HK/CHINA WRAP Sold down as investors turn more cautious as 2H starts; on good volume. No sign of Team China.
HSI -518pts (-1.8%) 28,310 HSCEI -248pts (-2.3%) 10,416 T/O HK$175.88bn (+20.4% DoD as connect flows resume)
Markets opened higher but have drifted back to trade around flat with caution ahead of the US jobs data. Eurozone PPI higher on rising energy costs.
Caixabank -0.6% announced laying off 6,452 employees in the biggest staff overhaul in the history of the Spanish banking sector.
Meanwhile U.S. activist hedge fun Elliott is urging GlaxoSmithKline +0.9% on news Elliott is urging it to review its leadership and consider selling some of its consumer healthcare business.
Kindred Group -6.7% in early trade after announcing the acquisition of Relax Gaming.
Ambu -11% after revising down its full-year profit guidance.
PPI May +1.3% MoM vs +1% Apr (F/cast was +1.2%)
PPI May +9.6% YoY vs +7.6% Apr (F/cast was +9.5%)
Budget Balance May €-118.79B vs €-91.37B (F/cast was €-104B
Opened in Asia Dow -9pts, S&P and NDX slightly -VE now flat ahead of the jobs report.
CHINA CSI 300 closed -149pts (-2.8%) @ 5,081
CSI 300 opened lower and trended lower through the morning with support at 5,100 going into lunch. PM saw the market continue to drift lower to close around the day lows. No sign of Team China. Various reasons being rumoured; including rising yield concerns, lack of catalysts following 1H earnings reporting and a pickup in margin-trading short-selling activities.
Laggards were Liquor giant Moutai and China Merchants Bank.
Foreign investors are also dumping mainland shares via Stock Connect, with net outflows hitting 8.6b yuan, the most since September.
Yesterday's softer-than expected Caixin PMI data also weighted on investor outlook; the June data was the lowest number in three months indicating decreasing momentum for China manufacturing rebound.
Shanghai Composite -70pts (-2%) @ 3,519
Shenzhen Composite -368pts (-2.5%) @ 14,670
ChiNext Composite Index -73pts (-2.1%) @ 3,430
Guangdong's National Health Commission reported zero local COVID-19 case and asymptomatic case yesterday (29 June), along with 8 imported infections.
HSI Pre market opened @ 28,859 +31pts vs +139pts ADR’s Oil names firm, Evergrande +VE but Ecommence very weak. Market sold down sharply to 28,600 in the first few minutes with ECommerce names heavily sold. Continued selling before seeing support at 28,310 around 11am and then worked slightly better into lunch. PM drifted lower, saw a small bounce but then the selling resumed support around 28,230 level late afternoon and then worked slightly better into the close.
Caution ahead of the US payrolls numbers and a comment from the IMF that the U.S. Fed will likely begin to scale back asset purchases in the first half of 2022, and probably needs to raise interest rates later that year or in early 2023. Covid cocnerns also a worry.
ZYLOXTB-B (02190.HK), which is scheduled to be listed next Monday (5 July), opened high at $50 in gray market, +17%, PhillipMart data showed. The stock last posted at $56, up 31% against its listing price of $42.7, on a volume of 500,000 shares.
HONG KONG DATA
The Centre for Health Protection (CHP) reported 11 new covid cases today (2 July) One of which was temporarily listed as a local untraceable infection.
Short Selling Friday 16.8% vs 13.8% Wednesday
Top Shorts Country Garden (2007) 46%, Hengan (1044) 41%, Hang Seng Bank (11) 38%, CLP (2) 36%, BankComm (3328) 31%, Bank of China (3988) 31%, MTRC (66) 30%, ICBC (1398) 30%, HSBC (5) 30%, Ping An (2318) 30%, Henderson Land (12) 29%, CKI (1038) 26%, Wuxi Bio (2269) 26%, BaBa (9988) 25%, CK Asset (1113) 25%
AFTER MARKET NEWS
XIAOMI-W (01810.HK) announced that on July 2, the Company awarded a total of 70.2317 million Award Shares to 3,904 Selected Participants under the Share Award Scheme. The closing price of the Shares on the date of grant of the Awards was HK$26.2.
CK ASSET (01113.HK) announced that Li Ka Shing Foundation Limited acquired a total of 1.685 million of the company's shares at the average price of HK$53.2654, HK$53.32, HK$53.6003 and HK$53.7711 per share on 25 June, 28 June, 29 June and 30 June 2021 respectively. As a result, the deemed interests of Li Ka-shing, Victor T K Li and Li Ka Shing Foundation Limited in CK Asset under the Securities and Futures Ordinance, based on the existing total number of issued shares of nearly 3.647 billion CK Asset shares, are as follows: Li Ka-shing's increased from 45.57% to 45.61%; Victor T K Li's increased from 45.63% to 45.68% and Li Ka Shing Foundation Limited's increased from 10.88% to 10.93%.
SOUND GLOBAL (00967.HK) announced the further delay in publication of annual results and despatch of the annual report for the year ended 31 December 2019; publication of interim results and despatch of the interim report for the six months ended 30 June 2020; and publication of annual results and despatch of the annual report for the year ended 31 December 2020. Trading in the shares of the Company has been suspended with effect from 13 April 2016 and will remain suspended until further notice.
Internet names -VE after Guangdong announced further restrictions on large-scale Internet platforms,
Centa-City Leading Index (CCL) last stood at 188.38, up 0.15% weekly to a 97-week high, said the research department of Centaline Property.
For the first half of 2021,
CCL Mass +6.53%
CCL (large units) +8.01%
CCL (small-and-medium flats) +6.69%.
The luxury home index outran the small-and-medium flat index, meaning luxury home prices had been chasing laggard in the first half of year.
*PETROCHEM FIRM on oil price jumped after the OPEC+ talks broke down. An agreement to boost output was thrown into doubt as the UAE blocked a preliminary deal Saudi Arabia forged with Russia on Thursday. The alliance descended into infighting, casting doubt on an agreement that could ease a surge in prices. Also SINOPEC (386 HK -0.5%) and PETROCHINA (857 HK +0.3%) issued positive profit alerts for the first half of the year, which they attributed to the strong rebound in global oil prices; CNOOC (883 HK +1%).
*E-COMMERCE/INTERNET VERY WEAK yield concerns seem to be one reason. Others include Jack Ma pledging shares but Ionly saw that in the PM. Pre market there was news of Krafton in S Korea which had to scale back the size of its IPO. Also the general feeling that growth stocks are very sensitive to interest rates which could rise sooner rather than later.
ALIBABA (9988 HK -3.6%) is poised to make its first major investment since it paid a record antitrust fine as part of a bruising crackdown on Jack Ma's internet empire. A consortium led by the Alibaba and the Jiangsu provincial govt is nearing a deal to buy a stake in the retail arm of Suning conglomerate, news reported. The deal would add to the 20% stake that Alibaba already owns in Suning.com, one of China's biggest retailers of appliances, electronics and other goods that's valued at ~US$8b.
TENCENT (700 HK -1.6%) MEITUAN (3690 HK -5.1%) YEAHKA (9923 HK -5.1%) BIDU (9888 HK-3%) KUAISHOU (1024 HK -6%).
*MACAU CASINOS WEAK Gaming revenues in Macau rose for the 5th straight month; up 8.12x YoY to 6.54b patacas in June, beating estimates, but on a monthly basis, -37.4% MoM affected by re-emerging Covid cases in Guangdong province. June's numbers are only 27% of the level seen before the pandemic struck. GGR for the first half grew 45.4% YoY to 49.02b patacas. Sector also weighted down by the news that HK-Macau border may not re-open due to a possible local Covid case reported in HK. Also worth noting that the casino’s have been trimming staff numbers over the past month or so.
GALAXY (27.HK -2.3%) MGM (2282.HK -3.9%) MELCO (200.HK -1.7%).
*AUTOS WEAK concerns of slowing sales growth. DONGFENG GROUP's (489 HK -1%) VOYAH Motor Science and Technology's VOYAH FREE first mass-produced car rolled off the assembly line in Wuhan. As a "new strength in vehicle manufacturing", Yoyah will strive to become a leader in China's high-end new energy passenger cars. GREATWALL (2333 HK -2.4%) GEELY (175 HK -4.7%) GAC (2238 HK -2%).
ZHONGSHENG (881 HK +7.8%) announced to acquire a Mercedes-Benz distributor in China from Jardines in a cash-and-share deal worth US$1.3b.
*HK RETAILERS MIXED after HK retail sales growth slowed in May, +10.5% YoY. The sector is still struggling because of the lack of tourist/visitor spending. In April, there was a 12.1% growth. Retail sales in May are estimated at HK$29.6b, which is 26% lower than sales in May 2019 before the onset of the pandemic. SASA (178 HK -5.4%) BONJOUR (653 HK -6%) LIFESTYLE (1212 HK +2.2%) CTF (1929 HK -0.9%) GIORDANO (709 HK +3%).
FE HORIZON (3360 HK +3.3%) said it plans spin off and separately list shares of Horizon Construction Development on the main board of the stock exchange.
XINYI SOLAR (968 HK -8.1%) continue to drop on concern the U.S. Has included it on the list of export control entities, accusing them of their involvement in forced labor in Xinjiang.
Market opened higher; initial testing above 7,300; hitting resistance at 7,312. Market sold down to 7,280 where it found support and then trended higher but hit resistance at 7,300 which it tested throughout the afternoon. Closed +43pts (+0.6%) @ 7,309
Energy stock lead the gains also +VE were Financials, Telstra Carsales.com, Domain Holdings, and News Corp. IDO Education +20% on becoming the sole distributor of IELTS English Language Tests.
PM Morrison announced a 4 phase re-opening scheme; dependent on vaccine milestones.
Data out in the morning
Home Loans May +1.9% MoM vs +4.3% Apr (F/cast -1.1%)
Investment Lending for Homes May +13.3% vs +2.1% Apr (F/cast was +1.8%)
Nikkei opened higher and trended higher through the morning to 28,850 around 10am. It then eased back to trade around 28,800 going into the lunch break. PM the market traded sideways between 28,765/800 and closed +76pts (+0.3%) @ 28,783
Topix followed a similar pattern, hit resistance at 1,959 then traded around 1,955 for most of the rest of the day but saw an uptick at the end to close +17pts (+0.9%) @ 1,956
KDCA reported 826 new covid cases during the morning hitting a 6 month high -VE for sentiment.
Kospi opened flat but rallied in the first hour as inflation came in lower than expected. Hit resistance at 3,295 and then sold down to almost flat before starting to work higher again but only to 3,288 but around 1pm sold down to 3,280 before working up to close flat @ 3,288
Kosdaq opened higher @ 1,036 but basically traded around flat for most of the day before a rallying to close +3pts (+0.3%) @ 1,038
Inflation Rate Jun +2.4% YoY vs +2.6% May (F/cast was +2.8%)
Inflation Rate Jun -0.1% MoM vs +0.1% May (F/cast was +0.2%)
Taiex opened higher at 17,745 and worked higher, hit resistance around 17,776 after 30 minutes. Sold down to flat before bouncing to 17,785. Then eased back to trade around flat into the close -4pts (+0.02%) @ 17,710 T/O was US$21.67b vs US$23.02B Thursday
CECC reported 58 new covid cases
Apple and Intel have tested their chip designs with the next-generation 3nm chip production technology from TSMC in advance, with commercial output of these chips slated to begin in the second half of 2022, reported Nikkei.
Northbound RMB 62,810m Sell 32,431m vs 28,379m Buy
Southbound HK$ 20,484m Sell 12,229m vs 8,256m Buy
Northbound RMB 71,186m Sell 36,689m vs 34,317m Buy
Southbound HK$ 23,907m Sell 13,490m vs 10,418m Buy
MEITUAN (03690.HK) -5.1%
BABA (09988.HK) -3.6%
TENCENT (00700.HK) -1.6%
HKEX (00388.HK) -1.5%
PING AN (02318.HK) -1.5%
AIA (01299.HK) -0.7%
CCB (00939.HK) -0.7%
HSI & HSCEI Constituents on Move:
XINYI SOLAR (00968.HK) -8.1%
KUAISHOU-W (01024.HK) -6%
BYD COMPANY (01211.HK) -4.7%
CG SERVICES (06098.HK) -4.7%
GEELY AUTO (00175.HK) -4.7%
EVERG SERVICES (06666.HK) -4.4%
JD HEALTH (06618.HK) -4.2%
ALI HEALTH (00241.HK) -3.8%
ANTA SPORTS (02020.HK) -3.8%
CHINA RES BEER (00291.HK) -3.7%
SUNNY OPTICAL (02382.HK) -3.6%
BIDU-SW (09888.HK) -3.1%
HSMI & HSSI Constituents on Move:
PER ENERGY (02798.HK) +14.1%
MAPLELEAF EDU (01317.HK) -11.4%
LEE & MAN PAPER (02314.HK) +11.3%
ND PAPER (02689.HK) +10.8%
SUNLIGHT REIT (00435.HK) +8%, hitting new high
CIMC (02039.HK) +2.6%, hitting new high
MARKET HOURS NEWS.
WeChat Pay HK announced to launch additional offers for users redeeming consumption vouchers via the app, including merchant offers worth over $10,000 in total and a lucky draw with a maximum daily reward of $5,000. The company will also provide a merchant map in July to facilitate users to discover available discounts nearby.
BABA-SW (09988.HK)'s founder Jack Ma and its executive vice chairman Joe Tsai have pledged a substantial amount of their shares in the company to several investment banks, including UBS, Credit Suisse and Goldman Sachs, in exchange for bank loans, reported Financial Times. The two are the most substantial individual shareholders of BABA-SW, with the combined value of their shares reported to reach over USD35 billion.
The number of mortgages for completed flats in June this year amounted to 9,557, up 25.2% month-over-month, setting a 9-month new high; and that of uncompleted flats surged 21.1% month-over-month to 912, marking a new high in 17 months, according to statistics from mReferral's Research Department and the Land Registry. Compared to the same period in last year, the mortgage number of completed flats in June rose 27.6% YoY to 7,488, while that of uncompleted flats rose 106.3% YoY.
Douyin E-commerce published a governance notice on handset goods. Having launched a special governance campaign on cellphones, Douyin E-commerce has handled 320 non-compliant handset products and punished 57 merchants in this regard, revealed the notice.
Huawei is currently speeding up its global recruitment process and expanding its R&D investment in chip-related industries in China, reported The Nikkei. The report stated that Huawei is hiring chip engineers, software developers and AI researchers on different platforms, with working locations scattered around Germany, Turkey and Canada.
BABA-SW (09988.HK)'s CEO Daniel Zhang announced today (2 July) to initiate a series of organizational upgrades, with the aim to achieve a sector-oriented managerial mode best suited to the current business environment with multiple engines and operations, reported Chinese media. BABA-SW's Amap, Ali Local Life Services and Fliggy will be amalgamated into a new life service unit, with Yu Yongfu at the helm, reporting directly to Daniel Zhang.
HUTCHMED (00013.HK) announces that the U.S. Food and Drug Administration (FDA) has accepted its filing of the New Drug Application (NDA) for surufatinib for the treatment of pancreatic and extra-pancreatic (non-pancreatic) neuroendocrine tumors (NETs). The Prescription Drug User Fee Act (PDUFA) goal date assigned by the FDA for this NDA is April 30, 2022.
CKH HOLDINGS (00001.HK) announced that it has agreed with Ooredoo to extend the period to pursue negotiations on a potential transaction to combine PT Hutchison 3 Indonesia, a subsidiary of the company, and PT Indosat TBK, a subsidiary of Ooredoo, on an exclusive basis until 16 August. While substantial progress has been made and substantive agreement has been reached on a number of key commercial issues, additional time is needed by the parties to finalise definitive agreements and, once finalised, to seek their respective internal corporate approvals.
ZHONGSHENG HLDG (00881.HK) announced that the company would purchase Zung Fu China, one of the largest dealership networks of Mercedes-Benz in Southern and Western China, from Jardine Motors under JSH, a substantial shareholder of the company. The consideration payable by the company for the acquisition is USD1.3 billion. The company will settle USD900 million in cash; with the balance to be settled by the issuance of the consideration shares at the issue price of HKD63.3964 per share.
NEW WORLD DEV (00017.HK) announced the four-bedroom special units of its 'The Pavilia Farm III' recorded a transaction price of up to over $45,000 per square foot, breaking the price record of multi-level apartments in the New Territories for the second time in the same week. It also announced that the company has, as of the end of June, sold over 980 housing units, cashing in close to $14.7 billion in the first half of the year.
TikTok announced to broadly adopt a longer video format on its platform in coming weeks, allowing the maximum length of the videos to be up to 3 minutes, with the current limit being set at 60 seconds. Fuel Injector, a management company for TikTok's influencers, expressed that extending the video length limit could lead to increased users' income, which would be beneficial to TikTok in its competition with other platforms that originally endorse longer videos, such as Facebook.
HKEX (00388.HK)'s CEO Nicolas Aguzin expressed on the Bond Connect forum that China leads the global economic growth in the post-COVID era, and under a low interest rate environment in the long run, the Chinese market is more appealing to investors. Under such circumstance, Hong Kong retains its unique competitive edge as the connecting bridge between China and the international capital markets, and its role would only become increasingly important over time, added Aguzin.
PRE MARKET HOURS NEWS
SCE CM (00606.HK), on debut, opened at $3.81, up about 3% against the listing price of $3.7, on volume of 22.95 million shares in pre-market orders.
Sources reported that travel between Hong Kong and Macau could resume as soon as 11 July with the Macau's authorities to release relevant details today at the earliest. It is understood that Hong Kong visitors entering Macau will have to be fully vaccinated and to be able to present a negative COVID-19 nucleic acid test result. The chief executive Carrie Lam, returning from Beijing last night, has also stated that Hong Kong has made tremendous progress in terms of containing the COVID-19 pandemic and that the Chinese government has asked for detailed reports to evaluate the possible border reopening between Hong Kong and China.
The Centre for Health Protection said it is investigating a local preliminary positive COVID-19 case from an unknown source involving the L452R mutant strain. The 41-year-old female patient has been asymptomatic and had no recent travel history. She worked as a part-time cleaner at Bridal Tea House Hotel, which is a designated quarantine hotel in Yau Ma Tei. She last worked on July 1.
Several major transportation hub construction projects have been accelerating in Shenzhen as the one-hour living circle continues to expand, reported Securities Times. Guangdong's NDRC announced to have included the second high speed railway route between Guangzhou and Shenzhen in the national development projects. The NDRC will carry out the preliminary researches alongside relevant cities and departments.
PETROCHINA (00857.HK) issued a positive profit alert. It is estimated that the net profit attributable to equity holders of the Company for the first half of 2021 will increase by an amount between RMB75 billion and RMB90 billion, turning losses into profit based on PRC Accounting Standards.
SINOPEC CORP (00386.HK) issued a positive profit alert. Under the PRC Accounting Standards, the net profit attributable to equity shareholders of the Company for the first half of 2021 is estimated to be between RMB36.5 billion and RMB38.5 billion, representing a turnaround from loss to profit as compared with the corresponding period in 2020, and representing an estimated increase between 16.6% and 23% as compared with the corresponding period of 2019.
CITIC SEC (06030.HK) issued a positive profit alert. The company estimates that the net profit attributable to owners of the parent for the first half of 2021 will increase 20%-30%, as compared with that of the same period of the last year.
Q TECH (01478.HK) announced that Kunshan QT China received the notice of acceptance of the Listing Application from the Shenzhen Stock Exchange on 30 June. The terms of the Offering and the timetable of the Proposed Listing have not yet been fixed up to now.
HAITONG SEC (06837.HK) issued a positive profit alert. The net profit attributable to shareholders for the first half of 2021 is expected to increase by 35% to 50% as compared with that for the corresponding period of last year.
PICC P&C (02328.HK) issued a positive profit alert. The net profit of the Company for the first half of 2021 is expected to increase by 20% to 35% as compared to the same period of 2020.
MICROPORT (00853.HK) announced that EP, a 38.49% owned associated corporation of the Company, is planning to seek a listing on the Sci-Tech Innovation Board of the Shanghai Stock Exchange. On 30 June, the Shanghai Stock Exchange has accepted the application of EP.
NWS HOLDINGS (00659.HK) announced that the company entered into the framework agreement with XIAMEN PORT (03378.HK) in relation to the proposed disposal of the 20% equity interest in the JV Company Xiamen Container Terminal, at the consideration of RMB1.568 billion (equivalent to approximately HKD1.878 billion).
Upon completion, the group will no longer hold any equity interest in the JV company and will have fully exited all investments in port-related projects.
XPENG-W (09868.HK) announced that the offer price had been confirmed at HK$165 per share. The gross proceeds from the offering are expected to be HK$14.025 billion. The stock will likely begin trading on 7 July.