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Georgina Lee

Deb Price

Welcome, traders.
Catch up on the day's action below.
Send any questions or feedback you may have to deb.price@scmp.com .
— Georgina Lee and Deb Price in Hong Kong 


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Stocks

Stocks Blog: Trade talks between Donald Trump and Xi Jinping directing investors' moves

Investors monitor stock price movements in Shanghai on May 6, 2019. Photo: Agence France-Presse


Photo: Shutterstock

Business

Markets

China issued preconditions for a trade agreement, including that the US remove its ban on tech sales to Huawei: Wall Street Journal
Lots of gongs: Six companies started trading in Hong Kong today


The Shanghai Composite ended the month of June up 2.8 per cent while the Hang Seng rose 6.1 per cent over the month. That was a huge reversal for both from dismal May, when they suffered big losses amid the escalation of trade tensions.  


China stock market

Hong Kong stock exchange

Live

Here's what we are watching this morning:
Overnight markets/ What futures foretell
-- Overnight in US markets, S&P 500 was up 0.38 per cent,  Nasdaq up 0.73 per cent, and the Dow Jones Industrial Average was up by 0.31 per cent.
 -- Hong Kong futures are up 0.13 per cent , while the China A50 futures down 0.1 per cent.
IPO debuts:
-- Impro Precision Industries (1286 HK); Tu Yi Holding (1701 HK);Feiyang International (1901 HK); Shinelong Automotive Lightweight (1930 HK); Silver Tide (1943 HK); Grown Up Group Investment Holdings (1842 HK)  in Hong Kong
-- China Satellite Communications (601698 CH) in Shanghai
Economic statistics/Central Bank action:
None
Corporate events: annual general meetings
GF Securities (000776 CH), China Coal Energy (1898 HK), China Vanke (2202 HK), Shanghai International Airport (600009 CH), Citic Securities (600030 CH) Tsingtao Brewery (600600 CH), China Merchants Securities (600999 CH), Guangzhou Baiyunshan Pharmaceutical Holdings (874 HK)
Good reads: The Trump administration’s move to add China’s supercomputing companies to its trade blacklist will only accelerate the domestic industry’s efforts to become more self-reliant, reports Celia Chen ahead of a conference in the country’s hi-tech heartland of Shenzhen. Bosideng International Holdings, China’s largest down clothing maker, will take its product upmarket and online to compete with imported brands like Canada Goose and Moncler, as it puts up a defence against a shortseller’s report, writes Yujing Liu.
 


Morning guidance 

The Hang Seng Index (HSI) opened down 0.2 per cent, at 28,562.27.
Insurer AIA (1299 HK) lost 0.2 per cent at HK$84, while CNOOC (883 HK) was down 0.7 per cent at HK$13.36.
Capping the losses on the Hang Seng were selective telecom gear stocks and carriers, with China Unicom (762 HK) up 1 per cent at HK$8.70; Sunny Optical (2382 HK) up 1.23 per cent at HK$82.30, and China Tower (788 HK) up 1 per cent at HK$2.10.
The CSI 300, which tracks blue chips listed on Shenzhen and Shanghai, was flat, down less than 0.1 per cent at 3,832.06, while the Shanghai Composite Index was down 0.2 per cent, at 2,992.4.
Trading was sluggish, partly due to the northbound Stock Connect being halted ahead of the July 1 public holiday in Hong Kong.
Generally, investors’ mood remained cautious, as all eyes are on Saturday, when presidents Xi Jinping and Donald Trump are scheduled to meet in Osaka, japan. A South China Morning Post report Thursday said a truce in the trade war with the United States has been agreed to ahead of the meeting between Xi Jinping and Donald Trump ion the G20 sidelines.
In Shanghai, liquor distiller giant Kweichow Moutai (600519 CH) opened lower, down 0.5 per cent at 976.5 yuan, further sliding from the peak of 1,000 yuan it reached in previous trading session.
The slide in Dawning Information (603019 CH) continued, falling 10 per cent to 36.5 yuan. The supercomputer maker said Wednesday that it was included in the national security “entity list” of the US Department of Commerce. That could affect its software products and services that are dependent on US technology, it said, and could affect its 2019 operating income and business strategies going forward.
— Georgina Lee 


Hong Kong, China benchmarks open lower 

Bosideng International Holdings (3998 HK), China’s largest down clothing maker, will take its product upmarket and online to compete with imported brands like Canada Goose and Moncler, as it puts up a defence against a shortseller’s report.
The company chairman and chief executive Gao Dekang outlined the company’s strategy to target big-spending twenty-somethings and millennials at a press conference in Hong Kong on Thursday, following a difficult week that saw the company’s Hong Kong shares whipsawed after a short-seller report raised doubts over its accounting.
“Bosideng is no longer a brand worn by the parents’ generation only, but a brand that young people would go to,” said Gao, who launched the company in 1976 as a small village tailor. “The company has changed fundamentally.”
The stock is trading down 1.4 per cent at HK$2.09
Read full story by Yujing Liu here. 

 


 Bosideng trading down as it tries to get beyond short-seller attack

Asia Satellite (1135 HK) shot up 9.8 per cent to HK$9.09 on news of a joint venture between Chinese conglomerate Citic and US private equity firm Carlyle that would end with it privatized. 
That gain put the stock — which returned to trading this morning — at its highest price since June 2017.
The Carlyle-Citic joint venture owns 74.4 per cent of Asia Satellite and proposes to buy the rest at HK$10.22 per share. It values the deal at about HK$1.02 billion.
The offer price represents a 31.5 per cent premium over the average closing price of about HK$7.77 quoted for the five trading days up to June 20, the last trading day before the stock was suspended.
The proposal, if approved by shareholders, means the company would be delisted from the Hong Kong bourse.
“For the past few years, the shares have suffered from extremely low trading liquidity, (which) could make it difficult for shareholders to execute substantial on-market disposals without adversely affecting the price of the shares,” it said in an exchange announcement.
 
— Georgina Lee 


Asia Satellite shoots up to 2-year high after privatization bid by Citic, Carlyle joint venture

Dawning Information (603019 CH) continued to slide today after disclosing Wednesday that it was included on the US national security “entity list,” which would affect its software products and services that are dependent on US technology and its 2019 operating income and business strategies going forward.
In morning trading, it slipped 4.2 per cent to 34.96 yuan. That was the supercomputer maker's lowest share price since September 2017.  A total of 1.67 billion yuan worth of shares changed hands.
On Thursday, it fell 10 per cent.
The US blacklist identifies groups and individuals believed to be involved, or pose a significant risk of becoming involved, in activities contrary to America’s national security or foreign policy interests. (Read full story about the "entity" list here.) Huawei Technologies and more than 140 other Chinese companies have been put on the list. 
Investors remain jittery on the prospect of any easing of the US China tech cold war from the Xi-Trump meeting Saturday morning at the sidelines of G20 Summit in Osaka.
— Georgina Lee 


 Dawning Information most traded stock in Shanghai after US put it on national security 'blacklist'

The more delay in ending the trade tensions between the US and China, the more markets will be hit, writes J.P. Morgan Asset Management Global Market Strategist Hannah Anderson.
"Declining business investment and cooling trade are not a good signal for equity performance, particularly in (emerging markets), and the longer tariffs stay in place the greater degree to which these higher costs will show up in equity earnings, particularly in the U.S.," the strategist writes in a note sent out this morning. 
"Markets are likely to breathe a small sigh of relief this weekend, but investors should be careful not to exhale fully as the trade war is unlikely to end anytime soon.”
Presidents Donald Trump and Xi Jinping are expected to meet Saturday morning in Osaka, where the Group of 20 leaders of major economies are gathering.
Investors are skittish in early trading today, with a mix of media reports out about what is likely to happen Saturday. The Sang Seng Index is down 0.6 per cent, while the Shanghai Composite Index declined 0.95 per cent.
— Deb Price 
 


Don't expect too much from Xi-Trump weekend, warns J.P. Morgan strategist Hannah Anderson

Kin Yat Holdings (638 HK) plunged 10 per cent, to 99 HK cents — its lowest level since September 2015 — after the electronic product maker said net profit for the year ended March 2019 dropped 26.2 per cent, to HK$110.4 million, from HK$149.7 million a year ago.
In the same annual report statement filed today, it also said as of the end of March, its total banking borrowing was HK$810.1 million, which dwarfed its cash and bank balances of HK$227.2 million. Its current liabilities also exceed its current assets by HK$192 million.
“The Group has not complied with the financial covenant requirements of certain bank borrowings. Such non-compliance may cause certain bank borrowings become immediately due and payable,” it said.
“These conditions... indicate the existence of a material uncertainty that may cast significant doubt about the Group’s ability to continue as a going concern,” it said.
 


Kin Yat Holdings issues warning about its debt, future -- stock plunges 

Spot gold rebounded to US$1,420.2 per ounce during Asia hours, and gold futures for August delivery on COMEX exchange also reached a 12-month high at US$1,424.2.
In Hong Kong, gold mining related stocks performed well, with SD gold (1787 HK) up 1.9 per cent at HK$21.2; Zhaojin Mining (1818 HK) up 1.9 per cent at HK$8.8; and Zijing Mining (2899 HK) up 1 per cent, at HK$3.18. Their gains bucked the downward trend of the broader Hang Seng Index, down 0.6 per cent at 28,452.86.
Gold-related stocks also rose in China.
Zhongjin Gold (600489 CH) is up 8.38 per cent at 10.61 yuan; Gansu Gantai Holding (600687 CH) is up 5.1 per cent at 2.25 yuan; YanTai Yuancheng Gold (600766 CH) is up 3.24 per cent at 10.51 yuan; and Shandong Gold Mining (600547 CH) is up 3.1 per cent at 42.15 yuan.
They bucked the trend of Shanghai Composite Index, which is down 0.9 per cent at 2,970.42.
— Georgina Lee 


 Gold mining stocks perform well in Hong Kong, China

Just how many debuts were there on the Hong Kong stock exchange today?
So many that each of the three gongs on stage had two CEOs from different companies banging it.
Impro Precision, Feiyang Group,  Tui Yi Holding Company, Grown Up Group Investment Holdings, Silvertide Holdings and Shinelong Automotive Lightweight Application banged the gong today @HKEXGroup pic.twitter.com/z4urY0PJ1m
— Joy Pamnani (@joypamnani) June 28, 2019
The six companies were Impro Precision Industries (1286 HK), Tu Yi Holding (1701 HK), Grown Up Group Investment Holdings (1842 HK), Feiyang International (1901 HK), Shinelong Automotive Lightweight Application (1930 HK) and Silver Tide Holdings (1943 HK).
Impro Precision Industries, which makes casting and precision machines, rose to HK$3.25 in its  trading debut, from an initial public offering price of HK$3.
Tu Yi Holding, which focuses on Japan-bound travel for customers in Eastern China, fell to HK$0.405 in its trading debut, from an initial public offering price of HK$0.52.
Grown Up Group Investment Holdings, which makes luggage and backpacks, rose to HK$0.54 its its trading debut from an initial public offering price of HK$0.50.
Feiyang International, a Chinese travel service provider, fell to HK$0.99  in its trading debut, from an initial public offering price of HK$1.05.
Shinelong Automotive Lightweight Application, which makes auto moulds for cars in China, rose to HK$1.27, from an initial public offering price of HK$0.88.
Silver Tide, a construction subcontractor in Hong Kong, fell to 0.41 in its trading debut, from an initial public offering price of HK$0.50. 
— Joy Pamnani 


Lots of debuts in Hong Kong -- and it got a bit crowded with the gongs

The 19 per cent drop in bitcoin during New York trading hours to US$10,671 brought back memories to investors of the more than 80 per cent shrinkage of cryptocurrency market capitalization for most of 2018.
Bitcoin reached more than US$13,800 earlier this week, which put its year-to-date return to more than 200 per cent. But the recent outage at leading US exchange Coinbase, which caused bitcoin to drop more than US$1,700 in a span of just 15 minutes, has spread fear among some investors. The recent gains had been due to increased adoption of bitcoin by retailers and institutional investors. But the recent volatility has made investors doubt whether such broader adoption will stop such free fall incidents.
A gauge tracking 122 blockchain related stocks fell by 2.91 per cent.
Cashway Technology  (603106 CH) fell 10 per cent to 13.02 yuan; Wuhan Zhongyuan Huadian Science and Technology (300018 CH) was down 9.9 per cent at 7.43 yuan; Brilliance Technology (300542 CH) dropped 7.9 per cent at 14.64 yuan;  and Zhejiang Kan Specialities Material (002012 CH) was down 7.7 per cent at 5.15 yuan.
— Georgina Lee 


Blockchain stocks in China fall after bitcoin volatility-deja vu puts doubts back on investors’ minds

Shares of global retail merchandise sourcing and supply chain manager Li & Fung jumped 12.3 per cent after it announced shortly after morning trading closed that Singapore sovereign fund manager Temasek has agreed to pay US$300 million for a 21.7 per cent stake in its wholly-owned logistics services unit LF Logistics.
The deal values the entire unit at US$1.4 billion.
This comes ahead of the logistics unit’s planned initial public offering and separate stock listing.
Li & Fung shares have been hammered in the past few years by the downsizing of traditional retailers in its key markets in the West amid the proliferation of online shopping, and, more recently, a protracted trade war between the United States and China.
It traded at HK$1.37 in early afternoon, after a brief suspension in the morning.
— Eric Ng


Li & Fung shares jump over proposed deal  

Traders have the jitters before the big sit-down between presidents Donald Trump and Xi Jinping on Saturday, pushing markets down.
On the Shanghai Composite Index, all sectors are down, with communication services and information technology the biggest percentage losers, at more than 1.6 per cent each.
Zhongjin Gold (600489 CH) was up 7.15 per cent. 
First Tractor (601038 CH), which makes heavy farm machines and has recently had speculators pile into it, is having another bad day, declining 8.7 per cent, to 8.94 yuan. It fell 8.7 per cent Thursday and by the 10 per cent limit on Wednesday, after seven straight days at the 10 per cent limit or right at it. 

 
Kweichow Moutai (600519 CH) is up a tad today, at 982.11 yuan. On Thursday, it became the first Chinese stock to ever top 1,000 yuan, going to 1,001 before it settled at the close down from that.
On the Hang Seng Index, all sectors are also down, led by consumer staples, down 1.5 per cent, and health care, at 1.2 per cent. 
Pork producer WH Group (288 HK) led losses, falling 3 per cent to HK$7.94. Snack maker Want Want China Holdings (151 HK) declined 2.4 per cent to HK$6.39. Developers were mixed. China Overseas Land and Investment (688 HK) rose 2.1 per cent to HK$28.70.
  
— Deb Price 


Hang Seng, Shanghai weighed down by trade jitters

Tsui Wah Holdings (1314 HK), which operates the traditional Hong Kong-style cha chaan teng restaurant chain Tsui Wah, saw net profit decline 94 per cent to HK$4.7 million, against HK$80.77 million for the year ended March 31 this year.
Revenue fell 2.8 per cent to HK$1.79 billion, compared with HK$1.84 billion.
Chairman Lee Yune-hong said the depreciation of the yuan and weakening of desire for consumption brought about by the Sino-US trade war, coupled with fierce market competition and increased costs and expenses, have hurt the group’s business.
The stock is down 1.5 per cent to HK$0.66. 
— Peggy Sito and Georgina Lee 


Tsui Wah Holdings shares fall on plunge in net profit 

CSG Smart Science & Tech (300222 CH), which makes health consultant robots and medical image analysis robots, said one of its controlling shareholders’ shares that were pledged to Bank of China’s brokerage arm as part of a security financing deal he arranged with the latter could be subject to forced disposal.
The 7.05 million shares, representing a 1.85 per cent stake in the company, are subject to forced disposal by Bank of China’s brokerage unit because the shareholder did not buy back the pledged shares on the scheduled redemption date, which fell on June 14.
CSG Smart Science & Tech was down 4.6 per cent, at 12.93 yuan, leading the losses in percentage terms on the ChiNext Index, which was down 1.5 per cent at 1,502.48.
— Georgina Lee 


CSG Smart Science & Tech leads decline on ChiNext, down on forced disposal of shareholders’ pledged shares

The Shanghai Composite Index ended 0.6 per cent lower, at 2,978.88, led down by financial stocks, as investors stood on the sidelines one day ahead of the meeting between president Xi Jinping and president Donald Trump in Osaka at the G20 meeting.
 Shanghai Chinese stocks end up 2.8 per cent for June, reversing losses of previous month of 5.8 per cent.
The CSI 300, which tracks blue chips listed on Shanghai and Shenzhen bourses, dropped 0.2 per cent at 3,825.59.
Gains in index heavyweights helped cap losses in their benchmarks.
Liquor distiller Kweichow Moutai (600519) was up 0.2 per cent at 984 yuan, and Ping An Insurance (601318 CH) rose 0.6 per cent to 88.61 yuan.
Banks led declines, with China Merchants Bank (600036 CH) down 1.3 per cent at 35.98 yuan; Agricultural Bank of China (601288 CH) down 0.6 per cent at 3.6 yuan; and Industrial and Commercial Bank of China (601398 CH)  down 0.3 per cent at 5.89 yuan.
“Previous concerns around Chinese banks have eased, now that the easing of longer term interbank rates, such as 3-month, or 6-month Shibor (Shanghai Interbank offered rate) indicate that banks are less likely to come under liquidity pressure in the interbank market as we go into the second half this year,” said Linus Yip, chief strategist at First Shanghai Securities. He was referring to the previous interbank liquidity pressure caused by the central bank’s seizure of Baoshang Bank in late May, when the event stoked concerns around more smaller banks being taken over by the government.
Going into next week, Yip sees the Shanghai benchmark potentially testing the 3,100 mark, “so long as we don’t have more sanctions or punitive measures from the Xi-Trump meeting”.
— Georgina Lee 


 Shanghai Chinese stocks end up 2.8 per cent for June, reversing losses of previous month

The arrest by the Independent Commission Against Corruption of a former senior executive of Hong Kong Exchanges and Clearing and two associates for alleged corruption over listing approvals was "an individual case and not reflecting that the listing regime has a problem," said Laura Cha Shih May-lung, chairwoman of the HKEX.
"Even if we have a perfect system, we cannot prevent a bad apple in the market. It is too early to say if we need to transfer the regulatory power to the SFC," she said, referring to the securities watchdog, the Securities and Futures Commission.
HKEX chief executive Charles Li Xiaojia said he has not seen any unqualified companies listing.
"The listing regime has clear rules and system to approve the listing. The system does not allow individual interference of the approval process," he said.
— Enoch Yiu


Arrest of former senior HKEX executive is 'individual case,' not reflecting larger problem, says chairwoman Laura Shih May-lung

The Hang Seng fell 0.28 per cent to 28,542.62, but the big news was its jump of 6.1 per cent for the month of June. That followed May, when it had its first losses amid escalating trade tensions, falling a painful 9.4 per cent.
Today, losses in the blue chip index eased in the afternoon, thanks to gains in selective Chinese banks, with China Construction Bank (939 HK) up 0.7 per cent at HK$6.73, and Industrial and Commercial Bank of China (1398 HK) gaining 0.4 per cent at HK$5.70.
Leading the Hang Seng lower were HSBC (5 HK), down 0.4 per cent at HK$64.80; Link Reit (823 HK), down 1.6 per cent at HK$96; and utility stocks, with HK & China Gas (3 HK) down 1.3 per cent at HK$17.32, and CLP Holdings (2 HK) down 0.5 per cent at HK$86.20.
“The market has been see-sawing,” said Royston Securities’ Chief Executive Kenny Tan, adding the fall in prices today shows the market is still divided in predictions for the trade talk outcomes.
The six trading debuts on the main board had mixed first-day performances.
Impro Precision Industries (1286 HK) closed little changed from offering price, at HK$3.01, compared to offer price of HK$3. Tu Yi Holding, which focuses on Japan-bound travel for customers in Eastern China, closed 30.5 HK cents, below its offer price of 52 HK cents.
Grown Up Group Investment Holdings (1842 HK) ended at 57 HK cents, better than the offer price of 50 HK cents. Feiyang International (1901 HK) closed at 98 HK cents, below offer price of HK$1.05.
Shinelong Automotive Lightweight Application (1930 HK) ended HK$1.18, up from offer price of 88 HK cents. Silver Tide  (1943 HK) closed at 46.5 HK cents, below offer price of 50 HK cents.
— Georgina Lee 


Hang Seng ends June up 6.1 per cent in June — after 9.4 per cent drop in May