no new COVID-19 cases today (sixth day)
RESULTS This Week: Thursday Parkson Retail (3368), Alibaba (9988).
China CSI 300 -21pts (-0.5%) @ 3935 market opened lower as PBoC left Prime Loan unchanged which disappointed some as they were expectations of a cut to support the economy. Markets then range traded with caution/consolidation ahead of the NPC meeting which starts tomorrow. PM saw the markets initially rise retesting the morning highs but without conviction and then sold down to the day lows but Team China was there to ensure the market didn’t close on the lows and the market saw a bounce into the close.
I think hopes of massive stimulus are fading. There was some vaccine optimism but trade tensions continue to overhang the market. The latest stimulus policies are relatively small events and include MIIT to further cut VAT on SME and individual business, allowing tax defer from 5 yrs to 8 yrs. Waiving 3 social security insurance items for variety companies for 600bn CNY. The transportation authority waive highway tolls for 140bn CNY. Expect employment stimulus over infrastructure as I think jobs will be the main focus.
HK Pre Market opened +74pts @ 24,462 vs -284pts ADRs @ 24,104 financials seeing short covering as China left Prime Loan Rate unchanged whereas a number of houses had been expecting a cut and had gone short. After the initial squeeze market sold down on HK worries; unemployment, credit card/personal loan defaults rising, survey showing 30% of businesses expecting to close in 6 months. Day low around 10:40am (24,316) then a bounce but resistance at yesterday’s close. Sold off but support above the earlier low and then a tight range (+/-25pts) in the PM and then a 30pts uptick in the closing auction to close essentialIy flat. I think a lot of investors are NOT expecting massive stimulus out of China at the NPC which starts tomorrow. The KEY for me is that China is facing a huge unemployment problem and that will be the focus; getting people back to work, the Party fears social unrest more than anything else. Previous stimulus has been about growing the economy this will be more basic, finding people jobs nationwide; no easy task with covid and tariff wars in play.
HSBC (5.HK) -2.5%
TENCENT (700.HK) +2.3%
CCB (939.HK) +0.6%
AIA (1299.HK) +0.3%
HKEX (388.HK) +0.2%
PING AN (2318.HK) +0.2%
HSI & HSCEI Constituents on Move:
AAC TECH (2018.HK) +6.8%
CSPC PHARMA (1093.HK) +4.7%
CHINA UNICOM (762.HK) -3.7%
HSMI & HSSI Constituents on Move:
CMGE (302.HK) +19.2%
HENGTEN NET (136.HK) +17.6%
COSMOPOL INT'L (120.HK) -10.2%
MICROPORT (853.HK) +9.6%, hits new high
HOPE EDU (1765.HK) +4.5%, hits new high
NEW HIGHER EDU (2001.HK) +4.2%, hits new high
CHINA KEPEI (1890.HK) +4%, hits new high
WEIGAO GROUP (1066.HK) +3%, hits new high
JAPAN opened higher on better than expected Machinery Orders and worked higher for most of the day, easing back slightly in the PM Closed +0.8%.
S Korea opened flat but markets have tracked higher though the day Kosdaq +1.8%, Kospi +0.5%
Taiwan opened higher but trended lower, found support at yesterday’s closing level and then trended higher, saw a pull back in the last hour but then a small rally to Close +0.4% at 10,908 (11k still the key breakout level)
World Trade Organization's goods trade indicator plunged from 95.5 in February to 87.6 in March, hitting the record-low since 2016. WTO found the reading in line with its April forecast of a 13%-32% global merchandise trade decline. -VE
CHINA MOBILE (941.HK) said China Mobile Communications Group, its parent company entered into a collaborative framework agreement in relation to 5G co-construction and sharing with China Broadcasting Network Corporation Ltd. (CBN) The parties shall jointly determine network construction plans, jointly invest in the construction of the 700MHz 5G wireless network. On the basis of maintaining their respective independent branding and operations, the parties shall jointly explore model innovations in areas such as products and operations, carry out in-depth collaboration in areas such as content and platforms, and pursue collaborative operations in areas such as channels and customer services. The duration of collaboration between the parties shall be from the effective date of the 5G Collaborative Framework Agreement to 31 December 2031.
Macau's total spending (excluding gaming expenses) of visitors -70.4% YoY to a mere MOP5.01 billion in Q1 2020, as visitor arrivals were -68.9% (3.2192 million). It also announced a plan to reboot tourism in 3 phases:
1) initiation of pre-promotion events locally and overseas;
2) offer of half-day free trips for overnight tourists pursuant to epidemic development;
3) roll-out of concessions for sea, land and aviation traffic.
CHINA TELECOM (728.HK) mobile subscribers 339 million in April with a net increase of 1.97 million and cumulative net increase of 2.95 million. During the period, 5G subscribers reached 21.7 million with a net increase of 5.09 million and cumulative net increase of 17.09 million.
SHENZHEN INVEST (604.HK) won a bid for residential land parcel in Shuanglin North Heng Road, Chenghua District, Chengdu city at a total consideration of RMB1.15 billion, with a floor price of RMB16,800 per sq.m..
Tai Hung Fai bought an old building at the junction of Des Voeux Road West and Sai On Lane in Sai Ying Pun was awarded to Tai Hung Fai at the upset price $700 million via a compulsory auction.
Centa-Salesman Index (CSI) last stood at 68.67, +1.1 ppts from 67.57 in the previous week. Steadying above 65 for three straight weeks, indicating the ongoing bullish sentiment of front-line agents and hinting price uptick. The property market has not fully warded off the epidemic sluggishness despite active second-hand transactions, leading to lukewarm CSI uptrend.
JLL (local property agents) wrote that the leasehold demand for offices remains weak in Hong Kong although the coronavirus pandemic has been getting less serious from late-April. In April, the overall rents went down 3% MoM while the vacancy rate at Grade A office towers elevated to 7.2% by the end of the month.
Comprehensive Social Security Assistance (CSSA) caseload in April showed a rise of 4,819 cases, representing an increase of +2.2% MoM. The total CSSA caseload stood at 227,500, with a total of 311,400 recipients. Analysed by case nature, old age cases remained steady at 135,200 cases. Unemployment cases rose by 24% to 18,165 cases.A press conference on the third session of the 13th National Committee of the Chinese People's Political Consultative Conference (CPPCC) was convened this afternoon. It will open its third session at the Great Hall of the People at 3pm tomorrow. The session will be closed in the afternoon on 27 May (next Wednesday), four-and-a-half days shorter than the original schedule.
WING TAI PPT (369.HK) said it has sold 217 units and cashed in more than $1.13 billion under OMA by the Sea Sunday to date. 108 more flats will be available this Sunday (24 May).
Vanke Hong Kong unveiled the first price list for its development project in Cheung Sha Wan, "The Campton", involving 94 flats. The project priced each flat at $5.762-10.45 million, i.e. $17,007-22,051 per sq.ft.. With maximum 16% discount, the actual selling prices ranged $4.841-8.778 million, i.e. $14,288-18,526 per sq.ft.. SHK PPT (16.HK) said that 21 of its malls will join hands in launching an event for everyone between 22 May and 21 June, where shoppers can get an instant lucky draw opportunity for every $300 spent at the malls. There will be up to 200,000 prizes worth over $6 million in total. The developer has launched a range of mall promotions and spending rewards since February to support merchants, expecting to give out at least $60 million of spending rewards to spur consumption this year.
MTR CORPORATION (66.HK) will continue to ponder over dividend payment based on the future circumstances, ranging from its business performance to financial position, said Chairman Rex Auyeung at the general meeting. The group will in six years roll out 22,000 residential units from 16 real estate development projects, the chairman underscored.
AGRITRADE RES (1131.HK) halted trading with effect from 9:00 a.m. on 20 May 2020 pending the release of an announcement in relation to inside information of the Company.
Savills sold Yee Tak Building at No. 121-131 Shau Kei Wan Main Street East on a public auction today (20 May), according to the compulsory sale order under the Land (Compulsory Sale for Redevelopment) Ordinance of Lands Tribunal. The land parcel was captured by Hip Shing Hong at the reserve price of $804 million. It was known that Hip Shing Hong had filed for compulsory sale in 2018.
Overnight HIBOR last posted at 0.11857%, down for 6 days, logging a 1-month low, according to HKAB. Meanwhile, the 1-Month HIBOR related to mortgage rate last stood at 0.59786%.
AEC GROUP (8320.HK) said that, on 19 May, the Company has sold 2.28 million SANBASE CORP (8501.HK) shares, representing approximately 1.14% of its issued share capital, on the open market at an aggregate consideration of HK$1.2996 million at HK$0.57 per share. The Group expected to recognise an unaudited loss of approximately HK$438,000.
CHINA MOBILE (941.HK) said that total mobile customers amounted to 947 million in April, representing net addition of 432,000. During the month, 4G customers amounted to 754 million, representing net addition of 1.772 million (March: 6.583 million); 5G customers added 12.022 million to 43.745 million.
LENOVO GROUP (992.HK) FY results for the year ended March 31, 2020. Net profit +11.4% yearly to US$665 million. EPS was US5.58 cents. A final dividend of HK21.5 cents was declared, against HK21.8 cents for the same period last year.
China Banking and Insurance Regulatory Commission (CBIRC) has been highly concerned about the incident regarding BANK OF CHINA (3988.HK) (601988.SH)'s "Crude Oil Bao" products, having asked the bank and its clients to negotiate on an equal footing and fix the problem in conformity with the law, Chinese media Financial News citing the watchdog.
*HK CONSUMERS WEAK after HK's unemployment up for a seventh month to the highest in more than a decade and underemployment up. Plus a local survey reported 30% of respondents expected to close within 6 months. Also credit card and personal loan defaults rising. SASA (178 HK -1.5%) CHOW TAI FOOK (1929 HK -2.3%) LUK FOOK (590 HK -2.7%) CDC (341 HK -1.1%).I.T. (999 HK +5.3%) didn’t see any news, announced board meeting date on May 27th.
*PHARMA MIXED on vaccine and new drugs optimism. Founder of Fosun Group expects to soon win approval for testing a vaccine for covid-19 in China, a day after President Xi promised to make any protective shot universally available. FOSUN PHARM (2196 HK -0.4%) SINO BIO (1177 HK +1.3%) WUXI BIO (2269 HK -1.7%) CANSINO (6185 HK +8%).
CSPC (1093 HK +4.5%) said its "Docetaxel for Injection (albumin-bound)" cancer-treatment has obtained an approval granted by China's National Medical Products Admin. to conduct clinical trials in China.
*E-COMMERCE FIRM on positive sector's outlook. News that JD.com is seeking to pass the listing hearing for its Hong Kong secondary listing next week with the aim of making its mainboard debut on June 18 to raise US$3b.
TENCENT's (700 HK +1.8%) backed WeDoctor, one of China's biggest online health-care startups, is planning to submit its Hong Kong IPO application at the end of this month to raise as much as US$1b. Also TENCENT-backed Yeahka, a Chinese payment technology services provider, has opened book for its HK IPO.
ALIBABA (9988 HK +0.2%) MEITUAN (3690 HK +2%).
*TECH & COMPONENTS MIXED with trade tensions rising but saw support as the negative affect of US ban on Huawei is priced in. APPLE has tapped factories in Vietnam to make its over-ear headphones as the company looks to diversify manufacturing away from China due to political and trade tensions, according to news. AAC (2018 HK +6.8%) upgraded by brokers, TONGDA (698 HK +4%) SIM TECH (2000 HK +2%). SEMICONDUCTOR weak on Huawei implications HUA HONG (1347 HK -2%) SMIC (981 HK -2.8%). XIAOMI (1810 HK +0.8%) ahead of earnings due today.
*HK PROPERTY WEAK after CK ASSET (1113 HK -1%) won the Anderson Road site in Kwun Tong, will build at least 1,000 starter home units. It paid only HK$4.95b or HK$4,546 per buildable square foot, the lower end of market valuation. That its price won shows that other developers are even more bearish on the market! But good for CK Assets margins and it will be several years before this site is developed and the market will have moved on. SHKP (16 HK -0.5%) SINO (83 HK -2.5%) NWD (17 HK -1%) HENDERSON (12 HK -1%).
*AUTO WEAK as BAIC (1958 HK -1.1%) chairman calls for the establishment of a govt-led battery industry fund, in order to provide financial support to develop batteries used in electric vehicles. Xu suggests the fund includes both exiting government subsidies and private sector capital. BYD (1211 HK +0.3%) GEELY (175 HK -0.9%) GREATWALL (2333 HK -1.3%) DONG FENG (489 HK -4.4%).
*EXPORTERS MIXED WALMART and HOME DEPOT saw good sales they benefit from being essential businesses so could stay open and they increased online; Home Depot saw SSS +6% TECHTRONICS +0.6% as mentioned this morning. Others that require on distribution via non essential businesses weak; MAN WAH (1999 HK -4.3%) VTECH (303 HK -2.2%) YUE YUEN (551 HK -2.1%).
*EDUCATION PROVIDERS FIRM Chinese government’s drive to accelerate reform of independent colleges of higher education institutions are seen to boost leading players’ profitability over medium term. MINSHENG EDU (1569 HK +4.8%) HOPE EDU (1765 HK +4.1%) KEPEI EDU (1890 HK +4%) NEW HIGHER EDU (2001 HK +4.7%).
Hope you found it useful, feedback welcome