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Georgina Lee

Anthony Richardson

A good day for Hong Kong's property developers as Chief Executive Carrie Lam announces plans to tackle the housing crisis. That sent the Hang Seng higher.
Join us to see what tomorrow holds!
-- Georgina Lee and Anthony Richardson


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Stocks

Stocks Blog: Surging developers take Hang Seng higher as Lam addresses housing crisis; Kweichow Moutai drags down China shares

Chief Executive Carrie Lam had to abandon her live policy address after being repeatedly heckled. Photo: Winson Wong

Business

Markets

Hong Kong's MTR Corp jumps as plan for new rail lines announced
China's shares finish lower, weighed down by Kweichow Moutai, IT stocks


China's shares finish lower, weighed down by Kweichow Moutai, IT stocks


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Cosmetics retailer Sa Sa International Holdings (0178 HK) said its quarterly sales in July to September dropped 20.8 per cent on the year to HK$1.61 billion (US$205.2 million) as a fall in tourist arrivals arising from the protests eroded its business.
  The company said in an exchange filing on Tuesday evening that sales in Hong Kong and Macau plunged 24.1 per cent to HK$1.31 billion. Same-store sales in the two cities dived 28.5 per cent.
-- Daniel Ren   


Sa Sa International reports slump in sales in third quarter

More than 60 per cent of firms listed on China's ChiNext exchange are set to report profit growth for the third quarter despite the economic slowdown.
  According to data provider Shanghai Wind Information, 279 firms trading on the start-up board of  the Shenzhen Stock Exchange have issued statements forecasting a rise in earnings in the three months ended September. They were among a total of 452 firms that had published earnings forecasts as of Monday. Ninety-three of them said they would post a jump in quarterly earnings.
-- Daniel Ren   


ChiNext-listed firms remain buoyant in third quarter

Here's what we are watching this morning:
Overnight markets/ What futures foretell:  -- Overnight in US markets, the S&P 500 climbed 1 per cent to 2,995.68, the Nasdaq jumped 1.2 per cent to 8,148.71, and the Dow Jones Industrial Average rose by 0.9 per cent to 27,024.68.  -- HK futures are up 0.19 per cent, China A50 futures are up 0.15 per cent.
IPO debuts:  -- CR Construction Group Holdings (1582 HK) and Hong Kong Johnson Holdings (1955 HK)
Economic statistics/Central Bank action:  -- Nothing scheduled
  Trade data out of China:  -- None
Earnings:  -- Zhaojin Mining Industry Company (1818 HK)   


Morning Guidance

China’s central government on Tuesday officially revised management rules for foreign banks and insurers, in a move that eases restrictions on international players in the financial sector.
  The rules, first announced as a draft in October last year, allow foreign banks to take time deposits of no less than 500,000 yuan (US$70,000) from a single resident, down from the 1 million yuan required before.  Foreign banks can also set up both branches or wholly foreign-owned subsidiaries in China now, according to a State Council document released on Tuesday.
  The new rules also scrapped the requirement for overseas insurers to have at least 30 years of experience in the insurance business, as well as to have a representative office in China for two years, to operate in China.
-- Yujing Liu   


China’s relaxed rules for foreign banks, insurers kick in

An investment research company has delivered a vote of confidence in Hong Kong’s beleaguered stock market which has been battered by increasingly violent anti-government protests.
  Morningstar said in a research note on Tuesday that property and banking stocks would recover their lost ground if the unrest were to end soon.
  “The question is how quickly the government can reinstate confidence,” said the research report. “We believe that confidence can return quickly, and a V-shaped recovery is possible given past response.”
  The bullish forecast by Morningstar marks a stark contrast to the gloomy sentiment engulfing the Hong Kong economy as the protests wreak havoc in local real estate, tourism and retail businesses.
  The Hang Seng Index has underperformed other global equity markets since the protests started on June 9. As of Tuesday, the blue-chip index had fallen 4.6 per cent since June 12, closing at 26,503.93 on Tuesday.
-- Daniel Ren   


Morningstar a beacon of optimism on Hong Kong stocks

Hong Kong stocks opened up 0.2 per cent at 26,553.9. In China, the CSI 300, which tracks blue chips listed on Shenzhen and Shanghai, was 0.1 per cent higher at 3,940.83.
  The Shanghai Composite Index also edged up 0.1 per cent, to 2,994.8.
  At 11am, the city’s legislature will hear Hong Kong Chief Executive Carrie Lam Cheng Yuet-ngor’s policy address, which is being closely watched for measures to address land and property crises blamed by Beijing for fuelling violent protests.  Analysts said the market would be weighing up the implications of the policy address for Hong Kong’s social stability.
  Leading the Hang Seng higher were Hong Kong properties, with Link Reit (823 HK) up 2.4 per cent at HK$84, CK Holdings (1 HK) jumping 2.2 per cent to HK$73.8, Swire Pacific (19 HK) advancing 1.4 per cent to HK$74 and Henderson Land (12 HK) increasing 1.3 per cent at HK$37.7.
-- Georgina Lee   


Property firms lead Hong Kong stocks higher at the opening

Liquor giant Kweichow Moutai (600519 CH) reported third-quarter net profit rose 17 per cent from a year ago, at 10.5 billion yuan. Its gross revenue, at 21.4 billion yuan, was up 13 per cent.
  Brokerage Bernstein has lowered its 2019 full-year earnings estimate by 3 per cent to 34.35 yuan per share, while it keeps its price target at 1,022 yuan. Bernstein said gross revenue and net income of the liquor distiller were 11 and 12 per cent below its respective estimates, according to a report by Bloomberg.
  Kweichow Moutai is  down 2.6 per cent at 1,180 yuan. As of Tuesday's close, the stock had more than doubled.
-- Georgina Lee   


Kweichow Moutai drops after unsurprising third-quarter results

ESR Cayman, backed by private equity firm Warburg Pincus, has begun gauging investors' interest for an initial public offering on the Hong Kong stock exchange (HKEX), reviving its fundraising plans four months after postponing it, Bloomberg reported, citing people with knowledge of the matter. 
  The developer of logistics warehouse systems launched the process this week, the people said, asking not to be named as the information is private. ESR had planned to raise up to US$1.24 billion in an IPO in June but withdrew the sale because of what it said were unfavourable market conditions. 
  The postponement, together with an earlier withdrawal by Budweiser Brewing Company APAC, amounted to US$11.05 billion in postponements for HKEX. Budweiser (1876) revived its IPO last month, almost halving the mount raised to US$5 billion. Budweiser's shares fell 0.9 per cent in recent trading to HK$31.70, 17 per cent up from its IPO price of HK$27.00.
-- Eugene Tang   


Logistics firm ESR Cayman revives Hong Kong IPO plan

The stock was the top loser among blue chips, after Goldman Sachs cut its recommendation to “sell” from “neutral”. The price target is at HK$18. 
  According to Bloomberg, over the past three months analysts have reduced their consensus one-year target price for the stock by 9.7 per cent, with targets ranging from HK$14.5 to HK$25.7.
  Year-to-date, the stock is up 18.6 per cent. Hang Lung Properties (101 HK) dropped 1.6 per cent to HK$17.7 this morning.

  The Hang Seng Index was up 0.5 per cent, at 26,632.58.
-- Georgina Lee   


Hang Lung Properties biggest loser as Goldman cuts recommendation

Local building contractor CR Construction Group Holdings (1582 HK) saw its share price virtually double to HK$1.97 while environmental hygiene company Hong Kong Johnson Holdings (1955 HK) shot up 47 per cent to HK$1.47 on their trading debuts.
  Both stocks started from an initial public offering price of HK$1.
#IPOs on HK's mainboard today:
  - Local building contractor CR Construction Group Holdings (1582 HK)  - Environmental hygiene service provider Hong Kong Johnson Holdings (1955 HK)@SCMPNews@scmpbusiness @HKEXGroup pic.twitter.com/G5PD94jKJG
  — Holly Chik (@hollycwchik) October 16, 2019
  CR Construction was the third largest contractor in Hong Kong by revenue from building works in 2018. Last year, it recorded HK$4.7 billion of revenue and had a market share of about 5 per cent.
  Hong Kong Johnson ranked first among local environmental hygiene companies by revenue and market share last year. It mainly provides cleaning services for buildings, parks and recreation centres in both the government and non-government sectors.
“With the support of our two major shareholders, we are confident about our development in the future,” said chairwoman and non-executive director Xu Jili of Hong Kong Johnson, referring to Zhuhai Huafa and Canvest Environmental Protection Group.
  “There’s still room for growth in the Hong Kong environmental hygiene market.”   
-- Holly Chik   


Debutants CR Construction and Johnson off to a flying start in Hong Kong 

Authorities in the Luhe District of Nanjing province will allow non-residents who don't have hukou ­- a qualification for local residency - to buy property as long as they are educated to at least university level, according to mainland Chinese media reports.
  The move was part of the local government’s efforts to attract new talent, the reports said.
  Poly Developments and Holdings (600048 CH) advanced 1.2 per cent to 15.79 yuan, Guangzhou Yuetai Group (600393 CH ) shot up 9.2 per cent to 3.21 yuan; China Vanke (000002 CH) gained 2 per cent to 27.3 yuan and Greenland Holdings (600606 CH) was up 1 per cent at 7.31 yuan.   
-- Georgina Lee


Relaxation of buying restriction in Nanjing sends property stocks higher

Hong Kong legislature's president suspended the meeting just as city's Chief Executive Carrie Lam Cheng Yuet-ngor was poised to deliver her much-anticipated policy address. Opposition lawmakers were shouting slogans in the chamber to disrupt Lam's address and two pan-democrats were ordered to leave the chamber.
  Lam was being repeatedly heckled inside and outside the chamber as she tried in vain to outline her government's policy programme.
  The city's leader had not yet started her speech, only saying her policy address would be uploaded online later.
  -- SCMP reporters   


Lam's policy address suspended as Hong Kong leader is heckled in Legco

Gains in the Hang Seng Index narrowed to less than 0.1 per cent, at 26,511.28, after a policy address by Hong Kong's leader descended into chaos.
  The speech by Chief Executive Carrie Lam Cheng Yuet-ngor was interrupted by heckling pro-democracy lawmakers before being suspended amid farcical scenes.
  The MSCI Hong Kong Index edged up 0.7 per cent, at 14484.05.
-- Georgina Lee   


Hang Seng gains narrow as Chief Executive’s policy address suspended

Hong Kong's rail operator MTR Corp (0066 HK) climbed 3.2 per cent to HK$45.1.
  The gains came as the government unveiled plans to build three new lines: Tung Chung Extension, Tuen Mun South Extension and Northern Link.   
The announcement was made by Chief Executive Carrie Lam in her policy address, which she delivered by video after being heckled by opposition law makers earlier. It confirmed an earlier report by Cable TV.
-- Georgina Lee and Anthony Richardson   


MTR Corp tops blue-chip gainers as plan for new rail lines unveiled

Kweichow Moutai (600519), the liquor distillery giant, was the biggest loser in the Shanghai Composite Index this morning, falling 3.2 per cent after posting lacklustre third-quarter results overnight.
  Industrial and Commercial Bank of China (601398 CH) was the second biggest loser by points, down 0.5 per cent at 5.69 yuan. Brokerage CSC Financial (601066 CH) fell 3.3 per cent to finish for lunch at 23.8 yuan.  The Shanghai Composite Index was down 0.3 per cent, at 2,982.74, at the break.
  Bucking the downward trend were health care stocks. Shandong Pharmaceutical Glass (600529 CH) increased by the daily 10 per cent limit, to 27.42 yuan while Zhejiang Huahai Pharmaceutical (600521 CH) surged 7.5 per cent to 16.68 yuan.
-- Georgina Lee   


Shanghai benchmark led down by Kweichow Moutai, financials

Bank of China (3988 HK) saw its share price continue to rise for a fourth day, advancing 1.3 per cent to HK$26.55 in the morning. Earlier this week, Goldman Sachs upgraded its recommendation for the bank to “buy” from “neutral”, with a target price at HK$35.1, according to a Bloomberg report.
  Of the 14 analysts tracked by Bloomberg, 11 of them currently have a “buy” rating, and three “hold”.
-- Georgina Lee   


Bank of China (HK) racks up four straight days of gains after Goldman upgrade

Ascentage Pharma aims to raise HK$392 million to HK$416 million (US$50.3 million to US$53.4 million) by selling 12.18 million shares at HK$32.2 to HK$34.2 each, via a Hong Kong initial public offering. 
  The fund-raising target is much smaller than the market had anticipated because the firm is not short of cash after raising US$124.9 million of private equity capital in July last year, said Yang Dajun, chairman of the company.
  The valuation of the firm would be US$881 million if was priced in the middle of the range, compared to US$776 million in July last year. The company, based in Suzhou, Jiangsu province, develops drugs for cancer, hepatitis B and age-related diseases. 
  It aims to apply next year for approval to launch a medicine for chronic myeloid leukaemia. 
  The shares sale starts today and they are scheduled to start trading on the bourse on October 28.
-- Eric Ng


Ascentage Pharma aims for US$53 million with Hong Kong IPO

Sun Hung Kai Properties (16 HK) rose 2.9 per cent to HK$115.1, Henderson Land (12 HK) climbed 2.8 per cent to HK$38.25, New World Development (17 HK) jumped 3.5 per cent to HK$10.7 and CK Asset (1113 HK) was up 2 per cent at HK$53.35.
  The big gains came after Chief Executive Carrie Lam announced a raft of measures to address a shortage of housing in the city, which she described as the most pressing issue facing Hong Kong, and the "root" of social discontent.   "Housing is not a simple commodity," she said. "It is important to provide people with proper homes. This is the foundation of a stable society."
  She said 10,000 affordable housing units will be built in the next three years. An existing HK$2 billion fund will be increased to HK$5 billion to help make that happen.
  The government-backed Hong Kong Mortgage Corporation will relax the ceiling on mortgage financing schemes for first-home buyers.
  She confirmed the government will make use of the Lands Resumption Ordinance to take back private land for public housing and unveiled details of a land sharing scheme that would boost public housing.   
"Housing is not a simple commodity," she said. "It is important to provide people with proper homes. This is the foundation of a stable society."
  She announced a plan to boost the supply of so-called transitional housing for those who are in the queue for public accommodation. A total of 10,000 units will be built in the next three years, she promised.
  There will be a cash allowance for low-income households not living in public rental flats and not receiving social security, including those on the waiting list for public housing, by providing a cash allowance, Lam said.
-- Georgina Lee and Anthony Richardson   


Hong Kong developers jump as Lam unveils plans to boost housing

In a policy address delivered via video because of hecklers, Chief Executive Carrie Lam Cheng Yuet-ngor said the government is ready to back first-home buyers by widening the lending cap for which borrowers are eligible.
  The government-backed Hong Kong Mortgage Corporation will relax the ceiling of mortgage financing schemes for first-time buyers. For those who are allowed to borrow up to 90 per cent of the value of a flat, the lending cap will be raised to HK$8 million from the existing HK$6 million.
  For those capable of taking mortgages worth up to 80 per cent of the house’s value, the cap is raised to HK$10 million from HK$6 million.
  The Hang Seng properties sub-index was the best performing sub-index, up 1.7 per cent at 38,285.15.
All the major developers enjoyed gains, while Midland Holding (1200 HK), a leading property agency, shot up 8 per cent to HK$1.07
-- Georgina Lee   


Property firms rise as Lam unveils mortgage sweeteners for first-time buyers

Shares of EuroEyes International Eye Clinic (1846 HK) plunged 7.3 per cent to HK$10.2 after the lunch break in the Hong Kong market after skyrocketing on their debut yesterday.
  The German eye-surgery provider shot up to HK$11 on Monday from an initial offering price of HK$7.5.
  -- Holly Chik   


EuroEyes loses some ground after skyrocketing on debut

The company said in an announcement late on Tuesday that for the six months ended September, sales volume is expected to come in at no less than HK$1 billion, representing growth of at least 10 per cent from a year ago. It attributed the increase to its proactive client engagement and promotional campaigns to boost sales. 
It provided the update based on preliminary, unaudited sales data.
  Discounting the “golden week" holiday, for the first ten days of October unaudited sales volume dropped “no more than 9 per cent” from a year ago, said UM Healthcare. It cited the decline in mainland Chinese tourists to Hong Kong and the closure of certain shopping malls in which its clinics are located during the protests.
  Shares of UM Healthcare (2138 HK) shot up 8 per cent to HK$5.54, the highest in nearly a month.
-- Georgina Lee   


UM Healthcare surges to near one-month high on good sales volume

The CSI 300 Index, which tracks blue chips listed inn Shanghai and Shenzhen, closed 0.3 per cent lower at 3,922.69, while the benchmark Shanghai Composite Index lost 0.4 per cent to finish at 2,978.71.
  “Despite the index decline, sentiment in the market has actually improved. This can be seen from the stronger net inflow from foreign investors into China's shares through the Hong Kong stock connect,” said Kenny Tang Sing-hing, chief executive of Royton Securities.
  For example, for five out of the six trading days in October the Shanghai northbound connect recorded net inflow. That came after 64.6 billion yuan of net inflow in September, a record high.
  Kweichow Moutai (600519 CH) fell 3.4 per cent to 1169.99 yuan, after the liquor distiller reported lacklustre third quarter results. In Shenzhen, its smaller rivals also dropped, with Wuliangye Yibin (858 CH) down 1.9 per cent at 130.13 yuan.
  LONGi Green Energy Tech (601012 CH) plunged 8.6 per cent to 24.4 yuan. Foxconn Industrial Internet (601138 CH) slipped 0.9 per cent to 14.77 yuan, while 360 Security Tech (601360 CH) lost 0.9 per cent, ending the day at 14.77 yuan.
-- Georgina Lee   


China shares close lower, weighed down by Kweichow Moutai, IT stocks

Developers helped lift the Hang Seng Index higher, with the properties sub-index up 2.7 per cent at 38,675.12 at the close. They were the top percentage gainers in the blue-chip index, which finished the day up 0.6 per cent at 26,665.29.
  “There is a positive feeling that the scarce land resources could now unlock their market value faster than before, with policies such as the Land Sharing Scheme which I expect would facilitate more collaboration between the government and developers to quicken up new house build,” said Kenny Tang Sing-hing, chief executive of Royton Securities.
  In the city’s first televised policy address ever, the chief executive Carrie Lam Cheng Yuet-ngor unveiled details of the Land Sharing Scheme announced last year. The scheme will start early next year. Private developers will be invited to hand part of their farmland to the government in exchange for higher density and quicker development approval.
  Meanwhile, the government said it is ready to back first-time buyers by raising the lending cap for which borrowers are eligible. For example, for those who are allowed to borrow up to 90 per cent of the value of the flat, the lending cap will be raised to HK$8 million from the existing HK$6 million.
  “The government’s housing policy appears to be more aggressive than initially expected. Still, the impact on Hong Kong stocks will be neutral, in my view, because the state of the housing market also depends on the state of Hong Kong’s economy,” said Tang.
  New World Development (17 HK) was the biggest gainer in the Hang Seng, climbing 4 per cent to HK$10.76. Sun Hung Kai Properties (16 HK) jumped 2.9 per cent to HK$115.25, Henderson Land (12 HK) surged 2.8 per cent to HK$38.25 and Link Reit (823 HK) was up 2.9 per cent at HK$84.35.
  -- Georgina Lee   


Stocks Blog: Surging developers take Hang Seng higher as Lam addresses housing crisis; Kweichow Moutai drags down China shares

Hong Kong's MTR Corp jumps as plan for new rail lines announced China's shares finish lower, weighed down by Kweichow Moutai, IT stocks

Hong Kong's MTR Corp jumps as plan for new rail lines announced

China's shares finish lower, weighed down by Kweichow Moutai, IT stocks