Market Highlight

Asian stocks were mixed, with Japan and South Korea down, while Australia rose. US futures slipped after a holiday. The dollar was little changed and Treasuries fell. WTI dropped. Chinese banks cut their benchmark lending rates for the first time since August.

The Hang Seng Index opened 0.9% lower, dropping 180.26 to 19,732.63, as stocks lose for the second straight day in Hong Kong. Meituan contributed the most to the index decline, decreasing 2.0%. Country Garden Holdings Co. had the largest drop, falling 5.1%. In early trading, 65 of 80 shares fell, while 13 rose; 3 of 4 sectors were lower, led by commerce and industry stocks.

China's CSI 300 Index fell 0.1%, while the Shanghai Composite declined 0.3%. CSI 300 Materials Index stocks led the benchmark lower, with six of 10 sectors declining. On the CSI 300, 202 of 291 stocks fell, while 89 rose. Anhui Conch Cement Co. led the declines, falling 6.3%, while Hundsun Technologies Inc. gained, rising 8.3%.

Important News

• Chinese stocks in Hong Kong fall, with property shares among top losers, after the nation’s banks cut a reference for mortgages by a smaller magnitude than expected. Chinese banks cut the one-year loan prime rate by 10 basis points to 3.55% and the five-year rate, a reference for mortgages, by the same magnitude to 4.2%. The market was hoping to get a 15-bps cut to the 5-year LPR for any signal of stronger support to the property market as mortgage loan rates are using the 5-year LPR as the benchmark. 
   
• Kuaishou E-commerce released its data of 618 shopping festival. During the promotion period from June 1 to June 18, the number of orders placed in Kuaishou E-commerce grew by nearly 40% YoY and the number of buyers enlarged by nearly 30% YoY. GMV of branded products surged by more than 200% YoY, orders placed while watching short-videos spiked by nearly 210% YoY, and GMV of goods found by search function hiked by nearly 130% YoY.
   
• The 24 companies that debuted the yuan-denominated stock trading scheme in Hong Kong attracted a small fraction of their stocks' trading volume on Monday, as interest in using the new currency option was dwarfed by the Hong Kong dollar. For now, the dual counter service allows investors in Hong Kong to trade stocks using the 833 billion yuan offshore yuan pool in Hong Kong. But the HKEX is working with Chinese regulators to allow mainland investors to eventually participate via the Stock Connect investment channel that connects the Hong Kong, Shanghai, and Shenzhen stock exchanges.
   
• UBS faces hundreds of millions of dollars in penalties over Credit Suisse's mishandling of Archegos, the FT reported. Swiss, US and UK regulators completed their investigation into the affair, and the Fed's fine could be as much as $300 million, while the UK could impose a penalty of £100 million. Switzerland's Finma doesn't have the authority to impose fines, though it plans to publish its report into Credit Suisse's Archegos failings.
   
• Berkshire Hathaway said on Monday it added to holdings in Japan's five biggest trading houses, likely underpinning strong momentum propelling the nation's stock market to multi-year highs.
   
• Goldman thinks the BOE will slow the pace of bond sales under its QT program due to a huge supply of gilts that investors will struggle to absorb. Its analysts predict sales will fall to £7.5 billion a quarter from £10 billion now. Two-year gilt yields rose above 5% yesterday, the highest since 2008. Separately, production costs for UK food and drink manufacturers fell for the first time last month since 2016, according to a Lloyds Bank survey, an early sign that inflationary pressures in the sector may be starting to ease.
   
• Joe Biden hailed what he said was progress in restoring US-China ties after Antony Blinken wrapped up two days of meetings in Beijing, including talks with Xi Jinping. "We're on the right trail here," Biden said. Blinken was told that the US should stop saying that China is a threat and end sanctions which are "illegal," a Foreign Ministry official said. The two leaders have not spoken since they met last year in Bali.
   
• The EU is ready to propose a financial aid package of around €50 billion to support Ukraine. The proposal from the European Commission will help finance Kyiv's current expenditures and pay for urgent reconstruction priorities, people familiar said.
   
• The extra yield pickup for buying investment-grade corporate bonds instead of Treasury bills is the lowest in a generation. That sets a limit on how much bonds can tighten. And the earnings yield on benchmark stocks has now fallen below that on three-month bills for the first time since the dot-com bubble, which should be a powerful brake on equity gains.
   
• A reduced short bet on Metro Bank is all that remains of the bearish wagers by Odey Asset Management, once known for bold positions on declining UK stocks.
   
• Sony's plans for a merger with Zee to make it the leader in India's TV entertainment market were doomed from the start, Andy Mukherjee writes. By pursuing it for almost two years, the Japanese company has become an unwitting actor in a farce. It should cut its losses and walk. The television market in India is large, but its best days are in the rear-view mirror.
   
• Shop till you drop. Hong Kong's biggest mall is ramping up its luxury appeal to compete for shoppers. Since the border with mainland China reopened, Harbour City has seen sales and foot traffic return to more than 70% of their peaks in 2019, according to Yen Thean Leng at Wharf Real Estate Investment, which owns the property. She expects more to come, though there are some challenges in getting consumers to splurge.
   
• Four US lawmakers will travel to Detroit on Tuesday to press the Ford and GM CEOs to cut their supply chains' reliance on China, especially in EV batteries. Republicans Mike Gallagher and John Moolenaar, and Democrats Raja Krishnamoorthi and Haley Stevens are expected to argue that CATL — which has a partnership with Ford — is closely tied to the Chinese Communist Party and has received Chinese government subsidies that allow it to undercut US firms, a person familiar said.
   
• Chart of the Day: M&G Investments is buying the yen on a wager the BOJ will end its cap on Japan's bond yields in the near future. "They could do away with yield-curve control at any time now," said public fixed income CIO Jim Leaviss. "The fundamentals of the Japanese economy do now permit a removal of YCC." Inflation accelerated in April, putting more pressure on the BOJ to normalize policy sooner rather than later. He said the yen is an easier way to bet on a more hawkish BOJ than shorting JGBs.
  
  

Hong Kong

Option Name

Last Price

Volume

700 HK 06/29/23 C360 Equity

5.3

2904

700 HK 06/29/23 P350 Equity

5.94

2260

388 HK 06/29/23 P300 Equity

1.5

1103

1928 HK 06/29/23 C31 Equity

0.12

1060

9988 HK 06/29/23 C90 Equity

1.79

1033

9868 HK 06/29/23 C44 Equity

2

1005

1928 HK 06/29/23 C30 Equity

0.3

1004

700 HK 06/29/23 P400 Equity

46.49

1000

1398S HK 06/29/23 C4.3 Equity

0.011

1000

9988 HK 06/29/23 P87.5 Equity

1.76

953

US

Option Name

Last Price

Volume

VALE US 07/21/23 C16 Equity

0.22

66163

VALE US 07/21/23 C17 Equity

0.09

54892

NKLA US 07/21/23 C5 Equity

0.07

52948

NKLA US 07/21/23 P1 Equity

0.19

52114

NKLA US 07/21/23 P0.5 Equity

0.03

51976

RIVN US 07/21/23 C17.5 Equity

0.77

50327

LCID US 06/23/23 C7 Equity

0.17

49578

AAPL US 06/23/23 C187.5 Equity

1.29

42654

AAPL US 06/23/23 C185 Equity

2.57

40634

UBER US 08/18/23 C45 Equity

2.5

37734

Edward Liu

Head

Tiffany Cheung

Product Specialist

Jenny Luo

Trader

Email

advisory@goldhorse.com.hk