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Deb Price

Iris Ouyang

Kathleen Magramo

Welcome to a fresh week, traders --
The death toll due to the coronavirus has shot up to 910 -- more than during Sars.
Catch up on the day's action below.
If you would like the Live Stocks Blog emailed to you each morning, click here. 
-- Deb Price, Iris  Ouyang and Kathleen Magramo 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.


Hong Kong stocks slide as coronavirus deaths surpass those of Sars

A community worker checks the temperature of a resident on a street near the Yellow Crane Pavilion in Wuhan, central China's Hubei province on February 7, 2020. Photo: Xinhua


Business


Death toll due to virus tops 900 -- more than during Sars epidemic
Could China's unprecedented lockdown be breakout moment for China's new economy stocks? 



Ping An Good Doctor, Ali Health soar as traders bet unprecedented lockdown in China could lead to a watershed moment for new economy stocks. That's what happened to e-commerce during the 2003 Sars outbreak.


Hong Kong stock market

Live

The death toll of the novel coronavirus has officially surpassed that of Sars, after China’s health authorities reported a further 97 deaths over the course of Sunday, the deadliest day so far.
The latest daily increase brings the total number of confirmed deaths caused by the novel coronavirus pneumonia (NCP) – as officially named by China’s National Health Commission (NHC) Saturday – to 910. All but two of those have occurred in mainland China.
In figures released Monday morning and current as of Sunday at midnight, the commission reported 3,062 new cases of infection, bringing the total to date to 40,171. Of those currently hospitalised, almost 6,500 are severe cases, according to the data.
Read full story here. 


Coronavirus death toll hits 910 -- more than during Sars

It’s never happened before: more than 50 million people in the world’s most wired country locked down at home with their smartphones turned into lifelines. Some analysts think this may later be recognised as a watershed moment, marking the start of a new era for online services – and the stocks closely tied to them.  Hong Kong-listed companies linked to online games, digital medical services, remote working and distance education are among new economy stocks that soared last week, as investors sensed a transformative moment might be at hand – literally – as China’s unprecedented decision to keep tens of millions of people quarantined in their flats to combat a deadly new virus deepened mainlanders’ intimacy with their smartphones.  With countless Chinese schools closed, NetDragon Websoft, a Chinese online gaming company offering online learning products, rallied for six straight sessions, running up a gain of nearly 48 per cent.  Cloud services and office software stocks surged on demand from remote work arrangements.  Read full story for investors here by Deb Price and Kathleen Magramo.


Will lockdown turn out to be a transformative moment for new economy stocks?

Shanghai-based Shimao Property Holding (813 HK) says contracted sales amount dropped 11 per cent  to 10.2 billion yuan in January from the same period last year due to an earlier Lunar New Year and some sales offices being affected by the outbreak of coronavirus.
In its January investor letter on Sunday, it said nine regional companies completed the establishment of online sales systems for all projects and continue to improve their function.
“Depending on the severity of coronavirus in each region, the company introduced online purchase promotions; clients who purchase online are eligible for free return within one month to enhance their confidence and increase the transaction rate,” the statement said.
From January 30, the company optimized the entire process of online sales: from online viewing, online consulting services, online house selection, all the way to online payment.
The land bank in Hubei only accounts for less than 5 per cent of the company’s total land bank, and the land bank in Wuhan is less than one-third of Hubei.
Its self-owned hotel in Wuhan is the Hilton Wuhan Riverside. To support Wuhan, the hotel is cooperating with the government to accommodate the military medical team that came to help.
-- Sandy Li   


Shimao Property sees 11 per cent drop in contracted sales in January year-on-year

Chinese restaurant chain Jiumaojiu International Holdings (9922 HK) announced it will extend suspension of operation of all restaurants (including both self-operated and franchised restaurants).
The decision was made due to the ongoing coronavirus outbreak, it said in the company filing to the Hong Kong stock exchange on Sunday.
The Guangzhou-based group operates 328 outlets in mainland China.
The company will make further announcements in due course on the date and progress of the resumption of operation of restaurants.
-- Sandy Li   


Chinese restaurant Jiumaojiu extends virus-related closing of restaurants

Here’s what we are watching this morning:
  US Friday markets/ What futures foretell
--The S&P 500 fell 0.5 per cent, the Nasdaq fell 0.5 per cent and the Dow Jones Industrial Average fell 0.9 per cent. 
-- Hong Kong futures fell 1.3 per cent, while the FTSE China A50 futures per cent dropped 1.1 per cent 
IPO debuts: ActBlue (300816 CH) 
Economic statistics: In China, January year-on-year PPI, CPI, foreign direct investment, money supply
Central Bank action: None to note   


Morning guidance

Shougang Concord Century Holdings (697 HK), which manufactures steel cords, and processes and trades copper and brass products, expects its performance returned to black last year.
An unaudited consolidated net profit  is estimated to be not less than HK$90 million last year, according to the company’s filing to the Hong Kong Stock Exchange on Sunday.
In 2018, the firm recorded a loss of HK$8.7 million.
“The turnaround from loss to profit position is primarily attributable to the increase in gross profit,” it said.   It attributed the earnings due to the growth in sales volume of the steel cords, the reduction in production costs, and the increase in export sales volume of the steel cords.
The company will announce the full year results in March.
-- Sandy Li   


Shougang Concord expects 2019 was back to profitability

The Hang Seng Index fell 1.1 per cent to 27,094.45. That follows last week’s big run-up of 4 per cent.
Tencent (700 HK) declined 0.9 per cent to HK$398.80.
Other high turnover stocks include Alibaba (9988 HK), which fell 1.7 per cent to HK$211.80, and Meituan Dianping (3690 HK), which tumbled 4.3 per cent to HK$97.55.
-- Deb Price 


Hang Seng Index falls 1.1 per cent

The Shanghai Composite Index fell, and was last trading down 0.5 per cent at 2,863. 
Kweichow Moutai (600519 CH), one of the most heavily traded stocks on the northbound trading link to the mainland, fell 1  per cent to 1,065 yuan.
-- Deb Price     


Shanghai falls; Kweichow Moutai drops 1 per cent

Shares of state-backed China Traditional Chinese Medicine (570 HK) surged as much as 15.3 per cent after it said subsidiary Guangdong Yifang Pharmaceutical has received approval from the mainland authorities to manufacture the Tuejie Quwen granules medicine.
The medication has been deemed by expert consultants of the Guangdong Epidemic Prevention and Control Headquarters to be useful for treating patients of the new coronavirus.
The medicine "can apparently mitigate the clinical symptoms ... slowing down [its] progression" [and have] "relatively good clinical value", China TCM said in a filing to Hong Kong's stock exchange today.
Guangdong Yifang has "actively organised" manufacturing and distribution, China TCM, a unit of Sinopharm Group, said, without saying when production will start and what volume could be produced.
China TCM is now trading 5.9 per cent ahead at HK$4.49.
-- Eric Ng


China Traditional Chinese Medicine shoots up on coronavirus medicine approval

HSBC Holdings (5 HK) gained 0.9 per cent to HK$58.30, after rolling out relief measures worth US$3.9 billion to Hong Kong businesses hit by the novel coronavirus outbreak. 
The lender allowed taxi and public light bus operations, as well as  borrowers of property-secured commercial loans, to make interest-only payments.
Read the full story by Enoch Yiu and Chad Bray here.
-- Kathleen Magramo


HSBC rises after relief measures for Hong Kong businesses hit by virus

ActBlue (300816 CH),  which develops, produces and sells products for exhaust treatment, surged to the 44 per cent upside limit to 29.2 yuan on its debut on ChiNext, China’s NASDAQ-like board of the Shenzhen Stock Exchange.
-- Iris Ouyang    


ActBlue soars to 44 per cent limit in ChiNext debut 

Online education and digital medical stocks continue to rise after posting huge gains last week amid the novel coronavirus outbreak.
China’s largest online health care provider, Ping An Good Doctor (1833 HK), jumped 7.6  percent  to HK$79.10. Alibaba-backed AliHealth (241 HK), an online pharmacy platform, shot up 8.8 per cent to HK$13.14.
NetDragon Websoft (777 HK), a Chinese online gaming company offering online learning products, gained 0.4 per cent to HK$27.75. It is on its way to seven straight sessions of gains. 
Online tutoring platform Koolearn Technology (1797 HK) is bucking the trend among these stocks, falling 3.6 per cent to HK$36.
-- Kathleen Magramo   


Ping An Doctor, Ali Health soar amid virus lockdown

The Shanghai Composite Index has turned up 0.1 per cent to 2,879. 


Shanghai Composite turns up -- a bit

Shanghai Pharma (601607 CH) dropped by 4.2 per cent to 19.91 yuan, even as Citic Securities reinstated a “buy” for the company.
  The company declined 4.6 per cent to 20.79 yuan on Friday, after it surged 9.4 per cent on February 3. It saw gains on three of the last week's five trading days.
Last week's surge came as the company announced a strategic cooperation relationship with Gilead, an American pharmaceutical giant that produces Remdesivir, which has been used by American doctors to significantly improve symptoms of the first novel coronavirus patients in the United States.
--Iris Ouyang


Shanghai Pharma extends drop

Hang Seng down 0.5 per cent

Xinghuacun Fen Wine (600809 CH) rose 0.9 per cent to close to 86 yuan after three consecutive days of gains. 
Sinolink Securities raised the shares to a “buy.” 
New Times Securities maintained its “strong recommend” for Xinhuacun Fen Wine, citing better-than-expected performance in 2019 when the company reported revenue of 26.6 per cent gain to 11.91 billion yuan and profit of 37.6 per cent to 2.02 billion yuan.
Although the novel coronavirus could affect revenue growth of the company, its nation-wide expansion and enhanced branding among consumers and franchisers will support its 2020 revenue growth at more than 15 per cent, New Times Securities noted.  
--Iris Ouyang   


Xinghuacun Fen Wine ticks up

The Shanghai Composite Index is down a teensy 0.02 per cent at 2,875.


Shanghai Composite turns a bit down

Stocks related to agriculture in mainland China broadly rose 10 percent as the Ministry of Agriculture and Rural Affairs assured crop yields in the country are sufficient.
It is estimated that agricultural output for the winter and spring season will be around 170 million tons, roughly a 2 per cent increase compared to the same period last year.
Cotton miller Xinjiang Talimu Agriculture Development (600359 SH) jumped 10.1 per cent to 5.68 yuan. Rice company Jiangsu Provincial Agricultural Reclamation and Development (601952 SH) climbed 10 per cent to 7.13 yuan. Corn company Beijing Dabeinong Technology Group (002385 SZ) rose 10 per cent to 6.58 yuan.
  A gauge tracking 24 agriculture stocks compiled by data provider Xuangubao jumped nearly 8.6 per cent.
-- Kathleen Magramo   


Agriculture stocks in mainland China shoot up as crop yields are deemed sufficient 

The Chinese government is planning to reform meat production amid challenges posed by the coronavirus outbreak, African swine fever and avian flu outbreaks, according to Jefferies, citing unspecified sources. 
  “Our sources indicate that the government is approaching some meat importers and offering them the opportunity to set up state-of-the-art meat and animal processing factories on the mainland,” Jefferies said in a report today. “We also understand that the government is bringing in specialists in setting up meat-processing production lines to advise on international best practices for food safety.”
It expects large corporations and state-owned enterprises will get involved in the industrialization of the meat industry, with WH Group (288 HK), Wens Foodstuff (300498 CH), Muyuan Foods (2714 CH) and COFCO Meat Holdings (1610 HK) likely to be the beneficiaries.
-- Iris Ouyang


China to reform meat production in line with international standards: Jefferies

China’s consumer inflation expanded at its fastest pace in more than nine years in January, as pork prices soared due to the coronavirus epidemic and stronger demand over the Lunar New Year period, official data released on Monday showed.
The consumer price index (CPI) rose 5.4 per cent from a year earlier, up from a 4.5 per cent gain in December and at its highest point since October 2011, data from the National Bureau of Statistics (NBS) showed.
The result was above an analyst poll by Bloomberg, which forecast 4.9 per cent growth.
Within the CPI, pork prices jumped 116 per cent, as city lockdowns and transport restrictions due to the coronavirus outbreak hurt supply and demand. Overall food prices jumped 4.4 per cent month-on-month, which lifted the gauge by 0.96 percentage points.
Read full story here. 


China’s consumer inflation expands at fastest pace in nine years

China’s benchmark finished the morning session at 2,866.


Shanghai Composite ends morning session with 0.4 per cent fall

Lockdowns in China to contain the spreading coronavirus will cost the world US$26 billion per week on losses of exports to China, contributing to manufacturing and trade recessions that are likely to continue in the first half of this year, Allianz said in a research report today. 
“With the stock absorption over the past few months being only partial, the lower global demand and higher uncertainty are likely to push inventories up in the coming months,” Allianz said. “Hence, we expect the global manufacturing sector to remain in (shallow) recession in H1 2020.”
Allianz revised down its forecast for global trade growth this year by 0.5 percentage point (pp) to 1.3 per cent. The weekly loss, equivalent to a raise in global import tariffs on goods by 1 pp in 2020, exceeds the around 0.7 pp caused by the U.S.-China trade war last year. 
The financial service company expects 2020 global GDP to grow 2.3 per cent, 0.1 pp lower than its previous forecast, dragged by a 0.3 pp lower forecast of China’s annual growth at  5.6 per cent. 
Read full story by Daniel Ren and Peggy Sito here on how the virus is impacting global supply chains.
--Iris Ouyang


China lockdowns cost global trade US$26 billion per week

Hong Kong’s benchmark finished the morning session with a loss of 0.8 per cent, at 27,193.17.
Of its 50 constituent members, only 10 showed gains.
In the broader market, Ping An Good Doctor (1833 HK) gained 7.2 per cent to HK$78.80, while Ali Health (241 HK) shot up 10.6 per cent to HK$13.36.
-- Deb Price


Hang Seng to start afternoon session with a 0.8 per cent loss

Ali Health (241) continues to surge, rising 11.4 per cent to HK$13.46, while Ping An Good Doctor (1833 HK) has given up some of its big morning gains but is still ahead by 6.6 per cent at HK$78.35. They continue to benefit as part of a rush into stocks expected to get a boost from China’s unprecedented lockdown of tens of millions of its citizens.
The Hang Seng Index losses have stabilised in early afternoon trading. Hong Kong’s main benchmark is down 0.8 per cent at 27,187.53 with only eight of it 50 constituent members posting gains.
Of sub-indexes, finance stocks are down 0.6 per cent, utilities stocks have fallen 0.9 per cent, while properties declined 0.7 per cent and commerce and industry fell 1 per cent.
-- Deb Price     


Ali Health, Ping An Good Doctor surge in declining Hong Kong market

HKTV (1137 HK) reached a three-year high at HK$6.9 during the day,  trading at a 29.9 per cent increase.
  The television network turned into an e-commerce platform saw its gross merchandise value rise 49.6 per cent this January, totaling HK$ 338 million, compared to the same period a year ago, according to an exchange filing this morning. It also recorded a 64.7 per cent surge in daily order numbers last month.
The group said more Hong Kongers have switched to online shopping to avoid crowded areas, which have boosted its performance.  Online store HKTVmall sold over 4.5 million masks to more than 64,000 customers between January to February 5, it said in a social media post last week.
It continues to trade at nearly the nearly 30 per cent gain at HK$6.90.
-- Kathleen Magramo   


HKTV surges nearly 30 per cent, reaching three-year high

The Shanghai Composite Index is back up, trading ahead 0.2 per cent at 2,881. It has swung between small losses and small gains today.
Tesla-linked stock rose 2.3 per cent as production was set to resume today at the Shanghai factory after the end of the extended Lunar New Year, according to a gauge tracking them.
Cement stocks rose 5.7 per cent, while chicken stock advanced 5.4 per cent and animal feed stocks rose 5.6 per cent.
Kweichow Moutai (600519 CH) lost 1 per cent in early afternoon trading to 1,065.05 yuan.
  Meanwhile in Shenzhen, Apple AirPods supplier Luxshare Precision Industry (002475 CH) swung into a small gain of 0.4 per cent to 42.95 yuan. Apple has temporarily closed stores in China and is concerned about supply disruptions due to the novel coronavirus outbreak.
-- Deb Price    


Kweichow Moutai declines, while Apple Airpods supplier Luxshare Precision swings into small gains

Jefferies said it prefers Chinese automakers with limited or no joint-venture risk, rating Geely Automobile Holdings(175 HK), Great Wall Motor (2333 HK), Brilliance China Automotive (1114 HK) and FAW Car (000800 CH) as top “buys.”
“Geely, Great Wall Motor, Brilliance and FAW car are automakers with no direct JV [joint-venture] impact and manufacturing footprint in Hubei province,” Jefferies said in a report today, while “Brilliance is highly defensive given very limited disruption to wholesale/production.”
  Despite steep price corrections, Jefferies expects high volatility on Hubei-exposed Dongfeng Motor Group (489 HK) and SAIC Motor (600104 CH), “especially during results season.”
It also noted SAIC-GM has a plant in Wuhan accounting for 25 per cent of the joint venture’s total capacity.
“Dealers will be the least impacted given our non-consensus view on end demand,” while China MeiDong Auto Holdings (1268 HK) is a top pick given limited risk from their single-city, single-store distribution model, it added.
  China’s wholesale/production volume of autos could decline 40 per cent to 60 per cent year over year in the first quarter to form the bottom, Jefferies said, given areas most affected by the novel coronavirus contribute 31 per cent of the national production volume.
   But it is optimistic about the outlook of the auto retail sales.
“Despite a depressed 1H20 (-12% YoY), we kept the retail volume forecast at +4% YoY given more auto financing on easing measures,” Jefferies said. “We trimmed FY20E earnings by 3-5% to factor in the disruption and forecast automakers' earnings to grow 5-15% in FY21.”
-- Iris Ouyang 


Automakers with little footprint in Hubei ‘buy’: Jefferies

HuoBi Technology Holdings (1611 HK), whose businesses include blockchain-based technology solutions, rose 4.7 per cent to HK$4.2, as bitcoin traded in the US$10,000 range, where it last was in October.
Bitcoin has soared about 40 per cent this year, as the novel coronavirus virus threatens global growth.
-- Deb Price    


HuoBi Technology gets boost as bitcoin trades in US$10,000 range

Nine members of the same Hong Kong family contracted the new coronavirus after sharing a hotpot, sending catering stocks down.
China’s largest hotpot chain, Haidilao International Holding Ltd (6862 HK), fell 2.9 per cent to HK$31.1.
Haidilao operates 550 restaurants in 116 cities in mainland China. It earlier shut its branches in mainland China amid the coronavirus outbreak.
Rival restaurant chain Xiabu Xiabu (520 HK) fell 5.6 per cent to HK$8.03. Yihai International (1579 HK), which makes condiments for hotpot dishes, shed 3.6 per cent to HK$46.1.
Read full story here on the family’s infection.
-- Kathleen Magramo


Hotpot stocks tumble after family infected with coronavirus in Hong Kong

The Shanghai Composite Index rose 0.5 per cent to 2,890.49, led by gains in agricultural stocks. It was its fifth consecutive session of gains.
The ChiNext gauge of small-caps fared better, advancing 1.3 per cent to 2,042.18.
The Shenzhen Component Index increased by 1.2 per cent to 10,757.26, also its fifth straight session of gains.
-- Kathleen Magramo


Shanghai benchmark rises for fifth consecutive session

China shares continued to rise today because traders expect more stimulative monetary measures, said Alan Li, portfolio manager at Atta Capital. 
“The stock market is mainly supported by the excessive liquidity in mainland China and the bullish sentiment in A shares,” said Li.
“There’s a logic behind it -- that the spread of virus is out of control, and the most effective way to support the economy and the only thing the Chinese government can do is more monetary easing. And the biggest beneficiary is capital markets,” he said. 
“However, the effect of monetary easing will be decay by time and people will focus back to fundamentals. I will keep my preservative view and relatively low position in near term,” Li added.   
-- Deb Price


China traders bullish on expectations of stimulative measures amid virus, says Alan Li

Investors need to react quickly to the virus-sensitive market, says Louis Tse Ming-kwong, managing director of VC Asset Management.
“The turnover of about HK$80 billion on the Hong Kong market is not small, which means that selling is [moderate]. I believe most of the sell calls come from investors and brokers based in mainland China,” Tse said. “Perhaps, some investors who bought in during the stock market dive when the mainland market opened last week are now taking profits.”
Major tech-related stocks have a wider price range movement but can bear the fluctuations supported by their historically strong gains, Tse said.
E-commerce group Alibaba (9988 HK) fell 1.6 per cent to HK$ 212 in late trading.  Internet giant Tencent (700 HK) dipped 0.1 per cent to  HK$402. Food delivery giant Meituan Dianping (3690 HK) sank 6.2 per cent to HK$ 95.60.
  He has his eyes on cloud-based services which benefit from work from home arrangements. One he likes is software company Weimob (2013 HK), which rose 0.9  per cent to HK$5.46. 
“The market is very sensitive at the moment,” Tse explained, “Any [news] coming in concerning the coronavirus could affect different industries, so investors have to watch out for risks and react quickly as the outbreak unfolds.”
  -- Kathleen Magramo   


Investors need to react quickly in virus-sensitive market, says Louis Tse

Ping An Good Doctor (1833 HK) shot up 8 per cent to HK$79.45 while Ali Health Information and Technology (241 HK) soared 13 per cent to HK$13.66  on expectations they will benefit from China’s unprecedented city lockdowns.
The Hang Seng Index closed down Monday 0.9 per cent at 27,241.34. Of the 50 constituent members, 37 fell, with declines seen in finance, utilities, properties, and commerce and industry sub indexes.
One of the biggest winners of the day was HKTV (1137 HK), which reached a three-year high at HK$6.9 during the day, before finishing with a 26.2 per cent gain at HK$6.70.
  The television network turned into an e-commerce platform saw its gross merchandise value rise 49.6 per cent this January, totaling HK$ 338 million, compared to the same period a year ago, according to an exchange filing this morning. It also recorded a 64.7 per cent surge in daily order numbers last month.
-- Deb Price    
