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Yujing Liu

Srinivasan Iyer

Good day traders --
It was a mixed day in Hong Kong and China. Have a look below to see how the day unfolded.
If you have any questions or feedback, please send them to deb.price@scmp.com .
-- Yujing Liu and  Srinivasan Iyer in Hong Kong  


New World Development loses blue-chip status in ejection from Hang Seng Index

China’s tech giants PDD Holdings, Xiaomi, Alibaba, Tencent defy economic woes: 6 latest earning reports

China’s largest brokerage formed by Guotai Junan and Haitong’s US$14.5 billion merger

Hang Seng Index decline deepens as dismal earnings outlook puts investors on edge

Stocks

Stocks Blog: Hang Seng reverses gains as blue chip developers fall amid fears of further decline in property prices

A pedestrian walks past the Bund Bull statue in Shanghai on October 24, 2018. Photo: Bloomberg 


Business

Markets

Shanghai Composite Index ends in negative territory after rising in the morning session
Investors wait on the sidelines awaiting clues from the Fed and trade war developments


Sun Hung Kai Properties and Wharf Real Estate Investment both fell by as much as 2.6 per cent


China markets

Hong Kong Stock Exchange

Live

Anson Wong has a lot of smart friends. And he’s found bringing them together to study stocks, pool money and invest by strict rules has made learning how to trade more fun and profitable.
“Information is very important in investments. You can learn different things from each other. You become different sources (for each other). You have different strategies. One or two may be accurate, or maybe most of them are wrong. But at least you have more ideas combined together,” says Wong.
The 21-year-old accounting and finance student at the University of Hong Kong was crowned champion of a local Public Futures Trading Contest and was a top 10 finalist in a Joint University Forex Simulation Contest. 
He started learning stocks at 15, when he and some friends traded on a stock-trading demo platform. “We lost all our (simulator) money,” he recalls with a chuckle.
But he learned a lot — including the strength of pulling together smart people’s ideas. Now, he says, he has made nearly HK$50,000 trading, including with groups of friends.
To other young investors who would like to set up a similar group, he advises to first arrive at an agreed upon set of rules, including about when to sell a losing stock or at what point to take gains from a winning one. When you invest in a stock, then follow it as a group, he says, analysing news that comes out about it together, and looking at how it stands up in its industry against its competitors. 
“Because it was all of our money, we set a limit of a 30 per cent (gain) for ourselves, and we closed (the trade) when we reached there. When you are investing by yourself and you make 30 per cent, you may think (the returns) will increase further. But when you are in a group, you can’t make emotional decisions,” he says.
The experience has made Wong want to trade full-time. He hopes to work at an investment bank or hedge fund.

 
— Joy Pamnani 
 
 


Young Investors: Learn the ropes with friends, advises Anson Wong 

CK Asset Holdings (1113 HK) has reached an agreement to buy the entire issued share capital of Greene King, which operates 2,700 pubs, restaurants and hotels in the UK, for £2.7 billion cash.
It proposed to buy out shareholders by offering 850 pence (about HK$80.8) per share, valuing the London stock exchange-listed company at about £2.7 billion (HK$25.2 billion), according to a stock exchange announcement Monday night.
As of August 16, CK Asset owned a small 2.9 per cent stake in Greene King through a wholly-owned subsidiary.
The cash consideration presents an enterprise value multiple of 9.5 times Greene King’s earnings before interest, taxes, depreciation and amortization (Ebitda), which was at £482 million for the 52- week period up to April 28.
“The Group is a long-term and strategic investor in stable, profitable and cash flow generating businesses that benefit from real estate backing. The company believes that the UK pub and brewing
sector shares the characteristics,” it said in the exchange announcement.
It will also request approval from the London stock exchange and other regulators for the delisting of the shares. The deal is conditional on shareholders’ approval and other conditions.
-- Georgina Lee 
 


CK Asset proposes to buy UK–listed pub retailer Greene King

Here's what we are watching this morning:
Overnight markets/ What futures foretell
-- The US market rallied on Monday, boosted by Trump’s comments that rekindled trade talk hopes. The S&P 500 jumped 1.2 per cent, the Nasdaq Composite climbed 1.4 per cent, and the Dow Jones Industrial Average rose 1 per cent.
-- The Hang Seng Index Futures were 0.1 per cent lower, while the China A50 futures dipped 0.2 per cent.
IPO debuts:
None.
Economic statistics/Central Bank action:
Hong Kong will release its July composite consumer price index (CPI) at 4:30pm. The US Federal Reserve’s Federal Open Market Committee will publish its July meeting minutes on Wednesday, and its chairman Jerome Powell will be speaking in the opening ceremony of the central bank’s annual retreat in Jackson Hole, Wyoming on Friday.
Corporate events:
-- A wave of first-half results are hitting the market today, from companies including smartphone and home appliance maker Xiaomi Corp (1810 HK), town gas provider The Hong Kong and China Gas (3 HK), property manager China Resources Land (1109 HK), developer China Vanke (2202), hotpot chain operator Haidilao International (6862 HK), and hotpot condiment maker Yihai International (1579 HK).
 


Morning guidance 

Lamtex Holdings (1041 HK) said in an exchange filing after market closed Monday that it expects a loss of about HK$24.4 million for the six months that ended June, widening from a loss of HK$6.6 million a year ago.
The company, formerly known as China New Energy Power Group, is engaged in securities trading and property investment.
It said the bigger loss was caused by a HK$6.5 million impairment of loan receivables, as well as a HK$2.2 million impairment loss of interest receivables and other losses related with an associate.
The profit warning is based on the board’s preliminary review of unaudited information. Lamtex shares last traded  on August 16, when they closed at 21.1 HK cents.
-- Georgina Lee 
 


Lamtex Holdings issues warning on bigger net loss for first half 

Looks like it could be a good day for investors who have their hands on Huawei suppliers and Chinese electronics stocks.
In a surprise move, the US announced it would extend for another 90 days exemptions for some American companies of a ban on doing business with Chinese telecommunication giant Huawei Technologies.
US suppliers to Huawei rallied overnight on heels of the news. Chip makers Nvidia Corporation (NVDA NASDAQ) and Qualcomm Incorporated (QCOM NASDAQ) jumped 7 per cent and 2.2 per cent respectively.
— Yujing Liu


US extension of Huawei ban exemption set to boost supplier stocks

Cathay Pacific found itself unexpectedly sucked into the protest turmoil, and its stock went on a sudden bumpy ride.
Is this the time to buy? Or should investors wait? 
Here's advice from Kenny Wen, wealth management strategist at Hong Kong brokerage Everbright Sun Hung Kai.




Video: Cathay Pacific can weather this storm, says stocks strategist Kenny Wen 

Amco United Holdings (630 HK), which has interests ranging from manufacturing medical devices and offering public relations services, said in an exchange announcement after market close on Monday that it expects a net loss of HK$16.5 million for the first half, a reversal from a net profit of HK$3.4 million in the year-earlier period.
Based on preliminary information, the company expects to incur a loss of HK$3.7 million on trading investments, impairment loss of HK$4.1 million and lower turnover during the period. It will report its interim results by the end of this month.
-- Georgina Lee


Amco United expects to post first-half loss

CSPC Pharmaceutical Group (1093 HK) has entered into an agreement with Synermore Biologics (Suzhou) to license and commercialise the world’s first targeted therapy for asthma. Developed by Synermore, omalizumab biosimilar is approved in China and the US.
The deal was finalised by CSPC Baike (Shandong) Biopharm, a wholly-owned unit of CSPC Pharma. The company has agreed to pay upfront 10 million yuan and development milestone payments of up to 50 million yuan to Synermore Biologics for the exclusive rights to develop and commercialise the product in China. 
“The product has completed the bioequivalence study in Australia and application for phase III clinical trial in China is expected to be submitted in the near term,” it said in an exchange announcement.
CPSC Pharma's shares got a boost from the deal, rising 6.8 per cent in early trading today. 
-- Georgina Lee


CSPC Pharma buys exclusive rights for asthma drug in China

Enthusiasm about China’s plan to reform and promote the southern city of Shenzhen is still running high on the second trading day after its release.
Shenzhen-based companies extended their strong gains from Monday in early trading.
A gauge of 51 Shenzhen’s homegrown companies jumped 5.7 per cent, with 18 of them surging by the 10 per cent daily limit for a second day.
Electronics stocks gained broadly, such as computer storage device maker Shenzhen Kaifa Technology (000021 SZ), which climbed the 10 per cent daily limit to 10.65 yuan, and electronics market operator Shenzhen SEG (000058 SZ), which also shot up 10 per cent to 5.63 yuan.
Beijing announced over the weekend a sweeping reform plan for Shenzhen, China's hi-tech capital  in the southern province of Guangdong, to develop it into one of the world's most competitive and innovative cities in the coming two decades.
-- Yujing Liu


Shenzhen stocks skyrocket for a second day

Investors cheered CK Asset Holdings' (1113 HK) purchase of UK pub operator Greene King for US$3.27 billion. Shares of CK Asset rose as much as 3 per cent in early trading before paring gains to trade at HK$55.40.
-- Srinivasan Iyer
 


Investors raise a glass to CK Asset's UK pubs deal

China, Hong Kong markets fluctuated in early trading but turned higher in the latest trading.
The Shanghai Composite Index rose 0.2 per cent to 2,889.1, after opening as much as 0.3 per cent lower. The benchmark has been hovering near the 2,900-point level since May, as worries over the trade war and slowing economy have prevented it from breaching the key resistance level of 3,000 points.
The Shenzhen Component Index added 0.5 per cent, while the ChiNext Index of start-ups listed in Shenzhen also inched up 0.1 per cent.
In Hong Kong, the Hang Seng Index was little changed at 26,790.75, after paring early losses of as much as 0.5 per cent.
-- Yujing Liu


Shanghai, Hong Kong recoup early losses to trade higher

The Chinese central bank’s weekend move to reform the mechanism for establishing the loan prime rate (LPR) and to make it a benchmark for lending rate is “equivalent to a rate cut”, according to Chen Dong, senior Asia economist at Pictet Wealth Management.
The change is likely to push down commercial banks’ effective lending rates, Chen wrote in a note today. It will benefit the real economy as it addresses the stubborn problem of inefficient transmission mechanism for China’s monetary policy, he said.
“The latest change in interest rate policy is both part of a long-term structural reform, and also a response to short-term growth headwinds,” Chen wrote.
While China’s economy still faces many challenges in the short term and is likely to grow by 6.3 per cent in terms of GDP for 2019, the central bank’s move “should improve the economic outlook for 2020 and beyond”, according to Chen.
-- Yujing Liu 


China’s de facto rate cut brightens economic outlook for 2020, Pictet says

Dozens of stocks related to Huawei’s supply chain advanced, after the announcement of the latest 90-day extension of US blacklist exemption for some American suppliers to do business with the Chinese telecoms giant.
A gauge tracking 180 companies related to Huawei Technologies rose 0.9 per cent, with 12 of them jumping by the daily limit of 10 per cent.
O-film Tech (002456 SZ), which supplies smartphone camera modules to Huawei, gained 6.1 per cent to 10.02 yuan. Luxshare Precision (002475 SZ), a supplier of electronic connectors, added 2.6 per cent to 24.86 yuan.
-- Yujing Liu


Huawei-related stocks rise on extended US exemption

Hong Kong’s top leader said she is willing to create a platform for dialogue, but will not sanction an independent investigation into police actions during a political crisis that has rocked the city for almost three months.
“All my principal officials and I are committed to listening to what the people have to tell us,” said Chief Executive Carrie Lam Cheng Yuet-ngor.
Lam said her administration would start immediately work on setting up a means of finding a solution to the ongoing civil unrest, while dismissing calls for an independent inquiry into police misconduct.
Read full story here 
-- Yujing Liu


Carrie Lam says she is ‘committed to listening’ to the people of Hong Kong

There is still room for China to cut interest rates and reserve requirement ratios after the latest reform to establish the mechanism to set the loan prime rate (LPR), according to a senior central bank official.
But whether the central bank will take the action depends on the future status of the economy and inflation, Liu Guoqiang, deputy head of the People’s Bank of China, said during a media briefing today, according to Chinese media reports.
Liu also stressed that the LPR change will not lead to a decrease in mortgage rates, and warned the banking industry to bear in mind President Xi Jinping’s famous slogan – “houses are for living in, not for speculation”. 
-- Yujing Liu


China still ‘has room for rate cut’, central bank official says

Stocks related to Shanghai’s free-trade zone shot up after the official launch of the zone's expansion, which was attended by commerce minister Zhong Shan and Shanghai mayor Ying Yong today.
The addition of 119.5 sq km at Lingang to the free-trade zone is part of China’s effort to replicate a mini-Hong Kong style marketplace in Shanghai. Lingang is also home to car maker Tesla’s first factory outside the US.
A gauge of 23 China-listed stocks related to the free trade zone gained 1.7 per cent. Shenzhen Easttop (002889 SZ), a logistics company that owns over 40,000 square metres of warehouse in Shanghai’s free-trade zone, jumped by the 10 per cent daily limit to 27.79 yuan.
-- Yujing Liu


Shanghai free-trade zone stocks gain as Lingang officially opens

Shares of China's state-owned banks fell, amid concern that the central bank's reform of the loan prime rate would squeeze lenders' interest rate margins and erode their profits.
"It will take some time for lower lending rates to stimulate more loan demand, in particular when corporate capex is being held back by a slowing economy," said Standard Chartered's economists Li Wei, Ding Shuang and Shen Lan in an e-mailed commentary.
Shares of Industrial and Commercial Bank of China (601398 CH), the world's largest company by capitalisation according to Forbes, fell by as much as 1.1 per cent in an advancing market in Shanghai to an intraday low of 5.41 yuan. ICBC's Hong Kong-listed shares (1398 HK) declined by as much as 1.4 per cent into HK$4.91. China Construction Bank (601939 CH), the country's third-largest lender, fell as much as 1.3 per cent to 6.98 yuan in Shanghai and by as much as 1 per cent in Hong Kong (939 HK) to HK$5.71.
Read story here
-- Eugene Tang 


Chinese bank shares fall amid concerns over rate reform

Stocks related to television broadcasting advanced broadly, after China’s top media regulator released a new guideline to promote the development of radio and television broadcasting industries on Monday.
The National Radio and Television Administration said it would accelerate the development of 5G broadcasting networks and the application of ultra-high-definition television broadcasting.
The goal is for the broadcasting industry to produce more and better content that can both satisfy the “need of the new era”, as termed by President Xi Jinping, and cater to market demand by 2025, according to the policy.
A gauge of 24 television broadcasting-related stocks rose 3.5 per cent. Shenzhen Topway Video Communication (002238 SZ), which is in the business of television data transmission, jumped by the 10 per cent limit to 8.71 yuan.
-- Yujing Liu


Broadcasting stocks higher on fresh policy support

Hong Kong investors have once again taken a liking to pharmaceutical stocks, as the battered sector offered fresh hopes for a recovery in valuations after several upbeat first-half results.
CSPC Pharmaceutical Group (1093 HK), a Chinese drug maker based in the northern province of Hebei, climbed 10.3 per cent to HK$14.3 in the latest trading, after delivering interim earnings that were in line with expectations.
China Medical System (0867 HK), which focuses on the promotion and sales of prescription drugs, soared 16 per cent to HK$8.94. The company posted a 22 per cent jump in first-half profit from the same period last year.
Shares of drug makers have been hammered since early this year by China’s push for a centralised bulk procurement programme, which the market feared would set off a price war and drive down profit.
But the worst could be over on the policy side, as CSPC told investors and analysts in a call on Monday that new changes in the programme will lessen pricing pressure, according to a Jefferies report published late on Monday night.
The valuation of CSPC is attractive, Jefferies analysts led by Cyrus Ng wrote. They maintained a “buy” rating for the stock with a 12-month target price of HK$19.7.
 

-- Yujing Liu


Drug makers rise in Hong Kong as investors pile in

Hong Kong’s interbank interest rates will turn increasingly volatile as investors continue to yank cash from the city’s financial markets, according to Morgan Stanley, Reuters reported today.
The Hong Kong dollar may test the weak end of its trading band with the greenback if the pace of outflows increases, Morgan Stanley strategists including Chun Him Cheung wrote in a report dated August 19. That would force the city’s de facto central bank to defend the peg, squeezing liquidity and triggering a spike in local borrowing costs, they wrote.
“We expect the linked exchange rate system between USD and HKD to hold despite growing investor concerns,” Morgan Stanley’s note said. “However, if fund outflows increase, this could push spot USD/HKD to the 7.85 ceiling, resulting in a more volatile Hibor owing to the lower level of aggregate balance in the Hong Kong monetary system.”


Hong Kong rates to become volatile as investors pull cash, says Morgan Stanley

Property developers are leading declines in Hong Kong, with the Hang Seng Properties Index dropping by as much as 1.1 per cent, as more banks are predicting real estate prices to drop through next year, amid persistent protest rallies in the city.
Sun Hung Kai Properties (16 HK), Hong Kong's largest developer by capitalisation, fell as much as 2.6 per cent to an intraday low of HK$116.10. Wharf Real Estate Investment (1997 HK), which builds commercial and retail property in the city, fell as much as 2.6 per cent to an intraday low of HK$46.25.
Read full story here
-- Eugene Tang


Hong Kong developers drop over fears of declining property prices  

Hong Kong and China markets struggled for direction following their biggest rally in about two months on Monday, as investors keep a close eye on trade war developments and upcoming US interest rate comment from the Federal Reserve.
The Hang Seng Index swung between gains and losses, trading 0.3 per cent lower at 26,214.59.
The Shanghai Composite Index ended 0.1 per cent lower at 2,880, after gaining as much as 0.3 per cent in the morning. The Shenzhen Component Index was little changed, while the ChiNext Index of start-ups dropped 0.7 per cent.
“Even though Huawei suppliers got an extension on the blacklist exemption, there’s not much news on the latest development in the trade talks. So investors are waiting and seeing,” said Stanley Chan, director of research at Emperor Securities.
Also highly anticipated by the market is the Fed’s minutes from its July policy meeting to be released on Wednesday. Its chairman Jerome Powell is set to give a speech during the central bank’s annual retreat on Friday, potentially shedding more light on the global interest rate outlook.
Despite the uncertainties, the Hang Seng Index stands a chance to breach the 28,000-point level as soon as this week, Chan said, as both the Chinese and Hong Kong governments are rolling out fresh measures to prop up the economies.
"China's loosening of monetary policy and its fiscal stimulus will make investors relax a little bit and increase the market's risk appetite," he said.
-- Yujing Liu


Bulls and bears locked in a tug of war as market struggles for direction

K Wah International Holdings (0173 HK), chaired by Hong Kong's sixth richest person Lui Che-woo, said its underlying profit increased 46 times to HK$1.48 billion for the six months ended June, primarily derived from the sales of property in Hong Kong and the mainland.
"The amount was substantially above that for the same period last year as certain sold units for K City [in Hong Kong] completed last year were handed over to the buyers with revenue recognised in the period," according to its filing to the Hong Kong stock exchange today during the lunch break.
The company declared an interim dividend of 6 HK cents per share, unchanged from last year.
The company's shares closed 1.3 per cent lower at HK$3.87.
-- Lam Ka-sing 


Hong Kong developer K Wah reports massive jump in profit

Huarong International Financial Holdings (0993 HK), an asset management and securities trading firm, plummeted by as much as 60.8 per cent in afternoon trading before closing 45 per cent lower at 33 HK cents.
Shares worth HK$27 million (US$3 million) changed hands today, shooting up from Monday’s HK$3 million. It is not immediately clear what triggered the crash.
The company is 72.6 per cent owned by state-owned bad debt manager China Huarong Asset Management (2799 HK). The company has been battered by a corruption case involving its former chairman Lai Xiaomin. Officials found a stash of 270 million yuan (US$39.5 million) in cash hidden in his home.
Huarong International in April reported massive losses last year. Its net profit plunged by 93 per cent year on year to 1.6 billion yuan, while revenue declined 16 per cent year on year. 
-- Yujing Liu


Chinese bad debt manager's subsidiary sinks in Hong Kong

The Hang Seng Index dropped 0.2 per cent to 26,231.54, snapping a four-session winning streak.
Financials and property developers weighed on the benchmark, while electronics stocks shot up after temporary suspension of a ban Huawei and its suppliers.
HSBC Holdings (5 HK), the largest bank in Europe and Hong Kong, declined 1 per cent to HK$57.4, while insurer AIA Group (1299 HK) shed 1.1 per cent to HK$77.4.
The decline was in line with losses in mainland Chinese banks, as Beijing’s latest move to effectively lower interest rates worried investors that banks’ profit margins would shrink.
Property developers also suffered amid a gloomy outlook for housing prices in the city. Sun Hung Kai Properties (16 HK), Hong Kong's largest developer by capitalisation, dropped 2.1 per cent to HK$116.7.
Suppliers of smartphone components to Huawei gained. Sunny Optical Technology (2382 HK) was up 4.9 per cent to HK$105.6 and AAC Technologies Holdings (2018 HK) finished 3.2 per cent higher at HK$38.5.
-- Yujing Liu


Stocks Blog: Hang Seng reverses gains as blue chip developers fall amid fears of further decline in property prices

Shanghai Composite Index ends in negative territory after rising in the morning session Investors wait on the sidelines awaiting clues from the Fed and trade war developments

Shanghai Composite Index ends in negative territory after rising in the morning session

Investors wait on the sidelines awaiting clues from the Fed and trade war developments