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Louise Moon

Deb Price

Hong Kong shares ended up, while mainland China stocks slipped. Catch up on the day's action below.
Please send questions you'd like answered to deb.price@scmp.com .
 
-- Louise Moon and Deb Price 


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Hong Kong stocks close near 7-week high as Kuaishou surges, oil firms drop

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Stocks

Stocks blog: Mainland stocks slip while Hong Kong shares gain

A pedestrian walks past the Bund Bull statue in Shanghai on October 24, 2018. Photo: Bloomberg 


An investor checks out stock prices in Nanjing, China on March 4, 2019. Photo: Xinhua 


Mania for China’s hemp-related companies prompts stock regulator to crack down

A group of workers harvest hemp at a farm near Beijing. Photo: Alamy

Business

Markets

Crystal Ball: Chemical plant crackdown to boost top players, Founder Securities says
Crystal Ball: China stocks still have room to run, says JPMorgan


Crystal Ball: Chemical plant crackdown to boost top players, Founder Securities says


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 rose 0.46 per cent, Nasdaq climbed 0.59 per cent, and the Dow Jones Industrial Average gained 0.15 per cent.
 -- Hong Kong futures are up 0.34 per cent, while the China A50 futures were down 0.15 per cent.IPO debuts:
NoneEconomic statistics/Central Bank action:
NoneCorporate events: earnings, meetings, news conferences
None to note.Later: Wednesday, China new yuan loans. Thursday, China Consumer Price Index and Producer Price Index, both for March. Friday, China export and import data.Good reads: Louise Moon looks at how Chinese cannabis-related stocks have been getting way too high this year for Beijing's taste, prompting a crackdown to calm down the investor mania. Pearl Liu introduces Jason Hui Sai-tan, the 41-year-old president of Chinese developer Shimao Property Holdings, who wants to build China's tallest building. And Zoe Low explains the global expansion plans of Hong Kong-listed Babytree.
 


Morning guidance 

In Hong Kong, the Hang Seng opened up 0.61 per cent, or 183.26 points, to 30,119.58. In the mainland, the Shanghai Composite opened 0.76 per cent higher, or 24.70 points, to 3,271.27, while the CSI 300 of large caps gained 0.86 per cent, or 34.87 points, to 4,097.10.
-- Louise Moon


Hang Seng, Shanghai open higher 

Sunny Optical soared to its highest level since August this morning, in the biggest gains on the Hang Seng.
The smartphone camera lens maker jumped 5 per cent to HK$104.70 after posting its 2018 earnings on the stock exchange before trading began.
Net profit and revenue, however, were both lower than analysts pooled by Bloomberg expected. The company reported a net profit of 2.49 billion yuan for 2018, down 4 per cent from the previous year. Revenue was up almost 16 per cent, at 25.9 billion yuan.
So far this year, Sunny Optical shares are up 50 per cent. Bloomberg Intelligence expects its earnings growth to improve moderately in 2019, as output volume increases and sales climb on the back of company expansion and increasing popularity of high pixel handset camera and vehicle sensors.
--Louise Moon


Sunny Optical shares soar after releasing earnings

Australian mining company MMG said its Las Bambas mine in Peru will restore operations today, after an indigenous village agreed to lift a two-month road blockade of its copper mine.
The company, which mines base metals around the world, rose over 3 per cent in morning trading to HK$3.74. Its major shareholder, Shenzhen-listed state-owned enterprise China Minmetals, was down 1.18 per cent to 13.38 yuan in morning trading.
MMG has agreed to pay the local community for transiting through its farmland. In a filing to the stock exchange on Monday, CEO Gao Xiaoyu said the company “remains committed to working together with all communities and other stakeholders to seek sustainable outcomes along Peru’s most important copper logistics corridor.”
-- Louise Moon


Miner MMG shoots up on news of end to road blockade at copper mine 

The trade war "has indirectly prompted Beijing to speed up reforms and unveil stimulus measures, including tax cuts, infrastructure spending and monetary easing, worth some 2.8 trillion" yuan (US$416.8 billion), said Patrick Zweifel, chief economist of Pictet Asset Management, with US$174 billion of assets under management, writing in an e-mailed commentary. "We believed around one third of that filter through into economic growth, equivalent to an annual boost of around 0.3 to 0.5 per cent per year over the next two years."
-- Eugene Tang 


Trade war prompted Beijing to speed up reforms, says Pictet's chief economist

Clients turned risk-on in China A-shares as the Shanghai Composite Index broke out above 3,200, according to note from Bank of American Merrill Lynch on Monday morning.
Net inflows worth US$96 million moved into industrials, financials and consumer discretionary sectors, while net sold were consumer staples last week. The net inflow amount was not large compared to previous weekly flows, and may imply that some foreign investors might have missed the rally and that the strength last week was mainly driven by local investors.
Given the strong performance of China's A-share market last week, hedge funds took profits significantly -- US$92 million on April 4 ahead of the long weekend, led by selling from materials. Interestingly, long-only funds remained net buying on the day and led by health-care at US$27.4 million, a notable pick-up. That brought year-to-day net inflows to health-care to US$84.4 million.
-- Xie Yu 


BofAML clients turn risk-on in China A-shares

China Southern Airlines' shares declined in both the Hong Kong and Shanghai markets after Daiwa Securities downgraded its recommendation to "hold."
Shares of China's largest carrier fleet fell by as much as 2.7 per cent in an advancing Hong Kong market to HK$7.52. The airline's shares fell 4.9 per cent in in Shanghai to 9.18 yuan.
-- Eugene Tang


China Southern Airlines shares lose altitude on downgrade

Chinese chemical makers have surged this morning after state media Xinhua reported a chemical industry park will shut down, sparking concerns over future supplies.
Yancheng City in the eastern-central coastal province of Jiangsu decided to close down the Xiangshui chemical industry park, where 78 people died last month in a chemical plant blast. Last Friday, there was a third explosion within two weeks in Jiangsu, though no-one was hurt.
More than 10 stocks shot up to the maximum 10 per cent allowed in mainland markets. Among them were Zhejiang Longsheng Group (600352.S), which has the second-largest market cap among peers, Tangshan Sanyou Chemical Industries (600409.SS) and Zhejiang Runtu (002440.SZ). Industry leader Wanhua Chemical (600309.SS) jumped by just over 9 per cent.
-- Louise Moon 


Shares of Chinese chemical makers shoot up over shutdown of park

The local government’s move to shut down the Xiangshui industrial park in China “was beyond market expectations” and will have “profound impact on the chemical industry,” according to a Founder Securities report.
“In the past, authorities only inspected industrial parks and ordered them to improve safety standards. Shutting down the entire park is rare and indicates a tougher crackdown,” analysts led by Li Yonglei wrote in the report dated Saturday.
More industrial parks could be closed in the future following Xiangshui, they said. This will benefit the industry’s top players who have good safety and environmental standards because they will be able to expand amid the tightened regulatory environment.
Founder Securities recommended stocks including Zheijang Longsheng Group (600352 SH) and Zhejiang Jihua Group (603980 SH) in the dye industry, Jiangsu Yangnong Chemical (600486SH) in the pesticide industry and Lily Group (603823 SH) in the pigment industry.
-- Yujing Liu 


Crystal Ball: Chemical plant crackdown to boost top players, Founder Securities says

Kweichow Moutai is set to refresh its new high today again after rising to a record in three out of the five past trading days.
The shares added 4.3 per cent to 902.50 yuan in morning trading in Shanghai, valuing the liquor distiller at 1.12 trillion yuan (US$166.7 billion), after saying first-quarter profits probably rose as much as 30 per cent from a year earlier. That beat the projection of a 21 per cent growth in a Bloomberg survey.
Shenwan Hongyuan Group raised Kweichow Moutai’s earnings forecasts for this year by 4.1 per cent and that for 2020 by 5.3 per cent, and set a 12-month price target of 1,000 yuan for the stock.
Kweichow Moutai remains one of the favourites among foreign investors participating in the exchange link programmes.
-- Zhang Shidong 


Kweichow Moutai poised to uncork a fresh high

China Merchants Land (0978.HK) jumped 5 per cent to HK$1.47 in morning trading, its highest level since June after posting improved sales for the first quarter this year.
The Hong Kong property developer reported an 11 per cent year-on-year growth in aggregate contracted sales from January to March, at 5.96 billion yuan (US$887.34). In the same period last year, the company posted an 11 per cent fall.


China Merchants Land jumps on improved Q1 sales 

The run-up on Chinese stocks still has room to run as growth at the world’s second-largest economy probably bottoms out in the middle of the year amid policy support, Marcella Chow and Chaoping Zhu, strategists at JPMorgan Asset Management, said in a note.
Loosening monetary policy and more fiscal expenditure, coupled with a reduction in personal and value-added taxes, will lead to a stronger appetite for risk assets and a strengthening momentum in equities.
Still, the money manager said China’s stocks will be swayed by bigger price swings going forward as the valuation is already approaching the 10-year average. The Shanghai Composite Index dropped 0.1 per cent to 3,243.64 at noon in Monday morning trading, erasing a gain of as much as 1.3 per cent.
-- Zhang Shidong


Crystal Ball: China stocks still have room to run, says JPMorgan Asset

Sino Biopharmaceutical (1177.HK) rose over 5 per cent in morning trading to HK$7.82, its highest price since November.
The stock overtook Sunny Optical as having the largest gains on the Hang Seng and sent the health-care sector up 4.43 per cent, miles ahead of the rest of the market.
Gains came after the company announced the expiration of 40 million bear contracts.
Sino Biopharmaceutical has hugely underperformed the benchmark since August, but has shot up this year, having already risen just over 50 per cent. Its 14-day relative strength index (RSI) is 67, almost 10 points more than this time last week. A reading above 70 indicates overbought and below 30, oversold.
-- Louise Moon
 


Sino Biopharmaceutical shoots up 5 per cent

The share price of smartphone components supplier Q Technology (1478 HK) rose 11.9 per cent in the morning session after Nomura upgraded the stock’s targeted price from HK$7.7 to HK$10.
The stock was last up 10 per cent to HK$9.09.
The stock has been on a tear since March 29, shooting up 36 per cent.
Q Technology is principally engaged in the design, research, development, manufacture and sales of camera modules. Its primary products include the autofocus (AF) and fixed focal (FF) camera modules. Nomura expects the company to gain shares in Huawei's Mate 30 orders.
-- Peggy Sito 


Q Technology flies on Nomura upgrade

Markets in China have slid because the US-China trade negotiations continue to dampen overall sentiment, according to Louis Tse Ming-kwong, managing director of VC Asset Management.
The world’s two largest economies are still far from signing any meaningful agreement and euphoria that had markets surging is starting to wean, said Tse. It is also putting a cap on Hong Kong going any further, as the Hang Seng clings to minimal gains this afternoon.
The office of the US Trade Representative said “significant work remains” in trade talks, which are due to resume this week.
By around 2pm, the Shanghai Composite and the CSI 300 of 300 A-share stocks listed in Shanghai and Shenzhen were both down 0.5 per cent, and the Hang Seng was up just 0.2 per cent.
“Markets are jittery,” said Tse.
--  Louise Moon


'Markets are jittery' over trade war, says Louis Tse Ming-kwong

The Shenzhen stock exchange issued yet another concerned letter to a cannabis-related company.
Chengzhi Shareholding Co (000990.SZ), which provides medical and health services, shot up by the daily limit of 10 per cent, to 31.54 yuan on Monday, prompting the stock exchange to ask if trading was speculative and to clarify any relevant risks.
Four similar letters were sent two weeks ago.
Chengzhi has shot up 153 per cent since March 8.
-- Louise Moon
 


Another cannabis company asked by China authorities about its spike in share price

China Petroleum & Chemical (0386.HK), or Sinopec, was up 0.63 per cent to HK$6.35 after news it has joined with Royal Dutch Shell to study a shale oil block in eastern Shandong province, it announced today on its website.
The study will take place in Shengli oilfield, the second largest in China. Shale oil is in its early development stages in China, and makes up just 1 per cent of the country’s total crude oil output, reported Reuters.
Sinopec is also listed in Shanghai (600028.SS) and was up 1.52 per cent to 6 yuan by close.
-- Louise Moon


Sinopec jumps after joining with Royal Dutch Shell on shale-oil study  

The Shanghai Composite closed down 0.1 per cent at 3,243.33.
It started the day of trading up before dipping into negative territory in the late morning.
The basic materials sector climbed the most, by 3.17 per cent, led by chemical companies that surged over concerns about supplies running short. A total 27 companies, many chemical, hit the daily price increase limit of 10 per cent.
The CSI 300, meanwhile, similarly dropped to end down 0.1 per cent at 4,057.23. Basic materials also saw the highest gains.
-- Louise Moon


Shanghai Composite Index slips 

The Hang Seng Index ended up 0.47 per cent at 30,077.15, after fluctuating between losses and gains through the afternoon.
Health-care shares shot ahead, adding over 5 per cent. The sector was led by the biggest gainer of the day, Sino Biopharmaceutical, which skyrocketed 6.85 per cent after announcing the expiration of 40 million bear contracts.
-- Louise Moon
 


Hang Seng finishes ahead, lifted by health care shares 

Stocks blog: Mainland stocks slip while Hong Kong shares gain

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Crystal Ball: Chemical plant crackdown to boost top players, Founder Securities says Crystal Ball: China stocks still have room to run, says JPMorgan

Crystal Ball: Chemical plant crackdown to boost top players, Founder Securities says

Crystal Ball: China stocks still have room to run, says JPMorgan