HSI -166pts (-0.6%) 28,828 HSCEI -94pts (-0.9%) 10,663 T/O HK$146.12bn (-4% DoD no Northbound connect flows but two IPO’s)
Markets opened flat but sold down on covid concerns and mixed data raising inflation fears until around 11am when the started to bounce. Auto’s leading the laggards but all sectors in the red. IAG weak on news of a probe into its planned T/O of Air Europa
EssilorLuxottica is pushing ahead with its planned acquisition of Dutch eyewear chain Grandvision.
Porsche -5% while Swedish cloud comms firm Sinch +2.8%.
Core Inflation Rate Jun +0.9% vs +1% YoY May (F/cast was 1%)
Inflation Rate Flash Jun +1.9% YoY vs +2% May (F/cast was +2%)
Inflation Rate Flash Jun +0.3% MoM vs +0.3% May (F/cast was +0.4%)
Unemployment Rate May +3.7% vs +3.8% Apr (F/cast was +4.4%)
Unemployment Change Jun 5.9% vs 5.9% May revised (F/cast was 5.9%)
Inflation Rate Prelim Jun +1.5% YoY vs +1.4% May (F/cast was +1.6%)
Inflation Rate Prelim Jun +0.2% MoM vs +0.3% May (F/cast was +0.3%)
Household Consumption May +10.4% MoM vs -8.7% Apr revised (F/cast was +0.6%0
PPI May +0.5% MoM vs -0.8% Apr revised (F/cast was +0.6%)
PPI May +7.2% YoY vs +6.7% Apr revised (F/cast was+7.9%)
Current Account Q1 £-12.8B vs £-26.3B Q4 (F/cast was £-16B)
Business Investment Final Q1 -16.9% YoY vs -7.4% Q4 (F/cast was-18.1%)
Business Investment Final Q1 -10.7% QoQ vs +5.9% Q4 (F/cast was-11.9%)
GDP Growth Rate Q1 -1.6% QoQ vs +1.3% Q4 (F/cast was -1.5%)
GDP Growth Rate Q1 -6.1% YoY vs -7.3% Q4 (F/cast was -6.1%)
Opened in Asia Dow +20pts, S&P +0.08% and NDX +0.11% but turned lower in European hours currently Dow -50pts S&P -0.1%, NDX slightly -VE.
Ahead MBA Mortgage Applications and 30 yr Mortgage Rate, ADP Employment Change, Chicago PMI, Pending Home Sales, EIA Oil Report
CHINA CSI 300 closed +34pts (+0.7%) @ 5,224
CSI 300 opened Pre Market PMI data CSI 300 opened flat but rallied despite weak PMI data but trading was choppy through the morning. PM market opened higher at 5,220 and traded 5,230/210 through the afternoon to close at the upper end; suggesting Team China working hard.
Most sectors were strong but total trading volume shrank again, returning to below 1 trillion yuan for two consecutive days.
Leaders Tech, cyclical and financial sectors; Sector wise, semiconductor, software, steel, medicine, brokerages, military, white liquor, gas, insurers, coal, auto, and banks.
Laggards Agriculture, electricity, and traded weaker.
Shanghai Composite +18pts (+0.5%) @ 3,591
Shenzhen Composite +162pts (+1.1%) @ 15,162
ChiNext Composite Index +72pts (+2.1%) @ 3,551
Manufacturing PMI Jun 50.9 vs 51.0 May (F/cast was 50.9)
Non Manufacturing PMI Jun 53.5 vs 55.2 May (F/cast was 55)
Manufacturing PMI in June is regarded as broadly in line as manufacturing industries continued to record steady expansion. It highlighted that the two indices representing the automobile manufacturing industry have seen a contraction pattern for two consecutive months, mainly due to the negative impact induced by factors like the chip shortage.
Non-manufacturing PMI showed a slacking expansion rate of the non-manufacturing industries. The 52.9% of combined PMI output index, the NBS contended, showed that Chinese companies continue to grow their production and operating activities in general, but in a slightly slower pace.
Guangdong's National Health Commission reported zero local COVID-19 case and asymptomatic case yesterday (29 June), along with one imported infection.
HSI Pre market opened @ 29,107 +114 pts vs ADR’s higher T/O with 2 IPO’s but no Northbound connect as HK closed Wednesday. After market Retail Sales Data. Market initially sold down to 28,922 in first 30 mins after weak PMI data. Bounced to flat but then sold down to lows beforea small bounce into lunch. PM opened flat but sold down after 30 mins to traded around 28,875 for the afternoon before dipping lower into the close and then dropped 27pts in the closing auction. Some end of month/quarter/half window dressing with E Commerce and Energy being bought but Consumer, Shipping and Property being sold.
On debut, HUTCHMED (00013.HK) closed at $60.3, up $20.2 or over 50% against the listing price of $40.1, on volume of 34.71 million shares and turnover of $2.185 billion. Excluding the handling fees, a book gain of $10,100 was reported per board lot of 500 shares.
NAYUKI (02150.HK) struggled on its first listing day as the stock closed at $17.12, -13.5% or $2.68 against its listing price of $19.8, on a volume of 150 million shares, involving $2.761 billion. Excluding the handling fees, a book loss of $1,340 was reported per board lot of 500 shares.
HONG KONG DATA
Retail Sales May +7.8% YoY vs 11% Apr (F/cast was +12%)
The government announced today (June 30) its financial results for the two months ended May 31, 2021. Expenditure for the period April to May 2021 amounted to HK$97.1 billion and revenue HK$76.3 billion, resulting in a cumulative year-to-date deficit of HK$20.8 billion. A government spokesperson said that the cumulative year-to-date deficit for the period 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.
According to statistics published today (June 30) by the Hong Kong Monetary Authority, total deposits with authorised institutions increased by 1.2% in May 2021, and monetary statistics for the month were not affected by IPO activity. Among the total, Hong Kong dollar deposits and overall foreign currency deposits increased by 0.8% and 1.6% respectively.
The Centre for Health Protection (CHP) reported 2 new imported cases today (30th). (vs 1 imported Tuesday) .
Short Selling Wednesday 13.8% vs 16.5% Tuesday
Top Shorts Bank of China (3988) 39%, Hengan (1044) 37%, Hang Seng Bank (11) 37%, Citic (267) 31%, BYD Co (1211) 29%, Bud Apac (1876) 28%, BankComm (3328) 25%, Henderson (12) 25%, Petrochina (857) 25%
AFTER MARKET NEWS
The Macau and Hong Kong governments had been in talks on border reopening, which will not entail zero local Covid infections in Hong Kong for 28 consecutive days. Full vaccination will be a must for travelers from Hong Kong to Macau, local media citing Macau Health Bureau's initial plan. Those arriving in Macau with quarantine exemption will be assigned a designated color code distinctive from Macau residents' health codes (either red, yellow, or green). However, Hong Kong entrants will be banned from using swimming pools and other water facilities in the hotels.
Wheelock Properties' Managing Director Ricky Wong expressed in a press conference that, including the collaboration projects, the company has sold at least 1,050 units in the first half of the year, cashing in $18.2 billion, already exceeding that of the entire last year of approximately $11.5 billion. Wong projected the full-year sales in 2021 may likely reach over $20 billion. On another note, Wong projected at least 5-8% hike for the Hong Kong home prices in the second half of the year, considering the fact that the pandemic is becoming under control, paired with robust economic recovery and the vibrant market sentiment.
REGINA MIRACLE (02199.HK) announced the results for the year ended 31 March 2021, recording a net profit of $126 million, down 56.7% year-over-year, with an EPS of 10.3 HK cents. The company also declared a total amount of dividend worth 4.8 HK cents, including 3.3 HK cents final dividend and 1.5 HK cents special dividend.
China's policy of allowing a couple to have three children can hardly reverse the deceleration of population growth, forecast Fitch Ratings. The nation's seventh national census suggested that population growth remained feeble although the government has since 2011 revoked "one child policy" progressively.
While the average annual population growth rate of China from 2010 to 2020 hit the trough since the onset of the census, the natural population growth rate in 2020 was the lowest since 1960.
Fitch did not see the latest population policy to increase births drastically as young couples, especially those in tier 1 and 2 cities, kept shouldering high costs from home price surge and education expenses.
Fitch Ratings initiated CALC (01848.HK) a Long-Term Issuer Default Rating (IDR) of BB+ and a Short-Term IDR of B. The Outlook on the Long-Term IDR is Stable. The Stable outlook indicated the rating agency's expectation that CALC will maintain sufficient liquidity to support larger orders, given sturdy operating environment in China.
SFC published "Annual Report 2020-21" which stated that the total income for the year ended by March was $3.008 billion, up 89% year-over-year. Owing to the increase in income, a surplus of $979 million was recorded for the year, compared to a deficit of $375 million last year.
The report further stated that as of 31 March 2021, the number of licensees and registrants increased to 47,178, of which the number of licensed corporations rose to 3,159.
*CHINESE FINANCIALS WEAK on bad-debt concerns, after CHINA HUARONG said neither it nor its auditor is able to estimate the time needed to complete or publish its 2020 annual results, and it's seeking to indefinitely delay its AGM. Meanwhile, it plans to offload its almost 80% stake in Huarong Zhongguancun Distressed Asset Exchange Center. ICBC (1398 HK -1.1%) CMB (3968 HK -0.2%).
*E-COMMERCE/INTERNET MIXED on end of half window dressing. ALIBABA (9988 HK +0.3%) led a consortium including the Jiangsu provincial govt are nearing a deal to bail out the retail arm of billionaire Zhang Jindong’s Suning empire, news said. TENCENT (700 HK -1.1%) KUAISHOU (1024 HK -3.8%) NTES (9999 HK +1.6%) BILIBILI (9626 HK -2.2%) MEITUA (3690 HK -1%) BAIDU (9888 HK +1.1%).
*TECH & COMPONENTS saw support as chip production delay remains a concern; INTEL fell in the US after saying a new version of its Xeon server chip line will go into production in 2022, rather than by the end of this year as promised. Meanwhile, several Chinese semiconductor companies announced eyecatching 1H2021 earning forecast. SMIC (981 HK +2.4%) FIT HON TENG (6088 HK +1.4%) HUA HONG (1347 HK +1.2%).
SOLOMON SYSTECH (2878 HK -13%) profit-taking after stock touched a 14-year high recently.
*AUTOS WEAK on concerns that the pace of car sales may slowdown in 2H, and the pace of EV expansion may not be as strong as expected. GEELY (174 HK -3.3%) said it is exploring other avenues for raising funds, including letting individual business units seek out capital on their own, after backing away from a listing on Shanghai’s Nasdaq-style Star Board. CEO Daniel Li said potential investors have approached Geely about its new electric-vehicle arm, Zeekr Intelligent Tech. GREATWALL (2333 HK -2.4%), DONGFENG (489 HK -1.7%) BYD (1211 HK -1.9%). Dealership YONGDA AUTO (3669.HK +7%) is reportedly selling 80% stake in Yongda Financial Leasing.
*MACAU CASINOS FIRM on news report of HK-Macau plans limited reopening of travel in mid-July. MELCO (200 HK +2.7%) SANDS (1928 HK +2.2%) GALAXY (27 HK +4.4%) SJM (880 HK +4.4%)
Market opened higher in-line with the futures for the final trading session of the financial year. High was 7,370 in early trades and then trended lower with support around 7,340 until 3pm after which it drifted lower to close +12pts (+0.2%) @ 7,313.
Leaders Communications and Materials. Telstra +4.3% on news its sold 49% of its tower business. AGL Energy -10% surprised investors said it will not issue a special dividend as it splits into two companies but preserve capital and issued a profit warning for coming years.
Covid cases remain a concern.
Private Sector Credit May +1.9% YoY vs +1.3% Apr (F/cast was +1.5%)
Private Sector Credit May +0.4% MoM vs +0.2% Apr (F/cast was+0.2%)
Nikkei opened higher and ticked up to 28,998 in opening trades but then sold down to flat at lunch time after Industrial Production data disappointed. PM traded around flat to close -21pts (-0.1%) @ 28,792
Topix traded in a similar pattern, early high was 1,960, to flat at lunch. PM trended lower to close -6pts (-0.3%) @ 1,944
Industrial Production Prelim May -5.9% vs +2.9% Apr (F/cast was -2%)
Industrial Production Prelim May +22% vs +15.8% Apr (F/cast was +27%)
Consumer Confidence Jun 37.4 vs 34.1 May (F/cast was 33)
Housing Starts May +9.9% YoY vs +7.1% Apr (F/cast was 8.5%)
Construction Orders May +7.4% vs +3.3% Apr (F/cast was +2.5%)
Tomorrow the Tankan Survey and PMI data
Investors encouraged on news the Moderna drug was effective vs the delta variant. Tech+VE following the US. Trading volume remained moderate with Foreigners and Institutions sellers net sellers. Retail remain buyers
KDCA reported 794 new covid cases (+199 DoD) a sharp spike.
Kospi opened higher despite mixed initial data; early high was 3,305 then consoldated back to 3,293 before working higher in choppy trading to 3,305 around 2:20pm but then trended lower to close +10pts (+0.3%) @ 3,297
Kosdaq opened higher rallied before easing back to the openeing level but then worked higher, saw resistance above 1,030 and closed +7pts (+0.7%) @1,030
Industrial Production May -0.7% MoM vs -1.6% Apr (F/cast was -0.4%)
Industrial Production May +15.6% YoY vs +12.6% Apr revised from 12.4% (F/cast was +19%)
Manufacturing Production May +16% YoY vs +13% Apr (F/cast was +21%)
Retail Sales May +3.1% YoY vs +8.6% Apr (F/cast was +7.9%)
Retail Sales May -1.8% MoM vs +2.1% Apr revised from +2.3% (F/cast was +1.4%)
Construction Output May -7.6% YoY vs -3.2% Apr revised from -1.8% (F/cast was -0.7%)
Tomorrow we get Trade Data and PMI
Taiex opened higher and trended higher but saw resistance approaching 17,800 and eased slightly at the end to close +157pts (+0.9%) @ 17,756
T/O was US$19.15bn vs US$21.18bn Tuesday. Old Economy stocks were leading focused on Shipping and Steel still. Tech was a relative laggard.
CECC reported 56 new covid cases (+2 DoD)
Tomorrow we get PMI data
CONNECT FLOWS (Northbound connect closed Wednesday and Southbound will be closed Thursday when HK closed).
Southbound HK$ 13,438m Sell 7,540m vs 5,897m Buy
Southbound HK$ 17,359m Sell 7,589m vs 9,770m Buy
TENCENT (00700.HK) -1.1%
MEITUAN (03690.HK) -1.1%
AIA (01299.HK) +0.8%
PING AN (02318.HK) -0.7%
BABA (09988.HK) + 0.3%
CCB (00939.HK) unchanged
HSI & HSCEI Constituents on Move:
HENGAN INT'L (01044.HK) -4.4%
GALAXY ENT (00027.HK) +4.4%
CHINA FEIHE (06186.HK) -4.2%
SHIMAO GROUP (00813.HK) -4%
EVERGRANDE (03333.HK) -4%
KUAISHOU-W (01024.HK) -3.8%
CHINA RES LAND (01109.HK) -3.4%
GEELY AUTO (00175.HK) -3.4%
XINYI SOLAR (00968.HK) -3.1%
HSMI & HSSI Constituents on Move:
XD INC (02400.HK) +17.3%
SSY GROUP (02005.HK) +10.7%, hitting new high
SIMCERE PHARMA (02096.HK) +5.4%, hitting new high
MARKET HOURS NEWS.
Deutsche Bank will be temporarily unable to sponsor IPOs in Hong Kong starting July as it lacks sufficient licensees for the time being, reported Reuters. Deutsche's sponsor licence was suspended following the resignation of two bankers in charge of IPO, the sources said. The licence shall be renewed assuming the vacancies have been filled.
NEXT DIGITAL (00282.HK)’s board of directors have decided that the group will purportedly cease operation from tomorrow (1 July). Its human resources department will follow up the compensation matters of relevant employees in accordance with labor legislation.
Law Chi-kwong, Secretary for Labour and Welfare, unveiled the enhancement and anti-abuse measures under the $2 public transport fare concession scheme. Starting 27 February 2022, the eligibility age for the scheme will be lowered from 65 to 60, likely involving 600,000 citizens. To enjoy the benefit, each passenger must apply for and use a personalized "JoyYou" Octopus card with their photo and both Chinese and English names.
ChemChina plans to raise about RMB65 billion (US$10 billion) by floating its Swiss agrichemical giant Syngenta on the SSE STAR Market, Reuters citing sources. Syngenta will purportedly unveil its prospectus today, and the deal could value the firm at US$60 billion (including debt) or US$50 billion (excluding debt).
SINGAMAS CONT (00716.HK)'s shares have been suspended from trading temporarily from 1pm, pending the possible disclosure of inside information from the company. The stock surged 25.7% to close at $0.88 at mid day, on a volume increased to 124 million shares.
EC HEALTHCARE (02138.HK) had proactively introduced strategic investors from telecoms, tech, insurance, pharma and other industries over the past year in pursuit of more synergies, as CFO Heung Wing Lee told reporters. The company will continue to woo strategic investors going ahead. EC Healthcare COO Gabriel Lee said the group has recently been invested by Adrian Cheng, alongside talks on joining hands in NEW WORLD DEV (00017.HK)'s projects.
HUTCHMED (00013.HK) made its debut on the Main Board
of the Stock Exchange today (30 June). The company may ramp up its cash resources to US$1 billion with the funds raised from IPO, together with gains from the latent OTC drug JV disposal, said CEO Christian Hogg at the press conference. The drugmaker maintains its target to achieve the break-even point between 2024 and 2025.
EVERGRANDE (03333.HK) today revealed to Chinese media that the group's net gearing ratio has fallen below 100% up to now, successfully eliminating one of the red lines. In March 2020, the Chinese property developer announced to roll out development strategies for sharp growth, scale control and debt reduction to keep bringing down its debt through utmost determination and efforts.
As the development ministerial session of the G20 meeting was being held, Vice Minister of the Ministry of Commerce Wang Shouwen expressed during a speech that China welcomes a discussion in regards to the issues of exempting the intellectual property rights for vaccines, under a WTO framework. Wang stressed that G20 remains to be an important platform for international economic collaboration and that the countries should be steadfast on the multi-lateral approach and collaborate on fighting the global pandemic and reaching the goal of sustainable development by 2030.
BYD COMPANY (01211.HK) announced that BYD Semiconductor has recently submitted the application material for the initial public offering and listing of its shares on the ChiNext Board of the Shenzhen Stock Exchange, and received the Notice on the Acceptance of BYD Semiconductor Company Limited’s Application Documents for the Initial Public Offering and Listing of Shares on the ChiNext Board from the Shenzhen Stock Exchange on 29 June 2021.
CHINA HUARONG (02799.HK) announced that the Company intends to transfer its equity of 79.6% holding in Huarong Exchange Center. If the Potential Equity Transfer is completed, Huarong Exchange Center will cease to be a subsidiary of the Company and will no longer be consolidated into the consolidated financial statements of the Group.
Tap & Go partners with Trip.com to launch consumption voucher discounts worth as much as $480. The discount designates that from 1 August 2021 to 30 September 2021, any Tap & Go users who use the designated discount code to book any travel products on Tap & Go x Trip.com page, fulfilling a certain amount of transaction, could enjoy an exclusive discount.
Those who spend the total $5,000 of their consumption vouchers could enjoy a discount of as much as $480.
NEXT DIGITAL (00282.HK) announced that on 29 June 2021, the Company accepted a non-legally binding proposal made under a letter of intent entered into with a potential purchaser in respect of a possible disposal by the Group of Taiwan business. The related subsidiaries publish the online edition of Taiwan Apple Daily. The Proposal is subject to contract and due diligence which the Potential Purchaser anticipates to complete on or before 9 July 2021. The parties have agreed to work towards signing definitive transaction agreement(s) on or before 30 July 2021 or such later date as may be mutually agreed.
The application market research institution Sensor Tower stated that mobile phone applications garnered a revenue of USD64.9 billion worldwide in the first half of the year, up 25% year-over-year. Sensor Tower's report continues to illustrate that the TikTok topped the chart as the top grossing application among non-gaming apps, earning USD920 million, up 74% year-over-year, with Google's YouTube trailing behind with USD565 million. Among the gaming applications, Honor of Kings by TENCENT (00700.HK) is crowned as the champion, generating over USD1.5 billion revenue.
PRE MARKET HOURS NEWS
Both Hong Kong and Macau intend to go ahead with limited border resumption in mid-July, whereby no quarantine is required in traveling between two places, Commercial Radio Hong Kong cited sources. However the two cities are still observing how the epidemic in Hong Kong is going to pan out for the final decision due to the Delta variant confirmed cases found among ground support staff. There has been no spillover from the two Delta cases so far, sources said, hoping the border reopening will not be upset.
NDRC's Guangdong branch published a notice on the launch of auto trade in special action for 2021, reported Nanfang Daily.
According to standards, those replacing their scrapped cars with NEVs in use will receive an RMB10,000 subsidy per vehicle. Old car owners will be granted a RMB5,000 subsidy per car for buying fuel-engined vehicles.
Shenzhen Municipal People's Congress has passed a new law on environmental protection yesterday (29th), which is scheduled to take effect from the coming September, reported Shenzhen Special Zone Daily. The regulation authorizes the city government to establish standards for carbon emission intensity for major industries and to designate projects with limit-exceeding carbon emission estimate to a negative admission list.
GEELY AUTO (00175.HK) is considering other avenues to raise capital despite withdrawing from the SSE STAR Market listing, the carmaker's Co-Vice Chairman Daniel Li told Bloomberg. For instance, Geely may allow its brands to raise funds on their own. Potential investors have also approached Geely's EV arm Zeekr, revealed Li.
At G20 Foreign Ministers' virtual meeting, Chinese Foreign Minister Wang Yi urged G20 members to adopt responsible macro policies and prevent negative spillovers to others, thus ensuring stable operation of international economic and financial systems. Meanwhile, the group has to build an open global economy with steadfast efforts, while taking the lead to keep industrial and supply chains worldwide secure and sturdy, Wang furthered.
Didi Chuxing's parent company Didi Global Inc will start to be listed in New York from today (Wednesday) and is said to have raised USD4 billion while pricing the shares at the top end of its listing price at USD14 apiece, reported Reuters, citing market's sources. The report stated that the valuation of Didi Global Inc reaches approximately USD73 billion on a fully diluted basis.
CSC (06066.HK) (601066.SH) announced that the Company had entered into a fintech strategic cooperation agreement with Tencent. Pursuant to which, both sides shall work together particularly on fintech, financial business, user service, creating an online base for investor education, and building fintech teams.
According to Baidu Apollo's official WeChat account, BIDU-SW (09888.HK) and GREATWALL MOTOR (02333.HK) (601633.SH) will enter into an extensive partnership on AVP products, with their first collaboration smart vehicle model that is equipped with the AVP functions -- WEY Mocha project to be launched in the second half of 2021.
The Communist Party of China (CPC) is set to celebrate its centennial at Beijing's Tiananmen Square at 8am tomorrow, reported Xinhua News Agency. Xi Jinping, General Secretary of the CPC Central Committee, Chinese President and Chairman of the Central Military Commission, will deliver an important speech at the celebration ceremony.