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Louise Moon

Hong Kong and mainland stocks slid on Tuesday amid concerns of slowing global growth, and as the future of US-China trade relations hangs on investors’ minds.
The Hang Seng Index shed 0.70 per cent, or 191.09 points, to close at 26,005.45. The Hang Seng China Enterprises Index lost 0.93 per cent, or 99.57 points, to end at 10,613.48.
On the mainland, the Shanghai Composite slipped 1.18 per cent, or 30.81 points, to 2,579.70. The CSI 300 dropped 1.33 per cent, or 42.32 points, to 3,143.32.
IMF cuts forecast for global economic growth in 2019 amid trade tensions
Optimism over thawing trade relations between the US and China had lifted stocks on Monday, but seemed to fade after Bloomberg reported the two sides are making little progress on the key issue of intellection property protection.
The two sides are set to meet next week for further talks.
On Monday economic data from China showed the slowest growth in 28 years for the world’s now second-largest economy, highlighting risks to the outlook for global growth. Stocks were downbeat overnight in Europe with London’s FTSE 100 finishing virtually flat on the news. US markets were closed for the Martin Luther King Jr. holiday.
China economy slows further, matching its lowest ever quarterly growth
Meanwhile the International Monetary Foundation (IMF) issued its second downgrade in three months, predicting 3.5 per cent global growth this year, down from the 3.7 per cent expected in October. The forecast reflects the weakest pace of growth in three years.
A survey released by PwC found that 30 per cent of business leaders expect global economic growth to weaken over the next 12 months. Asian CEOs were slightly more optimistic than their counterparts, with half thinking global growth will improve in 2019, compared to 42 per cent globally.
Hong Kong is seeing a correction rather than a downward turn, said Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi, predicting a short term target of 27,000 for the Hang Seng.
“Everyone knows that the overall economy is slowing down, that is normal,” said Pang. “After several years growth, under the current situation and particularly with the trade war, the global economy is slowing down.”
Jiayuan share crash coincided with selling by chairman and his wife, disclosure shows
Jiayuan International Group plunged 22.59 per cent to HK$3.70. Last Thursday the property developer plunged 80.6 per cent to HK$2.52. Jinyuan said in a Hong Kong stock exchange filing on Monday that its chairman Shum Tin Ching and his wife Wang Xinmei sold a combined 93.62 million shares on Thursday at an average price of HK$2.70. A company filing that day had stated the board was not aware of a specific reason for the price and volume movements.
The information technology sub-index was dragged down 4.04 per cent. Among its constituents, Sunny Optical was down 5.10 per cent to HK$45.55 and AAC Technologies lost 3.31 per cent to HK$73.10.
Apple’s cut on forecasts for the handset market, and a lack of expected new functions for handsets to be launched this year means such suppliers’ share prices are facing pressure, said Pang.
“There is no good news for mobile handsets,” he said.
Tencent fell 1.24 per cent to HK$335.80, ending five straight sessions of gains. It was again absent from China’s latest list of approved video games, released on Tuesday, after a freeze for much of last year.
Among drugmakers, Sino Biopharmaceutical fell 3.2 per cent and CSPC Pharmaceutical was down 3.66 per cent.
Beijing has introduced reforms that will cut prices of drugs and improve their efficacy and safety, placing companies under mounting pressure to invest in innovative drugs development and reduce reliance on low profit products that are the same copies of original drugs.
China pharma must swallow that jagged little pill called R&D as government slashes profit margins of generic drugs
“The major problem is that under the centralised bidding system, it seems their product price still has to go down further,” Pang said, referring to Beijing’s pilot reform. “That will hurt their overall gross margin as well as the bottom line.”
Sun Hung Kai Properties, the city’s biggest home developer, edged down after reports it would redeem HK$400 million (US$50.98 million) in bonds due in 2024. The share ended 0.40 per cent lower at HK$123.70.
PetroChina lost 0.95 per cent to HK$7.32. On Monday, it announced its expected net profit for 2018 to increase by 28 billion yuan (US$4.11 billion) to 30 billion yuan – an increase of between 123 per cent to 132 per cent when compared to a year ago – but warned of a US$1.5 billion write-down from the disposal of some assets. Earnings could have risen as much as 149 per cent without the disposed assets.
Macau’s casinos were weaker after Credit Suisse estimated the January gaming revenue is down 10 per cent to 12 per cent year-on-year, which is weaker than expectations.
Galaxy Entertainment lost 1.89 per cent to HK$49.40, and Sands China was down 1.64 per cent to HK$36.00.
Geely Automobiles fell 2.67 per cent to HK$12.40 after UBS cut its target price from HK$23 to HK$12.8, though maintained its “buy” rating. Demand for automobiles and uncertainties on the industry were cited as reasons.
Brilliance China fell 2.82 per cent to HK$6.55, even as Citi lifted its target price from HK$7.2 to HK$8.8.


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Business

Markets


Trade talks so far producing pretty much nada on intellectual property protection, Bloomberg reports
IMF issues second downgrade in three months on global growth



Investors feeling bummed by slowing growth in China, new IMF downgrade on global growth, and apparent lack of progress on intellectual property protection in US-China trade talks.


China, Hong Kong stocks back-pedal as investors sort through uncertainties on trade, global growth

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;} Trade talks so far producing pretty much nada on intellectual property protection, Bloomberg reports IMF issues second downgrade in three months on global growth

Trade talks so far producing pretty much nada on intellectual property protection, Bloomberg reports

IMF issues second downgrade in three months on global growth