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Enoch Yiu

Snow Beer seller China Resources Enterprise was the hottest stock in the market on Tuesday after saying it sold off its non-beer retail and food business to the parent company to focus on its beer business for HK$28 billion.
The company resumed trading on Tuesday morning and saw its share price soar 56.25 per cent to HK$23.75 at 11am, after it announced the deal with state-owned conglomerate China Resources (Holdings).
The rally in the company's share is the most in over two decades.
The company said it will focus on its beer business with its Snow Beer the top selling drink in the country of 1.3 billion people.
“The deal is positive news to China Resources Enterprise as besides the beer business, its other retail and food businesses are not doing well. The deal would allow it to focus on what it is good at. It will also give it capital to expand other businesses,” said Ben Kwong Man-bun, a director of KGI Asia.
Banks and financial stocks were also high flyers on Tuesday. Hong Kong Exchanges and Clearing bounced back to HK$281 at 11am, up 3.23 per cent on the day, after it fell by 3.88 per cent on Monday.
Industrial and Commercial Bank of China rose 1.34 per cent to HK$6.79, Ping An rose 2.87 per cent to HK$107.5, Bank of China rose 2.1 per cent to HK$5.35, and China Construction Bank rose 1.74 per cent to HK$7.54.
Kwong said the financial stocks fell on Monday as investors cashed in their gains.
“Such a correction is done and investors have now come back to these stocks,” he said, added companies also benefited from People’s Bank of China decision to reduce by one per cent the required reserve ratio on Sunday which unleashed 1.2 trillion yuan in additional liquidity and allowed banks to lend out more money.
China Mobile, the country’s largest mobile firm, also rose 7.33 per cent to HK$115.7 at 11am, as the company added more subscribers to its fourth generation service.
Rail stocks China CNR and CSR both dropped more than 12 per cent, while China Railway also fell 9.22 per cent. Kwong said these firms have been high flyers during the past rally and investors may consider their value as having risen too much and they encountered selling pressure. Citigroup also called their shares as being in a bubble and recommended selling them at this time.


China Resources Enterprise rallies after news it will focus on beer business

A waitress carries bottles of Snow Beer. Photo: Handout

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