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Yujing Liu

Deb Price

Markets were on fire on the first trading day of the new quarter!
Catch up on all the action below.
Please send any questions you'd like answered about our markets to deb.price@scmp.com .
-- Yujing Liu and Deb Price 


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Stocks

Stocks Blog: Hong Kong joins mainland China in 'bull market club'

Participants run next to Nunez del Cuvillo fighting bulls on the fifth bull run in Pamplona, northern Spain on July 11, 2018. Photo: Agence France-Press


Stock indexes of China, Hong Kong ended the first quarter with spectacular surges. Can they repeat the feat next three months?

FILE- In this Feb. 21, 2019, file photo senior US-Chinese officials resume trade negotiations as they meet during continuing meetings on U.S.-China trade in Washington. With the U.S. delegation are U.S. Trade Representative Robert Lighthizer, top left, Treasury Secretary Steve Mnuchin, center left, and White House economic adviser Larry Kudlow, bottom left. At right from top are Chinese Vice Premier Liu He, and Chinese officials Yi Gang, and Liao Min. Top U.S. trade and economic officials will visit China late next week for another round of negotiations, a White House official says. (AP Photo/Jacquelyn Martin, File)

JPG for ONLINE

Investors at a stock brokerage in Hangzhou on February 11, 2019. Contrary to global conventions, China’s stock market uses red to denote gains and advances, choosing to illustrate declines and losses in green. A wall of red is a welcoming sight for Asia’s largest capital market, which spent 2018 as the world’s biggest loser. In the first quarter of 2019, stock indexes of Shenzhen, Shanghai and Hong Kong were among the world’s biggest winners. Photo: Xinhua

Business

Markets

Hang Seng jumps 1.8 per cent 
Shanghai ends up 2.6 per cent on huge foreign capital inflow 


Hang Seng surges, enters bull market; Shanghai closes 2.6 per cent higher 


China stock market

China economy

Live

Here's what we are watching this morning:
Overnight markets/ What futures foretell
 -- Overnight in US markets, S&P 500 gained 0.36 per cent, Nasdaq gained 0.34 per cent, and the Dow Jones Industrial Average gained 0.36 per cent.
-- Markets opened higher elsewhere in Asia. Japan’s Nikkei 225 jumped 1.8 per cent, South Korea’s Kospi rose 1.1 per cent, and the S&P/ASX 200 was 0.7 per cent higher in Australia.
-- Hong Kong futures are up 0.4 per cent, while the China A50 futures are 0.8 per cent higher.
IPO debuts:
None to note
 
Economic statistics/Central Bank action:
-- March reading of China’s Caixin/Markit Manufacturing Purchasing Managers' Index (PMI) will be out at 9.45am. The market expects the data to inch up to 50 from the 49.9 in February, after the official PMI released in Sunday jumped the most in seven years to 50.5 in March.
 
Corporate events: earnings, meetings, news conferences:
None to note.
 
Later: Chinese Vice-Premier Liu He to visit Washington to lead the ninth round of trade negotiations this week. The Hong Kong and China markets will be closed on Friday.
 
Good reads: A smart look at growing concern about Chinese banks, which Beijing has told to ramp up lending to small businesses. And a look at what's ahead for Hong Kong and mainland markets in the second quarter, after their spectacular kick-off to 2019.


Morning guidance 

Looks like it’s gonna be another great day for China’s stocks.
The Shanghai Composite Index soared 1.6 per cent to 3140.93, its highest intraday level since May 29, 2018. The Nasdaq-style ChiNext Index jumped 2.4 per cent to 1,734.30. Shenzhen Component Index was up 2.2 per cent.
-- Yujing Liu 


Shanghai jumps to highest intraday level in 10 months 

In Hong Kong, the Hang Seng Index surged 1.5 per cent to 29,478.
-- Yujing Liu 


Hang Seng surges 

The March Caixin manufacturing PMI reading came in at 50.8, higher than the market estimate of 50.
This is the first time the index has risen above the 50 level since December, which indicates an expansion in factory activities. The Caixin PMI focuses on smaller and private firms.
The data rose from the 49.9 recorded in February, and is the highest in eight months.
-- Yujing Liu


Caixin PMI for China factory activity beats expectations

Gree Electric Appliances, China’s largest air-conditioner maker, was suspended from trading on Monday to prepare for a change in its controlling stake, according to a statement by the Shenzhen Stock Exchange.
The company currently controlled by 64-year-old billionaire chairwoman Dong Mingzhu will release a statement through designated media. The outspoken Dong created a lot of chatter in China’s business circles when she managed to stay at the helm of Gree in January, as many expected her to retire.
-- Yujing Liu 


Appliance giant Gree to face change in controlling stake

In China, regulatory clarity is one of the things that most excites investors.
A gauge tracking 80 blockchain-related stocks listed in China surged 4.4 per cent, after Chinese authorities released a list of 197 companies that had successfully registered for their blockchain-based information services on Saturday. That means they got the green light to continue operating.
In the first set of rules specifically targeting blockchain service providers, the Cyberspace Administration of China in October asked companies to register users’ real names and national identification card numbers, censor content and store user data to allow inspection.
A total of 13 stocks jumped by the daily limit of 10 per cent.
-- Yujing Liu


Blockchain stocks soar

"The impact of policy easing is gradually kicking in, pushing up sequential growth indicators such as PMI first," Bank of American Merrill Lynch said in a note this morning about March PMI out of China that far exceeded expectations.
"In particular, the larger-than-expected tax/fee cuts and improving financial conditions have likely help boosted business sentiment in the manufacturing space. In addition, demand for industrial restocking may also rise as commodity/raw material prices rebounded. This is consistent with the improvement in some high-frequency industrial indicators, such as growth of coal consumption at major IPPs (at +4.0% yoy in 1-28 March, vs. -10.8% yoy in Jan-Feb)."
However, the BofAMerrill Lynch analysts said real activity growth in year-on-year terms could have remained under pressure in the first quarter of the year. As a result, the analaysts "believe policymakers will stick to their commitment on policy easing to stabilize growth. We maintain our view that activity growth will likely stabilize and then improve gradually starting in 2Q19."
-- Deb Price


Policy easing is 'kicking in' in China, says BofA Merrill Lynch

China-listed partners of the newly-approved securities joint ventures controlled by JP Morgan and Nomura got a quick boost in stock price.
Shanghai Waigaoqiao Free Trade Zone Group, which invested 160 million yuan in the JP Morgan JV for a 20 per cent stake, surged by the daily limit of 10 per cent. Chengtun Mining Group, reported by Chinese media to own a 7 per cent stake in the JV through indirect shareholding, also jumped by 10 per cent. Orient International Enterprise, with a 25 per cent stake in the Nomura JV, rose 1 per cent.
-- Yujing Liu 
 


Partners of JP Morgan, Nomura securities JVs soar

The Hang Seng Index is poised to enter a technical bull market on Monday.
Intraday, it has jumped 1.9 per cent to 29,594.86 – 20.2 per cent higher than its recent October low.
The benchmark is at its highest intraday level since June.
A bull market is defined by an increase of 20 per cent in stock prices.
-- Yujing Liu 


Hong Kong poised to enter bull market

China's onshore bonds today started being included in the Bloomberg Barclays Global Aggregate Index.
The move is expected to bring billions of foreign money into the world's third largest bond market, worth US$13 trillion.
China has made access easier over the years. In 2017, it launched the Bond Connect scheme that lets investors buy and sell onshore bonds via Hong Kong.
The inclusion "represents a significant milestone for China bond market development and the opening up of the onshore bond markets," said Kheng-Siang Ng, Asia Pacific head of Fixed Income at State Street Global Advisors. "The increasing foreign investors inflows should create a healthy mix of investor and trading flows as well as improved liquidity. We expect this to accelerate inshore bond market development to become more matured and sophisticated like other developed markets."
-- Louise Moon
 


China bonds now in Bloomberg Barclays Global index

Shares of China's pharmaceutical producers jumped after the Chinese government added opioid fentanyl to a list of controlled substances, fulfilling the December 2018 promise Chinese President Xi Jinping made to President Donald Trump in negotiations to resolve the US-China trade war, according to media reports.
The move is a further crackdown on China's illegal fentanyl producers, lifting the shares of five legal producers.
Humanwell Healthcare Group, one of the biggest producers of anesthetics and analgesics in the country, rose by as much as 3.7 per cent to 11.84 yuan, the highest intraday level since March 8. Yifan Pharmaceutical's shares rose by as much as 5 per cent to an intraday high of 13.92 yuan on the Shenzhen market.
-- Eugene Tang


China drug-makers soar as Beijing further cracks down on illegal opioid fentanyl producers

Chinese authorities stressed again they will step up the regulations of industrial hemp, in a potential attempt to calm a frenetic surge in stock investors’ interest recently.
The cultivation, storage and transportation of industrial hemp in China is conducted under strict scrutiny of the authorities, a spokesman of the National Narcotics Control Commission said in a press briefing, the official Securities Times reported. The remarks came after the commission issued a notice last week that asked provincial governments to tighten regulations.
Industrial hemp is a variety of the cannabis plant, but contains much a lower portion of the active ingredient than marijuana. China sold US$1.1 billion worth of hemp in 2017 and accounted for a third of the global market, according to a report by analytics firm New Frontier Data.
A gauge tracking 26 hemp-related stocks rose 2.3 per cent. Stocks one the gauge such as Shanghai Shunho New Materials Technology – which has only received a license to grow hemp – have surged 437 per cent since the beginning of this year.
-- Yujing Liu


China authorities think hemp stocks are getting too high

Zhuhai Gree Group, a Chinese state-owned enterprise owned by the government of the southern city Zhuhai, is planning to transfer part of its controlling stake in the home appliance giant Gree Electric Appliances (000651 SZ), according to filing to the Shenzhen Stock Exchange.
The transfer will have to be approved by authorities including the State-owned Assets Supervision and Administration Commission. It is not certain whether or when it will be approved, Gree said in the filing.
The stock is likely to be suspended no more than 5 trading sessions, it said.
-- Yujing Liu 


Gree says controlling shareholder to transfer stake

MMG, the Hong Kong-listed overseas mining unit of state-owned metals trading giant China Minmetals, surged as much as 12 per cent in early trading today after a recently-freed leader of an indigenous community that has cut off road access to a major copper mine in Peru run by the company said he was open to negotiate with government officials potentially within a week, according to a Reuters report over the weekend.
It was the first sign of a potential way forward to end the protest blockades.
They have cut the mine's export and disrupted personnel transport as well as inbound and outbound logistics for over a month.
MMG was also bolstered by copper prices that rose almost two per cent last Friday after heavy rain and news of a delay in projects investment by Chilean copper major Codelco stoked worries of future shortages, while hopes for a US-China trade deal allayed concerns of weaker global demand.
 
-- Eric Ng


Miner MMG surges 12 per cent on report of possible way to end Peru blockade

Nuclear power stocks jumped after China said further nuclear power projects will start construction this year.
China currently has 56 nuclear power units in operation and under construction, the third largest number in the world. More will start construction this year as China continues to develop its nuclear power capabilities, said Liu Hua, vice minister of Ecology and Environment and administrator of the National Nuclear Safety Administration. He was speaking today at the China Nuclear Energy Sustainable Development Forum, according to reports.
Taihai Manoir Nuclear Equipment gained 7.95 per cent to 14.1 yuan in morning trading. China National Nuclear Power rose 6.45 per cent to 6.44 yuan, and China Nuclear Engineering was up 8.77 per cent to 9.8 yuan.
-- Louise Moon 
 


Nuclear stocks shoot up after China says project construction will start this year

Investors piled into the markets on the back of a stellar March Caixin PMI reading.
The Shanghai Composite Index surged 2.3 per cent to 3161.49 by the noon close, extending a 3.2 per cent gain on Friday to reach the highest intraday level since May 23, 2018. The Shenzhen Component Index jumped 3.1 per cent, and the ChiNext Index of start-ups was up 3.4 per cent.
Trading volume stood above 600 billion yuan in the morning, indicating a high chance that the full-day turnover could be over 1 trillion yuan, a level that has not been achieved since March 13.
-- Yujing Liu



Shanghai surge puts it at highest intraday level since May 23, 2018

Fidelity International remains "risk-on" on Asia and China's credit markets, says Morgan Lau, fixed income portfolio manager at Fidelity International.
The addition of RMB bonds to Bloomberg Barclays Global Aggregate Index beginning today signals "a further opening up of China market to global investors and underscores the growing importance and popularity of US$13 trillion worth China’s onshore bond market," added Bryan Collins, head of Asian Fixed Income and Portfolio Manager at Fidelity International.
RMB bonds will be the fourth-largest component in the index, he noted, following the US dollar, the euro and the yen.
Foreign ownership of Chinese government bond increased to more than 8 per cent by the end of last year, due to appealing yields, low correlation and easing bias from the People's Bank of China, he said.
"Looking ahead, we believe global investors can benefit through the cycle by allocating to China’s new go-to negatively correlated risk-free asset class," he said. "The developments in the China onshore bond market will also create a positive spill-over effect to boost the wider Asian fixed income market.”
-- Deb Price


Fidelity International 'risk-on' after RMB bond inclusion to Bloomberg index

Contracted property sales growth in China will continue to slow down over the next 12 months, after official data pointed to a 3.2 per cent year-on-year decline in sales volume in the first two months, analysts at Moody’s Investors Service say.
The slowdown is result of lower sales volume and softer demand in lower-tier cities in particular, the report dated Friday says.
The analysts also expect more localized fine-tuning policies amid a national priority to stabilise the market.
The credit rating agency says 35 per cent of the 61 Chinese developers it tracks have weak liquidity because of high refinancing needs, rising from 31 per cent in December.
-- Yujing Liu 


Moody's sees China property sales growth to continue to slow down

Becky Liu, head of China macro strategy at Standard Chartered, is pumped up by the inclusion of Chinese bonds into the Bloomberg-Barclays Global Aggregate bond index.
"We expect foreign inflows to pick up materially in the subsequent months, after a lacklustre start of 2019," Liu said in a research note today.
The bank reiterated its annual inflow forecast of 800 billion yuan to 1 trillion yuan in 2019.
Based on today’s value, China weighting will reach 6.4% upon full inclusion, it said. That includes 2.99% in China government bonds (CGBs) and 3.44% in policy financial bonds (PFBs).
China average yield -- estimated at 3.2% -- is much higher than the average of Bloomberg Barclays Global Aggregate Bong Index --at 1.77%, it said.
-- Deb Price


Foreign inflows to 'pick up materially' over RMB bond inclusion in Bloomberg index

Gome Retail surged 15 per cent to HK$0.84 in Hong Kong and Gome Finance Tech jumped 18 per cent to HK$0.77 following a Chinese report that Huang Guangyu, the jailed former chairman of home appliance giant Gome Retail Holdings, will be released next year and return to the company.
The report by Chinese media 21jingji.com cited the investor relations director Li Hong as saying that Gome will accelerate its transformation towards a one-stop provider for home solutions when the former chairman comes back to the company. The Chinese newspaper Beijing News later cited Li Hong to deny it, saying the press misunderstood him.
Market rumours have been circulating since the beginning of this year that Huang could be released ahead of the end of his sentence.Huang was convicted in 2010 of insider trading, corporate bribery and transferring money to underground private banks for Hong Kong dollars, resulting in 14 years behind the bars. His sentence was reduced several times to end in February 2021, according to 21jingji.com.
Gome Retail did not have an immediate comment.
-- Yujing Liu


Gome Retail stocks surge on media report jailed ex-chairman to be released next year

Six A-share listed companies denied or downplayed their business relationship with industrial hemp on Monday, after Chinese authorities increased efforts to curb speculation of hemp-related stocks.
Shenzhen-listed Zhuhai Rundu Pharmaceutical, for instance, told its investors that despite applying for an intellectual property license for its technology in Cannabinoid extraction, it has no related products on sale so far. Stock of the firm has surged by more than 42.6 per cent since early February.
Industrial hemp is a variety of the cannabis plant, but contains far less of the active ingredient than marijuana.
-- Xie Yu 
 


What me? Six A-share companies deny, play down relationship to hemp

Trading volume in the A-share markets surged above 1 trillion yuan amid a net inflow of 3.7 billion yuan of foreign capital.
A total of 190 stocks soared by the daily limit of 10 per cent.
The Shanghai Composite Index closed 2.6 per cent higher at 3170.36 points. The Shenzhen Component Index advanced 3.6 per cent while the ChiNext Index of start-ups climbed 4 per cent.
The 14-day relative strength index (RSI) of the Shanghai benchmark is on the brink of indicating an overheated market. The reading rose to 66.5, close to the 70 level that indicates overbuying.
-- Yujing Liu



China stocks charge on big inflow of foreign capital

Market sentiment is very positive based on a number of factors ranging from China’s tax cuts to progress in trade talks and a dovish outlook on US interest rate hike, according to Gordon Tsui Luen-on, managing director of investment company Hantec Pacific.
“But will the sentiment last? It’s hard to tell from now…The upward momentum won’t be completely convincing until the benchmark [Hang Seng Index] breaches 30,500 points,” Tsui said.
Among all sectors, Tsui is most optimistic about Hong Kong property developers and brokerages.
Developers will benefit from the US Federal Reserve’s dovish outlook on interest rate increase as well as the strong local demand, according to Tsui. Home prices rebounded for a second month in February.
Meanwhile, the high trading volume in Hong Kong – turnover has largely held above HK$100 billion since the beginning of February – is also good news to brokerages, which overall posted poor results last year, Tsui said.
-- Yujing Liu 


Crystal Ball: Gordon Tsui Luen-on likes Hong Kong property and brokerage stocks 

It’s official: Hong Kong is finally in a bull market.
The Hang Seng Index jumped 1.8 per cent to close at 29,562.02 on the first trading day of the second quarter, gaining 20.2 per cent since a recent low in October. Market turnover stood at HK$129 billion.
The benchmark is a latecomer to the bull market club: China’s major indexes including the Shanghai Composite, the large-cap CSI 300 and the ChiNext all entered technical bull markets by the end of February in a rapid run-up.
A bull market is technically defined as a 20 per cent increase in stock prices.
In mainland China, only 60 stocks fell while 3,503 stocks rose.
-- Yujing Liu 


Stocks Blog: Hong Kong joins mainland China in 'bull market club'

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Hang Seng jumps 1.8 per cent Shanghai ends up 2.6 per cent on huge foreign capital inflow

Hang Seng jumps 1.8 per cent

Shanghai ends up 2.6 per cent on huge foreign capital inflow