Hong Kong, mainland China stocks extend losses to a second day ahead of US Federal Reserve rate decision
- BYD falls hard after reporting an 88.6 per cent year-on-year profit drop
- Standard Chartered rises 2.8 per cent after third quarter profit beats expectations
China and Hong Kong stocks extended losses to a second day, with Chinese electric car maker BYD falling hard on Wednesday after reporting its third-quarter profit fell 89 per cent and Standard Chartered jumping after its results beat estimates.
The Hang Seng Index fell 0.4 per cent to 26,667.71.
The Shanghai Composite slipped 0.5 per cent to 2,939, while the CSI 300 of large cap stocks traded in Shanghai and Shenzhen fell 0.5 per cent to 3,891.23.
BYD – China’s top electric car maker backed by legendary investor Warren Buffett – dropped 6.8 per cent to 43.96 yuan in China and 5.6 per cent to HK$37.40 in Hong Kong.
It posted an 88.6 per cent year-on-year net profit fall to 119.7 million yuan for the three months to September 30. It also forecast that net profit would fall 36.2 per cent to 43 per cent to between 1.58 billion yuan and 1.77 billion yuan for the whole of this year.
It cited weak demand in the entire car market due to marked price declines of petrol-powered vehicles and lower state subsidies for electric cars for the gloomy fourth-quarter outlook.
Traders looked ahead to the US Federal Reserve decision overnight on whether to cut its benchmark rate again, as is widely expected.
“Today markets watched closely the upcoming (US Federal Reserve) rate meeting and ongoing Fourth Plenary Session of the Communist Party of China,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.
“Pricing of interest rate futures imply a 90 per cent probability of the Fed cutting interest rates by 0.25 per cent this time … After the Fed announced cutting interest rates on July 31 and September 17, U.S stocks also dropped in the coming trading days, which implies Hong Kong stocks also will drop after the Fed announces cutting the rate this time,” he continued.
Alan Li, portfolio manager at Atta Capital, said the Hang Seng is trying to break through 27,000, but is finding it tough, though he remains positive about the benchmark in the short term.
CSPC Pharmaceutical was the biggest percentage gainer on the Hang Seng, rising 5.9 per cent to HK$19.98, marking a new high for the year. Investors are enthusiastic about its line of drugs.
WH Group rose 2.4 per cent to HK$8.47, marking its fifth straight day of gains. The world’s largest pork producer’s results released Tuesday excited investors. Its revenue increased 3.7 per cent and profit rose by 8.5 per cent in the first nine months of the year, despite dealing with tariffs amid the trade war and the African swine fever, which has roiled the Chinese pig market.
Standard Chartered rose 2.8 per cent to HK$71.25 after its third-quarter pre-tax profit beat analysts’ expectations.
China Life Insurance, China’s second-largest insurer, rose 1.6 per cent to HK$20.05 after it posted an almost threefold increase in profit for the first nine months.
Meituan Dianping rose 2.2 per cent to HK$94, while smartphone maker Xiaomi slipped 0.8 per cent to HK$8.79, its second straight day of losses. The two stocks began trading for the first time on the Stock Connect on Monday.
The two IPO debutantes on China’s Nasdaq-style Star Market got off to a fast start.
Shanghai Haohai Biological Technology closed up 46.5 per cent at 130.70 yuan, while Sino Medical Sciences Technology closed at 22.21 yuan, giving investors a 217.7 per cent gain.
Meanwhile, Kweichow Moutai, the world’s most valuable liquor company that is one of the most heavily traded stocks on the Stock Connect, fell 0.8 per cent to 1,183.80 yuan.
