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Zhang Shidong

Deb Price

Good day traders --
Alibaba stole the Hong Kong show, shooting up 5.6 per cent on its third day of trading.
China has hit back at US President Donald Trump for signing legislation in support of Hong Kong  protesters. This comes at a high-stakes moment in the US-China trade talks.
Catch up on the day's action below.
Please help us improve our blog by taking this quick -- under 2 minutes! -- survey. Your feedback will really help us make the blog better for you!
Also, if you would like the Live Stocks Blog emailed to you each morning, click here. 
-- Zhang Shidong in Shanghai and Deb Price 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.
 


Hang Seng Index weighed down by President Donald Trump signing legislation supporting Hong Kong protesters

Alibaba shot up 5.6 per cent in its third day of trading in Hong Kong. Photo: Xinhua

Anti-government protesters gathered in Hong Kong last month to urge the US Congress to pass the Hong Kong Human Rights and Democracy Act. President Donald Trump has signed the legislation into law. Photo: Felix Wong


Business

Markets

Xiaomi advances 1.8 per cent, as Daiwa Capital Markets says results show worst may be behind it
Sunny Optical gains 4.2 per cent


Alibaba (9988 HK) gained 5.6 per cent in its third day of trading, after news it is being fast tracked onto a broad version of Hong Kong’s benchmark stock index. That boosted hopes it will be added to the trading link between Hong Kong and mainland markets sooner than had been expected.  


Stocks

China stock market

Alibaba

Xiaomi

Tencent

Sun Hung Kai Properties

Hong Kong protests

Trade war

Kweichow Moutai

Stock Connect

Meituan

Live

Sun Hung Kai Properties (16 HK), Hong Kong’s largest developer by value, has won the biggest parcel of commercial land ever sold in the city for a record HK$42.23 billion (US$5.4 billion).
The commercial site is located at Austin Road atop the West Kowloon High-Speed Rail station. The winning bid of HK$13,345 per square foot was at the low end of a valuation range of between HK$41.1 billion and HK$63 billion, or between HK$13,000 per square foot and HK$20,000 per sq ft.
“It is definitely at the low end. It is mainly because the market is not good,” said Alex Leung, senior director at CHFT Advisory And Appraisal, who attributed the downbeat sentiment to the civil unrest gripping Hong Kong and the US-China trade war. “When the market is not good and there is an uncertainty, then investors will certainly be very conservative.”
Read full story by Lam Ka-sing here.


Sun Hung Kai wins biggest parcel of commercial land ever sold for record HK$42.23 billion

Shares of Alibaba Group Holding (9988 HK) will be admitted into a broad version of Hong Kong’s benchmark stock index on December 9, less than two weeks after raising U$13 billion on the city’s bourse in the world’s largest initial public offering.
Alibaba’s Hong Kong shares qualify for the fast entry rule for admission into the Hang Seng Composite Index, according to a statement by Hang Seng Indexes Company. The index, with more than 400 constituents, covers 90 per cent of the capitalisation on the Hong Kong stock exchange.
Shares of Hangzhou-based Alibaba, which owns South China Morning Post, this week began trading after the technology giant sold 575 million new shares to raise HK$101.2 billion (US$12.9 billion). The IPO surpassed Uber Technologies’ US$8.1 billion offering in May, and is the largest fundraising in Hong Kong’s financial history since insurer AIA’s HK$159 billion raised in 2010.
Alibaba’s shares rose 3 per cent to HK$193.20 yesterday, extending a 6.6 per cent gain during its trading debut on Tuesday. Alibaba offered its stock at HK$176 per share.
Read full story by Peggy Sito here.   


Alibaba to be fast tracked onto broad Hang Seng Composite Index

Xiaomi (1810 HK) has posted its slowest-ever quarterly revenue growth, as domestic demand for smartphones grapples with a protracted lull in sales and larger rival Huawei Technologies increases its share of the market.
Demand for smartphones has eased in China as consumers hold on to their devices longer. More consumers have also rallied behind Huawei, boosting sales of the world’s second largest smartphone vendor, which the United States added to a trade blacklist in May.
Smartphone sales still account for most of Xiaomi’s revenues, but it has been promoting its internet services division, which mainly consists of online advertising sales. The business, however, accounts for just 10 per cent of total revenue – the same proportion as when the company listed its stock in August of last year.
Revenue at Xiaomi’s smartphone business fell 8 per cent to 32.3 billion yuan (US$4.6 billion) in the quarter ended September 30. The Beijing-based company sold about 32.1 million phones during the period, roughly one million units fewer than a year earlier.
Read full Reuters story here.   


Xiaomi posts slowest ever quarterly revenue growth

US President Donald Trump on Wednesday signed into law legislation that could bring diplomatic action and economic sanctions against Hong Kong, brushing off multiple warnings by China against such a move.
“The Hong Kong Human Rights and Democracy Act reaffirms and amends the United States-Hong Kong Policy Act of 1992, specifies United States policy towards Hong Kong and directs assessment of the political developments in Hong Kong,” the White House said in a statement. “Certain provisions of the act would interfere with the exercise of the president’s constitutional authority to state the foreign policy of the United States.”
The legislation has provoked a backlash from the Chinese government, which on Monday summoned US ambassador to China Terry Branstad to warn that Congress’ passage of the legislation last week constituted “meddling” in the country’s internal affairs and would result in “consequences”.
Trump also signed into law the PROTECT Hong Kong act, which will prohibit the sale of US-made munitions such as tear gas and rubber bullets to the city’s authorities.
“I signed these bills out of respect for President Xi, China and the people of Hong Kong,” Trump said in a White House press release. “They are being enacted in the hope that Leaders and Representatives of China and Hong Kong will be able to amicably settle their differences leading to long term peace and prosperity for all.”
Read full story by Robert Delaney and Owen Churchill here.    


Trump signs Hong Kong Human Rights and Democracy Act

Alibaba Group Holding (9988 HK), which began trading its secondary listing in Hong Kong on Tuesday, considers the city a cornerstone of its strategy to globalise and prosper across three centuries, said its chairman.
Its successful US$13 billion initial public offering (IPO), the world’s largest fundraising of 2019, will swell Alibaba’s cash equivalent to almost US$46 billion. 
That bolsters the financial war chest of Asia’s most valuable company, which has grown since its establishment two decades ago in an English teacher’s dorm room into a technology behemoth with businesses in e-commerce, big data, financial services and cloud computing.
Alibaba wants to serve 2 billion worldwide customers by 2036, more than double the 960 million that are part of its so-called digital economy. The group also aims to create 100 million jobs and help 10 million small businesses to become profitable on its platforms, including
Taobao and Tmall for online shopping and Alipay for e-payments.
“After this IPO, Alibaba will be committed to position Hong Kong as a very important hub for our global strategies,” the company’s chairman Daniel Zhang said in his first interview since taking over the reins of the Hangzhou-based company. “Hong Kong is a very important financial centre. It is very important for our globalisation strategy. It will be a bridge between China and the world.”
Read full story by Enoch Yiu here.   


Alibaba sees Hong Kong as a cornerstone to its globalisation plans

Analysts have generally called the tectonic outcome the result of protest voting – people expressing their unhappiness with the events of the past months. 
Voters wanted to express their anger towards Beijing, the local government and police over their handling of protests, alongside their desire for democracy, according to the candidates on the ground. Some might have been put off by the violence, but they were turned off even more by the impasse blamed on the government. 
They also lumped the pro-establishment camp in with the embattled administration.
Voters were clearly fed up with the status quo: the Post found that 207 out of the 392 pro-democracy winners, or 52.8 per cent, were first-time contenders in district council elections, with little on-the-ground experience.
The elections have been felt in the stock market all week, with property stocks booming and then dropping as traders weigh what protesters are likely to next do.
Read full story analysing the election results by Jeffie Lam and Kimmy Chung here.   


What were Hong Kong voters saying in the elections?

Chinese corporate bond defaults are likely to tick up in 2020, while overall credit conditions for the country’s non-financial companies will be negative in the next 12 months, rating agency Moody’s Investor Service said.
The number of new onshore bond issuers who fail to meet repayment obligations could increase to as many as 50 next year from this year’s 35, with the total amount of principal involved approaching 200 billion yuan (US$28 billion), from about 100 billion yuan this year, Ivan Chung, the head of Greater China credit research and analysis at the agency, said on Wednesday.
Chinese regulators, who in 2014 shattered a long-held market perception that they would bail out any repayment failures, are now likely to tolerate an increase in defaults, as they seek to let the market play a bigger role in discerning risk. The defaults will still make up less than 1 per cent of China’s outstanding 20 trillion yuan onshore bonds, Chung said.
Read full story by stocks reporter Yujing Liu here. 


Chinese corporate bond defaults to rise in 2020

* Overnight markets/ What futures foretell
-- Overnight in US markets, the S&P 500 gained 0.4 per cent, the Nasdaq rose 0.7 per cent, and the Dow Industrials added 0.2 per cent. The three gauges closed at record highs for a third straight day as US economic growth and claims for unemployment exceeded analysts’ forecasts.
-- Hong Kong futures were 0.6 per cent lower, while the FTSE China A50 futures slid less than 0.1 per cent.
* IPO debuts: Justin Allen Holdings (1425 HK) and Pharmaron Beijing (3759 HK) will start trading in Hong Kong today, while Shandong Taihe Water Treatment Technologies (300801 CH) will debut in Shenzhen.
* Economic statistics/Central Bank action: none* Corporate events: earnings, meetings, news conferences: nothing major
*Later this week: The November purchasing managers’ index of the manufacturing industry is due Saturday.


Morning guidance 

Cofco proposes to make a general offer to buy the shares it doesn’t already own in China Agri-Industries Holdings (606 HK) in a privatization of the Hong Kong-listed unit, according to an exchange filing.
The big shareholder plans to buy the stock at HK$4.25, valuing the deal at HK$9.2 billion yuan (US$1.2 billion), and the purchase will be funded by cash and other financing means, the statement said.
The offer price implies a 34 per cent premium to the last closing price of China Agri-Industries. The stock, which has been suspended since November 22, will resume trading today.
-- Zhang Shidong


Cofco plans to take private China Agri-Industries for US$1.2 billion

The Hang Seng Index fell 0.5 per cent to 26,822.54. It has failed to close above 27,000 for the past six sessions.
Tencent (700 HK), China’s social media and online gaming giant, was flat at HK$335.
China food delivery giant Meituan Dianping (3690 HK) rose 1 per cent to HK$104.30. 
Subway operator MTR (66 HK) fell 0.1 per cent to HK$44.95. On Wednesday, it shot up 3.8 per cent to HK$45 -- its best percentage gain since city leader Carrie Lam formally withdrew the extradition bill on September 4 that had sparked the ongoing unrest.
Sun Hung Kai (16 HK) fell 0.3 per cent to HK$114.60, after it paid a record HK$42.23 billion for Austin Road commercial plot in the city. 
Meanwhile,  Alibaba (9988 HK) shot up 3.3 per cent to HK$199.50, on its  third day of trading, getting a boost from the after-market-hours announcement that it is being fast-tracked into the Hang Seng Composite Index, which includes more than 400 constituents and covers 90 per cent of the capitalisation on the Hong Kong stock exchange.
The hope is this will mean Chinese regulators and mainland stock exchanges will allow Alibaba to trade on the Stock Connect trading link between Hong Kong and the mainland. This would make another of China’s homegrown superstars that chose to list elsewhere available to mainland investors.
Meituan Dianping and Chinese smartphone maker Xiaomi (1810 HK) became available on the trading link last month.
Xiaomi rose 1.6 per cent to HK$8.87 per cent, despite posting its slowest-ever quarterly revenue growth on slower smartphone sales and fierce competion by rival Huawei Technologies.
-- Deb Price    


Hang Seng falls; Alibaba jumps more than 3 per  cent on third day of trading 

Justin Allen Holdings (1425 HK) and Pharmaron Beijing (3759 HK) started trading on the main board of Hong Kong Stock Exchange today.
Justin Allen’s share shot up 20 per cent to 0.48, from the offering price of HK$ 0.4.
The garment manufacturer Justin Allen has factories in Phnom Penh in Cambodia and Henan Province in China. In 2018, 71.6 per cent of its revenue came from sleepwear products while 25.4 per cent came from loungewear products.
The company’s exports are affected by the ongoing US-China trade war and Brexit. 
Currently, the exports are subject to 15 per cent tariffs imposed by the US. Brexit without a deal may lead to lower consumer spending on cloth by 1.4 per cent. The company believes the effects of Brexit would be small.
Pharmaron Beijing’s share jumped 10 per cent to HK$43.45, from the offering price of HK$39.5. The shares were oversubscribed by 113.23 times.
Pharmaron Beijing, by revenue, was ranked as the second-largest drug research and development platform in China and one of the top three drug discovery service provider in the world in 2018, according to Frost & Sullivan’s report.
Five cornerstone investors -- China Structural Reform Fund, Lake Bleu Capital, OrbiMed, Athos Asia Event Driven Master Fund, and Oaktree Capital Management -- have subscribed to about 27.22 per cent of the global shares.
Justin Allen (1425 HK) and Pharmaron Beijing (3759 HK) debut on Hong Kong Stock Exchange. @SCMPNews @scmpbusiness pic.twitter.com/FjrgCXWJ8E
  — Snow Xia (@SnowXia05) November 28, 2019
 
--Snow Xia   


Justin Allen, Pharmaron Beijing jump in Hong Kong debuts

US President Donald Trump’s move to sign a bill that is intended to support the anti-government protests in Hong Kong is not having much impact on Chinese stocks.
The Shanghai Composite Index rose 0.1 per cent to 2,906.02 at the open, continuing a pattern that the daily swing has been within 1 per cent on a closing basis over the past two weeks.
Infrastructure-linked stocks were the best performers after the State Council specified an early announcement that loosened the capital thresholds for port and road projects aimed to boost investment.
-- Zhang Shidong


China’s stocks unaffected by US bill supporting Hong Kong protesters

Shandong Taihe Water Treatment Technologies (300801 CH) jumped by the 44 per cent daily limit, the maximum allowed for debutants on the mainland’s exchanges, to 43.80 yuan in Shenzhen.
The company makes water treatment chemicals.
-- Zhang Shidong


Shenzhen debutant Shandong Taihe surges by daily cap

The worst looks over for Xiaomi (1810 HK) says Daiwa Capital Markets, which maintained its outperform rating on the Chinese smartphone maker though lowered its 12-month price target to HK$10 from HK$13.
“Its revenue and operating profits were largely in line with street expectations. The market’s focus on the tepid demand for China smartphone sales has been overshadowing the solid earnings growth of the company,” analysts John Choi and Candis Chan write in a new note. 
“We estimate the adjusted operating income of Xiaomi to still grow over 40% in 2020. We see limited downside risks to the current price level and believe recovering Internet services, easing of the previous macro headwinds and improving smartphone sales in terms of ASP and margins will drive the share price,” they wrote.
While there is risk of further slowdown in China smartphone sales, the analysts said they remain more positive than the market on Xiaomi’s profitability.
Xiaomi jumped in early trading and is up 4.6 per cent to HK$9.13.
“With the 5G era arriving, we expect ASP in the China market to improve by 15% YoY in 2020. We remain positive on the incremental market share gained from 5G models amid tough competition among Chinese Android brands and assume Xiaomi will secure a 10% share in the domestic market,” they wrote. 
“Outside China, Xiaomi continues to gain market share through entering new markets, paving way for the long-term growth in its MIUI user base. We expect Xiaomi to maintain GPM of above 8% from 4Q19, under its strategy of remaining highly price competitive.” 
-- Deb Price    


Xiaomi jumps more than 4 per cent; Daiwa maintains ‘outperform’ rating, says the worst is behind for smartphone maker 

Shares of China Agri-Industries Holdings (606 HK) surged as much as 28.4 per cent after state-owned parent Cofco (Hong Kong) offered to buy all the shares it does not already own for a total of HK$8.9 billion.
The per share offer price of HK$4.25 cash was a 34 per cent premium to the last traded price before trading was halted on Monday, China Agri said in a filing to Hong Kong's bourse this morning.
It was also 40.9 per cent higher than the average closing price of the 10 trading days prior to the halt.
China Agri is a major oilseeds, rice and wheat processing and trader in China.
Cofco (Hong Kong) is part of Cofco Group, the largest agricultural and food products in China by sales and one of the main importers and exporters of bulk agricultural products.
China Agri said the privatisation was driven by the under-performance of its share price amid global trade tensions and economic slowdown, which restricted its ability to raise funds from the capital markets.
China Agri posted a 40.2 per cent year-on-year decline in net profit to HK$448.8 million for the year's first half even as revenue grew 27 per cent, as profit margin of oilseeds processing was squeezed by poor demand of soybean meal used by the animal feed industry amid a severe Africa swine fever epidemic.
China Agri shares gained 27.8 per cent to HK$4.05. That is the highest since February 2017 and 27 per cent below its book value.
-- Eric Ng


China Agri-Industries soars after Cofco offers to buy all shares it doesn’t already own

The Hang Seng Index turned up after falling at the open on news President Donald Trump had signed legislation supporting Hong Kong’s protesters.
The market’s feelings were “a bit complicated,” says Alan Li, portfolio manager at Atta Capital.
“Signing the bills does raise uncertainty on the trade deal, but should calming Hong Kong people down,” he said. “That’s why there’s not much negative (impact) to the Hong Kong market.”
The Hang Seng Index is up a tiny bit, 16 points or 0.06 per cent to 26,970.91.
On Xiaomi (1812 HK), Li said its third quarter estimates beat analysts’ consensus. 
“The market is looking forward to its sales growth in 2020 with 5G smartphones,” Li said.
The Chinese smartphone maker gained 3.6 per cent to HK$9.04 in early morning trading.
-- Deb Price
   


Hang Seng Index turns up on ‘complicated’ reaction to Trump, says analyst Alan Li

China strongly condemns the signing of the “so-called” Hong Kong Human Rights and Democracy Act, state-run news agency Xinhua reports.
“Facts have proved that the United States is the biggest culprit in disrupting Hong Kong,” Xinhua reported of a statement by the Hong Kong and Macau Affairs Office of China’s State Council.
Xinhua reports, “The act, denounced by all Chinese, including Hong Kong people, is imbued with prejudice and arrogance, and treats Hong Kong with intimidation and threats, the statement said, adding that the act openly shelters those attempting to disrupt Hong Kong and antagonize China.“
US President Donald Trump signed the legislation despite threats by China. It comes at a high-stakes moment of the US-China trade negotiations.
The Hang Seng Index is down a bit, by 0.06 per cent to 26,937.48, while the Shanghai Composite Index slipped 0.3 per cent to 2,894.
-- Deb Price   


US ‘biggest culprit in disrupting Hong Kong,’ China’s top office overseeing city policy says 

Alibaba (9988 HK) is rated a ‘buy’ by the three analysts tracked by Bloomberg so far covering its secondary listing, with a consensus target price of HK$232.50.
Based on its HK$200 price in late morning trading, a 3.5 per cent gain on its third day in Hong Kong, that would be an anticipated gain of 16.25 per cent over the coming 12 months.
The stock -- the US-listed company’s secondary listing -- got a boost on the announcement it is being fast tracked onto the broad Hang Seng Composite Index, beginning December 9. It is expected to eventually be added to the trading link between Hong Kong and the mainland, giving investors there their first chance to buy the homegrown superstar. (Alibaba owns the South China Morning Post.)
HSBC rated it a buy on Wednesday, with a price target of HK$241. Macquarie rated it an outperform with a price target of HK$224. China Securities rated it a buy with a price target of HK$224.
-- Deb Price 


Three analysts covering Alibaba call it a ‘buy’ with price target of HK$232.50

One month after being included in the exchange link programme, Meituan Dianping (3690 HK) has turned out to be the beneficiary of the mainland inflows.
The average daily trading volume of Meituan, which offers services from food delivery to online ticketing and booking, has shot up 43 times more since it joined the Stock Connect on October 28 than the earlier part of the year, according to Bloomberg data.
In contrast, the average number of shares of Xiaomi (1810 HK) that changed hands is 7 per cent lower, the data showed, for the comparable periods.
The two companies with unequal voting rights joined the Stock Connect on the same day.
 Alibaba Group Holding (9988 HK), which began trading in a secondary listing in Hong Kong on Tuesday, will probably be soon accessible to mainland traders, as the stock is admitted to the Hang Seng Composite Index on December 9 in a fast-track move.
-- Zhang Shidong


Meituan much more heavily traded on Stock Connect than Xiaomi

Postal Saving Bank, set to be China’s biggest listing since 2015, could see a record number of retail investors who pull out at the last minute after they win the lottery for new shares.
The state-owned lender is seeking to raise about 28.4 billion yuan in an initial public offering started today.
Traders in the A-share market are fast becoming more cool-headed about IPOs, which used to be a sure bet in China’s highly speculative market.
A lack of macro catalysts that could stimulate the broader market has also led to a dampened sentiment.
The latest evidence is the listing of China Zhejiang Bank (601916 SH), which saw a record of 66 million yuan worth of subscribed shares given up by investors. The bank, which raised 12.6 billion yuan on Tuesday, tumbled below its IPO price during intraday trading in its debut before sliding nearly 5 per cent on the second day, making it the worst trading debut since 2012.
Many investors have complained on online investment forums that both banks are too expensive, given that their H shares are trading at a much cheaper valuation. Under current rules, A-share traders are barred from participating in new subscriptions for six months if they backtrack more than twice in a year on new shares they won through online lottery.
-- Yujing Liu 


Postal Savings bank could see record number of IPO withdrawals 

China should speed up the establishment of “a class action system with Chinese characteristics”, according to the head of its securities regulator, amid Beijing's effort to woo overseas investors to its markets.
In an article published Wednesday on the website of the China Securities Regulatory Commission (CSRC), Yi Huiman, chairman of the commission, highlighted the importance of protecting shareholder rights – especially small investors – as well as law enforcement and market transparency, across investment classes.
“It is necessary to increase the resources to the capital markets judicially, cooperate with the amendment of securities laws, criminal laws and other laws and regulations, [we should] accelerate the establishment of a class action system with Chinese characteristics, and substantially increase the cost of violations of laws and regulations,” Yi wrote.
While class action, or “representative action” as it is often referred to on the mainland, is possible in China, it rarely happens in practice for a number of reasons. For example, Chinese courts usually determine whether a lawsuit qualifies as a representative action, but this is rarely the option they recommend to resolve disputes.
Read full story by Amande Lee here. 


China weighs class action system for investors

All existing peer-to-peer lending platforms in China must become small loan providers within two years, a notice seen by Reuters on Wednesday showed, the latest official edict aimed at curbing the once-booming industry.
All Chinese peer-to-peer (P2P) lending firms need to clear outstanding loans in less than one year before switching to small loans, according to a notice issued by China’s Internet Financial Risk Special Rectification Work Leadership Team Office, which was launched by Beijing to mitigate risks in the online lending sector.
For firms that manage more than 5 billion yuan (US$711 million) in outstanding longer-maturity loans, the grace period can be extended by up to two years, according to the notice.
China’s P2P industry was once seen as an important credit mechanism, but lately it has been rocked by pyramid-scheme scandals and absent bosses, sparking public anger as well as a  broader government crackdown.
Read full Reuters story here. 


China’s P2P lending platforms must become small loan providers within 2 years

Alibaba (9988 HK) is keeping most of its morning gains but has slipped below HK$200 to trade up 3.7 per cent at HK$199.70, with the highest turnover among Hong Kong stocks. It has traded as high as HK$201.
The e-commerce giant has one of the strongest retention and user activation moats in the industry, Macquarie Research said in a recent report initiating its coverage at an outperform.
“We expect Alibaba to outperform its China internet sector peers in CY20, for which we expect broadly in-line revenue momentum at 29% yoy, but resilient non-GAAP EBITA (earnings before interest and taxes) growth of 25% yoy,” Macquerie analysts wrote of Alibaba, which is the parent company of the South China Morning Post. 
“We are holistically positive as Alibaba continues to build up its users and services across its ecosystem, but we think the Street could be over-emphasizing core marketplace e-commerce take rate growth rather than taking a holistic view of the stock. Any dip in the stock price associated with such potential disappointment could create strong buying opportunities,” the analysts wrote.
-- Deb Price    


Alibaba holding most of morning’s gains

Best Mart 360 (2360 HK), which operates 98 chain retail stores in Hong Kong and whose stores have been targeted protesters, said its revenue increased 14.7 per cent in the first six months of the year while profits decreased 6 per cent.
Profit attributable to shareholders in the six month period was HK$13.46 million, while revenue was HK$609.86 million. 
The stock has gained 0.4 per cent to HK$2.29. Unlike some other retailers, its share price has remained relatively stable since early July when protests turned violent.
Due to social unrest, it said it has received short-term 3 per cent to 30 per cent rental reductions  for periods ranging from one to six months “in response to the deterioration in the overall business environment in Hong Kong,” it said in its stock filing.
It said it will escalate the pace of its outbound investment to offset challenges in Hong Kong should protests continue.
“To this end, the Group had commenced the feasibility study on opening retail business in the Mainland China and is in the process of establishing business entity to actualize the development plan in the Mainland China. Barring unforeseen circumstances, it is expected that the Group’s first retail store in the Mainland China will be opened in the forthcoming financial year. Furthermore, the Group will actively extend its retail network in Macau,” it said in its overnight filing. 
By mid October 59 of its stores had been vandalised. Anti-government protesters accuse it of having ties to “Fujian gangs” that have clashed with demonstrators, but the company has denied the allegation.

-- Deb Price 


Protester-targeted Best Mart 360 gains a bit on first half results showing 6 per cent profit drop

Investors should watch out for a possible regulatory backlash against online gaming already seen in China spreading, says Jefferies in a note whose authors are led by Simon Powell.
China accounts for for more than 25 per cent of all global games revenue, and became the world’s biggest market in 2016, surpassing the US. The gaming industry is a more than US$150 billion market, which Jefferies says is larger than digital music and box office combined.
But the industry faces more regulation in the US and UK, over concerns about “persuasive design” that uses psychology and technology to pull users to their games and keep them playing, they write. 
Last year, China froze new game licenses, but started approving new games but at a slower rate. It pounded the share price of Tencent (700 HK).
Japan and Korea have also passed gaming regulations.
Regulations include such things as verifying a gamer’s age and limiting the time spent on games.
Meanwhile, the World Health Organisation recently included ‘Gaming Disorder’ in its disease list, determining that up to 8.5 per cent of adolescent gamers may be affected by it, Jefferies notes. 
“Recent moves in China suggest that investors are expecting restrictions to continue, but we believe that in developed markets the risk of action being taken by governments to restrict or label games, or of lawsuits being brought by consumers, may not yet be priced in by investors. While it’s very challenging to predict these black swan events, we believe investors should be alert to potential changes on the horizon,” the Jefferies analysts write.
Tencent is the world’s biggest games provider by market cap. Ranking 23rd is Hong Kong-listed NetDragon (777 HK), according to data by Bloomberg and Jefferies.
-- Deb Price 


Investors should be alert to possible backlash against online gaming, warns Jefferies

Innovent Biologics (1801 HK), one of the first batch of unprofitable biotechnology firms to list in Hong Kong after rules were revamped last year to allow such companies to list, gained 2.5 per cent from the noon market close after it said one of its cancer drugs has just been included in the drug reimbursement list of China’s state-run national health insurance programme. 
Sintilimab -- a drug co-developed with US pharmaceutical giant Eli Lilly -- became the first and only "PD-1 inhibitor" included in the latest reimbursable drugs list, it said, citing an announcement by the National Healthcare Security Administration.
The is a kind of immuno-therapy that uses the body's own immune system to fight tumours, the company said in a filing to Hong Kong's bourse just after the morning trading session close
The firm won approval to market the drug for relapsed or refractory classical Hodgkin's lymphoma in December last year, the Suzhou-based firm said.
The drug's sales amounted to 332 million yuan between the launch date of March 9 this year and June 30, according to a China Securities report.
Innovent did not disclose in its filing the discount it has to give the government in order for the drug to be included on the list.
Analysts have expected that discounts of over 50 per cent are necessary.
Innovent, whose shares were in negative territory most of the morning session, most recently was down 1 per cent to  HK$28.20.
It has gained almost 12 per cent since mid this month on expectation of the drug's inclusion in the list.
-- Eric Ng 


Innovent Biologics announces its tumour drug has been accepted on China’s drug reimbursement list

Concern about rising tension over the China-US relationship weighed on Chinese stocks.
The Shanghai Composite Index dropped 0.5 per cent to 2,889.69 at the close after US President Donald Trump signed a bill into law legislation that supports the anti-government protests in Hong Kong.
Steelmakers were among the biggest decliners, with SGIS Songshan (000717 CH) and Jiangsu Shagang (002075 CH) dropping at least 5 per cent.
-- Zhang Shidong


China’s stocks fall most this week after Trump signs bill supporting Hong Kong protesters

Alibaba (9988 HK) has had another spurt, and has now gained about 5 per cent today to HK$202.80.
-- Deb Price    


Alibaba now up about 5 per cent to HK$202.80.

Alibaba (9988 HK) shot up  5.6 per cent to HK$204 on its third day of trading.
For investors who bought the Chinese e-commerce giant at the initial price offering of HK$176 and held it, they have gained nearly 16 per cent over three days.
Alibaba got a boost on news it is  being fast-tracked into the Hang Seng Composite Index, which covers 90 per cent of the capitalisation on the Hong Kong stock exchange.
“Alibaba’s performance is a little bit better than my expectation,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. 
“Two targets --  HK$194, a 10 per cent upside compared with the listing price of HK$176, and HK$200 -- are broken. Aggressive investors may hold it. But others may take a wait and see approach,” Wen said.
Xiaomi (1810 HK) advanced 1.8 per cent to HK$8.89, on third quarter results that Daiwa Capital Markets said suggest the worst may be behind for the Chinese smartphone maker.
Apple supplier Sunny Optical (2382 HK) was the top blue chip gainer, advancing 4.2 per cent to HK$131.60.
The Hang Seng finished below 27,000 for the seventh straight session.
It declined 0.2 per cent to 26,893.73.
Traders will be watching for signs of any fallout on the US-China trade deal after US President Donald Trump signed legislation backing Hong Kong protesters, Wen said.
-- Deb Price    
