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Zhang Shidong

Srinivasan Iyer

Good day, traders,
The Hong Kong and China markets were unable to maintain the initial momentum provided by overnight gains on Wall Street and the US Treasury removing its designation of China as a currency manipulator.
Here's how the day's trading unfolded.
And if you would like the Live Stocks Blog emailed to you each morning, click here. 
- Zhang Shidong in Shanghai and Srinivasan Iyer 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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A woman walks by a money exchange shop in Hong Kong. Last night, the administration of President Donald Trump removed its designation of China as a currency manipulator. Photo: AP Photo

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Macau casino operators on a roll with all major players making gains 
Tencent sinks below HK$400 just a day after finishing at an 18-month high 


The Hong Kong and China markets were unable to maintain the initial momentum provided by overnight gains on Wall Street and the US Treasury removing its designation of China as a currency manipulator.


Hong Kong Stock Exchange

A-shares

China stock market

Live

Overnight markets/what futures foretell  -- Overnight in US markets, the S&P 500 and the Nasdaq both rose to record highs at the close, climbing 0.7 per cent and 1 per cent respectively, while the Dow added 0.3 per cent.  -- Hong Kong futures were 0.8 per cent higher, while the FTSE China A50 futures were up 0.5 per cent.   IPO debuts: Wenye Group Holdings (1802 HK) and Icon Culture Global (8500 HK) will debut in Hong Kong today. Zhejiang Tailin Bioengineering (300813 CH) will start trading in Shenzhen and Nanjing Wondux Environmental Protection Technology (688178 CH) on the Star Market in Shanghai.   Economic statistics/central bank action: China’s customs office will release the December data on foreign trade today.   Corporate events: earnings, meetings, news conferences  -- Citic Securities (600030 CH) said in a preliminary earnings statement that net income increased 31 per cent from a year earlier in 2019, while Ping An Bank (000001 CH) said full-year profit rose 14 per cent.   Later this week: On Friday, the National Bureau of Statistics is expected to reveal a set of key economic data, including China’s full-year economic growth.


Morning guidance

CNOOC (883 HK), China’s dominant offshore oil and gas producer, plans to raise total output by 3.4 to 5.4 per cent this year to between 520 million and 530 million barrels of oil equivalent (boe), it said in a filing on Monday.
Last year’s production stood at 503 million boe, above the targeted 480 million to 490 million boe. The state-backed energy firm is aiming for an output of 555 million boe next year - higher than the projected 535 million to 545 million boe, which will rise to 590 million boe in 2022.
It plans to spend 85 billion yuan to 95 billion yuan on resources exploration, development and production this year.
-- Eric Ng   


CNOOC lifts production target

China set the yuan’s reference rate at 6.8954 against the US dollar today, compared with 6.9263 yesterday, according to the foreign exchange trade centre. Last night, the Trump administration removed China from the list of currency manipulators, as the two nations are expected to sign a tentative trade deal soon.
Read story here
-- Zhang Shidong


China sets stronger yuan fixing rate after US removes it from currency manipulator list

Wenye Group Holdings (1802 HK) started trading on the main board of the Hong Kong stock exchange today, while Icon Culture Global (8500 HK) debuted on the GEM board.
Wenye Group, a construction design company, shed 20.76 per cent to HK$0.84 from the initial public offering price of HK$1.06 in early trading.
Icon Culture, a Guangzhou-based advertising firm, lost 16.55 per cent to HK$1.16 from its IPO price of HK$1.39.
-- Kathleen Magramo
 
Wenye Group Holdings Limited (1802 HK) started trading on the main board of the Hong Kong stock exchange, and Icon Culture Global Company Limited (8500 HK) debuted on the GEM board on Tuesday.@SCMPNews @scmpbusiness pic.twitter.com/H2cEV9Aaam
  — Kathleen Magramo (@kathmaemagramo) January 14, 2020


Disappointing IPO debuts

Chinese investors cheered the lifting of the currency manipulator on China by the Trump administration. The yuan strengthened in both onshore and offshore markets, while stocks edged up as well.
The Shanghai Composite Index rose 0.2 per cent at the open and the Hang Seng Index gained 0.5 per cent.
-- Zhang Shidong


China and Hong Kong stocks maintain momentum

Chinese developer Kaisa Group (1638 HK) paid HK$3.5 billion for a land parcel in Tuen Mun, marking the company’s first win in a public land auction in Hong Kong.
The Shenzhen-based builder beat 15 other bidders for the plot, including Sun Hung Kai Properties, CK Asset Holdings, Henderson Land, Wheelock Properties and Sino Land, according to the Lands Department.
The 582,892 square foot plot was initially expected to go for between HK$2.9 billion and HK$ 3.5 billion.
  China Evergrande (3333 HK) said it will again extend the deadline for its long-awaited listing on Shenzhen stock exchange by another one year.
The Chinese developer said that all first round and second round investors, with aggregate equity investment of 70 billion yuan, have agreed to extend the reorganisation and listing period to “before 31 January 2021” from “before 31 January 2020”.
-- Pearl Liu   


Overnight filings

Zhejiang Tailin Bioengineering (300813 CH) jumped by the 44 per cent daily limit to 26.42 yuan in Shenzhen today, while Nanjing Wondux Environmental Protection Technology (688178 CH) surged 83 per cent to 46 yuan on the Star Market in Shanghai.
New stocks trading on the Star board have no limit on how much they can move in the first five days of trading. 
-- Zhang Shidong


Strong IPO debuts on the mainland

China’s exports rose 9 per cent year on year in December, while imports increased 17.7 per cent in the same period in yuan terms, the customs office said this morning. That exceeded growth estimates of 2.9 per cent and 8.6 per cent, respectively, according to Bloomberg surveys.
-- Zhang Shidong


China’s December trade figures beat estimates

The yuan strengthened past 6.88 per US dollar early on Tuesday after the US Treasury Department dropped its designation of China as a currency manipulator, days before Beijing and Washington are to sign a partial trade deal, Reuters reported.
The onshore yuan firmed to a high of 6.8760 per dollar, its strongest level since July 26, 2019.
The central bank set its fixing for the yuan’s daily trading band at its firmest level in more than five months on Tuesday.


Yuan firms up further

The Hang Seng Index has recouped all the loss triggered by the drawn-out anti-government protests.
The benchmark added 0.1 per cent, nearing the highest level since May and rising above a July high when the city’s upheaval started to escalate.
The rebound probably has some more distance to go even after a 15 per cent rally from an August low, because the price-to-earnings ratio of 11 times on the Hang Seng gauge is still the lowest among the world’s major equity benchmarks.
-- Zhang Shidong
 



Hang Seng Index puts protest losses behind it

Global growth is expected to remain subdued for much of this year amid lingering trade tensions and geopolitical uncertainty , Vanguard Group said in its economic and market outlook for 2020 on Monday. 
“In the year ahead, we don’t foresee a significant reversal of the trade tensions that have occurred so far. And with continued geopolitical uncertainty and unpredictable policymaking becoming the new normal, we expect that these influences will weigh negatively on demand in 2020 and on supply in the long run,” Vanguard said in its outlook.
Vanguard cautioned investors that periodic volatility in the financial markets was to be expected this year, and the chances of a large drawdown of equities could be significantly higher than it would be in a normal market environment.
-- Iris Ouyang


Vanguard cautions on trade tensions, broader uncertainty

The Shanghai Composite is trading on a so-called head-and-shoulders bottom, a technical pattern that typically points to the reversal of a downward trend.
The index was at 3,124 on Tuesday, well surpassing a neck-line resistance of around 3,044 that coincided with a July high. According to some technical analysts, holding above the mark means that the Shanghai Composite will rise to at least 3,363, which implies a 7.7 per cent gain from its current level.
-- Zhang Shidong
 



Shanghai Composite technical pattern indicates upward move

FDG Electric Vehicles (729 HK) and FDG Kinetic (378 HK) led manufactures of new-energy cars higher in Hong Kong after billionaire Li Ka-shing dropped bankruptcy petitions against the two companies.
FDG Electric surged 40 per cent to HK$0.305 and FDG Kinetic jumped 104 per cent to HK$0.1. Huiyin Holdings Group (1178 HK) gained 23 per cent to HK$0.26.
EV stocks have also been on a roll on the mainland’s markets recently after Beijing said it will not cut subsidies significantly this year and Tesla reduced prices of its Model 3 in the Asian country.
-- Zhang Shidong


EV stocks climb after Li Ka-shing drops bankruptcy petitions against FDG

China’s rare earth exports bounced back in December from a 4-1/2 year-low seen the previous month, Reuters reported citing customs data.
Shipments rose 38.7 per cent to 3,657 tonnes, easing fears that the world’s major producer of the minerals will restrict supply.
Full-year exports from China, the world’s top producer of the group of 17 minerals used in consumer electronics and military equipment, came in at 46,330 tonnes in 2019, the lowest annual total since 2015, data from the General Administration of Customs showed.


China’s December rare earth exports rebound

Hong Kong shares fell in the morning session as investors took profits following a recent rally, with eyes on the signing this week of the China-US trade pact.
The Hang Seng Index dipped 0.2 per cent to 28,901.93 by noon.


Hong Kong stocks give up early gains

The mainland Chinese equities market is expected to attract 300 billion yuan (US$43.5 billion) in fresh foreign capital this year, as the US-China trade war ebbs and company earnings improve, Swiss investment bank financial services company UBS said.
Read story here


Chinese equities to attract US$43.5 billion in foreign capital: UBS

Macau casino operators defied the overall decline in Hong Kong.
While the Hang Seng Index slipped 0.1 per cent for the first drop in four days, Sands China (1928 HK) gained 4.3 per cent to HK$44.80, heading for a five-year high. China International Capital Corp raised its recommendation on the stock to outperform in a note yesterday, citing gains in market share and expansion of hotel capacity.
Galaxy Entertainment Group (27 HK) rose 3.9 per cent to HK$63.40 and MGM China Holdings (2282 HK) added 3.2 per cent to HK$14.10.
-- Zhang Shidong


Macau casino stocks on a roll

Chow Tai Fook Jewellery (1929 HK), the world's largest listed jewellery retailer, rose 1.8 per cent today, maintaining its steady climb for the past one month.
On Monday, Huatai Research raised its target price for Chow Tai Fook to HK$9.2 from HK$7.5 and maintained its “buying” rating, noting that high gold prices will support the company’s margin outlook.
-- Iris Ouyang


Chow Tai Fook rises after brokerage raises target price

SAIC Motor (600104 CH), China’s biggest carmaker by sales, dropped 1.8 per cent to 24.85 yuan, putting it on course for its biggest decline since January 6, after it said in a preliminary earnings statement that profit for 2019 had decreased 29 per cent from a year earlier.
Still, the worst is over for SAIC and the automaker will probably resume earnings growth this year, Citic Securities said in a note today.
-- Zhang Shidong


SAIC Motor falls most in a week on earnings report

Beijing OriginWater Technology (300070 CH), which provides waste water treatment solutions, rose by the maximum 10 per cent limit, after China’s Ministry of Ecology and Environment published an article on its website today saying that it was working on the environmental protection plan from 2021 to 2025.
The article, summarising a meeting held by the ministry earlier this week, also boosted other companies involved in providing environmental protection solutions. China Resources and Environment (600217 CH) climbed nearly 10 per cent to 5.86 yuan, while Welle Environmental Group (300190 CH) jumped 6.7 per cent to 7.82 yuan.
-- Iris Ouyang


Ministry plan boosts waste water solution providers

State-backed National Integrated Circuit Industry Investment Fund could be targeting investments in Konfoong Materials International (300666 CH), Suzhou Crystal Clear Chemical (300655 CH) and Jiangsu Pacific Quartz (603688 CH) among others after raising 204.1 billion yuan (US$29.7 billion) in its second round of financing, Citic Securities said in a note today.
These companies meet its criteria such as big market capitalisation and being part of global companies’ supply chain, according to the brokerage.
The investment fund was created in 2014 with the aim of supporting China’s home-grown technology companies.
-- Zhang Shidong


China’s national fund closing in on investment targets

The Shanghai Composite Index closed 0.3 per cent lower at 3,160.82 on concerns the recent gains are excessive.
The gauge had risen 8.5 per cent since December through yesterday, taking its 14-day relative strength index to 70. A reading above the level means stocks are overbought and may start to fall. Liquor distillers and brokerages were among the biggest decliners.
-- Zhang Shidong


China’s stocks close lower on signs of being overbought

Tencent Holdings (0700 HK), the most valuable constituent on the Hang Seng Index, fell below HK$400 after closing at an 18-month high of HK$406.4 yesterday.
It shed 1.9 per cent to HK$398.4 in afternoon trading. Tencent shares have been on a general upward since December 5 when it was trading at HKD$330, according to data from the Hong Kong stock exchange.
Macquarie Group has set a target of HK$410 for Tencent’s shares as it expects the WeChat business to provide growth momentum.
-- Iris Ouyang


Tencent slides back under HK$400

Wenye Group Holdings (1802 HK), which made its debut yesterday, endured a roller coaster ride. The shares fell as much as 16 per cent intraday, before closing 2.83 per cent higher at HK$1.09.
However, it was day to forget for GEM board debutant, Icon Culture Global (8500 HK). The company’s shares were relentlessly hammered, sinking more than 28.8 per cent to HK$0.99.
-- Kathleen Magramo


Mixed debut for two Hong Kong IPOs

 The Hang Seng Index lost 0.2 per cent to 28,885.14 at the close, snapping a three-day, 3.1 per cent gain.
Tencent Holdings (700 HK) and AAC Technologies Holdings (2018 HK) led the decline, while casino operators including Sands China (1928 HK) bucked the weakness.
-- Zhang Shidong


Hang Seng Index snaps three-day winning streak with Tencent and AAC Tech leading the decline

Macau casino operators on a roll with all major players making gains Tencent sinks below HK$400 just a day after finishing at an 18-month high

Macau casino operators on a roll with all major players making gains

Tencent sinks below HK$400 just a day after finishing at an 18-month high