HK / CHINA WRAP Market sell down in PM but close off lows Inflation worries persist

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HSI +11pts (-0.04%) 29,124 HSCEI -55pts (-0.5%) 10,794 T/O HK$172.74bn (-31% DoD) Thursdays included the MSCI reweight on the close 

EUROPE
Markets opened higher FTSE trading flat up small, DAX & CAC working higher. Insurance stocks leading but all sectors in the green.
Euro zone economic sentiment climbed more than expected in May to a three-year high. French economy hit a technical recession. UN ICAO to investigate Belarus air piracy act as Russia blocks Air France and Austrian Airlines routes to avoid Belarus.
US Futures
Opened in Asia Dow +122pts S&P +0.3% and NDX +0.22% and worked higher Dow now +168pts S&P +0.4 and NDX +0.3% Ahead Personal Spending and Income, Goods Trade Balance, Wholesale Inventories, PCE Price Index, Core PCE Price Index, Chicago PMI, Michigan Data Final (Current Conditions, Consumer Expectations, 5 yr Inflation Exepctations, Consumer Sentiment, Inflation Expectations) Baker Hughes Rig Count Presdients FY 2022 Budget.
Fed Speakers None

CHINA CSI 300 closed -17pts (-0.3%) 5,321
CSI 300 opened flat and traded in a tight range in the AM. PM opened higher and touched 5,360 but then sold down heavily to 5,289 before a bounce into the close. Investors turned cautious on the strenghening yuan and inflation fears; making exports from what is still the world’s factory more expensive. Foreign traders sell net $83m Chinese shares via Stock Connect today. Leaders Lithium batteries, breweries, securities firms, and non-ferrous metals.
Laggards healthcare, environmental protection, papermaking, media & entertainment, and medicine The yuan in focus after PBOC said the exchange rate can’t be used as a tool to spur exports or to offset the impact of commodity price surges.

Shanghai Composite -8pts (-0.2%) @ 3,601
Shenzhen Composite -44pts (-0.3%) @ 14,852
ChiNext Index +3pts (+0.1%) @ 3,226

CHINA DATA
China reported 7 new imported covid cases.

HSI
Pre market opened @ 29,219 +106pts vs +125pts ADR’s higher than normal pre market T/O due to the MSCI at close reweight Thursday. Market initial dipped to 29,150 before rallying to 29,336 but then reversed to 29,200 which it tested a couple of times before working higher into lunch. PM tested 29,320 but then sold down to 29,033 and traded sideways into the close.
Sentiment hurt on news Jimmy Lai and others get jail sentences for unlawful assembly.

HONG KONG DATA
The Centre for Health Protection (CHP) reported No new imported covid case no cases from unknown sources
 same as Thursday

Short Selling Friday 15.3% vs 17.5% Thursday 
Top Shorts 
Country Garden (2007) 43%, Henderson Land (12) 38%, Bank Comm (3328) 37%, Petrochina (857) 36%, Sands China (1928) 35%, Shenzhou Int (2313) 33%, Haidilao (6862) 32%, Hengan (1044) 29%, Ping An (2318) 27%, BoC (3988) 27%, Mengniu Dairy (2319) 25%.

AFTER MARKET NEWS
FOSUN INTL (00656.HK) bought 1 million FOSUN PHARMA (02196.HK) shares on 25 May, at an average price of $59.9081 per share
with the total amount involved being $59.908 million, according to HKEX News.
After the purchase, FOSUN INTL's shareholding percentage rose from 13.87% to 14.05% .
Bitcoin slumped 8.7% over the past 24 hours to US$35,813, busting below US$36,000 according to coindesk's data.

Australian Taxation Office (ATO) will ask 300,000 taxpayers to report gains or losses on cryptocurrency investment when lodging tax return, foreign media reported.
MTR CORPORATION (00066.HK) announced special fare promotions to celebrate the commissioning of the TML full line.
Passengers travelling on MTR domestic and cross-boundary journeys who enter or exit at Hin Keng, Kai Tak, Sung Wong Toi or To Kwa Wan stations can enjoy a fare discount. Adult Octopus holders can save $1 whilst other Octopus holders (including children, elderly, persons with disabilities and students) will enjoy a $0.5 fare discount.
Macau's 1Q GDP Dips 0.9% YoY in Real Terms; Gaming Service Exports Fall 20.7% Information from the Statistics and Census Service (DSEC) indicated that Gross Domestic Product (GDP) -0.9% YoY in real terms inQ1 2021, a milder contraction compared to the previous quarter (-45.9%).
Exports of services rebounded by 4.1% year-on-year, of which exports of gaming services fell by 20.7% while exports of other tourism services surged by 88.1%.
CHINA UNICOM (00762.HK) announced that the New York Stock Exchange filed Form 25 with the United States Securities and Exchange Commission on 7 May 2021 and the delisting of the Company’s American Depositary Shares became effective as of the beginning of the business on 18 May. In light of the delisting, the Company intends to file a Form 15F with the SEC to deregister the ADSs and terminate its reporting obligations under the Securities Exchange Act.
HK Govt Files Written Submission to WTO on US Requirement on Origin Marking

MEITUAN-W (03690.HK) announced the results for the first quarter ended March 31, 2021. Loss expanded to RMB4.847 billion. Based on non-IFRS financial measures, the adjusted net loss amounted to RMB3.892 billion, meeting brokers' forecast Adjusted EBITDA was negative RMB2.383 billion.
Centa-City Leading Index (CCL) last tracked at 184.49, down 0.09% weekly.

CCL Mass sagged 0.56% weekly to 186.25.
CCL (mid-and-small units) faded 0.35% weekly to 184.20.
The research department of Centaline Property, said the three key CCL indices softened this week following five weeks of rally. CCL and CCL (mid-and-small units) held steady at 184, while CCL Mass stood firmly at 186. They did not expect property prices to be going south.

MARKET COMMENT 
*CONSUMPTION WEAK
on inflation fears. XIABUXIABU (520 HK -6.6%) HAIDILAO (6862 HK-6.9%) CH MODERN (1117 HK -6.1%) U-PRESIDENT (220 HK -2%) MENGNIU DAIRY (2319 HK -1.2%).
*E-COMMERCE/INTERNET WEAK as US Treasury yields climbed higher overnight.
JD LOGISTICS (2618 HK) +3.3% higher than IPO price HK$40.36, off earlier highs of as much as +18%.
ALIBABA's (9988 HK -0.7%) backed group-buying platform Nice Tuan fined 1.5m yuan and ordered it to suspend its operations for three days over suspected dumping practices and pricing fraud. JD.COM (9618 HK -0.6%) KUAISHOU(1024 HK -2.3%) BIDU (9888 HK -1%) TENCENT (700 HK -0.7%).
*TECH & COMPONENTS WEAK profit-taking following recent gains. Semiconductors fell across the board: SMIC (981 HK -2.6%) HUA HONG (1347 HK -4.2%).
LENOVO (992 HK -4%) net profit for the year ended March 31 rose 77% to US$1.17b. Revenue rose 20% to US$60.74b. Basic earnings per share were 9.54 US cents. Lenovo's board recommended a final dividend of 24 HK cents per share.
*HK PROPERTY FIRM with CK ASSET (1113 HK +6%), after announced it has completed the HK$19.38b share buyback proposal yesterday and the acquisition of four assets from the Li Ka Shing Foundation last Friday.
NWD (17 HK +1%) is to sell 182 new homes in Tai Wai at around HK$20,000 psf after discounts at the third phase of The Pavilia Farm atop Tai Wai Station, +5.69% than the 1st price list of the first phase.
*CHINESE PROPERTY WEAK as Chinese regulators are reportedly investigating a 10b yuan transaction between CH EVERGRANDE (3333 HK -3.8%) and SHENGJING BANK (2066 HK -0.6%), which holds a substantial number of China Evergrande's bonds. There was no immediate response from the developer and no comment from Shengjing Bank or the CBIRC, news said.
SHIMAO (813 HK -2%) AGILE (3383 HK -3.5%) CIFI (884 HK -1.9%).
*OTHER MOVERS:
LEE'S PHARM (950 HK +4.6%) Q1 net profit +2.9% YoY to HK$41.05m.
GOME (493 HK +7.6%) off earlier highs of 10% after its renamed "True Happiness" App's GMV has increased by nearly four tims YoY, and monthly activity has stabilized at 40m.
HSBC (5 HK +3.8%) highest since March 2020, after announcing it had quit its US retail banking business with minimum losses.

Regional Markets 
Australia
ASX200market opened higher to 7,150 and worked slowly higher through the day to close +89pts (+1.3%) @ 7,184
Financials strong with Commonwealth Bank back above$100, Iron ore miners higher, but some weakness in Tech.
Japan 
Pre market data saw CPI data in-line, unemployment only slightly worse. Govt extended the state of emergency as expected.  
Nikkei opened higher and worked higher for most of the day. Resistance at 29,200 just after lunch and traded sideways. Closed +600pts (+2.1%) @ 29,149
Topix traded in a similar pattern currently +36pts (+1.9%) @ 1,947
Data
Unemployment Apr 2.8% vs 2.6% Mar (F/cast was +2.7%) 
Job/Application Ratio Apr 1.09 vs 1.1 Mar (F/cast was 1.1) 
Tokyo Core CPI May -0.2% YoY vs -0.2% Apr (F/cast was -0.2%)
Tokyo CPI May -0.4% YoY vs -0.6% Apr (F/cast was -0.4%)
Monday pre market we get Industrial Production and Retail Sales
S Korea
Kospi opened higher on easing inflation concerns and increased confidence in the recovery after US data. Trended higher but did dip briefly aruond 10 am to 3,175 but then continued the upward trend to 3,199 then eased to close +23pts (+0.7%) @ 3,189
Kosdaq opened higher muted started but after 10.30am worked higher to 980 but failed to break out, retrenched to test 978 before working slowly higher resistance at 980 and sold off to close +3pts (+0.4%) @ 978
No data Friday but Monday pre market Industrial Prodcution, Construction Output and Retail Sales  
Taiwan
Taiex opened higher and worked higher with resistance each time it approached 16,900. Closed +269pts (+1.6%) @ 16,871
Across the board buying but TSMC in focus along with Steel as raw materials continue to surge globally. Critically now closed significantly about the 16,550 resistance (60day MA).  

CONNECT FLOWS (significantly lower flow vs Thursday)
Shanghai
Northbound Rmb 47,685m Sell 24,148m vs 23,537m Buy 
Southbound HK$  16,585m  Sell 8,848m vs 7,736m Buy
Shenzhen
Northbound Rmb 59,870m Sell 29,893m vs 29,977m Buy 
Southbound HK$  20,365m  Sell 10,548m vs 9,817m Buy

Active Heavyweights
MEITUAN (03690.HK) -2.4%
CCB (00939.HK) +1.7%
HKEX (00388.HK) -1.2%
AIA (01299.HK) +1%
BABA (09988.HK) -0.7%
TENCENT (00700.HK) -0.7%
PING AN (02318.HK) +0.1%

HSI & HSCEI Constituents on Move:
HAIDILAO (06862.HK) -6.9%
CK ASSET (01113.HK) +6%, hitting new high
ALI HEALTH (00241.HK) -5.1%
WUXI BIO (02269.HK) -5%
JD HEALTH (06618.HK) -4.6%
SINO BIOPHARM (01177.HK) -4.4%
EVERGRANDE (03333.HK) -3.8%
HSBC HOLDINGS (00005.HK) +3.8%, hitting new high
PSBC (01658.HK) +3.7%
CITIC (00267.HK) +3.6%
GUANGDONG INV (00270.HK) +3.2%
HANG SENG BANK (00011.HK) +2.9%, hitting new high
BANKCOMM (03328.HK) +1.4%, hitting new high

HSMI & HSSI Constituents on Move:
PER ENERGY (02798.HK) -68.6%
HENGTEN NET (00136.HK) -13.9%
YADEA (01585.HK) -13.2%
TONG REN TANG CM (03613.HK) +10.4%, hitting new high

MARKET HOURS NEWS
.
The Ng Teng Fong Charitable Foundation under the Sino Group and CHINESE EST H (00127.HK) will donate a one-bedroom flat of Grand Central jointly as the ultimate prize for the lucky draw. The size of the flat is approximately 449 square feet with an estimated market value of $10.80 million.
Any Hong Kong permanent resident aged 18 or above who have received two doses of vaccine could participate in said lucky draw.
Secretary for Transport and Housing Frank Chan mentioned the full commissioning of Tuen Ma Line (TML) on 27 June, when two new stations (namely To Kwa Wan Station and Sung Wong Toi Station) and new TML platforms at Hung Hom Station and Ho Man Tin Station will all be put into service.
Asked about the cross-harbor "North South Corridor" (i.e. Hung Hom-Admiralty segment under Sha Tin to Central Link), Chan said both the Government and MTR will strive to catch up with the schedule despite fairly grave challenges.
Ten democratic defendants, including NEXT DIGITAL (00282.HK) Founder Jimmy Lai Chee-ying, as well as Lee Cheuk Yan and Albert Ho Chun-Yan, were sentenced to imprisonment ranging 14-18 months, among which Jimmy Lai was sentenced to a 14-month imprisonment. The related democrats had earlier been accused of organizing and partaking in unlawful assemblies knowingly on 1 October 2019. They had pleaded guilty and made their address previously. The court announced its judgement today (28 May).
The global wearable device market stayed robust in the first quarter of 2021, with shipment rising 34.4% YoY to 105 million units, according to IDC. By brands, XIAOMI-W seized a market share of 9.7%, coming in third globally and being surpassed by Samsung.
While the logistics sector in China is facing a price war challenge amid intensified rivalry post epidemic, the logistics business has an expanding customer base for JD LOGISTICS (02618.HK) apart from creating profit, the CEO Yu Rui said. Upon establishing business ties with clients, the company can further provide more one-stop supply chain services. Therefore, the CEO thought the price war to pose mild impact on their operation.
The company reported a more than RMB4 billion of loss last year. Group CEO Yu Rui attributed past losses to input ramp-up for business layout, including expansion of logistics network, warehouse space and other logistics infrastructure.
It also noted that JD LOGISTICS has been less and less dependent on its parent JD-SW (09618.HK), with revenue from external customers making up over 46% of the 2020 total. Yu expected the group's third-party revenue to keep gaining weight going ahead.
The government will not be able to eliminate Bitcoin, commented the star investor Cathie Wood, amid the brooding concerns as China imposes an all-rounded ban on cryptocurrency while higher scrutiny is being carried out in Europe and the U.S. Wood believes the governments will become friendlier to cryptocurrency in fear of missing out on the opportunity of an industry innovation.
The U.S. Senate advanced the USD250 billion US Innovation and Competition Act (USICA) with the aim to fortify their competitiveness against Chinese technology. The act awaits to be passed in the House of Representatives before being signed by president Biden into official law.
The act proposes disposing USD190 billion for the enhancement of the U.S.'s technological capability and strengthening alliance with international organizations to counter China's influence through diplomatic means.
ALI HEALTH (00241.HK) clinched a strategic cooperation agreement with German pharmaceutical company Bayer, whereby both parties will focus on exploring the patient management business of anticoagulant drugs, and will unfold deep cooperation in new drug retail, patient education, online medical services, and so on.

PRE MARKET HOURS NEWS
China Foreign Exchange Trade System announced Friday (28 May) that the central parity of USD/ RMB added 172 bps from the last trading day to 6.3858, hitting an about-three-year high.
The latest Drewry World Container Index showed that the rate for a 40-foot container to Rotterdam from Shanghai had climbed to US$10,174, up 3.1% weekly and 485% yearly, Bloomberg reported. The reading hit a new high since 2011.
GALAXY ENT (00027.HK) announced that all employees who have received two-dose COVID-19 vaccine between June and July are entitled to enjoy a maximum 2 days of "special vaccination leave", reported Radio Macau.
Also, GALAXY ENT plans to invite Macau's Health Bureau to set up vaccination booths in Galaxy Macau between the 10th and 12th in the coming month.
TOWNGAS CHINA (01083.HK) remarked that with the pandemic situation stabilizing in the mainland this year, industrial, commercial and public activities have almost resumed to normal. TOWNGAS CHINA’s revenue and profits for the first quarter of the year both recorded remarkable growth. Total gas sales for the first four months of the year rose by one-third. The group expects double digit growth in its gas sales this year as a result of the mainland’s economic recovery, increase in exports, clean energy promotion policies and a stable gas source.
The current foreign exchange market is considered to be balanced yet with various possible market factors and policy incentives to affect the direction of it in future, which may subsequently lead to either the appreciation or depreciation of the RMB, commented 30 members of the China's Foreign Exchange Self-Regulatory Mechanism during their 7th working meeting. During the meeting, it was upheld that companies are obliged to promote the concept of "risk-neutral" and avoid participating in betting on exchange rate. Betting on the appreciation or depreciation of RMB exchange rate was likewise cautioned against given potential long-term loss.
CK ASSET (01113.HK) Chairman Victor Li was glad the acquisition and the share buy-back offer had concluded successfully, marking a significant milestone for the group. Li expressed his deepest gratitude to shareholders for their trust and support. The group will remain committed to propelling business development adding value for shareholders as always, he furthered. CK ASSET received valid acceptances in respect of 411 million shares under the share buy-back offer. The proposed acquisition was completed on 21 May, while the share buy-back offer closed at 4:00 p.m. on 27 May.
A-LIVING (03319.HK) announced the planned placing of 86.6668 million H Shares at the Placing Price of HK$37.6 each, representing a discount of 6.58% to the closing price yesterday. The net proceeds from the Placing are estimated to be HK$3.242 billion.
China's State Administration for Market Regulation fined Beijing Shihui Technology RMB1.5 million on 27 May according to the law, ordering Nice Tuan to pause business for three days in Jiangsu amid rectification. In the next step, SAMR will pay close attention to community group-buying market competition without looser regulation and enforcement. The watchdog is adamant about keeping market price order. Equally, the authority offered other concerning firms a solemn reminder that there is no talisman even if they have paid their penalty.
Some Chinese counties are seeing home prices of as much as RMB30,000-40,000 per sq.m., Xinhua Insight reported.
Considering different economic build out levels across regions, experts said real estate control policies need to be implemented more precisely. Equally, the Government should cool down the sizzling property markets with notable speculation in time.
CK ASSET (01113.HK) announced that the Proposed Acquisition was completed on 21 May 2021. The valid acceptances in respect of a total of 411 million Shares were received from the Accepting Shareholders under the Share Buy-back Offer, representing 108.17% of the Maximum Number of Shares of 380 million to be bought back by the Company under the Share Buy-back Offer and 10.21% of the total number of issued Shares. The total consideration payable by the Company is HK$19.38 billion. Immediately after the Cancellation, the Controlling Shareholder Group (including LKSF) directly and/or indirectly holds 45.60% of the total issued Shares, up from the currently 41.29%.