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Louise Moon

Azar Zaidi

Consumer stocks boosted markets in Hong Kong and mainland China on Friday, while an assisting cast of property stocks and flag-carrier Cathay Pacific provided some heft in the special administrative region. 
Full report by Louise Moon and Azar Zaidi in Hong Kong.
 


An America awash in global capital risks spreading financial instability

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China’s stimulus policy: why leadership, foreign investors can’t see eye to eye

Jack Ma returns to Alibaba campus, as China moves to boost business confidence

Stocks

Stocks blog: Consumer stocks such as Tsingtao Brewery lift markets in China, Hong Kong 

Business

Markets

Shanghai Composite Index closes up 1.77 per cent for the week, reversing two weeks of losses
Kweichow Moutai adds 1.91 per cent, reaching a new all-time high for the third session this week


The Shanghai Composite closed up 0.28 per cent at 2,823.82. Consumer stocks gave the gauge a lift, and were led by Tsingtao Brewery, which rose by the daily maximum of 10 per cent to its highest level since July 1.


China stock market

Hong Kong Stock Exchange

Live

Overnight markets/ What futures foretell:
– US markets were mixed overnight on Thursday. The S&P 500 rose 0.25 per cent, Dow Jones Industrial Average gained 0.39 per cent, but the Nasdaq lost 0.09 per cent.
– Hong Kong futures are down 0.1 per cent at 25,402, while the China A50 futures are up 0.26 per cent at 13,187.08.IPO debuts: None.Economic statistics/Central Bank action: None.Corporate events, earnings, meetings, news conferences:
Investment Holding company China Fortune (600340 CH), Brewer China Resources Beer (0291 HK) and software company Yonyou Network (600588 CH) are all reporting earnings today.


Morning guidance

China Citic Bank International Limited, part of Citic (267 HK), said a Financial Times report on August 15 about the lender facing a Hong Kong Monetary Authority investigation was based on unfounded rumours. The Hong Kong-based bank said it has always conducted business in adherence with relevant laws and regulations, and that there were no investigations looking into its offshore financing activities. China Citic Bank International said it reserved the right to pursue legal action. An HKMA spokesman said the regulator does not comment on individual cases. Citic closed 0.9 per cent higher at HK$9.2 on Thursday.
– Enoch Yiu


China Citic Bank International says report on HKMA probe based on baseless rumours

The Hong Kong benchmark, Hang Seng Index, opened down 0.18 per cent at 25,449.67. In mainland China, the Shanghai Composite fell 0.03 per cent to 2,814.92, but the CSI 300 of large caps in Shanghai and Shenzhen edged up 0.01 per cent to 3,694.58.
– Louise Moon


Hang Seng, Shanghai Composite open lower but CSI 300 edges up

Shares of building contractor Hands Form Holdings (1920 HK), which debuted on the Hong Kong stock exchange on Friday, with an offer of 650 million shares at HK$0.20 each, fizzled out at the start of trading and fell 15 per cent to HK$0.17. The Kowloon-based company will be the sole listing in the city since mid-July.
The company focuses on the provision of wet trade works, including plastering on floors, walls and ceilings, tile laying on internal and external walls and floors, and brick laying. According to its prospectus, the company ranked fifth in Hong Kong for wet trades in terms of revenue last year and had a 3.8 per cent market share.
– Joy Pamnani, Louise Moon and Eugene Tang
 
 
Hands Form Holdings Limited (1920) banged the gong today @HKEXGroup pic.twitter.com/DQ9Yu80B95
— Joy Pamnani (@joypamnani) August 16, 2019


Building contractor Hands Form fizzles on Hong Kong trading debut 

Overnight in the US, China’s largest e-commerce company and South China Morning Post parent, Alibaba Group Holding, posted a 42 per cent increase in profit for the quarter ending June 30 to US$16.7 billion, defying a slowdown in the Chinese economy.
The New-York listed company said the increase was driven by a rise in annual active customers on its Chinese retail platforms. Online sales in China have been accelerating due to promotions across e-commerce platforms.
The e-commerce giant’s financial results are viewed by many investors as a proxy for consumer spending in China and an important barometer of its economic health. Most of the company’s revenue is generated from its home market, making it fairly insulated from disruptions in international trade. Its stock gained 3.03 per cent to US$166.97 by the close of trade in the US.
– Louise Moon


Alibaba posts a 42 per cent increase in quarterly profit

Ping An Insurance (Group) (2318 HK), China’s largest insurer by value, posted the biggest jump in its interim net profit since 2015, in a filing with the stock exchange after trading hours on Thursday.
It was helped by a one-time tax benefit, a stock market rally and growth in its new business units. Its net income rose 68 per cent to 97.7 billion yuan (US$13.8 billion) in the first half of the year through June 30, beating a 19 per cent increase forecast by analysts polled by Bloomberg. Its revenue rose 17 per cent to 690.25 billion yuan.
Daiwa Capital Markets upgraded the company’s rating to “hold” and raised its target price from HK$80 to HK$88. Its stock gained 1.6 per cent just after 10am to HK$88.65.
– Louise Moon


Ping An Insurance posts 68 per cent jump in interim net profit to 97.7 billion yuan

The Hang Seng Index is expected to rebalance on Friday. Investors will be waiting for the announcement to see which stocks will be kicked out and which will be admitted as index constituents. Hang Seng Indexes Company, the compiler of the benchmark Hang Seng Index and other indexes that track the local market, will announce the result of any changes in constituent stocks on Friday at 6pm. The change is the result of a quarterly review by regulators. Any constituent changes made to the Hang Seng Family of Indexes with take effect on Monday, September 9. 
– Louise Moon and Enoch Yiu


It’s rebalancing day at the Hang Seng Index 

Tsingtao Brewery (600600 CH) rose 8.93 per cent to 50.16 yuan, and is looking set to reach its highest daily gains since January. In a filing to the Shanghai Stock Exchange after trading hours on Thursday, it posted a 25.2 per cent increase in first-half net income to 1.63 billion yuan (US$231.5 million). Its revenue stood at 16.5 billion yuan, up 9.2 per cent.
The company said the stable development of China’s beer market, expansion in domestic and foreign markets and “optimisation of brand and variety mix structure” helped it achieve growth in sales volume and revenue. it produced 4.73 million kilolitres of beer, up 3.6 per cent year on year. It also strengthened cost control and spending, due to rising costs of raw materials.
The company topped a list of China’s beer industry brands for the 16th consecutive year during the first half, according to its filing.
– Louise Moon


Tsingtao shares to reach highest daily gains since January on first-half net income, revenue

Rare earths stocks are rallying in China, as trade war worries intensified following Beijing’s vow to counter impending US tariffs on US$300 billion of Chinese goods. China produces 80 per cent of the world’s rare earths and is a key source for US industries. In morning trading, JL MAG Rare-Earth (300748 CH) gained 7.57 per cent to 61.66, Chengdu Galaxy Magnets (300127 CH) rose by the 10 per cent daily limit to 21.44 yuan, China Northern Rare Earth Group (600111 CH) was up 3.14 per cent to 11.5 yuan and China Minmetals Rare Earth (000831 CH) added 4.32 per cent to 14.25 yuan.
– Louise Moon


Rare earths stocks rise again amid heightened trade war concerns 

Maoyan Entertainment (1896 HK) shed 9 per cent to HK$11.48 in morning trading despite reporting a positive result. On Thursday it posted a first-half net profit of 380.4 million yuan (US$54 million), compared with a loss of 20.6 million yuan in the same period last year. Revenue also rose, from 1.89 billion yuan to 1.98 billion yuan. The results are the company’s first after listing in February. It is China’s largest online movie ticketing service provider.
– Louise Moon


Maoyan Entertainment shares shed 9 per cent despite first-half profit rise

Suning.com (002024 CH) rose 5.67 per cent to 10.81 yuan, after the retail giant announced plans to buy back within 12 months shares worth between 1 billion yuan (US$142.12 million) and 2 billion yuan. The company said it would buy up to 133.3 million shares, equal to about 1.43 per cent of its total share capital. Each share will be no higher than 15 yuan. The buy back will be used for an employee stock ownership plan, the company said.
– Louise Moon


Chinese retail giant suning.com rises on share buy-back plan

Guodian Technology & Environment Group (1296 HK) said it expected a loss before taxation of 140 million yuan for the first six months of the year through June 30. For the same period last year, the loss was 97.15 million yuan, it said in a filing to the Hong Kong stock exchange during morning trading. The loss is down to a decrease in the selling price of windpower products amid intensified market competition. The company deals in the environmental-protection and windpower products business.
Best Food Holding Company (1488 HK) said it expected to record a “significant increase in the loss attributable to equity holders” for the first six months of the year. An increase in interest expenses and adjustments to items such as supply chains to some food and beverage brands under the group were to blame, it said in a filing to the exchange.
– Louise Moon


Two profits warnings in Hong Kong 

Hong Kong flag-carrier Cathay Pacific Airways (0293 HK) is gaining for a third consecutive day, rising 3.47 per cent to HK$10.74 on Friday.
The Civil Aviation Administration of China (CAAC) said on Thursday information the airline submitted about its crews had met requirements. Cathay staff members that had taken part in the Hong Kong protests were banned from flying to or over China this week. Beijing had asked the airline to submit a list of crew members working on mainland flights to the regulator.
The stock continues to pare losses after falling to a 10-year low and is now level with prices seen in December. Its parent company, Swire Pacific (0019 HK), is also up 2.2 per cent to HK$81.40 for a third day of gains, on level with January share prices.
– Louise Moon


Cathay, parent Pacific Swire rise for third straight day

By the midday break on Friday, the Hang Seng was up 0.8 per cent at 25,700.43, rising for a third trading session.
“The Hong Kong market was down quite a lot over the past few weeks, so there is bargain hunting interest around the 25,000 level,” said Kenny Tang Sing-hing, chief executive at Royston Securities. “Most players are waiting to see the outcome from the trade war negotiations,” he said. But sentiment was optimistic that a compromise will be reached, which is giving the market some support, he added.
Despite China’s retaliation, vowing to hit back at impending US tariffs, the fact that Trump is going to defer imposing them “indicates he wants a deal, and may change his attitude before the meeting” with Chinese President Xi Jinping in September, Tang said.
Continuing protests in the city are dampening sentiment, but not to a huge extent as markets have learned to deal with the ongoing unrest, he said. Tang expects the Hang Seng to maintain the rally, having dropped to its lowest level since January on Tuesday, and close the week at 25,800, which would mark a 0.5 per cent decrease compared with last week’s close.
– Louise Moon


Hang Seng rises on trade war optimism, has priced in protests

The Shanghai Composite closed for the midday break up 0.67 per cent at 2,834.85, while the CSI 300 index of large caps in Shanghai and Shenzhen gained 0.9 per cent to 3,729.52.
The Shanghai Composite was buoyed by better-than-expected results from companies such as Ping An Insurance (601318 CH) and Tsingtao Brewery (600600 CH). These results have created buying interest, particularly in the consumer stocks market. China this week posted a weaker-than-expected 7.6 per cent rise in retail sales for July, missing a forecast of 8.6 per cent. But traders are “still optimistic about the consumer market in mainland China, because [they expect] the government is going to use fiscal policy to stimulate the economy”, said Kenny Tang Sing-hing, chief executive of Royston Securities. “[The government] is likely to further reduce tax in the second half of the year.”
Tang expects Shanghai’s bourse to end the week at 2,900, a 4.5 per cent increase from last week’s close. Last week, the Shanghai Composite posted its biggest weekly drop in three months, falling 3.3 per cent.
– Louise Moon


 Shanghai Composite, CSI 300 rise at midday break 

On the day he took out two advertisements about the protests in some Hong Kong newspapers, Li Ka-shing’s CK Asset Holdings (1113 HK) is en route to its biggest daily rise since January 4.
Property companies have been rising in any case – the sector rose by 3.27 per cent on Thursday. On Friday, Sun Hung Kai Properties (0016 HK) gained 3.37 in early afternoon trading, Link Real Estate Investment (0823 HK) rose 1.44 per cent and Li’s CK Asset Holdings (1113 HK) was up 4.17 per cent at HK$53.65. Henderson Land Development (0012 HK) rose by 2 per cent, Wharf Real Estate Investment (1997 HK) by 2.77 per cent and New World Development (0017 HK) by 3.67 per cent. The sector as a whole has risen by 1.83 per cent so far on Friday.
Hong Kong’s richest man has called for an end to the violence “in the name of love”. 
Meanwhile, Alain Robert, the so-called French Spider-Man, scaled Li’s Cheung Kong Center on Friday morning in Hong Kong’s central business district to hang a banner that merged the Hong Kong and China flags, above the picture of a handshake.
– Louise Moon
 
 
The French Spiderman Alain Robert joins the protests by scaling Li Ka-shing's skyscarper and hanging a flag depicting the Hong Kong flag and a handshake #antiELAB pic.twitter.com/ZB2hn4ir5S
— Mark Agnew (@AdventureAgnew) August 16, 2019


CK Asset Holdings en route to biggest daily rise since early January

China Coal Energy (601898 CH) rose by 0.47 per cent to 4.28 yuan after posting a 50.9 per cent rise in sales volume for July to the Shanghai Stock Exchange after the market close on Thursday. Its sales volume reached 18.1 million tonnes, compared with 12 million tonnes in the same month last year. Production volumes of commercial coal, meanwhile, increased 44.9 per cent year on year to 8.88 million tonnes.
– Louise Moon


China Coal Energy rises on 50.9 per cent increase in sales volume 

Meituan Dianping (3690 HK), the mainland Chinese online food delivery giant, rose 2.15 per cent to HK$66.40, following a report it was working on a mapping business called “Meituan Maps”. The company aims to challenge Baidu Maps and AutoNavi, which is owned by South China Morning Post parent Alibaba Group Holding. On Tuesday it advertised more than a dozen positions for the service on a job site called Lagou.com, according to Reuters.
– Louise Moon


Meituan rises on mapping business report

China Resources Beer (0291 HK), the country’s biggest brewer, posted a net profit of 1.87 billion yuan (US$265.9 million) for the first six months ending June 30, a 24.7 per cent increase year on year. Its revenue grew 7.2 per cent year on year to 18.83 billion yuan, boosted by an increase in sales volume and higher average selling prices, according to the company’s filing. It will continue to bolster its position in the premium market by leveraging its partnership with Dutch brewer Heineken, even as it expects competition in the industry to remain intense. The company proposed an interim dividend of 0.12 yuan per share, up 20 per cent from last year.
– Daryl Choo


China Resources Beer, country’s biggest brewer, posts 24.7 per cent net profit rise

Hong Kong’s biggest banks said they have enough currency notes on hand to handle any extraordinary increase in demand for cash, as calls circulated online for protesters to empty out automated teller machines (ATMs) to disrupt the banking system in Asia’s financial hub, write Chad Bray, Enoch Yiu and Athena Chan.


Hong Kong’s banks say they have adequate cash to meet demand

Goldman Sachs has cut its economic growth forecast for the so-called Asian Tigers – Hong Kong, Korea, Taiwan and Singapore – as global growth slows down against a backdrop of the US-China trade war. “Besides their own domestic reforms, they all benefited enormously from the broader context of globalisation and the rapid economic development of the Asia-Pacific region,” Goldman economist Andrew Tilton said in a research note released on Thursday night. “However, the same characteristics that helped them benefit on the upside have left them relatively more exposed to the recent slowdown in global growth.”
Although some economies could benefit from global supply chains relocating to other parts of Asia because of US tariffs on Chinese goods, the Asian Tigers “are generally not the best positioned in the region”, Tilton said.
Goldman cut its 2019 gross domestic product growth forecast for Hong Kong to 0.2 per cent from 1.5 per cent and its 2020 forecast to 1.9 per cent from 2.3 per cent. “These disruptions, along with media coverage of clashes between protesters and the police force, have affected business and leisure travel and spending,” Tilton said.
Goldman also cut its forecast for Singapore GDP to 0.4 per cent in 2019 from 1.1 per cent and its 2020 forecast to 1.6 per cent from 2.4 per cent. The investment bank shaved its 2019 and 2020 forecasts for South Korea and Taiwan, but not as dramatically as for Hong Kong and Singapore.
– Chad Bray


Goldman cut economic growth forecast for Hong Kong, Korea, Taiwan and Singapore

China Resources Beer (0291 HK) rose 8.39 per cent to HK$39.40, an all-time high, after posting a 24.7 per cent year-on-year increase in net profit, and a 7.2 per cent year-on-year increase in revenue.
Tsingtao Brewery (600600 CH) also rose on good earnings, by 10.42 per cent. Liquor makers were up across the board, in line with the wider consumer sector. Kweichow Moutai (600519 CH), the world’s largest distiller, added 1.91 per cent, reaching a new all-time high for the third session this week. Wuliangye Yibin (000858 CH) rose 1.41 per cent.
– Louise Moon


 Liquor makers rise in line with wider consumer sector

The Shanghai Composite closed up 0.28 per cent at 2,823.82. Consumer stocks gave the market a lift, and were led by Tsingtao Brewery (600600 CH), which rose by the daily maximum of 10 per cent, to 50.66 yuan – its highest level since July 1. The benchmark closed up 1.77 per cent for the week, reversing two weeks of losses.
The CSI 300 index of large stocks in Shanghai and Shenzhen, meanwhile, gained 0.45 per cent to 3,710.54.
– Louise Moon


Boosted by consumer stocks, Shanghai Composite ends Friday, week higher

Hong Kong’s Hang Seng Index closed up 0.9 per cent at 25,734.22, ending the week above the psychologically important threshold of 25,000 points. Through the week it lost 0.79 per cent, dragged by poor earnings and the impact of protests bringing the city’s airport to a standstill.
In line with mainland China, consumer stocks like China Mengnui Dairy (2319 HK) and apparel company Shenzhou International Group Holdings (2313 HK) were among some of the top gainers on the benchmark, while Tencent Holdings was the biggest drag. The world’s largest gaming company lost 1.21 per cent to HK$326.40 after earlier warning of a difficult economic environment ahead, despite posting a better-than-expected rise in quarterly profits.
Li Ka-shing’s CK Asset Holdings (1113 HK) reported its biggest daily rise since January 4 – of 4.08 per cent – after the Hong Kong tycoon took out two advertisements about the protests in some newspapers. Property developers were on the rise in any case, continuing to reverse recent trends.
After a tumultuous week, Cathay Pacific Airways (0293 HK) ended Friday up 2.12 per cent at HK$10.60, boosting its weekly gains to 2.91 per cent. Its parent company, Swire Pacific (0019 HK), ended Friday up 2.32 per cent at HK$81.50, but lost 0.37 per cent through the week.
– Louise Moon


Stocks blog: Consumer stocks such as Tsingtao Brewery lift markets in China, Hong Kong

Shanghai Composite Index closes up 1.77 per cent for the week, reversing two weeks of losses Kweichow Moutai adds 1.91 per cent, reaching a new all-time high for the third session this week

Shanghai Composite Index closes up 1.77 per cent for the week, reversing two weeks of losses

Kweichow Moutai adds 1.91 per cent, reaching a new all-time high for the third session this week