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Louise Moon

Deb Price

Welcome.
Catch up on the day's trading action in Hong Kong and mainland China markets below.
Please send questions you'd like answered to deb.price@scmp.com .
-- Louise Moon and Deb Price
 


Inflated asset prices show markets don’t always know best

CSRC vows deeper reforms to open China’s capital market and boost tech listings

Moore Threads shares jump fivefold in Shanghai trading debut in rush for ‘China’s Nvidia’

FTSE’s rebalancing of China stock indexes to spur US$850 million fund flows, Goldman says

Stocks

Stocks Blog: Hong Kong closes at 10-month high, while Shanghai sees second straight day of losses

The bull sculpture at Exchange Square in Hong Kong. Photo: David Wong

An investor walks past a screen showing stock market figures in Hangzhou in China's Zhejiang province on June 19, 2018. Photo: Agence France-Presse


Chinese aircraft leasing firm hits pause on US$5.8 billion Boeing 737 MAX order as it awaits assurance on jet’s safety

All Boeing 737 MAX jets have been grounded globally since an aircraft operated by Ethiopian Airlines crashed on March 10. Photo: Xinhua

A model aircraft is displayed at the reception of the China Aircraft Leasing Group office in Hong Kong, China June 22, 2015. Shares of China Aircraft Leasing Group Holding Ltd rose early on Monday after falling by about a fifth in the previous session when the company said it was unable to contact its chief executive, who resigned without explanation. REUTERS/Bobby Yip

Business

Markets

Gree Electric jumps by daily limit in mainland trading on US$6.2 stake sale
Coal companies fall amid report of China oversupply in 2019


Blackrock sees China as 'one of the largest growth opportunities'


China markets

China economy

Live

Here's what we are watching this morning:
Overnight markets/ What futures foretell
-- Overnight in US markets, S&P 500 rose 0.10 per cent, Nasdaq climbed 0.19 per cent, and the Dow Jones Industrial Average slipped 0.32 per cent.
--  Hong Kong futures are 0.25 per cent up, at 30,198, while the China A50 futures were down 0.02 per cent to 13722.50.
IPO debuts: 
None
Economic statistics/Central Bank action: 
None
Corporate 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: Zheng Yangpeng reports that new home sales in megacity Chongqing jumped by 64.3 per cent. Peggy Sito reports that Hong Kong-listed China Aircraft Leasing has put its order for  100 Boeing 737 MAX jets temporarily on hold until it is assured of the aircraft’s safety. And Iris Deng looks at a new survey showing Chinese brands are taking a hit amid the Huawei security controversy. 
 


Morning guidance 

The Hang Seng opened up 0.04 per cent, or 11.16 points, at 30,065.99. In the mainland, the Shanghai Composite fell 0.14 per cent, or 4.42 points, to 3,240.39, while the CSI 300 of large caps rose 0.16 per cent, or 6.58 points, to 4,063.81 at open.
-- Louise Moon


Hang Seng opens slightly up while Shanghai slips 

Geely Auto (175 HK) reached its highest level since November in early trading, rising 4.54 per cent to HK$17.94 as Bank of America Merrill Lynch raised it to buy from underperform on new models and improvement in the China's manufacturing outlook.
Among Bloomberg analysts, 29 rate it a buy, eight a hold and three a sell.

-- Deb Price


Geely jumps on buy upgrade 

AAC Technologies (2018 HK) was trading up 1 per cent in Hong Kong, after China Renaissance raised the major supplier of Apple to a buy from a hold. It was trading at HK$51.
China Renaissance gave the stock a price target of HK$76.29, up from HK$50.
"We believe the stock price is already at the bottom and we expect it to bounce back," the research team wrote. "We believe catalysts to appear around end-May/June when we see: 1) improvement in lens and haptics GM, better visibility on stepping motor share gains, and increasing SLS penetration; and 2) stabilization of market share in iPhone acoustics and haptics." Among analysts surveyed by Bloomberg, the stock has 10 buys, 15 holds and 12 sells.
-- Deb Price


AAC Technologies climbs on buy upgrade

Geely Auto (175.HK) is hot this morning.
It posted sales volume figures after markets closed on Monday and issued 2.4 million shares.
The car maker announced total sales volume for March was 124,643 units, an increase of 3 per cent when compared to the same period last year, and an almost 50 per cent increase from February, according to a filing on the stock exchange.
Those in China, however, were down 2 per cent, and sales for the first quarter of the year lost 5 per cent.
During early morning the stock was rising. At its highest level since August, and the top gainer on the Hang Seng, it rose 4.78 per cent to HK$17.98.
-- Louise Moon 


Geely shares accelerate 

China Resources Gas (1193 HK) fell 1.3 per cent to HK$34.60, on the heels of a downgrade to hold from outperform by Daiwa Securities analyst Dennis Ip.
The analyst raised the price target to HK$36.50 from $HK36.
The stock has 18 buys, eight holds and three sells, with a consensus 12-month price target of HK$38.16. China Resources Gas distributes natural gas and petroleum gas in China.
-- Deb Price


China Resources Gas falls after downgrade

In his annual letter to shareholders on Monday, Blackrock CEO Larry Fink said he wants to make China home to one of the firm's leading asset managers as it expands outside the US.
Fink noted China as "one of the largest future growth opportunities for BlackRock", which oversees around US$6 trillion.
Asia is expected to drive 50 per cent of the organic growth in managed assets over the next five months, mainly boosted by China.
-- Louise Moon


Blackrock sees China as 'one of the largest growth opportunities'

China Southern Airlines (1055 HK) was on a bouncy flight in early trading, following a downgrade to hold from outperform by Daiwa.
It was last trading down 0.65 per cent to HK$7.69 in Hong Kong, but up 0.44 per cent to 9.16 yuan in Shanghai.
Among other airlines, Air China (753 HK) was downgraded to outperform from buy by analyst Kelvin Lau. It was last trading up 1.38 per cent at HK$10.26 in Hong Kong, and up 0.45 per cent to 11.16 yuan in Shanghai.
He also downgraded China Eastern (670 HK) to outperform from buy. It was last trading up 1.3 per cent at HK$6.22 in Hong Kong, and up 1.55 per cent to 7.88 yuan in Shanghai.
He cited the recent big run-up in share prices following the Chinese government's cut in airline and passenger fees, Bloomberg reports.
-- Deb Price


China airlines mixed in early trading 

Sino Biopharmaceutical (1177 HK) jumped 2.51 per cent to HK$8.18 in early trading, following an upgrade to overweight from equal weight by Morgan Stanley. The price target was raised to HK$9.20 from HK$8.50.
Of analysts covering the stock and surveyed by Bloomberg, 23 rate it a buy, three a hold and two a sell, with a consensus target price of HK$8.56.
-- Deb Price


Sino Biopharmaceutical jumps

Gree Electric Appliances surged by the 10 per cent daily limit to 51.93 yuan in Shenzhen today after its state-owned parent Zhuhai Gree Group said it seeks to a sell a 15 per cent stake in the air-conditioner maker in what will be an ownership shake-up.
The deal will be valued at at least 41.3 billion yuan (US$6.15 billion),  given an exchange statement said the stakes will be sold for no less than the average stock price over the past 30 trading days.
Gree’s shares resumed trading after being suspended over the past five days. The company is one of the favourites among foreign investors, who held a combined 7.9 per cent stake through the exchange link programme by the end of the third quarter.
-- Zhang Shidong 


Gree Electric jumps by daily limit in mainland trading on US$6.2 stake sales

Citi joined Bank of America in raising its price target for Chinese automaker Geely.
The research house maintained its “buy” rating but raised its target price from HK$17.3 to HK$21.1. It expects Geely to generate 7.6 billion yuan of revenue in 2019, which will grow at a compound annual growth rate of 76 per cent to 2021, reaching 23.5 billion yuan. Then from 2020 to 2022, the CAGR will increase to 32 per cent, predicted Citi.
This is on the back of the company’s new business of supplying auto parts, particularly to Malaysian car brand Proton. Proton signed a joint venture with Geely last year to assemble and sell cars in China.
-- Louise Moon


Citi raises price target for Chinese automaker Geely 

BYD  (002594.SZ, 1211.HK) was slightly up, following posting March sales volumes to the stock exchange after trading closed on Monday.
Total sales volume increased by 8.47 per cent when compared to March last year, reaching 46,825 units. A total 64 per cent of units sold were new energy vehicles, which BYD is a world leader in.
China is the world’s biggest market for electric cars and BYD is one of the largest players.
In Shenzhen, it was trading up 0.94 per cent to 53.94 yuan in early morning trading, while in Hong Kong it was up 1.2 per cent to HK$51.90.
-- Louise Moon


BYD trading up on increase in car sales

Inner Mongolia Yili Industrial Group (600887.SS) boomed by the maximum 10 per cent, to a 10-month high in its share price, after announcing it intends to buy back shares.
The dairy firm plans to buy back a 2.5 per cent to 5 per cent stake in the next 12 months, at no more than 35 yuan per share. The shares will be used for a stock ownership incentive plan, it said.
The boost lifted the CSI 300 consumer sector, which rose 1.08 per cent in morning trading.
-- Louise Moon


Inner Mongolia Yili Industrial jumps on share buyback plan

The China Coal Industry Association says Chinese coal companies plan to increase production by more than 100 million tons this year, according to local media.
Wang Hongqiao, vice president of the association, says China faces an oversupply in 2019.
The majority of coal companies across the board were down. The country’s largest coal mining state owned enterprise, China Shenhua Energy (601088.SS), dropped 1.22 per cent to 20.28 yuan in morning trading, and Shaanxi Coal Industry (601225.S) lost 1.52 per cent to 9.70 yuan, having climbed almost 13 per cent since March 28.
China Coal Energy (601898.SS) lost 0.75 per cent to 5.28 yuan, and Yanzhou Coal Mining (600188.SS) dropped 1.61 per cent to 12.25 yuan.
-- Louise Moon 


Coal companies fall amid report of China oversupply in 2019

China Fortune Land Development was the second biggest gainer on the CSI 300 in morning trading, rising 9.5 per cent to 34.39 yuan.
On Monday, the Hebei-based developer won shareholder approval for a sale of offshore bonds worth US$1 billion. On March 27, the company had printed the five-year bonds but had not received approval, which is required under Chinese rules.
-- Louise Moon


China Fortune Land shoots up 

The vice chairman of the China Electricity Council, Yu Chongde, said the country’s electricity demand may increase by 5.5 per cent this year, reported local media.
High coal prices have led more than 60 per cent of coal-fired power generation companies to suffer losses, it said. Yanzhou Coal Mining, for example, dropped 45 per cent through last year, from 15.97 yuan to 8.64 yuan, but has since climbed back up to reach 12.18 in morning trading.
Key electric power industry players were little moved and mixed in morning trading.
Datang International Power Generation (601991.SSE) dropped 0.28 per cent to 3.53 yuan, having climbed 5 per cent since March 28. GD Power Development (600795.SS) rose 0.36 per cent to 2.76 yuan, China Huadian Power International (600027.SS) gained 0.22 per cent to 4.56 yuan, while China Huaneng Power International (600011.SS) lost 0.76 per cent to 6.56 yuan.
-- Louise Moon


China electricity demand could increase by 5.5 per cent 

Chinese media company Caixin is reported to be seeking to raise between US$100 million and US$200 million in its latest funding round, in an aim to be listed overseas in the next two to three years, reported Reuters.
The Beijing-based company is backed by internet giant Tencent Holdings (0700.HK), and investment firms China Media Capital (CMC). Hong Kong is its preferred location to list, reported Reuters.
-- Louise Moon


Chinese media outlet Caixin seeking US$100 million to US$200 million in latest funding round: Reuters

The Hang Seng Index closed for the midday break up 0.27 per cent, or 81.15 points, to 30,158.30. After starting the morning with a small boost, it briefly dropped before accelerating into positive territory.
Meanwhile in the mainland, the Shanghai Composite paused for midday also up 0.14 per cent, or 4.38 points, to 3,249.19 and the CSI 300 of large caps rose 0.60 per cent, or 24.34 points, to 4,081.57. The Shenzhen Composite Index rose by 0.65 per cent, or 11.46 points, to 1,781.66.
All three had a volatile early morning, before getting upward traction at around 10:30.
-- Louise Moon


 Bulls seize back control in Hong Kong, mainland markets

AAC Technologies (2018 HK) is the leading mover in afternoon trading on the Hang Seng, up 5.8 per cent at HK$53.45.
The Shenzhen-based miniaturized component maker's relative strength index was at 66.1278, close to the 70 that signals a stock is overbought. It hasn't traded this high since February 25, when it closed at HK$58.75.
The surge comes as China Renaissance raised it to a buy, with a price target of HK$76.29.
China property developer Country Garden (2007 HK) is the next top gainer, up 4.6 per cent at HK$13.14. Of analysts tracked by Bloomberg, 20 have a buy order on it, five have a hold, and four have a sell. The consensus 12-month target price is HK$13.75.
China Mengniu Dairy was third, up 3.42 per cent to HK$30.20. The stock has increased 18 per cent since March 13, as of Monday's close, and is trading at its highest level ever.
Sino Biopharmaceutical (1177177 HK) was up 3.5 per cent at HK$8.26, after Morgan Stanley raised its rating to overweight and increased its price target to HK$9.20 from HK$8.50. It was last in this range in early November.
-- Deb Price


AAC Technologies is top mover on Hang Seng after ratings boost

The International Monetary Fund cut its growth forecast for the US to 2.3 per cent for this year, down from the 2.5 per cent it expected in January, according to its quarterly World Economic Outlook.
At the same time, it said the world’s largest economy is still expected to outpace other advanced nations as the global economy as a whole slows down.
The report warned of two main risks: high debt levels and trade tensions.
-- Louise Moon


IMF cuts growth forecast for US to 2.3 per cent

China wants to ban bitcoin mining, according to Reuters.
On Monday, National Development and Reform Commission said it was seeking opinions on a list of industrial activities it wants to encourage, restrict or get rid of. The public have until May 7 to comment. The list added cryptocurrency mining, including bitcoin, to more than 450 other industrial activities it said should be phased out. No details on timings or how to phase the industry out were given.
In 2017, regulators started to ban initial coin offerings and shut local cryptocurrency trading exchanges, Reuters added.
-- Louise Moon 


China eyes ban on bitcoin mining: Reuters

The Shanghai Composite closed down 0.16 per cent at 3,239.68. This was its second day of losses, after cranking out a 5 per cent gain last week. The bourse opened the day with a 0.14 per cent loss, before swinging up and coming back down again.
The CSI 300 of large caps, however, was up the entire day, ending with a 0.45 per cent gain to 4,075.43. In Shenzhen, the composite index also ended positive, up 0.72 per cent to 1,783.01.
-- Louise Moon


Shanghai slips in second straight day of losses

Chinese developers gained after the government announced a plan on Monday to relax residency curbs in many smaller cities and increase infrastructure spending.
The move comes as an attempt to revive a slowing economy by increasing the number of people who live in urban areas by 1 percentage point by the end of the year, from 59.6 per cent in 2018.
Market leader China Vanke (000002.SZ) advanced 6.15 per cent to 33.48 yuan. Country Garden Holdings (2007.HK) added 4.3 per cent to HK$13.1, Longfor Group Holdings (0960.HK) rose 2.21 per cent to HK$30.00, and China Aoyuan (3883.HK) gained 3.45 per cent to HK$9.87.
-- Louise Moon


Chinese developers gain on relaxed residency curbs

The Hang Seng benchmark ended up 0.27 per cent at 30,157.49, having edged its way higher after opening with just a 0.04 per cent gain.
The city’s bourse closed at its highest level in 10 months, when it ended at 30,309.49 on June 15.
-- Louise Moon


Hang Seng closes at 10-month high

China's March retail passenger car sales fell 12 per cent to 1.78 million vehicles, according to the Passenger Car Association (PCA). That's the 10 consecutive month of declines.
The decline in March follows an 18.5 per cent drop in February, and a 4 per cent dip in January.
-- Eugene Tang


Stocks Blog: Hong Kong closes at 10-month high, while Shanghai sees second straight day of losses

Gree Electric jumps by daily limit in mainland trading on US$6.2 stake sale Coal companies fall amid report of China oversupply in 2019

Gree Electric jumps by daily limit in mainland trading on US$6.2 stake sale

Coal companies fall amid report of China oversupply in 2019