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Louise Moon

Srinivasan Iyer

Happy Monday, traders --
The poor run for Hong Kong stocks continued today. Even mainland stocks snapped a three-day wining run.  
We'll be back tomorrow to bring you more of the latest market developments.
If you would like to receive the Live Stocks Blog each morning via email, shoot Deb a message at deb.price@scmp.com. 
-- Louise Moon and Srinivasan Iyer in Hong Kong


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Stocks

Stocks blog: Hang Seng extends run of losses to six straight sessions - the longest since October last year 

The corporate flag for Hong Kong Exchanges & Clearing (HKEX) and the Chinese flag fly outside the Exchange Square complex in Hong Kong. Photo: Bloomberg

Business

Markets

Hong Kong's benchmark index ends 0.87 per cent lower 
 No positive news to cheer investors, says Francis Lun, chief executive of Geo Securities


Hong Kong's benchmark index ends 0.87 per cent lower


Hong Kong Stock Exchange

China stock market

A-shares

Live

China Automobile New Retail (0526 HK), an investment holding company that trades imported cars, has signed a memorandum of understanding to buy 51 per cent stake in Beijing Gunlie E-Commerce Company, it said in a filing to the Hong Kong stock exchange on Sunday evening.
Beijing Gunlie E-Commerce procures and imports foreign brand cars into the Chinese car market. China Automobile New Retail said the acquisition would expand its business in trading and sales of imported cars, strengthening its competitive edge in the industry in China.
-- Louise Moon


China Automobile New Retail announces intended acquisition

* Overnight markets/ What futures foretell
-- On Friday in US markets, the S&P 500 fell 0.5 per cent to 2,992.07, the Nasdaq shed 0.8 per cent to 8,117.67, and the Dow Industrials lost 0.6 per cent to 26,935.07 
-- Hong Kong futures were down 0.28 per cent to 26,350, while the FTSE China A50 futures were up 0.32 per cent to 13.850.17
* IPO debuts: None.
* Economic statistics/Central Bank action: HK 2Q Balance of Payment current account balance; Singapore to release its consumer price inflation and Taiwan to announce its industrial production data 
* Corporate events: earnings, meetings, news conferences: Nothing major


Morning guidance

Investment management company FDG Electric Vehicles (0378 HK) will resume trading today, after deciding to halt trading on the Hong Kong stock exchange on Friday afternoon, it said in a filing to the exchange on Sunday evening.
The company requested the halt pending the release of an announcement that its chairman and executive director, Cao Zhong, has had a bankruptcy petition filed against him by Li Ka Shing (Canada) Foundation. The petition is at its preliminary stage, according to the filing, and the company does not yet have enough information to judge its impact on business.
“The company will continuously follow up on the progress of the bankruptcy petition and make further announcement to update the shareholders of the company as and when appropriate,” it said, without providing further information.
-- Louise Moon


Bankruptcy petition against FDG Electric Vehicles’ chairman

Hong Kong's Hang Seng edged up 0.12 per cent to 26,467.48 at the open.
On the mainland, the Shanghai Composite dropped 0.27 per cent to 2,998.36 while the CSI 300 of large caps in Shanghai and Shenzhen fell 0.26 per cent to 3,925.13.


Tables turn as Hang Seng rises while Shanghai Composite dips  

Hong Kong Exchanges & Clearing (0388 HK) has brought in UBS Group as an adviser to help it in its bid to takeover the London Stock Exchange (LSE), according to Bloomberg who cited sources familiar with the matter.
The Swiss bank will help the HKEX arrange meetings with LSE shareholders for which it US$37 billion. Credit Suisse and HSBC are also helping HKEX, said Bloomberg.
HKEX was down 1.56 per cent to HK$226.60 in the latest trading -- its lowest level since January.
-- Louise Moon


HKEX ropes in UBS to advise on LSE takeover

The Hang Seng turned lower, down 0.05 per cent to 26,422.
Leading the losses is the health care sector, down 2.62 per cent. Sino Biopharmaceutical (1177 HK) dropped 2.81 per cent to HK$10.38, while CSPC Pharmaceutical (1093 HK) shed 1.95 per cent to HK$15.08.
Smartphone component makers AAC Technologies (2018 HK) and Sunny Optical Technology (2832 HK), losing 3.17 per cent and 2.67 per cent, respectively.
The Shanghai Composite dropped just over 1 per cent, with all sectors down.
-- Louise Moon


Shanghai stocks extend losses to over 1 per cent, Hong Kong steady

Fosun International (0656 HK) fell 0.38 per cent to HK$10.42 in morning trading on the back of the collapse of British travel firm Thomas Cook.
The Shanghai-based conglomerate took a 75 per cent stake in Thomas Cook’s package tour division and a 25 per cent holding of its airline business in August, in a 900 million pound rescue deal.
Thomas Cook, the world’s oldest travel firm, collapsed on Monday after it failed to secure a rescue package from its lenders. The UK’s Civil Aviation Authority said it had stopped trading.
“I would like to apologise to our millions of customers, and thousands of employees, suppliers and partners who have supported us for many years,” said chief executive Peter Fankhauser in a statement on Monday morning.
“It is a matter of profound regret to me and the rest of the board that we were not successful.”
-- Louise Moon


Fosun falls after collapse of Thomas Cook

Trading in Tencent Holdings (700 HK) was brisk, with turnover crossing HK$1 billion is just under an hour. The average daily turnover in the counter in the past year was HK$6.39, while last week it was much lower at HK$4.66  billion.
It is worth noting that Tencent bought back shares for 18 straight sessions up to September 20.
Tencent had been trading up this morning, but fell 0.18 per cent to HK$337. Its share price sits slightly above the company's average 52-week average of HK$335.74. 
-- Louise Moon


Rapid turnover in Tencent 

China's northwest province of Shaanxi will release over 2,000 tons of frozen pork for the week long national day holiday which runs from October 1-7 on the mainland when demand is expected to surge, according to local media. The supply will be released over seven days starting today.
Pork prices in mainland China have skyrocketed this year because of the US-China trade war which has hit imports and the devastation wrought by African Swine Fever which has severely curtailed supplies. But key stocks followed the market trend in morning trading and scaled down.
WH Group (0288 HK), the world’s largest pork producer, lost 1.27 per cent to HK$7.02. Muyuan Foods (002714 CH), the country’s second largest, shed 2.23 per cent to 73.3 yuan, while Wens Foodstuff (300498 CH) lost 1.19 per cent to 38.2 yuan.
-- Louise Moon


Shaanxi province to release pork supplies ahead of national day holiday

Telecommunications was the only sector to gain in morning trading on the Hang Seng Index, rising 0.54 per cent.
The sector rose after Reuters reported that Huawei was joining China Mobile (0941 HK) to buy Brazilian telecoms carrier Oi.
The move will help the two expand in Latin America’s largest market. It will also allow Huawei deploy its 5G technology on Oi’s network.
Oi has been struggling since filing for bankruptcy in June 2016, to restructure HK$122.85 billion of debt.
China Mobile was the second largest gainer in Hong Kong, up 0.85 per cent at HK$65.15. 
China Mobile and China Telecom (0728 HK) have also signed with Spanish tech firm Lleida.net, allowing its customers to use the Chinese firms' networks. China Telecom was up 0.28 per cent to HK$3.56.
-- Louise Moon


China Mobile higher on takeover of Brazilian telecoms firm  

Zhongtai International Securities cut casino giants Galaxy Entertainment (0027 HK) and Sands China (1928 HK) to “accumulate” from “buy”.
Macau casino revenue dropped 8.6 per cent to August -- the biggest monthly drop since June 2016 -- to 24.3 billion patacas (HK$23.57 billion), according to Macau’s Gaming Inspection and Coordination Bureau. The loses come amid slowing economic growth because of the US-China trade war and ongoing protests in neighbouring Hong Kong.
Zhongtai analyst Alvin Ngan downgraded Galaxy’s price target from HK$60.90 to HK$60.60. Among analysts polled by Bloomberg, 22 recommend “buy”, five “hold” and one “sell”. Over the past six months, analysts have lowered their consensus one-year target price for the stock by 1.4 per cent, according to Bloomberg. The average price target is HK$60.83, and forecasts range from HK$43 to HK$79.70.
Ngan lowered his price target for Sands from HK$44.70 to HK$43.90. The average price target is HK$44.70, with forecasts ranging from HK$37.50 to HK$51.25. Of the 27 analysts polled by Bloomberg, 20 have a "buy" recommendation, seven “hold” and none to sell.
Galaxy and Sands were down 1.27 per cent and 1.35 per cent, respectively, during morning trading.
-- Louise Moon


Zhongtai International downgrades Macau casino stocks

Chinese agriculture officials cancelled a trip to US farms in Montana, northwest America, next week, and will return to China sooner than planned.
But a senior member of the delegation, vice-minister of the Ministry of Agriculture and Rural Affairs, Han Jun, told state-owned media outlet China Business News that the change in plan had nothing to do with trade negotiations, as the trip was a stand-alone arrangement.
The cancellation came during US-Chinese trade talks in Washington, where US President Trump said he wanted a complete trade deal with China, not just an agreement for them to buy more US agricultural goods.
Among agriculture companies, pig breeder Hunan New Wellfel (600975 CH) shed 3.69 per cent, chicken farming company Shandong Minhe Animal Husbandry (002234 CH) fell 6.9 per cent, and Tangrenshen Group (002567 CH) lost 4.91 per cent.
-- Louise Moon 


Chinese farm companies fall after officials cut short US trip

China’s Fosun Tourism Group (1992 HK) has said the proposed 450 million pound recapitalisation plan of Thomas Cook no longer applies now that the British travel giant has entered compulsory liquidation, according to Reuters.
In a statement to AFP, Fosun Group said it was “disappointed that Thomas Cook Group has not been able to find a viable solution for its proposed recapitalisation with other affiliated, core lending banks, senior noteholders and additional involved parties”.
“Fosun confirms that its position remained unchanged throughout the process, but unfortunately other factors have changed.
“We extend our deepest sympathy to all those affected by this outcome.”
By midday, Fosun Tourism Group was down 2.84 per cent, while Fosun International (0656 HK) had lost 0.96 per cent.
-- Louise Moon


Fosun 'disappointed' as Thomas Cook unable to find solution for proposed capitalisation   

By midday break Hong Kong’s Hang Seng was down 0.8 per cent to 26,207.26, looking to extend into its sixth straight session of declines after another weekend of protests.
All sectors except telecommunications were down, and only seven of the 50 constituent stocks had gained.
Leading the losses was Sunny Optical and AAC Technologies, which shed almost 5 per cent each.
China’s Shanghai Composite also fell by 1.3 per cent to 2,967.02, as investors waited for more clarity on US-China trade talks.
All sectors were down as the benchmark reversed three sessions of inclines. The CSI 300 of large caps in Shanghai and Shenzhen lost 1.48 per cent to 3,877.10.
-- Louise Moon


Hong Kong and mainland benchmarks deepen losses at midday break 

Software and services stocks will continue to perform well despite political tensions and the US-China trade war, said Kent Hargis, co-chief investment officer for low volatility equities of AllianceBernstein.
“Technology enablers” in the background, such as credit card processing companies, will see growth as technology usage expands, said Hargis.
“We are underweighting semiconductor and hardware names because we think that volatility will continue,” said Hargis, who also put industrial stocks such as auto and manufacturing under the same rating.
Volatility will remain in the market because the US-China trade war, slowing economic growth and rising populism and political uncertainties such as Brexit are “very likely to continue”, he said. Although the volatility is higher than normal, it is lower than in “extreme cases”, namely the fourth quarter of last year, the 2008 financial crisis and the European debt crisis.
-- Holly Chik


Tech service providers to shine despite trade war, volatility 

In case investors are watching other assets, Brent crude rose more than 1 per cent to to as much as US$65.50 a barrel, while gold remained steady at US$1,516.33 per ounce.
Crude has remained at elevated levels since a drone attack in mid-September on a key Saudi oil facility knocked out half of the country's oil production.  
Tensions in the Middle East have escalated since the attack, and the Pentagon has ordered additional US troops to be deployed in the Gulf region to strengthen Saudi Arabia’s air and missile defences.
Meanwhile, gold prices had climbed to a more than one-week high of US$1,516.81 in the previous session.
“Gold is currently in a mixed zone,” Howie Lee, economist at OCBC Bank, told Reuters.


Oil rises as tensions remain high in the Gulf, gold steady

Swire Properties (1972 HK) has reduced rents temporarily at Pacific Place Mall in Admiralty during “this challenging time” as Hong Kong has been overrun by more than three months of social unrest, according to Bloomberg.
Since the first large-scale protest on June 9, to last close, Swire Properties’ stock price has dropped 25 per cent. Swire Properties has fallen 1.6 per cent in today's trading so far, to HK$24.6, its lowest level since January 2017.
Tourists are being deterred from visiting, and locals are hesitant to spend money in an increasingly fragile economy.
Mall occupancy rates could be at risk of declining as merchants turn cautious and scale back expansion plans, according to a note by Bloomberg Intelligence analysts.
As spending by mainland tourists could tumble further, combined with potential for the yuan to fall further as the US-China trade war escalates, retail turnover rentals could slump in the second half of the year, they said.
Particularly vulnerable, they said, was Wharf Real Estate Investment Company (1997 HK). Its stock was down 1.86 per cent in afternoon trading, to HK$42.45.
-- Louise Moon



Swire Properties at lowest level since January 2017, offers temporary relief to mall tenants

Hong Kong rail operator MTR Corporation (0066 HK) fell to a three-week low in afternoon trading, losing 1.41 per cent to HK$45.30: its lowest since September 3.
The company has been hit by the unrest, as protesters have thrown petrol bombs and started fires inside stations. MTR also owns many shopping malls, which have also been a target of vandalism in Hong Kong.
In a statement on Sunday, MTR said it “strongly condemns vandalism of railway facilities”, adding it had reported some incidents of violence to the police. It expressed concern over a suspected arson case at its depot in Siu Ho Wan.
Its share price has lost 6 per cent since the first large-scale protest on June 9.
-- Louise Moon


MTR expresses concern over suspected arson at its depot

“The sentiment is poor, there is no positive news ... if anything it is getting worse,” said Francis Lun, chief executive of Geo Securities, pointing to the deadlock in the US-China trade talks and the ongoing unrest in  Hong Kong.
“Investors are selling with insurers leading the way, like AIA and Ping An, followed by HKEX and handset suppliers,” said Lun. Handset suppliers, he noted, rose too much last week and traders are resorting to profit taking this week.
Chinese markets have reversed three days of gains today because the “trade talks are going nowhere, despite them trying to put a brave face on it”, said Lun. “There is nothing to cheer.”
-- Louise Moon


There's nothing positive at the moment, says Francis Lun of Geo Securities 

IPOs are slowly returning to Hong Kong's stock market after a dismal summer disrupted by the worst political crisis in the city’s history.
As many as 16 companies have applied to raise funds on the local bourse in the first three weeks of September and the number of active applications has risen by 7 per cent to 231 so far this year.
Read Enoch Yiu's full story here 


IPO activity picks up on Hong Kong bourse

Film and television stocks rose ahead of China’s National Day holiday. The week-long holiday starting October 1 will see millions head to the cinemas to watch the latest blockbusters, giving a boost to media companies' line.
Entertainment production company Omnijoi Media (300528 CH) gained the maximum 10 per cent daily limit in Shenzhen. Beijing Enlight Media (300251 CH) rose 3.89 per cent, Huayi Brothers Media (300027 CH) was up 3.52 per cent, and Wanda Film Holding (002739 CH) gained 1.25 per cent.
-- Louise Moon


Film and TV stocks in the frame

The Shanghai Composite reversed three days of gains today, ending trading down 0.97 per cent to 2,977.08.
Nearly 80 per cent of listed stocks were down, and all sectors were negative. Just five companies rose by the daily limit of 10 per cent, as investors were downbeat over a lack of progress in the US-China trade war following talks over the weekend.
The CSI 300 of large caps fell 1.14 per cent to 3,890.66.
The US Trade Representative’s office issued a brief statement to say the two days of talks with China were “productive”. It said a previously planned principal-level trade meeting in Washington will take place in October.
China’s Commerce Ministry also brief statement describing talks as “constructive”, and said it had a good discussion on “detailed arrangements” for high-level talks in October.
-- Louise Moon


Chinese stocks fall nearly 1 per cent, three days of gains come to a halt

Hong Kong’s Hang Seng index extended its longest losing streak since October 2018 to six straight sessions. It lost 0.87 per cent to end at 26,205.09.
All sectors bar telecommunication services fell, and even that rose just 0.15 per cent. Just six of the 50 constituent stocks ended positive.
AAC Technologies (2018 HK) and Sunny Optical Technology (2382 HK) were the biggest losers. The smartphone component suppliers lost 6 per cent and 4.76 per cent, respectively.
Investors resorted to profit-taking after AAC rose 11.84 per cent last week, while Sunny Optical saw six straight weeks of gains.
-- Louise Moon
 


Stocks blog: Hang Seng extends run of losses to six straight sessions - the longest since October last year

Hong Kong's benchmark index ends 0.87 per cent lower No positive news to cheer investors, says Francis Lun, chief executive of Geo Securities

Hong Kong's benchmark index ends 0.87 per cent lower

No positive news to cheer investors, says Francis Lun, chief executive of Geo Securities