May 28 HSI -170pts T/O +20% DoD , Shorts 24% of T/O

HSI -169pts (-0.7%) 23,133  HSCEI -16pts (-0.2%) 9,552 T/O HK$132.69bn (+19.7% DoD) 

Warrants were 5.75% of market turnover.

Europe opened higher US/China tensions overhang the market but the momentum seems to be waning.

US futures are higher but off earlier highs. US reopening optimism outweighing US/China tensions.

US 67 companies due to reporting tonight; including Abercrombie and Fitch, FAT Brands, Costco Wholesale, Dell, Marvell Tech, Nordstrom, Salesforce and others(for full list )



Northbound RMB 29,117m Sell 13,273m : 15,843m Buy

Southbound HK$ 9,479m Sell 5,386m : 4,093m Buy


Northbound RMB 34,714m Sell 17,233m : 17,481m Buy

Southbound HK$ 8,422m Sell 4,339m : 4,083m Buy

Short Selling HSI Thursday 23.9% vs 22.4% Wednesday 

Top Shorts Wharf REIC (1997) 53%, SHKP (16) 44%, Country Garden (2007) 42%, MTRC (66) 39%, Geely Auto (175) 38%, Hang Seng Bank (11) 37%, Henderson Land (12) 37%, Hang Lung PPTY (101) 36%, HK & China Gas (3) 33%, CLP (2) 33%, China Overseas (688) 33%, Mengniu Diary (2319) 33%, Petrochina (857) 31%, CK Asset (1113) 30%, BoC (3988) 30%, Galaxy Ent (27) 30%, ICBC (1398) 29%, HSBC (5) 29%, China Mobile (941) 29%, Sino Land (83) 28%, Power Assets (6) 27%, Techtronic (669) 27%, CSPC Pharm( 1093) 26%, Sands China (1928) 26%, CCB (939) 25%, Tencent (700) 25%.

NPC approves drafting of national security law for Hong Kong announced after China market closed and didn’t have any material impact on the HSI.

USD/ CNH remained weak and once shed to 7.1964, setting an all-time low. In the last posting, the rate was at 7.1841.

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


China CSI 300 +11pts (+0.3%) @ 3,857 Opened slightly higher and initially traded higher on the last day of the NPC. Some concerns over US Sec Of State Pompeo’s remarks about Hong Kong no longer being autonomous from China.  Hit resistance at 3,885 around 10am and then sold down into lunch. Pm initially dropped to the day low (3,818) before bouncing to test yesterday’s closing level but failed to break above and consolidated before retesting and breaking above but with much conviction. Traded sideways in a tight range for the last 45mins.

HSI Pre Market -94pts @ 23,206 vs -195pts ADR’s @ 23,106 ahead of futures settlement today.  Tech names were flat but Developers were weak. A small initially rally to the day high 23,450 within the first 5 minutes but then the markets trended lower with investors worried as US Sec State Pompeo says HK no longer autonomous from China with that’s implications for its trading status with the US and worried what Trumps response to China will be over the imposition of a National Security Law.  After lunch saw some initial selling down to 22,800 but then market rallied and tested yesterday’s closing level but failed to break above eased back to around 23,000 level and then a small bounce before trading sideways into the close. Small uptick in the closing auction.  Increased volume today on a down day a slight -VE.
MSCI reweighs tomorrow at the close.

Active Heavyweights
TENCENT (700.HK) -2.8%
CCB (939.HK) +1.5%
HKEX (388.HK) -1.2%
HSBC (5.HK) -0.9%
ICBC (1398.HK) +0.8%
PING AN (2318.HK) +0.6%
AIA (1299.HK) +0.3%

HSI & HSCEI Constituents on Move:
CSPC PHARMA (1093.HK) -10.3%
SINO BIOPHARM (1177.HK) -4.9%
AAC TECH (2018.HK) -3.8%
SHENZHOU INTL (2313.HK) +3.3%
LINK REIT (823.HK) -3.1%


Japan which opened strongly, rallied before dipping mid morning and then resumed its upward trend and closed +2.3%.

S.Korea saw the Kospi open in the green but sell off for most of the day but then bounce into the close but unable to regain the green Closed -0.1% The Kosdaq open flat and trend lower again small rebound in the PM but closed -2.2%.

Taiwan opened higher but trended lower then traded sideways into the close which was below the important 11,000 level. Closed -0.6% @ 10,944

Chinese Premier Li Keqiang told local and foreign reporters that China is giving back money to the people to create new wealth, cultivate sources of tax revenue, and sustain its fiscal policy.  The country still has room for policies, whether they are fiscal, financial or social security ones, in the face of substantial economic or other changes. There will be sufficient reserves for Beijing to launch new initiatives without hesitation, as China's stable economic operation is of utmost importance.

China he said has ascertained her "six securities" target, ranging from employment to livelihood, which is related to GDP growth and it set to achieve positive growth this year when that target is achieved.

On comments that Beijing had unrolled weaker-than-expected stimulus kits, Li opined that the policies were quite fierce. He said China had avoided broad and indiscriminate economic stimulus policies long time ago, except for some extraordinary cases where more resources are needed. He said the country should adopt more theme-oriented policies. Under the current sizeable policy implementation, the government allocated funding to two categories: RMB2 trillion to address new deficit and issue of anti-epidemic national bonds; and a larger proportion to waiver of social security charges.

Spot USD/CNY closed at 7.1600, down 53 bps. As at 16:45, USD/CNY soared 103 bps in the night session. USD/CNH stood at 7.1765, up 2 bps. 
Centa Valuation Index (Major Banks) (CVI) last printed at 90.1 +19.79 pts WoW.   The index advanced significantly this week, failing to indicate re-emerging social incidents of late. They expect a persistent social movement possible, with rising uncertainty for home price trends but no signs of decline and believed CVI may rattle at around 80 in short run, with continuous home price rally.
PING AN (02318.HK)'s subsidiaries and B-soft (300451.SZ) jointly announced to give full play to their respective edges in the future, while exploring strategic partnership in smart medical insurance, smart healthcare, smart business insurance and other application scenarios. Accordingly, both parties aim to develop a new and comprehensive healthcare ecosystem.


DYNAM JAPAN (6889.HK) said its pachinko halls are going to resume operations from June 2020. It expected that its operating revenue will gradually recover from July 2020 and will return to normal from October 2020. It will continue in seek of expansion in pachinko business to boost market share but didn’t give a target figure. In light of the current worldwide economic landscape, the Japanese pachinko hall hopes to retain more cash to address market risks and better seize development opportunities, added Katsuta. The group thus decided to trim its dividend this year while keeping a close watch on the future market.

HKELECTRIC-SS (2638.HK) said  it will begin distributing dining coupon sets worth $500 each to needy families from tomorrow for use at SME eateries.  This is a continuation of the company’s “2+3 relief measures” launched earlier to help small and medium-sized caterers and underprivileged families during the current economic downturn. While each family is entitled to one set of coupons, a total of 40,000 sets will be made available for distribution.

The US had called on the Security Council to hold an emergency meeting on the Hong King National Security Law.  Beijing responded via social media claiming the request to be groundless.

China has bought over 10 cargoes of Brazilian soybeans this week, likely looking for secure supplies as its trade tensions with the US are escalating, Bloomberg citing insiders. Brazil is known as the largest soy supplier to China, which is in turn the world's biggest bean buyer.

TAI CHEUNG HOLD (88.HK) won the residential land at Ap Lei Chau Praya Road with $1.33bn, Thomas Lam, Executive Director, Head of Valuation & Advisory at Knight Frank, said the bid winning price beat estimate, showing the property developer remained confident of the after market of luxury housing in urban area. Lam said the total investment to approximate $2.2-2.6 billion, and the selling price to start from $28,000 per sq.ft. upon completion. I am less convinced, that fact that a relatively small HK developer has won the site may reflect that its land bank is not as healthy as others.  The conservative bids from larger developers I think better reflects the mood of the sector.


People's Bank of China will conduct seven-day RMB240 billion of Reverse Repo's today (28 May), according to foreign reports.

HK Govt said in response to a statement by the US Chamber of Commerce on the national security law, that the Chamber is right to acknowledge that Hong Kong's special status under "One Country, Two Systems" has worked well for Hong Kong, and indeed for the many overseas businesses established in Hong Kong. More than 85,000 US citizens live and work in Hong Kong and there are very deep and broad people-to-people bonds in areas such as education, arts and culture. It is in the interests of both the US and Hong Kong for these links to continue to thrive and deepen. Any unilateral change of US policy towards Hong Kong would create a negative impact on relations between the two sides as well as harm the US's own interests.

Chinese State Council announced 11 financial reform measures will be coming soon. In particular, major regulations will be issued surrounding ChiNext Board to push forward its reform and pilot registration system.

HUADIAN FUXIN (816.HK) trading halted with effect from 9:00 a.m. on 28 May 2020 (Thursday) pending the release of an announcement which contains inside information of the Company.

TIANNENG POWER (819.HK) said regarding CloudyThunder Research's article dated 27 May, that the contents and allegations contained in the Article are untrue. Further clarifications will be made in due course.

SUNWAY INT'L (58.HK) 2019 annual results. The loss expanded to HK$284 mn from HK$50.5 mn for the previous year. LPS equaled HK39.45 cents. No final dividend was declared. The company applied for a trading resumption with effect from today (28th).

BRILLIANCE CHI (1114.HK) said that Huachen Automotive Group, the controlling shareholder of the Company, entered into a strategic investment agreement with Liaoning Provincial Transportation Investment (LPTI). Huachen shall dispose of 200 million shares to LPTI, representing 3.96% of the total share capital of the Company.

ALI HEALTH (241.HK) annual results ended March 2020. Loss narrowed from RMB81.95 million in the previous year to RMB6.59 million. LPS equaled 0.06 fen. No final dividend was declared. Results were seen as a beat.

I.T (00999.HK) annual results ended February 2020. Loss reached $747 million, against $443 million in profit in the previous year. LPS equaled 62.5 cents. No final dividend was declared.

CHANGHONG JH (3991.HK) said that Zhu Jianqiu, an executive director and the president of the Company had acquired 7.75 million shares, representing 0.53% of issued Shares, from an independent third party through off-market transaction on 27 May 2020.

BANK OF E ASIA (23.HK) announced the update on the strategic review. In light of practical impediments caused by the COVID-19 virus, additional time is required for the Bank to continue its thorough evaluation of businesses and assets and exploration of potential strategic transactions. The Bank will announce an update on the status of the review by 30th September.


*PETROCHEMS WEAK  as WTI -7.1% BRENT -5.9% from nearly three-month high as investors worry over demand in the light of US/China stand-off and if Russia will agree to extend output curbs when OPEC+ meets in two weeks. It is expected that the alliance will probably stick to its pact at the June meeting. CNOOC (883 HK -1.5%) CH OILFIELD (2883 HK -1.9%) PETROCHINA (857 HK -0.4%).

SINOPEC (386 HK +1.8%) after the board approves a dividend of 0.3 yuan/shr.

*COAL MINERS MIXED China may impose coal import restrictions on coal from Australia and promote the use of domestic. Imported coal tends to have a higher calorific value and be cheaper than Chinese domestic coal.CH SHENHUA (1088 HK +1.7%) YZ COAL (1171 HK unch) CH COAL (1898 HK -1%) HIDILI (1393 HK +0.6%).

*E-COMMERCE WEAK as investors turn cautious over US/China risk. NetEase and are seeking to pass listing-committee hearings for their secondary listings today to raise as much as US$6b in total. yesterday announced a strategic partnership with Kuaishou Technology, a TENCENT (700 HK -2.8%) backed video app startup, for short video e-commerce live streaming during the "618" shopping festival. ALIBABA (9988 HK -1.9%) MEITUAN (3690 HK +1.5%) CH LIT (772 HK -2.9%).

*TECH COMPONENTS WEAK after Canadian court ruling that the US’s extradition case on Huawei’s Meng Wenzhou would continue and the potential for US action against Tech companies for China imposing a national security law on Hong Kong.

AAC (2018 HK -3.8%) SUNNY OPTICAL (2382 HK -2%) TONGDA (698 HK -4.4%) BYDE (285 HK -2.7%).

*CHINA PROPERTY FIRM  Investors still hoping policy will be eased towards the sector policies speculations. At the CPPCC meeting, Raymond Kwok of SHKP has proposed easing the restrictions on Hong Kong and Macau  residents to buy homes in the nine bordering cities in the Greater Bay Area. He suggests a panel be established to coordinate home purchasing policies of different cities in the Greater Bay Area. CH JINMAO (817 HK +0.4%), SUNAC (1918 HK +0.3%), VANKE (2202 HK -0.2%),  AGILE (3383 HK-0.2%), LONGFOR (960 HK+1.1%).

*HK PROPERTY WEAK uncertainty over US action regarding HK and the special trading status. I think whatever action the US takes the Property stocks are going to see continued demand from local residents.

TAI CHEUNG (88 HK -0.6%) outbid 18 other developers including the big HK ones to win the tender for a residential plot in Ap Lei Chau for HK$1.33b, close to the upper end of market valuation. I think the fact that the other developers were more conservative reflects their uncertainty over the short term prospects for the sector.

WING TAI PROP (369 HK +2.4%) released 88 flats in Tuen Mun at an avg price of HK$13,746 psf after discounts, 9.5% higher than the first price list.

SHKP (16 HK -1.7%) HENDERSON LD (12 HK -0.7%) NWD (17 HK -2.2%)

*HK RETAILERS WEAK as anti-government protests return and are likely to continue over the national security law and Hong Kong is closed for tourist visits.  SASA (178 HK -4.8%) LUK FOOK (590 HK -5.4%) LIFESTYLE (1212 HK -1%) TAI HING (6811 HK -2.4%).

I.T (999 HK +6%) rebounds announced an annual net loss of HK$745m for the financial year 2019-2020.

*EXPORTERS WEAK uncertainty over possible US reaction to China’s decision to impose a national security law in Hong Kong and whether China will then retaliate against foreign companies operating within China. TECHTRONIC (669 HK -2.2%) MAN WAH (1999 HK -1.4%) YUE YUEN (551 HK -1.3%) CH LESSO (2128 HK -5.7%).

*PHARMA WEAK on drug price concerns. CSPC (1093 HK -10%) yesterday was +7% after profit beat, but said the price of its NBP stroke drug (one of its biggest branded drugs) may drop following to “exclusive drug price negotiation”, fuelling concerns other firms may also be force to accept price cuts. CSPC saw significant shorting today.  SSY (2005 HK -4.3%) 3S BIO (1530 HK -3.5%) GENSCRIPT (1548 HK -4.5%).

SINO BIOPHARM (1177 HK -4.8%) ahead of earnings due today.

Feedback and comment welcomed