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Zhang Shidong

Azar Zaidi

How will the Asian markets respond to rate cuts in New Zealand, India and Thailand yesterday?
The spectre of further escalation in the US-China trade war continues to loom large over corporate boardrooms, while eyes will once again be on China’s yuan fixing rate against the US dollar. 
Stay with us, Azar Zaidi in Hong Kong and Zhang Shidong in Shanghai, as we keep an eye on stocks in Hong Kong and mainland China.


Stocks blog: Chinese stocks end losing streak, Hong Kong shares rise for second day

Business

Markets


Hang Seng Index rises 0.5 per cent to 26,120.77 at the close on Thursday
Shares of Chinese social media giant Tencent Holdings add 1.1 per cent



The Shanghai Composite Index added 0.9 per cent to 2,794.55 at the close, snapping a six-day, 6.2 per cent losing streak that sent the gauge to a five-month low. In Hong Kong, the Hang Seng Index rose 0.5 per cent to 26,120.77 at the close on Thursday.


Live

Chinese carmaker Geely Automobile Holdings (175.HK), which owns Swedish luxury vehicles company Volvo Cars and a stake in German carmaker Daimler, said sales in July were down 24 per cent year on year to 91,375 units, but were up 1 per cent over June. The total sales volume in the first seven months of 2019 also fell 16 per cent annually to 743,055 units. The sales in the first seven months have achieved 55 per cent of the company’s full-year target of 1.36 million units. Geely dropped 2.17 per cent to close at HK$10.8 on Wednesday.
Great Wall Motors (2333.HK) rejected reports in German media that its joint venture with carmaker BMW was in trouble. “Currently, the project is proceeding as scheduled, and both parties thereto are negotiating on specific cooperation plans and preparing for submitting project applications to relevant competent authorities. The media reports alleging that the joint-venture project between the company and BMW had encountered changes are untrue,” the company said in a stock exchange filing, and added the details of the alliance would need regulatory approvals.
BMW and Great Wall signed an agreement in July last year to form a 50-50 joint venture called Spotlight Automotive Limited, in a ceremony that was attended by Premier Li Keqiang and Germany’s chancellor, Angela Merkel, in Berlin. The joint venture, located in Jiangsu Province, will produce Mini branded electric vehicles starting from 2021. Great Wall Motors dropped 1.45 per cent to close at HK$4.75 on Wednesday.
The protests in Hong Kong and France have hurt the businesses of Hongkong and Shanghai Hotels (45.HK), which runs the popular Peak Tram and The Peninsula Hotels, which reported a 60 per cent net profit decline in the first half this year to HK254 million (US$32.39 million). Earnings per share were 16 HK cents, compared with 40 HK cents a year earlier. The profit drop was due to the suspension of the Peak Tram for an upgrade, while its hotels in Hong Kong, Paris and mainland China were hit hard by the US-China trade war and protests in France and Hong Kong. The company edged down 0.1 per cent to close at HK$9.63 on Wednesday.
Ping An Insurance (Group) (2318.HK), the country’s second-largest insurer, said its banking arm, Ping An Bank, has reported a net profit of 15.4 billion yuan (US$2.18 billion) for the first half of 2019, an increase of 15.2 per cent over the same period a year earlier. Net interest income reached 43.64 billion yuan, up 17 per cent while non-interest income stood at 24.19 billion yuan, rising 22.1 per cent. Ping An Insurance closed 0.34 per cent lower on Wednesday, at HK$88.25, before announcing the result of its banking unit. The group will announce its first-half result on August 15.
– Enoch Yiu


Overnight filings with the Hong Kong stock exchange

Overnight markets/What futures foretell:
– Overnight in US markets, the S&P 500 gained 0.1 per cent, the Nasdaq rose 0.4 per cent and the Dow Industrials slipped 0.1 per cent
– Hong Kong futures were 0.4 per cent lower, while the FTSE China A50 futures climbed 0.3 per cent
IPO debuts: Semiconductor maker Amlogic (688099 CH) and Shanghai Friendess Electronic Technology (688188 CH), a maker of laser motion control systems, will start trading as part of the second batch of companies on the Star Market on Thursday. They are not subject to restrictions on gains or declines in the first 10 days of trading.
Economic statistics/Central bank action: The customs office will release July foreign-trade data on Thursday. China’s central bank denied rumours about a cut in interest rates, and has lodged a case of spreading false information with the police, it said on microblog on Wednesday evening. 
Corporate events: earnings, meetings, news conferences
– Swire Pacific (19 HK), MTR (66 HK) and China Mobile (941 HK) are expected to announce first-half results on Thursday.
Later this week: The statistics bureau is due to release July data on consumer and factory-gate inflation on Friday morning.


Morning guidance

China’s central bank set the yuan fixing rate at 7.0039 per US dollar on Thursday, compared with 6.9996 on Wednesday. The Chinese currency has been in the limelight recently after the China-US trade war showed signs of extending to the currency market.
– Zhang Shidong


China sets yuan reference rate weaker than 7 to US dollar for first time since 2008

Huntsman Corporation said on Thursday it would sell two of its businesses to Indorama Ventures of Thailand in a deal valued at about US$2.1 billion. The transaction would consist of a US$2 billion cash payment and the transfer of US$76 million of underfunded pension and post-employment benefit liabilities.
Indorama, founded by Indian billionaire Aloke Lohia in 1994, will acquire manufacturing facilities in Texas, India and Australia as part of the deal, which is subject to regulatory approval and expected to close near the end of the year.
The chemical intermediates and surfactants businesses had revenue of US$3.5 billion and earnings before interest, taxes, depreciation and amortisation of US$449 million in the first half this year.
Huntsman shares closed down 2 per cent at US$18.27 in New York on Wednesday, while Indorama’s shares closed up 2 per cent at 38.25 Thai baht (US$1.24) in Bangkok.
Bank of America Merrill Lynch and law firm Kirkland & Ellis advised Huntsman on the transaction.
– Chad Bray


  Huntsman Corporation to sell two businesses to Indorama Ventures 

ChinaLin Securities and Hongta Securities led the gains among Chinese brokerages, after China Securities Finance cut the funding rates it charges securities firms for margin financing. The 182-day borrowing rate will be cut to 3.5 per cent from 4.3 per cent, and the 91-day rate to 3.8 per cent from 4.6 per cent, effective Thursday. China Securities Finance, a state-backed agency that supports brokerages’ margin financing and short-selling businesses, announced the cuts on Wednesday. ChinaLin gained 4.6 per cent to 17.07 yuan, Hongta added 6.6 per cent to 15.92 yuan and Dongxing Securities climbed 3.8 per cent to 10.58 yuan.
– Zhang Shidong


Chinese brokerages rally on lower funding costs

The frenzy around new shares on the Science and Technology Innovation Board, or Star Market, carries on. The IPO shares of Amlogic (688099 CH) and Shanghai Friendess Electronic Technology (688188 CH) have surged almost fourfold on their first day of trading. Amlogic jumped 287 per cent from its offer price to 148.88 yuan, while Shanghai Friendess rose 270 per cent to 253.96 yuan. The upsurge comes despite the fact the IPO shares of both companies had been priced higher than the industry average.
– Zhang Shidong


New Star Market listings almost quadruple on debut

The Shanghai Composite Index is expected to end its six-day losing streak, with global indices compiler MSCI set to raise the weighting of mainland China traded stocks in a gauge tracking emerging markets on Thursday. The change will take effect after the market closes on August 27, after which Chinese stocks will account for 2.5 per cent of the MSCI Emerging Markets Index. The Shanghai Composite has risen by 0.7 per cent to 2,789.14, while Hong Kong’s Hang Seng Index has added 1.2 per cent to 26,298.44.
– Zhang Shidong


Chinese stocks boosted by MSCI announcement

The recent sell-off has dragged stocks trading in the city to technically oversold levels. The 14-day relative strength index of the Hang Seng Index was at 26.2 on Thursday, its fifth day below the reading of 30, which indicates that equities are oversold. Factors that are weighing on stocks include massive protests across the former British colony, an intensified US-China trade war and a depreciating yuan. The relative strength index measures how rapidly a security rises or falls in a period of time.
– Zhang Shidong
 



Hong Kong stocks are technically oversold

China’s overseas shipments increased 3.3 per cent in US dollar terms from a year earlier in July, the customs office said on Thursday. A Bloomberg survey had forecast a 1 per cent decline. Imports contracted 5.6 per cent, also exceeding a projection of a 9 per cent decline. The trade surplus stood at US$45.06 billion. The Shanghai Composite Index steadied with a gain of 0.7 per cent.
– Zhang Shidong and Eugene Tang
 


Chinese stocks hold onto gains after July exports beat forecast

Chinese liquor distiller Xinjiang Yilite Industry (600197 CH) tumbled 8.4 per cent to 15 yuan in Shanghai trading, heading for its lowest close since February. The liquor producer said in its interim result that net income for the first six months fell 6.4 per cent from a year earlier to 201.8 million yuan (US$28.7 million), after its revenue decreased 5.7 per cent.
– Zhang Shidong


Xinjiang Yilite Industry drops to six-month low on lower profit

Wharf Holdings (4 HK), one of Hong Kong’s biggest landowners, reported a 14 per cent fall in net profit for the six months ending June 30, and said the economic fallout from the US-China trade war and weakened demand in Hong Kong due to travel advisories issued for the city were to blame.
The conglomerate’s net profit stood at HK$2.45 billion (US$312.5 million) or HK$0.8 per share, Wharf said in a filing to the Hong Kong stock exchange during the lunch break on Thursday. The interim dividend announced was unchanged at HK$0.25 per share. Its stock was up 0.48 per cent to HK$16.9 at the lunch break.
– Daryl Choo


 Wharf reports 14 per cent fall in net profit

Swire Properties (01972 HK) said on Thursday its core profit had tripled to HK$18.6 billion in the year’s first half from HK$6.2 billion in the same period in 2018. While its revenue rose 3 per cent to HK$7.51 billion, the sale of two office buildings – Cityplaza Three and Cityplaza Four – boosted the developer’s profit. It has declared an interim dividend of HK$0.29 per share. Its stock is trading higher by 1.1 per cent at HK$27.25.
– Cheryl Arcibal


Swire Properties says core profit tripled in first half

Swire Pacific Limited (00019 HK) said interim underlying profit attributable to shareholders rose by more than 12 times to HK$15.85 billion, following sales of Cityplaza Three and Cityplaza Four for HK$11.2 billion.
If the sale of these assets is disregarded, its recurring underlying profit grew by 40 per cent to HK$4.23 billion, helped by positive performances at most of its units, including a turnaround at Cathay Pacific. 
It has declared dividends of HK$1.35 per A share and HK$0.27 per B share, a 13 per cent increase on dividends for the first half of 2018. 
“Notwithstanding the improved performance in the first half, we are facing stronger headwinds. Global trade tensions and protests in Hong Kong are having direct and indirect effects on demand in a number of our businesses. But we face whatever near-term challenges may come from a position of financial strength,” said Merlin Swire, its chairman. Swire Pacific’s A shares were trading 1.7 per cent up at HK$84.2, while its B shares were up 0.3 per cent at Hk$13.2. 
– Cheryl Arcibal


Swire Pacific interim underlying profit rises by more than 12 times

China’s rare earths exports rose in July, according to the customs office, easing concerns that an ongoing trade war with the US would hit supplies of 17 chemical elements used in products ranging from Apple iPhones to Tesla electric vehicles. Exports of the elements rose 16 per cent from a year ago to 5,243 tonnes and increased 32 per cent on a month-on-month basis. The news sent rare earths stocks slumping on Thursday, with China Minmetals Rare Earth (000831 CH) and China Northern Rare Earth (Group) High-Tech (600111 CH), falling by at least 2 per cent in mainland China trading.
– Zhang Shidong


Chinese rare earths exports increased in July despite trade war

China Mobile (941 HK) fell 0.6 per cent to HK$62.80 after the country’s biggest operator of wireless networks said its first-half profit dropped 15 per cent from a year earlier to 56.1 billion yuan (US$7.96 billion).
– Zhang Shidong


 China Mobile slips after decline in first-half profit

Ping An Bank (000001 CH) jumped 6.4 per cent to 14.40 yuan in Shenzhen, on track for its biggest gain since April 16. Its net income for the first six months increased 15 per cent from a year earlier to 15.4 billion yuan (US$2.19 billion), as net interest margins widened and the ratio of non-performing loans fell, the lender said in an exchange statement. Shenwan Hongyuan Group expects the bank to trade at 1.5 times its book value, indicating a gain of 56 per cent from the current price.
– Zhang Shidong
 
 


Ping An Bank rises most in four months on first-half earnings

Some relief for markets on Thursday, after the Shanghai Composite Index added 0.9 per cent to 2,794.55 at the close, snapping a six-day, 6.2 per cent losing streak that sent the gauge to a five-month low. Better-than-expected trade data, Ping An Bank’s strong first-half result and the MSCI announcement on increased weighting of Chinese equities fuelled the rebound. The trading volume on the Shanghai exchange was, however, 9.3 per cent below its 30-day average, signalling a lack of sustained buying interest, and that the uptick in equities might be short-lived.
– Zhang Shidong


Chinese stocks end six-day losing streak, but uptick might be short-lived

The Hang Seng Index rose 0.5 per cent to 26,120.77 at the close on Thursday, extending a 0.1 per cent gain it recorded on Wednesday. Bargain hunting might explain the gains on equities, as a technical indicator suggested stocks on the benchmark dropped to oversold levels. Chinese social media giant Tencent Holdings added 1.1 per cent and Techtronic Industries rallied by 4.1 per cent.
– Zhang Shidong


Stocks blog: Chinese stocks end losing streak, Hong Kong shares rise for second day

Hang Seng Index rises 0.5 per cent to 26,120.77 at the close on Thursday Shares of Chinese social media giant Tencent Holdings add 1.1 per cent

Hang Seng Index rises 0.5 per cent to 26,120.77 at the close on Thursday

Shares of Chinese social media giant Tencent Holdings add 1.1 per cent