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Deb Price

Snow Xia

Good day, traders --
Hong Kong stocks fell as US-China tensions grew over what Beijing sees as Washington interference in its domestic affairs. China markets were mixed.
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. 
-- Deb Price and Snow Xia 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 falls after Donald Trump says US-China trade deal could wait until after US elections

Gold-linked stocks shot up today on growing US-China tensions. Above gold bracelets on display in Hong Kong. Photo: Bloomberg

A Chinese investor uses a mobile phone to check stock prices at a securities brokerage house in Beijing. Photo: EPA-EFE

Business

Markets

Gold-linked stocks soar on growing US-China tensions
Rare earth stocks in China gain on price increases


US President Donald Trump says he has no deadline for getting a partial trade deal completed with China. “I just tell you, in some ways, I like the idea of waiting until after the election for the China deal, but they want to make a deal now and we’ll see whether or not the deal is going to be right"


Stocks

Hang Seng Index

China stock market

Kweichow Moutai

Trade war

Sa Sa International Holdings

Tencent

Alibaba

Live

Social media and online games giant Tencent (700 HK) has plenty of fans, despite a very difficult year for its investors. Year to date, it’s up 5.4 per cent.
Of analysts tracked by Bloomberg, 49 rate it a buy, seven a hold and none a sell. Their consensus target price of HK$407.58 would mean a 23 per cent gain.
 

-- Deb Price    


Tencent has fallen 2.3 per cent since Alibaba debut last week

The US House of Representatives voted overwhelmingly to approve a strongly worded bill paving the way for sanctions against Chinese officials over human rights abuses in China’s northwest on Tuesday, after months of negotiations among lawmakers about how forceful the legislation should be.
Lawmakers voted 406 to 1 to approve the Uygur Intervention and Global Humanitarian Unified Response Act (UIGHUR Act) of 2019, which commands the US administration to identify and sanction officials deemed responsible for their involvement in the mass internment of members of ethnic minority groups in the country’s Xinjiang Uygur autonomous region.
The bill would also tighten export controls on China-bound US technology that could be used to “suppress individual privacy, freedom of movement and other basic human rights”.
Read full story by Sarah Zheng and Finbarr Bermingham here.    


US House passes bill for sanctions over alleged abuse of Muslims in northwest China 

China hopes new energy vehicle sales can reach around a quarter of all car sales in 2025, up from a target of “over 20 per cent” laid out in a 2017 planning document, the industry ministry said on Tuesday in a draft plan for development of the sector.
China’s market for new energy vehicles (NEVs) – which include plug-in hybrids, battery-only electric vehicles and those powered by hydrogen fuel cells – has been a bright spot in an otherwise lackluster car market, with sales jumping 62 per cent last year, versus a 2.8 per cent drop in all car sales.
But a steep cut in subsidies this year has dented NEV sales in recent months, and in October, NEV sales fell 45.6 per cent from a year earlier.
Read full Reuters story here.    


China aims for new energy vehicle sales to be 25 per cent of all car sales in 2025

The Bluebell group, Asia’s largest distributor of luxury brands, is asking Hong Kong landlords to share the pain by scrapping the base rent in shopping malls, saying a slump in tourist footfalls will push even more retailers out of business in the coming months. 
The group may have to give up two of its 22 stores in 19 malls across the city because short-term rent reduction cannot cover operating costs in stores where sales have plunged as much as 60 per cent during six months of anti-government protests, president and chief executive Ashley Micklewright said.
Hong Kong recorded its biggest retail slump on record in October when sales contracted 24.3 per cent to HK$30.1 billion (US$3.9 billion), the government said on Monday, extending a slide that brought the economy into a technical recession last quarter. The government, which estimates the economy will shrink by 1.3 per cent in 2019, is preparing to unveil its fourth round of stimulus soon.
“The concessions that they have been making so far do not reflect the size of the problem,” Micklewright said in an interview with the Post, referring to rent discounts during the August-October period. “It is not going far enough.
Read full story by Lam Ka-sing here.   


Hong Kong luxury retailers seek more rent relief as protests cut sales in deserted malls

The Hang Seng Index declined about 1 per cent to 26,135.33, on worries about whether a partial US-China trade deal can be worked out. 
Out of its 50 constituent members, 24 showed losses and only seven had gains.
Hong Kong property developers were among early losers. Wharf REIC (1997 HK) fell 0.5 per cent to HK$43.15. Sun Hung Kai Properties (16 HK) fell about 1 per cent to HK$111.90.
Index heavyweight Tencent (700 HK) fell 1.2 per cent to HK$327.
Meanwhile, besieged cosmetics retailer Sa Sa International Holdings (178 HK) fell 0.6 per cent to HK$1.68 Its business has been hammered due to a decline in mainland shoppers.
Alibaba (9988 HK), which has fallen the past three sessions, dropped 0.9 per cent to HK$190.90.
-- Deb Price 


Hang Seng Index falls on trade worries

The Shanghai Composite Index declined 0.3 per cent to 2,877.
The Industrial and Commercial Bank of China (601398 CH) declined 0.2 per cent to 5.78 yuan, while Kweichow Moutai (600519 CH) rose 1.2 per cent to 1,131.04 yuan.
Among mainland stocks in addition to Kweichow Moutai that are heavily traded by northbound investors:
-- Jiangsu Hengrui Medicine (600276 CH)  dropped 0.9 per cent to 83.80 yuan.
-- Ping An Insurance (601318 CH) fell 0.8 per cent to 83.63 yuan.
Among sectors, liquor stocks gained 2.4 per cent, gold-linked stocks rose 1.5 per cent, while wireless headsets stocks fell 0.9 per cent, according to gauges tracking them.  Apple AirPod supplier Luxshare Precision Index (002475 CH) fell 1.6 per cent to 33 yuan. 
-- Deb Price    


Shanghai Composite falls; Kweichow Moutai rises 

Xinjiang-linked stocks were mixed in early trading after the US House passed a sanctions bill over alleged abuse of Muslims in northwest China.
Xinjiang Goldwind Science & Technology (002202 CH and 2208 HK), which makes wind-power generators, fell 0.3 per cent to 11.45 yuan on the mainland and 1.1 per cent to HK$8.42 in Hong Kong.
Hangzhou Hikvision Digital Technology (002415 CH), the world’s largest maker of video surveillance products, rose 0.2 per cent to 31.08 yuan.
Zhejiang Dahua Technology (002236 CH), which makes surveillance equipment in Hangzhou, fell 1 per cent to 16.82 yuan.
-- Deb Price    


Xinjiang-linked stocks mixed after sanctions bill passes US House

Luoyang Jianlong Micro-Nano New Material (688357 CH), Primeton Information Technologies (688118 CH), and Hiecise Precision Equipment (300809 CH) debuted on China stock exchanges today.
Primeton’s share price shot up to 40.51 yuan at the open, 50.6 percent higher than the offering price of 26.90 yuan.
Primeton runs a software platform that includes cloud computing, and big data. It listed on the Star board where there are no trading caps the first week.
Hiecise’s share price shot up to 22.52 yuan at the open, 20.0 percent higher than the offering price of 18.77 yuan.
The main business of the Hiecise is research and development, production and sales of automatic cylindrical roll grinder.
Luoyang Jianlong’s share price opened at 44 yuan, 1.7 per cent higher than the offering price of 43.28 yuan.
In 2018, Luoyang Jianlong was ranked as the sixth top producer of molded zeolite and activated powder, accounting for 3.77 per cent and 4.85 per cent of the global market, according to the China Academy of Commerce Industry.
-- Snow Xia


Three Chinese companies debut in China; one shoots up 50 per cent

Hong Kong business activity in November contracted at the fastest pace in 21 years.
The latest Hong Kong PMI dropped to 38.5 in November, while it was at 39.3 in October, according to a new IHS Markit survey.
A figure above 50 means business expansion while a figure below 50 means contraction.
Protests, now in their sixth month, have hammered the city’s retail and tourism sectors, pushing the city into the technical recession in the third quarter.
-- Snow Xia


Hong Kong business activity drops most in two decades

China’s services expanded at a fast pace in November, according to the Caixin China Services PMI released today.
The Caixin China General Services Business Activity Index rose to 53.3 in November, which was the fastest expansion since April. Services include finance, real estate services, marketing, transportation and retailing.
A figure above 50 means business expansion while a figure below 50 means contraction.
The indicated expansion is in line with the National Bureau of Statistics’ Services PMI.
The official Services PMI rose 2.1 per cent to 53.5 in November.
The increase in both manufacturing and services PMI has led to the growth of the Caixin Composite PMI, which recorded 53.2 in November, up 1.2 per cent from the previous month, reaching the highest since March 2018.“China’s economy continued to recover in November, as domestic and foreign demand both improved. But business confidence remained subdued, reflecting the impact from uncertainties generated by the China-U.S. trade conflicts. That will restrain a recovery in economic growth,” Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group Ltd., an affiliate of Caixin Global, was cited by Caixin as saying.
Read full story here. 
-- Snow Xia


China’s services activity surges in November, Caixin Services PMI shows 

Daiwa Capital Markets is upbeat about China’s development of intelligent and connected vehicles.
“In our view, China’s Internet infrastructure is currently better established than the infrastructure in Europe and the US, which gives China advantages in terms of developing intelligent cars. We are also likely to see fast progress in the build-up of China’s 5G network in the coming years, which should support much wider application of car connectivity,” Kelvin Lau writes in a new note. 
China’s industry ministry is targeting new energy vehicle (NEV) sales to account for 25 per cent of China’s new car sales by 2025.
That is “aggressive as NEV subsidies are expected to be fully phased out by 2020,” Lau writes.
The ministry in its consultation paper sees intelligent and connected vehicles (ICV) sales as contributing 30 per cent of China’s new car sales by 2025. 
“We are positive on China’s ICV development in the future with major OEMs’  (original equipment manufacturers) collaboration with technology giants and the progress of 5G network build-up in the coming years,” Lau writes.  
BYD (1211 HK; 002594 CH), China’s biggest maker of new energy vehicles and backed by Warren Buffet, rose  0.7 per cent to HK$37.50 in Hong Kong and advanced 0.8 per cent to 44.12 yuan in the mainland. 
 -- Deb Price    


Daiwa Capital upbeat about China’s development of intelligent cars

Chip stocks shot up, putting them on track for two straight days of gains after news came out that Huawei is developing an insulated-gate bipolar transistor (IGBT).
IGBT is a highly efficient semiconductor device used for electronic switches.
Focus Lightings Tech (300708 CH) rose 8.2 per cent, NAURA Technology (002371 CH) rose 7.9 per cent, ArcherMind Technology (300598 CH) rose 6.6 per cent, and Unigroup Guoxin Microelectronics (002049 CH) rose 4.7 per cent.
-- Snow Xia   


Chip makers shoot up in China on Huawei development of semiconductor device 

Sa Sa International (178 HK) fell 1.8 per cent to HK$1.66, on track to close with its seventh straight session of declines. 
Business has been hard hit by protests, now in their sixth month, that have driven away mainland shoppers. 
Read a full story on Sa Sa’s problems by property reporter Lam Ka-sing here. 
-- Deb Price    


Sa Sa International on track for seventh straight session of declines

The Hang Seng Index is being driven by worries about the US creating trade conflicts around the world, said Louis Tse Ming-kwong, managing director of VC Asset Management.
The Hang Seng Index dropped 1.1 per cent this morning, and at its lowest was at 26,071.39.
The Shanghai Composite Index dropped 0.3 per cent, and the Shenzhen Composite Index rose 0.2 per cent.
“The Americans have got the upper hand in the trade deal,” said Tse, describing the current situation “quite disturbing.”
US President Donald Trump said at a press conference in London on Tuesday that he has “no deadline” and the trade war could drag until the next year after the US general election.
What makes investors frustrated is that apart from the US-China trade war, the US is fighting over trade with Argentina, Brazil, and France, added Tse.
Trump announced he would impose tariffs on goods from Argentina, Brazil, and France on Monday, claiming the moves were necessary because the trade with these partners was unfair.
Tse said investors are worried that the Hang Seng could fall below the 26,000 support level, 
“There might be mini deal by the end of this year, but we don’t know Trump’s tactics,” said Tse.   
-- Snow Xia   


Hang Seng being weighed down by trade concerns, says analyst Louis Tse

Postal Savings Bank, which has the largest number of bank branches in China, will be included in major Chinese stock indexes after it debuts on Shanghai Stock Exchange this month, China’s Securities Times reported.
The shares will be included in CSI 300 Index, CSI 100 Index and the SSE 50 Index.
Postal Savings Bank aims to raise about 32.71 billion yuan (US$4.66 billion). Its debut will be the largest offering in mainland China since 2015.
The share subscription rate before the debut was as high as 99.5 per cent, the highest rate among all IPOs this year.
It will trade under the code 601658. 
Some excitement about IPOs has faded in China as new stocks haven’t been getting what until recently used to be likely slam-dunk 44 per cent gains on their first day, or, on the Star board where there are no limits on first-day gains, even higher.  (Here’s an article about this development by Bloomberg.)  
-- Snow Xia   


Postal Savings Bank to be included in major China stock indexes after debut

Gold-linked stocks jumped in Hong Kong and the mainland as trade tensions increased appetite for the safe haven asset.
The price of spot gold is US$1,479.35 per ounce. Gold has gained 15.2 per cent this year. Growing trade tensions -- most recently with President Donald Trump saying overnight he could see a delay in an interim trade deal until after the US presidential elections next November -- have been pushing the price up.
Gold is set to make its biggest annual gain since 2010, when it increased 29.6 per cent.
China Silver Group (815 HK), a China silver producer, jumped 9.3 per cent to HK$0.82, Shandong Gold Mining (1787 HK), a China gold miner and processor, shot up 7 per cent to HK$17.28,  Zhaojin Mining Industry (1818 HK), a Chinese gold miner and processor, climbed 5.7 per cent to HK$8.54, China Gold International Resources (2099 HK), a miner with gold projects in inner Mongolia, rose 2.9 per cent to HK$6.39, and  ValueGold ETF (3081 HK), the first gold exchange-traded fund backed by physical gold stored in Hong Kong, rose 1.3 per cent to HK$35.80.
In mainland markets, Shandong Gold (600547 CH) rose 7.4 per cent,  Zijin Mining (601899 CH) advanced 1.1 per cent, China Molybdenum (603993 CH) gained 3.4 per cent and Yintai Gold (000975 CH) shot up 8 per cent. 
 

-- Deb Price and Snow Xia   


Gold-linked stocks shoot up as trade tensions grow

Rare earth metals stocks in China shot up, after the state-owned China Southern Rare Earth Group announced Tuesday that it will raise the price of heavy rare earth metals this week.
The price of gadolinium oxide increased by 1,000 yuan to 158,000 yuan per ton. The price of holmium oxide increased 5,000 to 305,000 yuan per ton, reported China’s Securities Times, citing China Southern Rare Earth Group.
JL Mag Rare-Earth (300748 CH) rose 7.9 per cent, Chengdu Galaxy Magnets (300127 CH) rose 4.9 per cent, and Shanxi and Guanlu (000831 CH) rose 6.2 per cent.
-- Snow Xia 


Rare earth stocks gain on price increases 

China has threatened to respond after the US House of Representatives voted overwhelmingly on Tuesday to approve a strongly worded bill paving the way for sanctions against Chinese officials over human rights abuses in Xinjiang.
In a statement, Chinese foreign ministry spokeswoman Hua Chunying said the bill “deliberately defames the human rights situation in Xinjiang and discredits Beijing’s efforts to fight against extremism and terrorism in the region”.
“The core of the Xinjiang issue [in China] is not human rights, ethnic minority or religion; instead, the core is anti-terrorism and anti-separatism,” the statement said. “We warn the US that Xinjiang is China’s internal affairs and has no room for foreign forces.”
Beijing would respond further as the situation developed, the statement added. It did not specify what form a response might take, but mainland media on Tuesday reported that China was considering restricting US officials and lawmakers from visiting Xinjiang and would soon release an “unreliable entity list” that would include “relevant US entities”.
Read full story by Owen Churchill and Kristin Huang here.


China protests as US House passes Uygur bill on alleged human rights abuses

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Pork prices in China have fallen four consecutive weeks, by more than 20 per cent, reversing the uptrend triggered by the African swine fever, Xinhua News reported, citing the Ministry of Agriculture.
The price of pork was 41.48 yuan per kilogram on December 1, down 20.84 per cent, from 52.40 yuan per kilogram on November 1. Pork production has recovered significantly, according to the Ministry of Agriculture.
“In general, the stock of sows [female pigs used for breeding] is rebounding, the decline in pig stocks has also basically bottom out. The data for November is not yet fully available, but on this trend, production should be better in November,” Yang Zhenhai, director of animal husbandry and veterinary bureau, ministry of agriculture, told Xinhua.
Pork stocks in China fell 1.4 per cent today, according to a gauge tracking 30 pork-linked companies. 
Henan Shuanghui (000895 CH) dropped 6.2 per cent and Wens Foodstuff (300498 CH) fell 3.0 per cent.
In Hong Kong, WH Group (288 HK), the world’s biggest pork producer, fell 2.4 per cent to HK$7.78.
-- Snow Xia   


Worst of African swine fever may be over in China, Ministry of Agriculture signals; pork-linked stocks fall

The Shanghai Composite Index fell 0.2 per cent to 2,878.11. The Shenzhen Component Index rose 0.3 per cent to 9,687.95.
Liquor giant Kweichow Moutai  (600519 CH) rose 0.4 per cent to 1,122.33 yuan.
Gold-linked stocks gained 3 per cent and rare earth stocks advanced 2 per cent, outperforming the market.
Among gold stocks, Shandong Gold (600547 CH) rose 7.8 per cent,  Zijin Mining (601899 CH) gained 1.1 per cent, and China Molybdenum (603933 CH) advanced 2.9 per cent.
Pork stocks fell 1 per cent and chicken stocks declined 1.2 per cent, according to gauges tracking them, as the Ministry of Agriculture signalled that the worst may be over for the devastating African swine fever. 
Of pork stocks, Henan Shuanghui (000895 CH) dropped 6.0 per cent, and Wens Foodstuff (300498 CH) fell 2.8 per cent.
-- Snow Xia    


China stock markets mixed; rare earth, gold stocks outperform

The Hang Seng fell 1.3 per cent today, with 48 out of the 50 Hang Seng constituent stocks declining.
The only blue-chip that rose was Geely Auto (0175 HK), which advanced 0.5 per cent. One stock was unchanged.
The worst performers of blue chips were Apple supplier AAC Tech (2018 HK), which declined 3.7 per cent, and Sunny Optical (2382 HK), which fell 3.5 per cent.
Among sectors, semiconductors rose 2.1 per cent, the MSCI Hong Kong small-cap advanced 1.9 per cent, and gold stocks climbed 1.6 per cent. 
The losers were the retail sector, which fell 1.3 per cent, the coal sector, which declined 1.2 per cent, and the property sector, which declined 0.9 per cent.
Gold and silver stocks outperformed the market, as US-China tensions boosted appetite for the safe haven.
China Silver Group (815 HK) shot up 12 per cent, Shandong Gold Mining (1787 HK) rose 8.9 per cent to HK$17.28, and Zhaojin Mining Industry (1818 HK) advanced 6.6 per cent.
Meanwhile, Alibaba (9988 HK) fell 1.9 per cent to HK$ 189 per share, racking up its fourth straight day of losses since its debut last Tuesday.
Cosmetics chain Sa Sa International (178 HK) fell 1.8 per cent to HK$1.66, in its seventh straight session of declines.
-- Snow Xia
