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Zhang Shidong

Azar Zaidi

Hong Kong, China stocks are expected to rebound on Tuesday after the S&P 500 rose overnight, for the third time in four sessions, as technology companies led a comeback. But tensions between Washington and Tehran will continue to check momentum as caution prevails.
 
The local markets are expected to retrain their focus to the phase one deal, which the United States and China, the world’s two largest economies, are expected to sign this month.
And if you would like the Live Stocks Blog emailed to you each morning, click here. 
– Zhang Shidong in Shanghai and Azar Zaidi in Hong Kong 
Note: Information in this blog is on an "as is" basis and not a solicitation or offer to buy or sell any securities or otherwise; and is not investment/professional advice or services in this regard.  It is subject to our T&C.  SCMP (as defined in T&C) shall not be liable for any loss, damage and costs relating to any investments in securities or otherwise in this connection.


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Business

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Evergrande declines after construction accident kills six people
China’s foreign currency reserves rose in December


The Shanghai Composite Index added 0.7 per cent at the close on Tuesday, as traders looked past the tensions in the Middle East to focus on economic fundamentals. The Hang Seng Index rose 0.3 per cent. 


China stock market

Hong Kong Stock Exchange

Live

Overnight markets/ what futures foretell:  – Overnight in US markets, the S&P 500 gained 0.4 per cent, the Nasdaq rose 0.6 per cent and the Dow added 0.2 per cent.  – Hong Kong futures are 1 per cent higher, while the FTSE China A50 futures have risen 0.5 per centIPO debuts: noneEconomic statistics/central bank action: China’s central bank will release December data on foreign reserves on Tuesday.Corporate events, earnings, meetings, news conferences: nothing majorLater this week: The statistics bureau is schedule to release the December inflation number on Thursday.


Morning Guidance

Chinese property developer China Merchants Land (0978 HK) expects its annual net profit to climb by at least 35 per cent in 2019 from the year before, it said in a profit alert on Monday night. The jump in profit is a result of an increase in the total floor area completed and delivered last year, it said in the exchange filing. Shares of China Merchants Land advanced by 18 per cent last year. They closed flat at HK$1.23 on Monday.
Country Garden Holdings (2007 HK), China’s largest property developer by contracted sales, reported a slight increase of 2 per cent in December sales to 12.4 billion yuan (US$1.8 billion) from the same period in 2018. Meanwhile, its contracted sales floor area declined by 15 per cent to 1.45 million square metres, it said in a stock exchange filing on Monday night. Shares of Country Garden dropped 2.1 per cent to close at HK$12.32 yuan on Monday. They surged by 38 per cent over 2019.
Wends Foodstuffs Group (300498 SZ), China’s top pork producer, forecast a surge in 2019 net profit of 250 per cent to 261 per cent from the year before, in a stock exchange filing on Monday night. Net profit could stand between 13.9 billion yuan and 14.3 billion yuan for last year, the company said. As a result of widespread African swine fever in China, the company’s selling price of pork jumped by 47 per cent. This led to the huge increase in profits even as its pork output declined by 17 per cent.
  – Yujing Liu


Overnight filings

Something to read with your morning coffee – Charles Li Xiaojia, the chief executive of Hong Kong Exchanges and Clearing, which runs Asia’s third-largest capital market, has rejected claims that Hong Kong’s glory days are numbered, writes Enoch Yiu.
Li insists the city has a bright future as a bridge between China and international markets in the next decade. Read the full story here. 


HKEX boss rejects claims Hong Kong’s glory days are numbered

The IPO shares of Beijing-Shanghai High Speed Railway (601816 CH) were oversubscribed 127 times, the operator of rail links between mainland China’s two biggest cities said in an exchange statement. About 2.34 billion shares were sold to public investors, and 868 million shares were slated for institutional buyers, the statement. Its offer price of 4.88 yuan apiece represents 23.39 times the company’s earnings, higher than a cap of 23 times set by the regulator for most of the mainland’s new offerings.
– Zhang Shidong


IPO shares of Beijing-Shanghai rail link operator oversubscribed 127 times

Stocks in mainland China and Hong Kong opened higher on Tuesday, as investors seem to have moved on from the tensions in the Middle East. The Shanghai Composite Index gained 0.4 per cent on rosy earnings from pig feeders such as Wens Foodstuff Group (300498 CH), while the Hang Seng Index rose 0.6 per cent, with all four of its industry groups in positive territory.
– Zhang Shidong


China and Hong Kong markets edge higher at open

Shanghai Environment Group (601200 CH) rose 3.8 per cent to 11.73 yuan, heading for its biggest gain since June 24, on Tuesday morning after Citic Securities initiated its coverage of the stock with a buy rating. The company, which has a 70 per cent market share of waste incineration in Shanghai, stands to benefit from the fast expansion of such projects outside the city, and its parent firm is very likely to inject its waste water treatment assets into the listed unit soon, the brokerage said in a report on Tuesday.
– Zhang Shidong


Shanghai waste incineration firm heading for biggest gain in six months

Wens Foodstuff Group (300498 CH), China’s second-largest pig farming company, added 4.4 per cent to 37.40 yuan, and was on course for seven days of gains, after it said its net income might have surged by as much as 261 per cent from a year earlier in 2019. The rise in its stock also buoyed industry peers. Muyuan Foodstuff (002714 CH) climbed 3.6 per cent to 93.56 yuan and Hunan New Wellful (600975 CH) added 3.6 per cent to 8.45 yuan.
– Zhang Shidong


Pig breeder Wens Foodstuff set for seven days of gains on profit report

Shares of Geely Auto (0175 HK) rose 1.68 per cent to HK$15.70 after it revealed positive sales data for December 2019. The Chinese car manufacturer’s sales increased by 39.3 per cent in December year-on-year from a low base a year ago, Toliver Ma, analyst at Guotai Junan Securities, said.
  “We expect challenges in the auto markets to remain, with auto demand still rather weak and maintaining profitability a key target for all players. Therefore, seeing a rather [conservative] sales,” Ma said in a research note. The carmaker sold 1,361,560 units in 2019, a 9.3 per cent year-on-year decline.
– Kathleen Magramo


Shares of Geely Auto rise on positive sales data for December 2019

Huayi Brothers Media (300027 CH) and other Chinese film studios have staged a comeback this year after a disappointing performance in 2019. Huayi Brothers rose 7.1 per cent to 5.12 yuan, taking its gains this year to 11 per cent.
  Shanghai New Culture Media (300336 CH) jumped by the 10 per cent daily limit on Tuesday to 5.75 yuan, bringing its rally to 41 per cent in 2020, while Wanda Film Holding (002739 CH) rose 5.7 per cent to 22.05 yuan, and was heading for a 22 per cent gain this year.     China’s box office might have risen significantly in the fourth quarter, because of a low base in 2018, according to Central China Securities. Shares of Chinese film studios took a beating last year amid increased censorship and a crackdown on industrywide tax evasion, which led to thousands of film studios shutting down.
– Zhang Shidong


Chinese film studio stocks in comeback after bleak 2019

Hotel and casino operators picked up gains despite mixed sentiment on Macau’s expected gross gaming revenue (GGR).     Citi estimated Macau’s GGR could fall by 2 per cent in January, while Nomura expected it to stay flat. HSBC Global Research forecast a larger fall, of about 4 per cent to 5 per cent. Meanwhile, Bernstein expected gaming trends to improve, since the average daily basis between January 1 to 5 rose by 2 per cent year on year.
  Bluechips Galaxy Entertainment (0027 HK) rose 2.75 per cent to HK$59.75 and Sands China (1928 HK) rose 0.47 per cent to HK$43.2 during morning trade. Wynn Macau (1128 HK) rose 0.30 per cent to HK$19.78 and MGM China (2282 HK) gained 1.35 per cent to HK$13.56.
Macau’s GGR declined 13.7 per cent year on year during December 2019, making 22.83 billion Macanese pataca (US$ 2.85 billion) in monthly revenue, according to official figures.
– Kathleen Magramo


Macau casino operators rise despite mixed gaming revenue expectations

Chinese stocks will remain stable this year, as the implications of financial deleveraging and eliminating outdated capacity fade, a trade deal adds confidence and foreign buying extends to more companies, according to investment management services company Fidelity International.
  An easing in the US-China trade war will probably be the biggest catalyst for stocks this year, as it will restore confidence in consumption and investment in manufacturing, said Lynda Zhou, a fund manager at Fidelity in Hong Kong. Overseas traders are likely to extend buying to second and third-tier companies, further supporting stock prices, she said.
  Zhou said she liked high-end manufacturing, consumer and technology stocks for the long run, but cautioned about the risk of technology stocks in the short term, because of their recent excessive gains.
– Zhang Shidong


Fidelity upbeat about China stocks in 2020

Buying interest has been strong on the technology-heavy ChiNext index of small caps. The gauge rose 1.5 per cent on Tuesday, and was on course for its highest close since April 2018.     A number of factors, such as loosened liquidity after a cut in the reserve requirement ratios of banks to earnings growth recovery following huge asset-impairment losses linked with goodwill, could be fuelling its momentum.   Lakala Payment (300773 CH) and Wuhu Token Science (300088 CH) have been the best performers on the index over the past 30-day period, rising by at least 40 per cent.
– Zhang Shidong



ChiNext trades at almost two-year high, as traders ride tech wave

China Evergrande Group (3333 HK) tumbled by as much as 5.1 per cent in Hong Kong trading on Tuesday after the Wuhan municipal government said yesterday that six people were killed in a collapse at a tourism resort the developer was constructing. Five others have been injured.
  –Pearl Liu and Zhang Shidong 


Evergrande declines after construction accident kills six people

The Shanghai Composite Index added 0.7 per cent to 3,104.80 at the close on Tuesday, snapping a two-day period of declines, as traders looked past the tensions in the Middle East to focus on economic fundamentals.
Pig-breeding farms gained after Wens Foodstuff Group (300498 CH) issued a resilient earnings forecast, while film studio stocks rebounded from lows after a dismal 2019.
– Zhang Shidong


China stocks shrug aside Middle East tensions to close higher

The Hang Seng Index rose 0.3 per cent to 28,322.06 at the close on Tuesday, with Tencent Holdings (700 HK) and CSPC Pharmaceutical Group (1093 HK) its biggest gainers, both rising by at least 1.9 per cent. China Evergrande Group (3333 HK) bucked the uptrend in the broader market, declining after a collapse at an under construction tourism project killed six people and injured five.
– Zhang Shidong


Hong Kong stocks rise for first time in three days

The value of foreign currencies held by China rose to US$3.1079 trillion in December from US$3.0956 trillion a month earlier, the People’s Bank of China said on Tuesday afternoon. That trailed an estimate of US$3.1100 trillion polled by Bloomberg.
– Zhang Shidong


China’s foreign currency reserves rose in December

Hong Kong, China stocks shrug aside Middle East tensions to close higher

Evergrande declines after construction accident kills six people China’s foreign currency reserves rose in December

Evergrande declines after construction accident kills six people

China’s foreign currency reserves rose in December