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Zhang Shidong

Azar Zaidi

The markets will be braced for volatility on Wednesday, with Asian equities looking like they are set for a mixed start following an overnight rebound in US stocks. But even as China moves to stabilise the yuan, fuelling hopes that cooler heads will prevail, Hong Kong could be in line for more losses.
Join us, Azar Zaidi in Hong Kong and Zhang Shidong in Shanghai, as we track all the day's happenings in the bourses of mainland China and Hong Kong. 


Hong Kong stocks slide after posting biggest gain in 5 weeks

China needs US$1.4 trillion to boost domestic consumption amid impending trade war 2.0

Founder of Chinese AI firm DeepGlint, an early mover, steps back amid rising losses

Hong Kong stocks stage largest rally in 5 weeks; hopes rise for new stimulus from Beijing

Stocks

Stocks blog: Chinese stocks fall ahead of MSCI announcement, foreign trade data

Business

Markets

CLP Holdings jumps in Hong Kong trading amid defensive play
Gold and cobalt producers rally in mainland trading


The markets are braced for volatility, with Asian equities set for a mixed start on Wednesday. Hong Kong could be in line for more losses.


China stock market

Hong Kong Stock Exchange

Live

Genting Hong Kong (678.HK), the largest cruise operator in Asia-Pacific and a member of Malaysia Genting Group, has agreed to sell up to 35 per cent of its interest in Dream Cruises to TPG Darting, which is part of private equity firm TPG Capital Asia and Growth Funds, and Ontario Teachers’ Pension Plan, a Toronto-headquartered pension fund. Net proceeds from the deal are expected to amount to a gain of US$470 million. The company closed 1.09 per cent higher on Tuesday at 93 HK cents.
Shanghai La Chapelle Fashion (6116.HK), a Chinese manufacturer of women’s clothing, might report a change of control, as its controlling shareholder Xing Jiaxing has pledged 99.81 per cent of his shareholding in the company – 141.6 million restricted A shares – to Haitong Securities for financing. The collateral’s value has fallen below contract price, which may allow Haitong to take control of the pledged shares, which represent 25.85 per cent of the total share capital of the company, or 42.54 per cent of its total A-share capital. Xing is negotiating with Haitong for a possible solution by adding money, or repurchasing the shares, to solve the problem. The company’s stock was unchanged at HK$3.23 on Tuesday.
Xiabuxiabu Catering Management (China) Holdings (520.HK), a hotpot restaurant chain in mainland China, said it expected its net profit for the six months ending June 30 to decrease significantly compared with the same period a year ago. The decline was mainly due to the adoption of a new accounting rule that leads to a higher charge for the leases of its more than 1,000 restaurants. The company closed at HK$10.58 on Tuesday, up 0.8 per cent.
Lee Kee Holdings (637.HK), a metal trader, will exit the futures brokerage business because of a change in business strategy. The company’s wholly-owned subsidiary, Horizon Commodities and Futures Company, will no longer accept new futures contract positions from clients starting Monday, August 12. The company closed 5.4 per cent lower at 35 HK cents on Tuesday.
China Ding Yi Feng Holdings (612.HK), whose shares have been suspended by the Securities and Futures Commission since March 8, said it expected to report a substantial net loss for the first half of this year against a profit for the same period a year ago. The loss is down to an unrealised loss revealed by a revaluation of its financial assets, and a significant decline in both dividend income and sales of its investment. Before the suspension, the company traded at HK$23.08.
China Oriental Group Company (581.HK), an iron and steel producer, issued a profit warning in a stock exchange filing on Tuesday night. The company said it expected its net profit for the first half of this year to decline by between 35 per cent and 55 per cent year on year, as a result of higher production costs due to the rising price of raw materials and a decrease in sales volume. The company said its overall operations and financial position remained healthy. It fell 2.6 per cent to close at HK$3.34. 
China Huarong Asset Management (2799HK), China’s biggest bad-debt manager, said in a profit alert it expected its net profit for the first half of this year to grow 190 per cent to 2 billion yuan (US$284.7 billion), up from 685 million yuan a year earlier. The growth is mainly down to an increase in valuation of its stock investment and high returns from asset disposals. The company will announce its full result at the end of August.
Huarong’s shares fell 1.3 per cent on Tuesday to close at HK$5.4. 
 
– Enoch Yiu


Overnight filings with the Hong Kong stock exchange

In a monthly market report released by bourse operator Hong Kong Exchanges and Clearing (388.HK) on Tuesday night, the two-month-long protests in the city have taken a toll on the stock exchange, with the average daily turnover in July down by 23 per cent year on year to HK$68.7 billion (US$8.8 billion), against HK$89.6 billion a year ago. The average daily turnover in June dropped too, down by 24 per cent to HK$82.4 billion. 
Total market capitalisation fell 3 per cent year on year to US$32.1 trillion as of the end of July.
Funds raised through initial public offerings in the first seven months this year dropped 30 per cent year on year to HK$83.95 billion, down from HK$119.5 billion in the same period a year ago, thanks to the mega IPO of smartphone maker Xiaomi that raised HK$42.6 billion. 
Two mega Iistings worth a combined US$11.04 billion were shelved by ESR Cayman, Asia-Pacific’s largest logistics landlord, and brewing giant Budweiser Brewing Company APAC. 
HKEX closed 1.2 per cent lower on Tuesday at HK$244.80.

– Enoch Yiu


Protests have taken a toll on the stock exchange

Overnight markets/ What futures foretell:
– Overnight in US markets, the S&P 500 gained 1.3 per cent, the Nasdaq rose 1.4 per cent and the Dow Industrials added 1.2 per cent
– Hong Kong futures were 0.9 per cent lower, while the FTSE China A50 futures climbed 0.1 per centIPO debuts: noneEconomic statistics/Central bank action: China’s central bank is expected to release data on foreign reserves today.Corporate events: earnings, meetings, news conferences
– Ping An Bank (000001 CH) and washing machine maker Wuxi Little Swan (000418 CH) will release interim results todayLater this week: China is due to announce the August data on imports and exports tomorrow, and the inflation data on Friday.


Morning guidance

China’s central bank set the yuan’s reference rate at 6.9996 per US dollar on Wednesday. It was at 6.9683 on Tuesday. The Chinese currency has been in focus recently, after Washington accused Beijing of letting the yuan weaken to counter new US tariffs on Chinese imports.
– Zhang Shidong


China sets weaker yuan reference rate against US dollar

Ray Dalio, founder of Bridgewater Associates, the world’s biggest hedge fund, said investors should remain bullish on China despite the trade war that has raged between Washington and Beijing over the past year.
“Think about it. Would you not want to have invested with the Dutch in the Dutch Empire? Would you have not wanted to have invested in the Industrial Revolution and the British Empire? Would you have not wanted to have invested in the United States,” Dalio said in a video posted on the fund’s YouTube channel on Wednesday. “I think [China is] comparable. Would you have not wanted to have invested in those places?”
He said the conflict between the world’s two largest economies was a “natural development” and investors should diversify and have “bets on both horses in the race”.
Read the full report here.
– Chad Bray


Remain bullish on China, Bridgewater’s Ray Dalio says

It comes as no surprise that Chinese stocks have rebounded at the open on Wednesday alongside the rest of the world’s markets, on hopes the tensions of the trade war will ease. The Shanghai Composite Index has added 0.3 per cent to 2,786.11, and is set to end a run of losses extending over five consecutive days. Still, caution prevails among investors, as gold stocks have led the gains in the broader market, signalling that risk appetite has not fully recovered. In Hong Kong, the Hang Seng Index has dropped 0.3 per cent.
– Zhang Shidong


Chinese stocks rebound to snap five-day losing streak

Gold prices surged in early Asian trade on Wednesday, moving sharply higher after the People’s Bank of China unveiled a weaker midpoint setting for the yuan against the US dollar.
Spot bullion prices were quoted at US$1,486.90 per ounce, rising US$12.90 or 0.88 per cent from the New York close.
The gain in bullion prices follows a relatively uneventful session in US trading overnight. Gold for December delivery on Comex rose US$7.70, or 0.5 per cent, to close at US$1,484.20 in regular trade, according to data from Dow Jones.
Stephen Innes of VM Markets said in a market note circulated ahead of the daily yuan fix by the PBOC that gold prices were enjoying a tailwind as the China-US trade war and other tensions “regressively impact the global growth narrative”.
He said the likely deterioration in the economy raises the odds the Federal Reserve will turn increasingly dovish, which is driving demand for safe havens such as the Japanese yen, the Swiss franc and gold. 
– Chris Oliver
 


 Gold prices surge in early Asian trading 

Shanghai Lingang Holdings (600848 CH), Shanghai International Port (600018 CH) and other stocks linked to the Shanghai Free Trade Zone slumped after China unveiled a plan to expand the special enclave. Shanghai’s Lingang area, where Tesla’s plant is located, was added to the city’s free-trade zone, the information office of the State Council said at a press conference on Tuesday afternoon. Some favourable policies will be implemented in Lingang, including tax breaks for hi-tech companies and easing of house purchases.
Investors had anticipated the news, with Shanghai Lingang rising 18 per cent over the past three weeks through Monday. The stock tumbled 8.9 per cent to 31.90 yuan on Wednesday, Shanghai Port slid 6 per cent to 6.40 yuan, while CTS International Logistics (603128 CH) sank 9.8 per cent to 8.84 yuan.
– Zhang Shidong
 


Stocks linked to Shanghai Free Trade Zone tumble

Shares of Wynn Macau (1128 HK), which operates casinos in the world’s largest gambling hub, fell for a fourth day, dropping by as much as 2.9 per cent to an intraday low of HK$15.40. The casino’s turnover for high rollers’ games tables plunged 33.4 per cent in the second quarter to US$9.28 billion, while revenue from mass market tables rose 4.2 per cent and slot machine revenue fell 3.9 per cent. Overall, Wynn Macau’s operating revenue rose 0.6 per cent to US$546.5 million.
– Eugene Tang 


Wynn Macau shares drop by as much as 2.9 per cent 

“Investors should take Trump at his word, that he will move forward with the next round of tariffs on China,” said Libby Cantrill, Head of Public Policy at Pacific Investment Management (Pimco), which had US$1.76 trillion in global assets under management as of March. “The latest escalation in trade tensions drove the US 10-year Treasury bond yield down to 1.74 per cent on Monday, its lowest level since 2016, as investors sought a haven from uncertainty. Indeed, we see trade conflict and politics as ongoing risks for the markets and reasons to maintain defensive positioning overall.”
– Eugene Tang 


US-China trade war, politics ongoing risks for markets, Pimco says

Global indices compiler MSCI is due to announce an increase in the representation of mainland Chinese stocks in its global gauges for a second time this year, at 5am on Thursday.
The inclusion of Chinese stocks will be raised to 15 per cent from 10 per cent, effective August 27, according to an earlier announcement by the index compiler. 
The rebalance is expected to attract inflows of US$22.7 billion, according to an estimate by Beijing-based investment bank China International Capital Corporation. This is the second of a three-step plan by MSCI to quadruple the weighting of Chinese stocks this year. 
The inclusion, however, has done little to help stem the recent net sales of mainland Chinese stocks. Overseas trade has dumped 1.25 billion yuan (US$177.5 million) in Chinese stocks via the Stock Connects so far on Wednesday, for what appears to be a sixth straight day of outflows.
– Zhang Shidong


MSCI to announce increase in Chinese stocks weighting tomorrow

Two more companies will begin trading on the Science and Technology Innovation Board, or the Star Market, on Thursday following a stellar debut by the first batch of 25 companies two weeks ago. Semiconductor maker Amlogic (688099 CH) sold its initial public offering shares for 38.50 yuan apiece, or 58 times its earnings, while Shanghai Friendess Electronic Technology (688188 CH), which makes laser motion-control systems, priced its stock at 68.58 yuan, a multiple of 50 times. Both stocks are priced higher than the industry average. Unlike IPO shares trading on the main board, new stocks on the Star Market do not face limits on price movements in the first 10 trading days.
– Zhang Shidong


 Two companies to start trading on Star Market tomorrow

Combined profits at the 31 publicly traded Chinese securities firms dropped 8.7 per cent from a month earlier to 6.49 billion yuan (US$921.6 million) in July, Shenwan Hongyuan Group said in a research note on Wednesday. Revenues dropped 16 per cent to 18 billion yuan it said. A decrease in investment gains from a weakening stock market were blamed for the declines in revenue and profit, the report said. The average daily trading values on the mainland’s two exchanges decreased 13 per cent from a month earlier to 431 billion yuan in July.
– Zhang Shidong


Chinese listed brokerages’ profits fell in July, Shenwan says

Cathay Pacific Airways (293 HK), Hong Kong’s dominant airline, reported a first-half net profit of HK$1.35 billion (US$172 million), recovering from last year’s loss of HK$263 million, beating analysts’ forecasts. Sales rose to HK$53.55 billion. The carrier’s shares rose 0.2 per cent to HK$10.34 before earnings were announced during the lunch-hour trading pause.
Two months of civic unrest – including a strike that caused hundreds of outbound flights to be cancelled in Hong Kong this week – have reduced inbound passenger traffic and are adversely affecting bookings, the carrier said in a statement.
 
– Eugene Tang 


Cathay Pacific reports first-half net profit of US$172 million

BYD (1211 HK), the Chinese electric-vehicles manufacturer in which Warren Buffett’s Berkshire Hathaway holds a 25 per cent stake, dropped to a one-year low in Hong Kong after saying its auto sales had decreased in July. Its stock slumped by 5.3 per cent to HK$42.70 after reports that sales of new-energy vehicles fell 12 per cent from a year earlier, and that sales of cars overall had decreased by 17 per cent. Its mainland China traded shares (002594 CH) fell 0.5 per cent to 51.14 yuan in Shenzhen.
– Zhang Shidong


  Buffett-backed BYD sells fewer vehicles, sinks to one-year low

Indian has just become the second economy to cut interest rates in Asia-Pacific on Thursday. The Reserve Bank of India reduced the policy rate by an unprecedented 35 basis points to 5.4 per cent, driving up stocks as well as bonds.
Hours earlier, the Reserve Bank of New Zealand cut its key interest rate by 50 basis points to 1 per cent.
– Zhang Shidong


Central banks in India, New Zealand cut borrowing costs

Chinese stocks slid back to declines at the close on Wednesday after erasing some gains in intraday trading. The Shanghai Composite Index dropped 0.3 per cent to 2,768.68, capping a sixth straight day of declines. The six-day losing streak matches a similar stretch that ended on June 6. The decline comes just before MSCI is due to announce an increase in weightings of Chinese stocks in its gauges for a second time this year. Also, the customs office is expected to release July data on foreign trade on Thursday.
– Zhang Shidong


Chinese stocks fall ahead of MSCI announcement, foreign trade data

The Hang Seng Index rose 0.1 per cent to 25,997.03, ending a five-day losing streak. CLP Holdings was the best performer on the benchmark, rising 3.1 per cent gain on Wednesday. The bigger of the city’s two electricity suppliers said it was eyeing the mainland Chinese market.
 


Hong Kong stocks end losing streak, close higher as CLP surges

Stocks blog: Chinese stocks fall ahead of MSCI announcement, foreign trade data

CLP Holdings jumps in Hong Kong trading amid defensive play Gold and cobalt producers rally in mainland trading

CLP Holdings jumps in Hong Kong trading amid defensive play

Gold and cobalt producers rally in mainland trading