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Zhang Shidong

Deb Price

Gigi Choy

Happy Friday, traders!
What a day! The biggest gain for the Hang Seng since 2011.
Catch up on the latest action below. 
We'd love to hear your thoughts and feelings, including strategies you're adopting, scary and funny moments, as well as super and awful trades for possible inclusion in the blog.
Where's the bottom? What's it going to take to start climbing out? And how long will it take?
Please send them to deb.price@scmp.com.
And, hey, are you getting your Live Stocks Blog every morning via email? You can! Don't miss out on our coverage of Hong Kong and mainland markets each trading day! If you would like the Live Stocks Blog emailed to you each morning, click here.
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.
-- Zhang Shidong in Shanghai, and Deb Price and Gigi Choy in Hong Kong 


Hong Kong’s TVB logs US$7.5 million profit, shaking off 7 years of losses

Pop Mart shares dive despite soaring profit as investors fear Labubu dependence

Global buy-backs hit record but mainland China, Hong Kong see declines: Capital Group

Hong Kong stocks extend rebound on signs of diplomatic path in Iran conflict

Hong Kong stock market

Hong Kong stocks shoot up amid bargain hunting for coronavirus-battered shares

Visitors to the US Department of Labor in New York are turned away at the door by personnel due to closure over coronavirus concerns on March 18, 2020. Applications for jobless benefits are surging in some US states. Photo: Associated Press


Business


China Mobile, CK Asset, casino stocks among big winners
Hang Seng's gain is biggest since 2011  
	 



Hang Seng sees biggest gain since 2011. Big winners include CK Asset, China Mobile and Galaxy Entertainment. 


Live

Overnight markets/what futures foretell
  - In overnight trading, the S&P 500 rebounded 0.5 per cent, the Dow Jones Industrial Average added 1 per cent and the Nasdaq gained 2.3 per cent.
Europe’s Stoxx 50 Index climbed 2.9 per cent. - Hong Kong futures were 1.2 per cent higher, while the FTSE China A50 futures climbed 0.9 per cent
IPO debuts: SG Group Holdings (1657 HK) will start trading in Hong Kong today. Rockontrol Technology Group (688051 CH) will debut on Shanghai’s Star Market.
Economic statistics/central bank action: China will release its monthly loan prime rate today Corporate events, earnings, meetings, news conferences: nothing major
Economic statistics/central bank action: China will release its monthly loan prime rate today
Corporate events, earnings, meetings, news conferences: nothing major


Morning guidance

Hong Kong and China Gas (Towngas) (0003 HK) -- the city's dominant gas supplier and one of the major natural gas distributors in mainland China -- posted after market close on Thursday a 7 per cent decline in underlying net profit for last year to HK$6.77 billion.
If non-recurring investment property revaluation gain booked in 2018 is included, net profit dropped 25 per cent to HK$7 billion.
Operating profit fell 4 per cent to HK$8 billion.
The firm, a unit of blue chip Henderson Land Development -- expects the coronavirus pandemic to bring "relative significant" impact on mainland China's economy, with a still uncertain outlook for the rest of the year.
It however expects that once the epidemic is over, its business will return to normal in a "relatively short period of time".
A final dividend of 23 HK cents was proposed, raising the total annual payout to 35 cents -- flat from 2018. The firm said in its resulting filing that "barring unforeseen circumstance" the 2020 total payout will not be less than that of last year.
-- Eric Ng


Towngas posts underlying profit decline

A series of studies of the coronavirus suggests it is infectious for longer periods than pathogens from the same family, such as Sars, presenting added challenges for containing it.
Researchers found that on average, people with SARS-CoV-2 – the virus that causes Covid-19, a pneumonia-like disease – can expel or “shed” virus particles from their bodies for a relatively long period of 20 days, spreading it even before symptoms appear.
The virus also remains persistent in the faeces of some children, suggesting it can be transmitted through a faecal-oral transmission route – meaning that contaminated faeces from the infected child is somehow ingested by another person.
This indicates longer quarantine periods may be needed for patients, according to a study by a team from the China-Japan Friendship Hospital, which included China National Health Commission expert Cao Bin.
Read full story here. 


Coronavirus infectious for longer periods than similar viruses, studies suggest

 InnoCare Pharma (9969 HK), a Beijing-based cancer drugs developer, has priced its HK$2.2 billion (US$289 million) initial public offering at the high end of the asking range, after receiving strong subscription interest of its shares despite the worst economic and stock market downturn in a decade.
“Our shares offering was well received by investors from all over world, including many long-term oriented institutional investors,” co-founder and chief executive Jasmine Cui Jisong told the Post in an interview ahead of the results. “They include some very supportive cornerstone investors.”
  The cornerstone investors, bound by a six-month shares sale moratorium from listing, have agreed to buy US$164 million (HK$1.28 billion) worth of shares offered at HK$8.18 to HK$8.95 each, according to the listing prospectus.
  Subscription interest from Hong Kong investors totalled 7.48 billion shares, 298.75 times the shares offered to them, InnoCare said in a filing to Hong Kong’s bourse today.
  Shares offered to international investors were “very significantly over-subscribed”, it added without giving a figure.
-- Eric Ng


InnoCare’s IPO nearly 300-time subscribed in Hong Kong despite global market crash

In his strongest terms yet, US President Donald Trump blamed the Chinese government on Thursday for the severity of the Covid-19 pandemic, as he sought to build distance between his presidency and the outbreak’s devastating toll on the US economy.
“The world is paying a very big price for what they did,” Trump said at a White House briefing, accusing China of covering up the outbreak’s early stages.
“If people would have known about it … it could have been stopped right where it came from: China,” he said.
Trump has pivoted this week to emphasising the virus’ origins in response to Chinese diplomats’ amplification of conspiracy theories that the contagion was brought to Wuhan by US troops last year. Trump’s repeated use of the term “Chinese virus” since Monday has been criticised as fuelling racism against those of Chinese and East Asian descent.
Read full story here. 


Trump steps up China blame over virus

The Hang Seng Index gained 2.6 per cent to 22,270.63.
The Shanghai Composite rose 1.1 per cent to 2,733.


Big opens for Hang Seng, Shanghai

Alibaba (9988 HK) gained 2 per cent in early trading to HK$177.50.
It had closed Thursday below its secondary IPO price of HK$176.
-- Deb Price


Alibaba back over its secondary listing price

Tencent (700 HK) jumped out of the gate this morning. It gained 4.1 per cent to HK$357.20.
The social media and gaming giant missed estimates this week but is in a unique space in China, the world’s most wired country.
Here’s what analysts say about it.
-- Deb Price  


Tencent see big morning start

OANDA says US stock markets are showing some signs of stabilisation thanks to optimism over progress in finding new treatments for Covid-19 and stimulus measures by both central banks and governments to support the global economy.
"Central banks are going all-in. Last night the ECB launched a 750-billion-euro program called the Pandemic Emergency Purchase Program (PEPP), practically a guarantee for the credit markets," analyst Edward Moya wrote in a note.
The foreign exchange company forecast that volatility will likely remain in place in the tech-heavy Nasdaq and could see downward pressure for risky assets if more lockdown measures are implemented and when the US reaches its health-care capacity.
-- Gigi Choy


US markets showing some stabilisation, says OANDA

Macau casino stocks are finally having a good morning.
Sands China (1928 HK) shot up 5.3 per cent to HK$27.55.
Galaxy Entertainment (27 HK) jumped 6.5 per cent to HK$41.10.
-- Deb Price


Macau casino stocks having lucky start

SG Group Holdings Limited (1657 HK) transferred from GEM (8442 HK) to the main board and opened up 1.4 per cent to HK$7 from HK$6.90.
The fashion designing and sourcing company said it has diversified its geographical coverage into more countries to reduce its reliance on its major customers and suppliers due to Brexit, the US-China trade war and other downward pressures on the global economy in its Q3 2019 report.
-- Gigi Choy


SG Group rises a bit on debut on main board in Hong Kong

China kept the loan prime rate, a market-based borrowing cost, unchanged in March.
The one-year LPR is 4.05 per cent, while the five-year rate is 4.75 per cent.
The number is released every month based on bidding from a group of commercial banks after they gauge demand for capital.
-- Zhang Shidong


China leaves loan prime rate unchanged

“It is driven by central banks’ action,” Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, said of the big runup in Hong Kong stocks. 
“After central banks deployed different emergency measures globally to try to buffer the economy, sentiment improved. Also after sharp correction, some investors believe the valuations of the Hang Seng Index are attractive,” he said. 
“Aggressive investors may focus on 5G and IT stocks. But I still think it is just a short-term rebound, not a long-lasting rally. The key remains the future development of virus outbreak,” he said.
-- Deb Price    


Bargain hunting back, but this is short-term rally, says analyst Kenny Wen

Rockontrol Technology Group (688051 CH) surged 147 per cent to 125.50 yuan on the first day of trading on the Science and Technology Innovation Board, or the Star Market, in Shanghai.
New shares on the new technology board are exempt from the exchange rule that limits gains in IPOs to no more than 44 per cent in debuts.
-- Zhang Shidong


Star market debutant Rockontrol more than doubles

Daiwa Capital Markets reiterated its buy rating for China Mobile but trimmed target price from HK$78.70 to HK$76.60.
Although China Mobile's 2020 capital expenditure (capex) guidance came in below Daiwa's expectations, it believes the low-risk nature of China Mobile dividends can help the company easily weather earnings volatility arising from the coronavirus pandemic.
China Mobile (941 HK) rose 9.6 per cent to HK$52.90.
-- Gigi Choy


China Mobile still at buy a Daiwa Capital Markets but price lowered

Chinese investors are a bit disappointed as China has left its loan prime rate unchanged this month, missing expectations of a cut in the new market-based mechanism for pricing borrowing costs.
The Shanghai Composite Index trimmed its gains to 0.7 per cent toward the end of the morning trading, while the gain on the ChiNext gauge of small-caps was only 0.2 per cent.
-- Zhang Shidong


China’s stocks pare gains as loan prime rate left unchanged

Daiwa Capital Markets reiterated its outperform rating for China Vanke (000002 CH) but cut the target price from 32.50 yuan to 29.70 yuan.
Daiwa forecasts 3 percent year-on-year growth in Vanke's 2020 contract sale to reach 650 billion yuan, with the real estate developer expecting 97 per cent of its projects to resume operations by end-March.
Vanke's shares rose 0.5 per cent to 25.35 yuan in Shenzhen and the stock increased 3.7 per cent to HK$24.05 in Hong Kong.
-- Gigi Choy


China Vanke reiterated as outperform by Daiwa, but target price lowered

The Hong Kong benchmark is now up 2.7 per cent at 22,304.22.


Hang Seng trims gains

FTSE Russell’s decision to further raise the weighting of Chinese stocks in its benchmarks will be effective after the market close today, despite the turbulence in the global stock markets, according to the index compiler.
After the market close, the inclusion factor of the mainland stocks will rise to 25 per cent in FTSE-linked indexes, from 15 per cent currently.
-- Zhang Shidong


FTSE Russell’s rebalancing of Chinese stocks takes effect after close

BlackRock expects the volatile global markets to settle down once the scale and impact of the coronavirus pandemic is better understood and fiscal and monetary policy response boosts confidence that financial markets are functioning properly.
The world's biggest asset manager said pledged policy response has been swift and it expects total fiscal stimulus to be similar in size to that of the financial crisis but in a shorter time frame.
"We believe market volatility is distracting from the sheer amount of promised stimulus – with more to come," the note said. "This is why we stay neutral on risk assets and believe investors should take a long-term perspective."
-- Gigi Choy 


BlackRock expects volatility to settle down on huge fiscal stimulus

The Shanghai Composite Index rose 0.5 per cent to 2,714.77 at the break, though trimming some gains after a key borrowing cost was left unchanged.
The ChiNext gauge of small-caps, which are more sensitive to the liquidity change, erased all the gains and remained little changed when trading ended after the morning session.
-- Zhang Shidong


China’s stocks hold onto gains at break

The Philippine Stock Exchange has been getting a lot of attention after its decision to shut down for two days after massive stock losses. It reopened Thursday but shut down at 1pm amid more volatility.
It re-opened today and was last up 2.6 per cent. That is stable after its opening with a 3 per cent gain.
-- Gigi Choy


Volatile Philippine Stock Exchange reopens, maintains stable gain

The Hang Seng Idex trimmed earlier gains to a 2.8 per cent gain at the lunch break. The level is 22,318.82, and 44 of the 50 constituent stocks showed gains. Commerce and industry stocks lead gains, followed by property stocks, according to Hang Seng sub-indexes.
Casino stocks were big gainers. 
Wynn Macau (1128 HK) shot up 10.3 per cent to HK11.38, while Sands China (1928 HK) jumped 6.5 per cent to HK$27.85.
Tencent (700 HK) advanecd 2.9 per cent at the break to HK$352.80.
-- Deb Price 


Hang Seng holds 2.8 per cent gain at lunch break

Victor Li’s Cheung Kong units released earnings as the city is mired in economic woes.
Victor Li Tzar-kuoi, the elder son of Hong Kong's richest man, said the two flagship companies founded by his father nearly seven decades ago are financially adequate to survive and thrive in the city’s worst economic slump in decades.
CK Hutchison, which owns businesses from chemists and supermarkets to ports and mobile phone networks, posted a 2 per cent increase in 2019 net profit to HK$39.83 billion (US$5.13 billion). Underlying profit at CK Assets (1113 HK), one of the city’s largest property developers, jumped 19 per cent to HK$28.7 billion, helped by a real estate bull run in the world’s costliest city.
Real the full story here.
-- Zhang Shidong


CK Assets jumps as underlying profit shoots up 19 per cent

CK Hutchison (1 HK) gained 5.9 per cent to HK$48.25 after posting a 2 per cent increase in 2019 net profit to HK$39.83 billion (US$5.13 billion). 
“The outbreak and rapid spreading of COVID-19 across continents and the slump in crude oil prices as a result of the recent price war have created unprecedented risks and challenges to the global economy,” chairman Victor Li said in a filing to the Hong Kong exchange. 
“The trading environment in the Mainland as well as the majority of other countries will become very challenging, severely impacting various businesses and industries. Together with Brexit uncertainties, social unrest in different countries, geopolitical and trade tensions, all will continue to weigh heavily on the global economy,” Li said.
Operations of the conglomerate -- which owns supermarkets, ports and mobile phone networks -- will be impacted in the year ahead, but said its telecommunication businesses are expected to be less affected. Li said, “the outlook for this business will remain positive.”
-- Deb Price     


CK Hutchison gains on 2 per cent increase in net profit 

Hang Seng up 2.4 per cent at 22,223.43

Low cost carrier HK Express -- which Cathay Pacific bought last year from Chinese conglomerate HNA Group -- will suspend flights from March 23 until April 30 due to the coronavirus pandemic. (Read full article here.)
It is the first airline in Hong Kong to shut down all commercial flight operations amid the public health crisis.
Cathay Pacific and Cathay Dragon will also slash capacity by 96 per cent across their scheduled services in April and May because of a significant decline in travel demand.
Cathay Pacific Airways (293 HK) rose 0.4 per cent to HK$8.19.
-- Gigi Choy


HK Express temporarily suspending all flights

California’s government ordered its 40 million residents to stay at home indefinitely except for essential activities.
Governor Gavin Newsom said that modelling has shown that 56 per cent of California residents are expected to contract Covid-19 over the next eight weeks, requiring nearly 20,000 more hospital beds than the state can currently provide.
That’s the largest lockdown in the US, as the state battles to curb the spread of the novel coronavirus.
Home to Silicon Valley, California is the world's fifth-largest economy, with a GDP of US$2.9 trillion. It is behind only the US, China, Germany and Japan.   
-- Gigi Choy


California orders its 40 million residents to stay home

Bank of America expects global GDP growth to fall effectively to zero this year, matching the major recessions of 1982 and 2009.
It says growth will surge when economies get up and running again, but the level of GDP growth will remain well below its old trend into 2021.
-- Gigi Choy


Global GDP growth will fall to match major recessions in 1982, 2009, says Bank of America

Standard Chartered expects global growth in 2020 to fall to a 37-year low, excluding the global financial crisis period.
The bank trimmed its forecast for global growth to 1.6 per cent, down from its original projection of 3.3 per cent made in November.
"The risk is that the virus shock persists – with outbreaks resuming in places that had brought the situation under control – or that we see a major credit shock, despite government interventions to limit systemic risks and mass layoffs," Standard Chartered said in a note.
It added that the three key areas to focus on are fundamentals, policy and confidence.
-- Gigi Choy


Global growth to fall to a 37-year low: Standard Chartered

Jefferies said China's telecommunications were more resilient than expected given the lockdown to slow the spread of the coronavirus.
Total industry revenue in Jan-Feb 2020 grew by 1.5 per cent year-on-year.
The investment bank said another encouraging trend is that both industry revenue and mobile revenue grw sequentially from Nov-Dec 2019 by 5.4 per cent and 2.5 per cent, respectively.
China Telecom (728 HK) rose 8.7 per cent to HK$2.24, while China Mobile (941 HK) increased 12.1 per cent to HK$54.10.
-- Gigi Choy


China telecoms jump; Jefferies says they were more resilient during virus than expected

A rebound finally descended on Chinese stocks, as the benchmark gauge ended higher for the first time eight days.
The Shanghai Composite Index rose 1.6 per cent to 2,745.62 today, paring the weekly loss to 4.9 per cent.
Speculations were mounting that the central bank will cut the benchmark interest rate after it left the loan prime rate, a market-based borrowing cost commercial lenders charge on companies, unchanged for this month. Pharmaceutical, consumer and financial stocks led the gain.
-- Zhang Shidong 


China’s stocks close higher for first time in eight days on rate speculation

Jefferies is slashing Chinese liquor companies' net profits to factor in the impact of the coronavirus pandemic.
There was a 35 per cent to 40 per cent decline in liquor consumption in 1Q20 due to the outbreak, according to the investment bank.
It expects demand to recover gradually from 2Q20 and return to normal level in 2H20.
"After virus outbreak, most premium liquor companies said they will maintain sales target, yet we are more cautious, as most volume lost during Chinese New Year is a permanent loss," Jefferies said in a note.
"We expect liquor names to control supply to avoid significant decline in retail/distributor price."The investment bank's top buys are Moutai and Yanghe for their high visibility and channel reform benefits, respectively.
Kweichow Moutai (600519 CH) gained 3.9 per cent to 1,035.28 yuan in Shanghai, putting it back over 1,000 yuan. Jiangsu Yanghe Brewery (002304 CH) gained 1.6 per cent to 83.51 yuan in Shenzhen.
-- Gigi Choy


A lot less drinking in China during the coronavirus, says Jefferies

Soho China (410 HK) jumped 32.9 per cent to HK$4.08 within half an hour through 15:20pm.
  Markets observers believe it is related to speculation that Blackstone’s US$4 billion deal offer to take it private will be finalised soon.
Soho China, a major prime office developer in China, confirmed it is in talks with overseas financial investors of a potential transaction like the reported privatisation offer made by Blackstone on March 11.
Soho China has not publicly announced whether it will proceed with any deal.
“There is speculation that the privatisation will be announced soon and that spurred the share increase,” said Jeffrey Mak, property analyst at CGS-CIMB Securities.
The U.S. firm offered HK$6 ($0.77) per share to take the company private, Reuters reported on March 10, citing people with direct knowledge.
The price represents an almost 100 per cent premium to the HK$3.03 average price of Soho China’s shares in January.
The shares closed at HK$3.70, up 22.3 per cent on Friday.
-- Pearl Liu   


Soho China soars on latest privatisation speculation

The Hang Seng Index closed up 5 per cent at 22,805.07, with 40 of its 50 constituent members posting gains amid a huge bargain buying binge.
Some gains were jaw-dropping.
CK Asset (1113 HK) ran up 13.5 per cent to HK$39, China Mobile (941 HK) soared 13.6 per cent to HK$54.80, China Unicom (762 HK) shot up 11.8 per cent, and
Galaxy Entertainment (27 HK) jumped 11.9 per cent to HK$43.20.
Tencent (700 HK) gained 4.8 per cent to HK$359.60.
-- Deb Price     


Hang Seng runs up 5 per cent on bargain hunting

What’s the difference between an economic depression and a recession?
There is no formal definition of the terms.
There is general consensus that a recession is a period of decline in general economic activity. Most commentators and analysts recognise a recession as two consecutive quarters of decline in a country's real GDP, according to the International Monetary Fund (IMF).
But the National Bureau of Economic Research (NBER) uses a broader definition.
It characterises a recession as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators".
A depression is considered to be a severe and prolonged recession in which real GDP falls at least 10 per cent, according to the IMF.
-- Gigi Choy


What’s the difference between a recession and a depression?

Goldman Sachs now forecasts the sharpest annual GDP contraction in Australia since the Great Depression of the 1920s, according to Bloomberg.
Goldman economists estimate that the Australian economy will shrink 6 per cent in 2020 versus last year, with most of the contraction expected to be driven by a collapse in "social" consumption.
-- Gigi Choy


Hong Kong stocks shoot up amid bargain hunting for coronavirus-battered shares

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} China Mobile, CK Asset, casino stocks among big winners Hang Seng's gain is biggest since 2011

China Mobile, CK Asset, casino stocks among big winners

Hang Seng's gain is biggest since 2011