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Yujing Liu

Deb Price

The Shanghai Composite Index closed above 3,200 points. That's the first time since March 22, 2018.
Catch up on all the day's action below.
Please send questions you'd like answered to deb.price@scmp.com .
-- Yujing Liu and Deb Price
 


Stocks Blog: Shanghai closes at highest level in a year

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


An investor checks out stock prices in Nanjing, capital of east China's Jiangsu Province, March 4, 2019. Photo: Xinhua 

CK Asset is no longer a pure property company, a year after Victor Li takes over the flagship firm from ‘Superman’ dad

Business

Markets

Economy

scmp major developers and land bank in hong kong (2017) developer land bank ck asset sun hung kai properties henderson land development new world development source: annual reports *2018 annual report

Gerald Ma Lai-chee, Member of Executive Committee & General Manager of Corporate Business Development at CK Asset Holdings Limited, at Cheung Kong Center in Central. 01APR19 SCMP / Nora Tam

Hong Kong tycoon Li Ka-shing, right, chairman of CK Hutchison Holdings company, chats with his son, co-managing directors Victor Li attend a press conference to announce the company's annual results in Hong Kong, Friday, March 16, 2018. Hong Kong billionaire Li said Friday he is retiring as chairman of his sprawling conglomerate and handing control to his eldest son. (AP Photo/Kin Cheung)

Close up of a flag outside the Cheung Kong Center in Central on 2 August 2018. Photo: Dickson Lee

You Asked: What put the big buzz in beer stocks today?
Star analysts see historic opportunity in China stocks


You Asked: What put the big buzz in beer stocks today?


Stocks

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 flat, Nasdaq gained 0.25 per cent, and the Dow Jones Industrial Average lost 0.30 per cent.
-- Hong Kong futures inched down 0.1 per cent, while the China A50 futures were 0.1 per cent higher.
IPO debuts
-- Shanghai Dongzheng Automotive Finance (2718 HK)

Economic statistics/Central Bank action
 
-- Caixin China PMI Services data for March
Corporate events: earnings, meetings, news conferences
None to note.
Later: Vice Premier Liu He, China’s chief trade negotiator, meets with US officials in Washington over the trade war, beginning Washington's Wednesday.

Good reads: Pearl Liu reports that Sunac China recorded the highest average selling price among the country's "Big Five" developers last year. Peggy Sito takes a look at CK Asset's evolution from a pure property company into one of Asia's largest conglomerates.


Morning guidance 

Chinese authorities approved a batch of 30 imported online games on Tuesday, ending a year-long game licensing freeze that crushed the share prices of gaming giants like Tencent Holdings (0700 HK) last year.
The licenses were won by companies including Tencent Holdings, Perfect World (002624 SZ), NetEase (NTES US) and Bilibili (BILI US).
NetEase rose 0.9 per cent in Nasdaq overnight, while Bilibili declined 4 per cent.
Tencent opened 1.3 per cent higher. Perfect World rose 1.5 per cent.
-- Yujing Liu 


Tencent jumps after Beijing approves 30 imported online games

CStone Pharmaceuticals (2616 HK) is drawing a big fan club.
The cancer-therapy developer that went public in Hong Kong on February 26 has a new buy rating from China Merchants Securities, with a target price of HK$19.83. Goldman Sachs also has a new buy rating on the stock, with a target price of HK$18.50.
Morgan Stanley initiated its coverage of it on Monday and rated it overweight/attractive, with a target price of HK$19, "as its pipeline offers multiple combination therapy possibilities in China's vast oncology market," Bloomberg noted. MS is "bullish on approval of company's PD-L1 therapy in cancer treatment and four in-licensed molecules, one from Agios and three from Blueprint," it continued. Also, Morgan Stanley considers it undervalued relative to other biotech companies in China, Bloomberg said.
Meanwhile, UBS initiated its coverage with a buy rating, with a price target of HK$19.71.
The consensus HK$19.26 would be nearly 18 per cent above its closing price Tuesday of $HK16.34.
The stock price jumped 1 percent in early trading.
-- Deb Price


CStone jumps as it gets latest fan to its 'buy' club

Hong Kong's Hang Seng shot up in early trading, and was last up 1 percent.
The Shanghai Composite Index was up 0.2 per cent, as traders began to digest strong services data from Caixin giving fresh signals of a rebound in China's economy.
-- Deb Price


Hang Seng starts trading day strongly

China’s services industry is showing some surprisingly good signs.
The Caixin/Markit Services Purchasing Managers’ Index (PMI) climbed to a 14-month high of 54.4 in March, far exceeding the market expectation of 52.3. Rising from 51.1 in February, the gauge indicates an accelerated expansion in the services sector.
The Caixin General Composite PMI also rose to a nine-month high of 52.9 from 50.7 in February.
-- Yujing Liu 


China services industry exceeds expectations in Caixin survey

Service providers on China’s largest social network WeChat got a boost from its operator Tencent Holdings (0700 HK).
Weimob (2013 HK), which offers cloud and marketing services to small companies on the WeChat platform, surged 23 per cent in open after Tencent increased its stake in the company to 8 per cent from 3 per cent, it said in a filing to the stock exchange.
China Youzan (8083 HK), which helps merchants build online shops on platforms including WeChat, soared as much as 18 per cent on the back of a HK$1 billion yuan investment led by Tencent that was announced yesterday. The stock was last trading up 9 per cent up.
-- Yujing Liu 


Weimob surges after Tencent boosts stake  

Shares of Shanghai Dongzheng Automotive Finance, which provides loans and services toward the purchase of luxury cars, fell as much as 11.4 per cent in their Hong Kong trading debut to HK$2.71, compared with an initial public offer price of HK$3.06.
-- Eugene Tang


Shanghai Dongzheng bombs in debut, falling 11 per cent

Wynn Macau, one of the casino operators in the world's largest gambling hub, rose by as much as 6.5 per cent to HK$21.40, the highest intraday level since September 2018, after Goldman Sachs upgraded its recommendation on the stock to a "buy."
-- Eugene Tang


Wynn Macau soars after ratings upgrade 

Bank of Communications (601328 SH) dropped 2.1 per cent to 6.16 yuan in Shanghai, after it said the national social security fund – its third-largest shareholder – is cutting its stake in the bank.
The move weighed on the markets in early trading, as investors speculated whether the move by the state fund was more broadly a selling signal about the Chinese markets. The fund has 2.2 trillion yuan in total assets.
The social security fund will reduce no more 2 per cent, or 1.4 billion of the bank’s A-shares over the next six months “based on the fund’s asset allocation plans and business needs”, according to a filing released late Tuesday.
The fund owned 15 per cent of its overall shares listed in Shanghai and Hong Kong by the end of last year.
-- Yujing Liu 


Traders nervous about move by China fund to cut stake in Bank of Communications

Shares of CK Asset Holdings (1113 HK), one of the two flagship companies of Hong Kong tycoon Victor Li Tzar-kuoi, advanced for the third consecutive day to as much as HK$72.50, the highest intraday level in 14 months.
The company is undervalued, and it should no longer be regarded as a pure property developer and should be trading without the discount that is typically applied to developers, CK Asset's general manager of investments Gerald Ma Lai-chee said in an interview with the South China Morning Post. 
-- Eugene Tang


CK Asset gains as its investments chief calls it undervalued

Online game-related stocks advanced broadly on the back of new imported game approvals. A gauge tracking 74 companies listed in China rose 1.6 per cent, while seven stocks soared by the daily limit of 10 per cent.
“The resumption of imported game licensing approvals is an ‘anxiety pill’ to the entire game industry,” Sinolink Securities analyst Pei Pei wrote in a report today. The licenses also cover games co-developed by Chinese and overseas companies as well as games using foreign intellectual property (IP).
China’s regulators started approving domestic video games in December after a nine-month freeze. The delay in imported game approvals “doubtlessly restricted the quality and the pace of new game releases,” Pei said in the report.
She said Tencent Holdings (0700 HK), which was deeply wounded by the licensing freeze last year, will be the strongest performer in imported games. Players like Bilibili (BILI US), Zhejiang Century Huatong Group (002602 SZ), Youzu Interactive (002174 SZ), and Kingsoft (3888 HK) are also likely to outperform.
-- Yujing Liu 


Imported game licenses an ‘anxiety pill’ to industry, analyst says

Chinese investors are feeling bullish on stocks.
That's according to a new survey of 200 mainland investors by J.P. Morgan Asset Management.
Just over half -- 50.6 per cent -- of Chinese investors said they were likely to be overweight equities in the next six to 12 months.
The possibility of a coming global recession is weighing on their decisions.  A whopping 86.2 per cent expect a global recession in the next one to three years, though only 18 per cent see it showing up in the next 12 months. 
Second to equities as investors' choice to be overweight in over the next year are fixed income assets, with 31.5 per cent of those surveyed picking bonds and the like. 
The biggest risk factor this year by far is slowing global growth, said 62 per cent of the investors. Others included trade war (22 per cent), a shift by Beijing in policy priorities to protect growth (6 per cent), and U.S. corporate debt overhang (5.6 per cent).
-- Deb Price 
 


Chinese investors favor stocks in short term, survey finds

Standard Chartered has lowered its growth forecast for Hong Kong to 2.2 per cent in 2019, from 2.7 percent previously, citing battering by the US-China trade war.
It sees weakness continuing in the city for 2020, and scaled back its annual growth forecast to 2.6 percent  from 3 per cent.
"While prospects for a trade deal have improved recently, punitive tariffs and trade uncertainty have already battered local sentiment," it said in a new research note.
A "bright spot" is private consumption expenditure, which is buoyed by a tight labour market. It also expects the city to benefit from the dovishness of the US Federal Reserve as well as fiscal stimulus in China.
Longer term, it sees China's continued market opening as helping Hong Kong "stay competitive as an international finance centre."
If things really get tough, the city has a big war chest to increase fiscal spending, it noted.
-- Deb Price
 


Hong Kong's growth forecast cut by Standard Chartered 

Two of China’s most influential stock analysts published separate extremely bullish reports on the A-share markets.
Jiang Chao, chief economist and macroeconomic bond analyst of Haitong Securities, wrote in a 20,000-character report that China investors facing “a historic investment opportunity” that could “allow ordinary people to change their fates” through stocks.
China stocks are likely to provide an annual return of 10 per cent in the future decades, and Chinese residents will shift their main investments from property to financial markets, he said Tuesday.
This is because the country is experiencing a rapid reduction in real interest rates, and Chinese stocks – with their valuations having plunged by 80 per cent over the past decade – will become the most attractive investment category, he said.
Ren Zeping, chief economist of the developer Evergrande, wrote in a separate report Tuesday that China’s current bull market is an “upgraded version” of the run-up in 2014, meaning that both were driven by positive economic reform policies instead of monetary easing or company earnings.
The bull run will last longer and rise higher if China can push forward more reforms and opening up, he wrote.
Ren is famous for accurately predicting the bull cycle in 2015 and the rapid surge in big cities’ home prices in 2016.
Both Ren and Jiang occupied for years the top two spots of the best macro analysts in China’s largest competition for research analyst before it was shut down last year.
-- Yujing Liu 


Star analysts see historic opportunity in China stocks

China's economy will pick up in the second quarter, Standard Chartered says, as higher government spending and tax cuts boost infrastructure investment and retail sales.
In a new research note, the bank maintained its GDP growth forecast at 6.4 per cent, versus the market consensus of 6.2 percent. 
It sees a calming of 2018's headwinds. Those were tightening of "shadow banking," or non-traditional banking services, and local government financing, as well as weak housing and car sales. The huge run-up in the Chinese stock markets this year has also boosted the financial sector, the research note said.
It expresses concern about manufacturing investment and export growth.
It expects range-bound housing sales and modest improvement in housing construction.
On the onshore yuan, it sees it strengthening moderately to 6.65 yuan per US dollar. 
-- Deb Price


 Standard Chartered maintains 6.2 per cent growth rate for China economy

The Shanghai Composite Index rose 0.9 per cent to 3206.70, breaching the 3,200 level for the first time since May 2018.
The rally accelerated in afternoon trading, as beer breweries, brokerages  and stocks related to the Shanghai free trade zone led the advance.
-- Yujing Liu 


Shanghai tops 3,200 level -- first time since May 2018 

AIA Group (1299 HK) shares hit a record high of HK$81.5 today, trading up 1.9 per cent. 
The largest listed pan-Asian life insurance group announced it has successfully priced US$1 billion of 3.60 per cent senior unsecured fixed rate notes due in 2029. The notes were under its US$8 billion Global Medium Term Note and Securities Programme.  
AIA is among 25 insurance companies that got approval to sell private health plans as part of the Government Voluntary Health Insurance Scheme launched on April 1. The goal is to get people to move from public to private health insurance by offerings a HK$8,000 annual tax incentive to taxpayers for each family member they buy coverage for. 
AIA said it will offer a lowest price guarantee for the first batch of customers. The insurer will also sell tax-deductible pension products. This is also part of a government initiative launched April 1 to encourage retirement savings. Taxpayers can get a HK$60,000 tax break for buying a deferred annuity product or for opening a voluntary  Mandatory Provident Fund account. 
A Moody's report said the two government tax programmes will be a boost to Hong Kong insurance companies.
Today's share price of AIA is the highest since its listing in Hong Kong in 2010.
AIA's initial public offering raised HK$159.08 billion, which remains the highest IPO in Hong Kong ever, according to stock exchange data.

-- Enoch Yiu 
 


AIA hits record high 

A reader asks why beer stocks are soaring today.
Answer: All the stars aligned.
A gauge tracking the nine beer breweries listed in Shanghai and Shenzhen surged 3.5 per cent in the latest trading, bringing their five-session gains to 7 per cent. Beijing Yanjing Brewery jumped by the daily limit of 10 per cent while Guangzhou Zhujiang Brewery followed closely with a 7 per cent rise.
After posting overall strong 2018 results last week, breweries are set to benefit from a number of factors, according to analysts.
The 3 per cent cut in the value-added tax (VAT) on Monday is likely to substantially boost company profits.
Guotai Junan Securities analysts say Yanjing’s profits could double this year, while Tsingtao Brewery and Huiquan Brewery could see profits rising 30 per cent.
Analysts at Orient Securities said in a report that breweries are moving away from competing on low prices and instead going upmarket, which will lift profits, after the industry’s production capacity was reduced last year.
In addition, beer stocks regularly rallied in April to June in the past as summer – the peak consuming season of beer – neared.
-- Yujing Liu 


You Asked: What's put the big buzz in beer stocks today?

Stocks related to the Shanghai free trade zone skyrocketed on market rumours that China and the US will set up zero-tariff free-trade ports between the two countries, as trade negotiations carry on in Washington this week.
A gauge tracking 21 related stocks surged 8 per cent. A total of 12 stocks shot up by the 10 per cent daily limit, including CTS International Logistics (603128 SH) and Shanghai International Port Group (600018 SH).
-- Yujing Liu


Free-trade ports between the US and China? Rumours send stocks flying

Chinese brokerages soared on the heels of a media report that securities regulators were planning to relax policies related to the refinancing of listed companies.
The China Securities Regulatory Commission is considering loosening the tight restrictions imposed in 2017 on companies’ refinancing actions such as secondary public offering and share placement, Chinese media 21jingji.com reported, citing anonymous sources.
The controls partially contributed last year to a meltdown in shares pledged up as collateral for cash-strapped companies to take out loans, as they did not have sufficient means to raise capital.
Brokerages jumped 5 per cent in general, according to a gauge, with five of them advancing by the 10 per cent daily limit.
-- Yujing Liu 


Chinese brokerages soar on report of planned loosening of refinancing restrictions

China stocks climbed to a one-year high, as selling forces succumbed to market bulls today for a fourth straight session.
The Shanghai Composite Index rose 1.2 per cent to close at 3216.30, the highest level since March 22, 2018. The Shanghai benchmark has gone up 29 per cent so far this year.
The CSI 300 Index was up 1.3 per cent, and the ChiNext Index rose 0.8 per cent.
Early doubts associated with the state social security fund’s cut of its stake in Bank of Communications dissipated quickly, as strong Caixin's PMI reading beat expectations and investors piled into brokerages, ports and beer breweries.
In Hong Kong, the Hang Seng Index closed up 1.2 per cent at 29,986.39, getting close to the key 30,000 level.
-- Yujing Liu
