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Zhang Shidong

Deb Price

Good day, traders --
Lots of drama today, including the fall by Tencent (700 HK) through a key resistance level.
Catch up on the day below.
And if you'd like to get the Live Stocks Blog sent to you via email each morning, send a message to deb.price@scmp.com.
-- Zhang Shidong and Deb Price 

 


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Stocks

Stocks Blog: Tencent falls through key resistance level; bargain hunters boost AAC Technologies

The Hong Kong Stock Exchange flag, China flag and Hong Kong flag are seen outside of the Hong Kong Stock Exchange in Central. Photo: Dickson Lee


Business

Markets

Sands China jumps on third-quarter results
Fidelity prefers China’s new-economy stocks as haven for trade war


China social media and gaming giant Tencent finished down 0.3 per cent at HK$319 -- below HK$320, which has been a key resistance level for it this year


China markets

Tencent

Hong Kong protests

Trade war

Live

Sinopharm Group (1099 HK) said in a Hong Kong exchange announcement that for the nine months ended September, net profit attributable to shareholders rose 12.7 per cent from a year ago, to 1.07 billion yuan from 950.5 million yuan.
Operating income rose 13.7 per cent to 32.7 billion yuan, from 28.8 billion yuan.
The company, however, did not provide a breakdown for the three-month third quarter on a standalone basis, or any operational review for the reporting period. 
On Wednesday, the stock closed down 1.7 per cent at 25.65 yuan.
-- Georgina Lee   


Sinopharm Group sees nine month net profit up 12.7 per cent

Topsports International (6110 HK) reported a 21 per cent year-on-year increase in net profit for the six months ended August, to 1.5 billion yuan from 1.2 billion yuan.
The company said in a Hong Kong stock exchange announcement that revenue rose 12.4 per cent to 17 billion yuan, from 15.1 billion yuan. Earnings per share were at 27.91 cents, up from 23.03 cents a year ago. It declared an interim dividend of 12 cents, which was absent a year ago.
The sportswear product maker, which also leases commercial spaces to other retailers, attributed the improvement for the first half to steady growth in number of stores and members.
During the first half, it opened 22 new stores, bringing its total to 8,365 with gross selling area up by 5.2 per cent. But compared to a year ago, the store number decreased by 223.
-- Georgina Lee    


Topsports' first half net profit rises 21 per cent

The offer price for China National Electric's initial public offering has been set at 18.79 yuan. It will issue a total of 500 million new shares, which represent 12.36 per cent of its enlarged issued share capital.
The offer price represents a 37.62 times price-to-earning multiple, based on its net earnings after deducting non-recurring income or losses for the full year of 2018. 
The IPO will raise a total of 939.5 million yuan for the company, of which it is expecting net proceeds at 857.3 yuan. Its stock code on Shanghai’s science and innovation technology board is (688128 CH).
STAR board companies are not currently available on the Stock Connect.
-- Georgina Lee


STAR board debutant China National Electric Apparatus Research Institute sets IPO price at 18.79 yuan

* Overnight markets/ What futures foretell
-- Overnight in US markets, the S&P 500 gained 0.3 per cent, the Nasdaq and the Dow Industrials both added 0.2 per cent  -- Hong Kong futures were 0.5 per cent higher, while the FTSE China A50 futures climbed 0.3 per cent
*IPO debuts: Jilin Province Chuncheng Heating (1853 HK), Sheng Ye Capital (6069 HK) and China Oriented International Holdings (1871 HK) will debut in Hong Kong today.
* Economic statistics/Central Bank action: nothing major
* Corporate events: earnings, meetings, news conferences
-- Ping An Insurance (601318 CH), property developer China Vanke (000002 CH) and Baoshan Iron & Steel (600019 CH) are scheduled to release third-quarter earnings late today.
*Later this week: Industrial profits for September are due on Sunday.


Morning guidance 

Lack of market-moving news is driving stocks in the mainland and Hong Kong in two difference directors.
The Shanghai Composite Index fell 0.1 per cent to 2,938.08, while the Hang Seng Index added 0.2 per cent to 26,619.33.
Traders are waiting for third-quarter results as more companies are scheduled to post quarterly reports in the earnings season.
-- Zhang Shidong


China and Hong Kong stocks open in mixed note

After the wild debut of Snack Empire Holdings (1843 HK) Wednesday, speculators are staying away from three new listings that hit the Hong Kong market today.
Two out of the three companies fell.
Jilin Province Chuncheng Heating (1853 HK) slipped 1.7 percent from its offer price at HK$2.31 after rising as much as 4.3 per cent. China Oriented International Holdings (1871 HK) slid 13 per cent to HK$1.12, reversing an intraday gain of as much as 16 per cent.
Sheng Ye Capital (6069 HK) rose 3.6 per cent to HK$8.09 after climbing as much as 6.8 per cent.
Snack Empire surprised investors with a hair-raising roller-coaster debut, shooting up nearly 200 per cent before erasing all the gains at the close. Snack has fallen this morning by 4.9 per cent to 58 HK cents.
-- Zhang Shidong 


Calm returns to Hong Kong IPOs

Tesla’s Chinese suppliers surged after the US new-energy car maker surprisingly posted third-quarter profit against the analysts’ estimates of losses.
Ningbo Xusheng Auto Technology (603305 CH), a maker of mold parts that derives 61 per cent of the revenues from Tesla, climbed 3.9 per cent to 29.12 yuan in Shanghai. Lens Technology (300433 CH) added 2.1 per cent to 12.95 yuan in Shenzhen.
-- Zhang Shidong 


Tesla’s Chinese suppliers surge after US EV maker returns to surprising profit

Traders have been piling into Chinese banks, seeking bargains in a market that is stuck in range-bound trading.
While the Shanghai Composite Index was little changed today, a gauge of 34 listed banks climbed 1.2 per cent, making it among the best-performing sectors.
Jiangsu Zhangjiagang Rural Commercial Bank (002839 CH), Jiangsu Changshu Rural Commercial Bank (601128 CH) and Bank of Ningbo (002142 CH) were the leading gainers, shooting up at least 3 per cent.
Chinese banks are the cheapest stocks among all industry groups, trading at six times earnings.
Soochow Securities chief economist Chen Li, who has made correct calls on China’s market this year, recommends buying low-valuation companies such as banks and property developers in the fourth quarter amid increasing downside pressure on the economy.
-- Zhang Shidong 


Banks are investors’ darlings in range-bound market

After its near 1 per cent drop Wednesday, the Hang Seng Index is trading up 0.5 per cent at 26,687.
On Wednesday, all but five companies in the 50-constituent Hang Seng Index closed lower. 
Today, 41 companies are up, only eight down and one unchanged.
One stock drawing buying interest is Apple supplier AAC Technologies (2018 HK), which dropped 3.6 per cent on Wednesday. Today, with no apparent news driving it, it has risen 2.2 per cent to HK$48.
Pork processor WH Group (288 HK) fell nearly 4 per cent on Wednesday. Today, with no clear news driving a rebound, it has climbed 1.5 per cent to HK$7.57. 
One stock that isn't fitting this pattern -- at least so far -- is Chinese social and gaming giant Tencent (700 HK). It fell 2.3 per cent on Wednesday -- its worst tumble in two months. Today it has fallen 0.75 per cent to HK$317.60. Tencent decided to begin live-streaming games of the National Basketball Association, which are still boycotted by China’s state television over comments about the protest in Hong Kong.
-- Deb Price    


Bargain hunters back in Hang Seng

China Securities Index, the compiler of the CSI 300 Index, will launch 21 new indices of stocks, bonds, volatility and currencies starting November 15, the venture between the Shanghai and Shenzhen exchanges said today.
The new measures will track segments of cyclical companies, high dividend-yield stocks, private enterprises and convertible bonds, the index compiler said in a statement.
-- Zhang Shidong


China Securities Index to unveil 21 new gauges next month

Shares of Sino Biopharmaceutical Limited (1177 HK) fell by almost 1 per cent to an intraday low of HK$10.70 in Hong Kong, after the founder of the drugmaker and his wife granted their 24-year-old son Eric Tse a US$3.8 billion gift in the form of 2.7 billion shares in the company.
They also appointed Tse an executive director and member of the company's executive board committee, with an annual salary of HK$3.9 million (US$498,000) plus discretionary bonuses, according to a Tuesday statement.
Sino Biopharmaceutical's shares have more than doubled this year, making them the best performer among the 50 stocks on the Hang Seng Index.
-- Eugene Tang 


Sino Biopharmaceutical shares fall on US$3.8 billion share gift to founder's son

As the earnings season gets under way, here is how major Chinese listed companies have fared so far in third-quarter results.
The 35 companies that have already posted quarterly results on the 300-member CSI 300 Index reported 25 per cent profit growth, accelerating from an increase of 19 per cent for the previous three-month period, according to Bloomberg data.
That beat the forecast by 2 per cent, the data showed.
Pig-breeder Muyuan Foodstuff (002714 CH) reported the fastest earnings growth among those companies, with net income for the third quarter surging 252 per cent from a year ago, thanks to surging pork prices amid strained supply.
-- Zhang Shidong 


A glimpse of how quarterly corporate earnings are going so far

Fulum Group (1443 HK) has fallen 1.7 per cent today to 28 HK cents, dropping as its restaurants have been targeted by protesters in Hong Kong.
The Chinese restaurant group has put eight properties worth HK$2.57 billion (US$327.78 million) up for sale. 
Its restaurants have been vandalised by protesters who believe it is linked to a Fujian clan. It is one of a number of businesses attacked by protesters because of links to mainland China or their owners supporting Beijing.
-- Deb Price 


Fulum Group slides, as it finds itself a target of protesters 

Suzhou Chunxing Precision Mechanical (002547 CH) suddenly tumbled by the 10 per cent daily limit in Shenzhen after the noon break.
What was spooking investors was a statement released by the company during break that the biggest shareholder Sun Jiexiao was detained by the police for alleged insider trading.
The securities regulator already administered retribution to Sun in March, banning him from any job related to the stock market for 10 years and fining 250,000 yuan (US$35,376).
Sun, who holds a 39 per cent stake in Suzhou Chunxing, has not taken any post in the listed company since last year, and the company’s operation remains normal, the statement said.
The stock slumped to 7.83 yuan.
 

-- Zhang Shidong


A small-cap suddenly thrown into tailspin after No. 1 shareholder gets detained

Jeweller Chow Sang Sang (116 HK) is having a golden day, shooting up 4.6 per cent to HK$9.04. 
"I think it is bargain hunting because Chow Sang Sang has fallen a lot," said Kenny Tang Sing-hing, chief executive of Royston Securities.
"Over the past one to two weeks, there has been some bargain hunting interest in retail stocks, like Sa Sa (178 HK) and Chow Tai Fook (1929 HK). Because the market thinks the worst is near the end for the retail market."
Chow Tai Fook has risen 0.4 per cent to HK$6.92 per cent today, while Sa Sa is down 2.5 per cent to HK$1.94.
Tang said he doesn't expect the buying momentum for retail stocks -- which have been hammered by protests -- will be strong.
 

-- Deb Price    


Chow Sang Sang shoots up 

Shanghai Pudong Development Bank (000001 CH) will sell up to 50 billion yuan (US$7.1 billion) in convertible bonds in what may end up as China’s biggest-ever sales of such debts.
The offering, which was already approved by the regulators overseeing the stock market and the financial sectors, will be conducted Friday and next Monday, the lender said in an exchange statement.
The coupon rate on the debts will be 4 per cent, when they mature in six years, according to the statement.
The China Securities Regulatory Commission eased its vetting of convertible bonds flotations after frantic demand for the debt prompted the regulator to slow down approvals.
Citic Securities and Guotai Junan Securities are the sponsors of the debt offering by Pudong Bank.
The lender’s stock rose 1.5 per cent to 13.07 yuan in Shanghai today.
-- Zhang Shidong


Shanghai Pudong Bank to conduct China’s biggest convertible bond offering

Fidelity International is bullish on Chinese stocks engaged in fledging industries, particularly robotics and high-end manufacturing companies, as the fallout of the China-US trade war is expected to linger.
“They are less sensitive to short-term macroeconomic headwinds,” said Raymond Ma, a portfolio manager at Fidelity. “The country is especially advanced in robotics and manufacturing, but has room to develop its semiconductor capacity, though it is nurturing its homegrown capabilities. The development of automation and robotics are providing opportunities as long-term structural factors such as rising average wages and a shrinking working population requires the development of new innovations.”
He did not name any specific stocks.
Meanwhile, China’s policies to stimulate the economy would be mild and accommodative going forward, as the purpose is to prevent downside rather than creating upside, said George Efstathopoulos, a multi-asset portfolio manager at the money manager.
-- Zhang Shidong 


Fidelity prefers China’s new-economy stocks as haven for trade war

The consolidating pattern on Chinese stocks dragged on today, leaving the mainland’s benchmark gauge little changed at the close.
The Shanghai Composite Index slipped less than 0.1 per cent, or 0.70 points, to 2,940.91.
While banks rallied on bargain hunting and chicken breeders advanced on higher poultry prices, tourism stocks slid to provide the drag on the broader market.
-- Zhang Shidong 


China stocks end day almost unchanged

Sands China (1928 HK) jumped 2.5 per cent to HK$38.40, after reporting third quarter revenue of US$2.11 billion.
That was a 2 per cent drop year-on-year, and net income remained flat at US$454 million, according to a filing with the Hong Kong exchange.
Given the challenging environment for Macau casinos -- with the double whammy of the trade war and Hong Kong protests -- the numbers boosted investor confidence.
"We remain steadfast in our belief that Macao is the best market in the world with respect to the continued deployment of our capital," said Sheldon G. Adelson, chairman and chief executive officer of Las Vegas Sands.
He added, "Next year, we will introduce approximately two million square feet of luxurious suite accommodations on Cotai with the opening of the Grand Suites at Four Seasons Macao and The Londoner Tower Suites. Additional tourism and entertainment amenities of The Londoner Macao will debut throughout 2020 and 2021."
In a note earlier this week, J.P. Morgan called the problems in Macau gaming "transitory and cyclical." It said the market has "over penalized the stocks to near-crisis-level valuations." 

 
-- Deb Price 


Sands China jumps on third-quarter results  

Investors are getting overly optimistic, says Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, as seen in the huge runup of Chow Sang Sang (116 HK) today. 
The government's HK$2 billion relief package announced Tuesday night to help businesses reeling from the protests and the city's "hot" initial public offering market have boosted confidence, he said.
"The general market sentiment has improved," he said. 
"I worry that investors may be too optimistic, especially on retail stocks given retail figures are getting worse, and even their management are holding neutral to negative views on business outlook," he said. 
Chow Sang Sang ran up 5.7 per cent to HK$9.13. 
-- Deb Price    


Investors need to be cautious in Hong Kong, advises Kenny Wen

Tencent Holdings (700 HK) finished down 0.3 per cent at HK$319 -- below HK$320, which has been a key resistance level this year.
It happened in an upbeat market, in which 44 of the Hang Seng's 50 composite stocks pocketed gains, with only four seeing losses and two unchanged. The Hang Seng ended ahead nearly 1 per cent, following a near 1 per cent loss on Wednesday.
The biggest percentage gainer was Apple supplier AAC Technologies (2018 HK), with analysts pointing to bargain hunting.
Casino stocks did well, led by Sands China (1928 HK), which closed up 2.5 per cent at HK$38.40 on third-quarter results that boosted investor confidence. 
Other stocks of interest:
-- Budweiser Brewing APAC (1876 HK), which debuted September 30, dropped 1.8 per cent to HK$30.50. That followed Wednesday's loss of 1.27 per cent to HK$31.05. The stock has been highly volatile, jumping up 4.3 per cent on Monday, for example, after falling 4 per cent last Friday.
-- Snack Empire (1843 HK), which shot up close to 200 per cent in its debut Wednesday before collapsing to end down 6.2 per cent, had another crushing day. It fell 11.5 per cent to .54 HK cents, below its 65 HK cents initial share price.
-- Deb Price 


Stocks Blog: Tencent falls through key resistance level; bargain hunters boost AAC Technologies

Sands China jumps on third-quarter results Fidelity prefers China’s new-economy stocks as haven for trade war

Sands China jumps on third-quarter results

Fidelity prefers China’s new-economy stocks as haven for trade war