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Martin Choi

Azar Zaidi

It is an uncertain spring, to paraphrase Virginia Woolf, but on Thursday, the last day of April, Asian stocks can be expected to rise, after US equities advanced overnight on signs of progress on a treatment for Covid-19, the disease caused by the novel coronavirus, as well as earnings optimism. The Hong Kong market is shut for a public holiday.     Nasdaq futures rose after results from Microsoft, Facebook and Tesla lifted sentiment. The S&P 500 Index earlier gained more than 2.5 per cent to touch a seven-week high. But it is positive news around potential treatments and vaccines, as well as the lockdowns being lifted that are driving markets.
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Stay with us, Martin Choi and Azar Zaidi in Hong Kong, for the day’s market news. 
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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Stocks

Shanghai Composite ends April higher, transport stocks rise ahead of Labour Day holiday

Business

Markets

The Shanghai Composite Index finished 1.3 per cent higher on Thursday
The index rose 4 per cent in April, after a drop of 4.5 per cent in March


The Shanghai Composite Index finished 1.3 per cent higher on Thursday. The CSI 300 gauge of large caps listed in Shanghai and Shenzhen gained 1.2 per cent and the technology focused ChiNext rose 1.9 per cent to 2,069.43.


China stock market

Hong Kong Stock Exchange

Live

US overnight markets/What futures foretell:  –The S&P 500 rose 2.7 per cent, the Nasdaq climbed 3.6 per cent and the Dow Jones Industrial Average rose 2.2 per cent.  – The FTSE China A50 futures have increased 0.6 per cent Economic statistics: In China, PMI data is out


Morning Guidance

CNOOC (883 HK), one of the largest Chinese oil companies, said revenue for the first quarter of 2020 declined by 5.5 per cent when compared to the same period last year, to 40 billion yuan (US$5.65 billion), “mainly due to the combined effect of lower realised oil price and increase oil and gas sales volume”. During this period, its average realised oil price decreased 19.3 per cent when compared with last year, to US$49.03 per barrel, “which was in line with the trend of international oil prices”. Its average realised gas price decreased 7.3 per cent year on year, to US$6.38 “primarily due to the declined gas price in North America”. Due to the current environment, the company said it has reduced its annual net production target for 2020, as well as total capital expenditure.
China Petroleum and Chemical Corporation (Sinopec) (0386 HK) recorded a net loss of 19.15 billion yuan for the first three months of the year, compared to a net profit of 14.76 billion yuan in the same period of 2019. According to Reuters, this is its first net loss in quarterly earnings since at least the fourth quarter of 2015. Sinopec said its refinery throughput fell 13 per cent year on year to 53.74 million tonnes. It said the oil and gas industry had been severely impacted by the slump in crude oil price, as well as a plunge in market demand for petroleum and petrochemical products in light of Covid-19, which resulted in instability in the global economy.
Luggage maker Samsonite (1910 HK) said the outbreak of Covid-19 initially hit its company-owned stores across the globe. Business has not yet returned to normal in China, with results for the first two quarters of 2020 set to reflect that, as well as potentially for the full year. Samsonite has had disruptions to its supply chain, from a decrease in production in China. It has lowered production levels and cancelled orders to help manage inventory levels amid reduced sales. Its factories in Belgium, Hungary and India were also closed at the beginning of March. An amended credit agreement now provides for an US$800 million senior secured term loan A facility, and an US$850 million revolving credit facility. To reduce costs, Samsonsite has reduced headcount and salaries, as well as furloughed staff, closed stores and reduced spending. “The company believed the group will be able to effectively manage through the current environment, although it expects the recovery to take longer than prior disruptions,” it said in a filing to the stock exchange. “The company believes the group has sufficient liquidity to provide it with adequate capacity to navigate the current environment as well as a prolonged downturn. However, there can be no assurances that such liquidity will be sufficient or that the group will not need to access additional financing.”
China Railway Group (390 HK) has proposed to list spin-off China Railway High-Speed Electrification Equipment Corporation Limited on Shanghai’s Star Market. It currently owns 100 per cent of the company through wholly-owned subsidiaries. This measure would “actively promote the transformation of scientific and technological achievements, enhance technological innovation ability, further implement the national innovation-driven development strategy and leverage on the capital market to improve the national key core technology innovation capabilities”, it said in a filing to the stock exchange. Its shares are proposed to be worth 1 yuan each, with no more than 94.1 million issued, with an overallotment capacity of 15 per cent, which would total 108.22 million.
Hong Kong restaurant company Tsui Wah Holding (1314 HK) expects to record a net loss of between HK$160 million (US$20.6 billion) and HK$180 million for the 11 months ended February 29, compared with a profit of HK$4.7 million the previous year. This is due in part to a decrease in revenue because of a decline in visitors and local diners since June 2019, and particularly since the outbreak in coronavirus. It is not expected to have a significant adverse impact on overall operations and cash flows, and the group expects cash balances of the group to amount to around HK$200 million to HK$210 million as of March 31.
– Louise Moon


Overnight filings

The Nikkei 225 has rise 2.5 per cent in Tokyo. Japanese Prime Minister Shinzo Abe said on Thursday that his government will consult experts to decide whether to extend the country’s state of emergency beyond May 6, according to Reuters. In Australia, which is battling its worst recession in decades, the S&P/ASX200 has gained 1.1 per cent. In New Zealand, the S&P/NZX50 fell 0.3 per cent.
  Singapore’s Straits Times Index was 1.2 per cent up. The country has the most coronavirus cases in Asia, behind only China and India. South Korea’s market is closed on Thursday.  – Martin Choi 


Asia-Pacific markets are up

Aberdeen Standard Investments Senior Global Economist James McCann said there was nothing new in an overnight announcement by Federal Reserve Chairman Jerome Powell. “The Fed is highlighting all the work it’s doing to support the economy and promising to do more if necessary. It’s sensible that the Fed take a brief pause to establish the impact of what they’ve already done. But they cannot afford to rest on their laurels.
  “Currently the Fed is essentially pushing harder on the same old levers. We know from the financial crisis that those levers aren’t enough to bring about the sustainable growth, inflation and higher rates that everyone wants,” he said.
  The Fed needs to be bolder. Its first step should be to increase the scale and scope of its credit easing measures to ensure that liquidity flows to those parts of the economy facing a crunch.
  “It also needs to innovate and helicopter money should be on the table. What’s being considered at the moment isn’t genuine helicopter money because the measures being proposed to fund fiscal efforts are not permanent. That’s a crucial difference. By making them permanent, the Fed could powerfully boost growth and inflation, in a way that’s unlikely to happen if they just stick to the same old tools. If done properly, the Fed can avoid losing the independence that it worries would happen by adopting helicopter money. But the first step to making a change is accepting the need to change, and that’s where the Fed’s problems start.”
– Eugene Tang


Fed just highlighting work done to support economy, analyst says

The Shanghai Composite Index opened up 1 per cent higher at 2,850.38. The CSI 300 gauge of large caps listed in Shanghai and Shenzhen has gained 1.1 per cent to 3,909.22 and the technology-focused ChiNext has risen 1.2 per cent to 2,054.44.
  Liquor distiller Kweichow Moutai (600519 CH) has edged up 0.4 per cent to 1,279.94 yuan, while Luxshare Precision Industry (002475 CH) and Goertek (002241 CH) – both make Apple AirPods – have risen 3.2 per cent to 47.57 yuan and 4.2 per cent to 18.98 yuan, respectively. Ping An Insurance (601318 CH) has risen 1.7 per cent to 75.26 yuan.
  – Martin Choi


China markets rise at the open, Kweichow Moutai edges up

China’s official manufacturing purchasing managers’ index (PMI) stood at 50.8 for April, with the reading signifying growth in activity among factory operators. April’s figure was slightly below the median result of a survey of economists conducted by Bloomberg, which had forecast a reading of 51.0. The reading for March was 52.0.
  China’s manufacturing economy stabilised further in April, as the country slowly inched closer to full capacity following the coronavirus lockdown, but serious concerns about overseas demand lingered.  Read the full story here.
– Martin Choi


China PMI at 50.8 for April, slightly below analysts’ expectations

US investment bank Jefferies said it was maintaining a “buy” rating for Midea Group (000333 CH), with a price target of 66 yuan. China’s biggest appliance maker rose 2.8 per cent to 53.77 yuan on Thursday morning.
  Midea’s earnings for 2019 stood at 278.2 billion yuan (US$39.3 billion), 2 per cent higher than a Jefferies’ forecast, and 5 per cent higher than a Bloomberg consensus. Midea’s first-quarter sales were, however, down 23 per cent at 58 billion yuan, in line with the Jefferies’ forecast.
  “Cash flow in 2019 was strong while the decline in [the first quarter] was under control. We believe Midea has demonstrated its management capabilities during the downturn,” Jefferies’ analysts said.
– Martin Choi


Jefferies maintains ‘buy’ rating for Midea Group after better-than-expected results

Jefferies maintained a “buy” rating for Haier Smart Home (600690 CH), with  a price target of 19.80 yuan. The home appliance producer dropped 2.1 per cent to 15.40 yuan on Thursday. Its 2019 net profit, at 8.2 billion yuan (US$1.2 billion), missed a forecast of 10 billion yuan by Jefferies.     This was driven mainly by significantly higher-than-expected expenses, according to the bank. Haier’s expenses for 2019 amounted to 33.7 billion yuan, higher than Jefferies’ forecast of 30.7 billion yuan.
  However, Haier’s first-quarter sales declined 11 per cent to 43.1 billion, better than Jefferies’ estimate of a 20 per cent decline. “We maintain our positive thesis on Haier Smart Home, given its market leadership as evidenced by significant market share gains during the [fourth quarter of 2019 and first quarter of 2020], despite the disappointing efficiency gains,” Jefferies’ analysts said.
– Martin Choi


Jefferies maintains ‘buy’ rating on Haier Smart Home despite higher-than-expected expenses in 2019

Shares of China’s three big state-run airlines have risen thanks to a pick up in domestic flights ahead of a national holiday, according to a report by Bloomberg. The carriers lost a combined 14 billion yuan (US$1.97 billion) in the first quarter as a result of the virus.
  China Southern Airlines lost 5.3 billion yuan and China Eastern Airlines lost 3.9 billion yuan, while Air China posted a loss of 4.8 billion yuan for the period.     The carriers were adding capacity ahead of the national holiday that starts on Friday and runs through to May 5. In the past two months, more than 30 per cent of domestic capacity has come back online, according to Cirium.
  Air China (601111 CH) rose 4.9 per cent to 7.19 yuan on Thursday, while China Southern Airlines (600029 CH) rose 4.1 per cent to 5.37 yuan and Chinese Eastern Airlines (600115 CH) rose 4.1 per cent to 4.33 yuan.
– Martin Choi   


Chinese airlines rise amid pick up in domestic demand: Bloomberg

The Shanghai Composite Index climbed 1.3 per cent to 2,859.21 at lunch on Thursday. The CSI 300 gauge of large caps rose 1.2 per cent to 3,914.39, while the ChiNext rose 1.9 per cent to 2,068.91.
  Luxshare Precision Industry (002475 CH) advanced 4.4 per cent to 48.15 yuan and Goertek (002241 CH) gained 7.4 per cent to 19.55 yuan. Ping An Insurance (601318 CH) increased 0.4 per cent to 74.32 yuan.     Liquor distiller Kweichow Moutai (600519 CH) bucked the trend and slipped 0.5 per cent to 1269.11 yuan. 
– Martin Choi


China markets up at the break, Kweichow Moutai slips

The Nikkei 225 rose 2.9 per cent in Tokyo on Thursday afternoon, while in Australia, which is battling its worst recession in decades, the S&P/ASX200 gained 2.8 per cent. New Zealand’s S&P/NZX50 fell 0.9 per cent. Elsewhere, Singapore’s Straits Times Index was up 2.1 per cent. The country has the most number of coronavirus cases in Asia, behind only China and India.
– Martin Choi


Asia-Pacific markets extend gains

China’s civil aviation stocks jumped 6.4 per cent, according to a gauge compiled by data provider Xuangubao. China Express Airlines (002928 CH) shot up 10 per cent to 14 yuan, trading at the daily limit. Spring Airlines (601021 CH) rose 8.4 per cent to 37.46 yuan.
  Meanwhile, the Shanghai Composite Index has risen 1.3 per cent to 2,860.05.
– Martin Choi


Chinese airlines among top gainers, China Express Airlines trades at daily limit

China Railway (601390 CH) said on Thursday that it will operate about 700 additional passenger trains, or 5,700 trains daily, starting from today until May 5, as part of plans for the Labour Day holiday. It will also operate 30 more high-speed sleeper trains for overnight travel from Beijing, Shanghai, Shenzhen and Guangzhou, among other locations in the country.
  Short and medium distance travel was expected to pick up as China’s coronavirus situation continues to improve, the railway group said in an announcement on its website. Its shares were trading up 3.2 per cent at 5.86 yuan.
  – Martin Choi


China Railway to boost passenger train numbers during holiday

In Australia, which is battling its worst recession in decades, the S&P/ASX200 closed 2.4 per cent higher. It has risen 8.8 per cent in April, its first month of gains since February, following the Covid-19 outbreak. In Tokyo, the Nikkei 225 closed up 2.1 per cent, and has risen 6.7 per cent this month. In New Zealand, the S&P/NZX50 fell 1.3 per cent at the close, but has risen 7.5 per cent in April. Singapore’s Straits Times Index was last trading 2 per cent higher.     – Martin Choi 


Australia, Japan record first month of gains since start of Covid-19 outbreak

The Shanghai Composite Index finished 1.3 per cent higher at 2,860.08 on Thursday. The index has gained 4 per cent in April, after a drop of 4.5 per cent in March. It has declined 6.2 per cent since the start of the year.
  The CSI 300 gauge of large caps listed in Shanghai and Shenzhen gained 1.2 per cent to 3,912.58 and the technology focused ChiNext rose 1.9 per cent to 2,069.43.
  Liquor distiller Kweichow Moutai (600519 CH) fell 0.72 per cent to 1,265.70 yuan on Thursday, while Apple AirPod makers Luxshare Precision Industry (002475 CH) and Goertek (002241 CH) rose, advancing by 2.6 per cent to 47.31 yuan and by 6.3 per cent to 19.35 yuan, respectively.     Ping An Insurance (601318 CH) ended the session 0.6 per cent higher at 74.46 yuan.
  Aviation stocks rose 4.4 per cent, while electronics components stocks gained 4.4 per cent and communications stocks rose 3.8 per cent, according to gauges tracked by EastMoney. China Railway (601390 CH) closed up 3.2 per cent to 5.86 yuan.
  The China markets will be on holiday on Friday, as well as Monday and Tuesday next week. Hong Kong will also be shut on Friday.
– Martin Choi 


Shanghai Composite ends April higher, transport stocks rise ahead of Labour Day holiday

The Shanghai Composite Index finished 1.3 per cent higher on Thursday The index rose 4 per cent in April, after a drop of 4.5 per cent in March

The Shanghai Composite Index finished 1.3 per cent higher on Thursday

The index rose 4 per cent in April, after a drop of 4.5 per cent in March