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Zhang Shidong

Deb Price

Markets presented plenty of challenges to traders today, with both the Shanghai and Hang Seng benchmarks falling.
Catch up on the day's action below. 
-- Zhang Shidong in Shanghai and Deb Price in Hong Kong
 


Google’s TurboQuant AI advance dents memory-chip stocks, but analysts say ‘buy the dip’

As oil-shocked world turns to renewables, China will reap the rewards

China’s Kuaishou slumps as analysts flag growth pressure despite strong results

China’s Jiangsu Aidea eyes Hong Kong listing as gateway to US and European Aids markets

Stocks

Stocks Blog: Auto makers drag down Shanghai benchmark from one-year high

Photo: Alamy

Bull statues outside the Shenzhen Stock Exchange building in the Futian District, Shenzhen. Photo:  Roy Issa

China’s electric car makers face ‘critical’ maturity period over the next two years, KPMG says

Electric cars are seen at a parking lot of a car factory in Xingtai, Hebei province. KPMG says electric car makers face tighter capital markets and challenges to build consumer trust in the world’s largest car market. Photo: Reuters

This picture taken on April 16, 2018 shows a traffic jam at a crossroad in the city centre of Beijing. / AFP PHOTO / Fred DUFOUR

Business

Markets

Economy

Crystal Ball: Risk of too much optimism about China, says Standard Chartered
China may offer up to 13% subsidy for appliances purchases, Huatai says


Join us each day for live coverage of mainland China and Hong Kong markets. Check back in regularly for updates on what's happening -- and what's ahead -- in these incredibly important markets.


China stock market

Hong Kong stock exchange

China economy

Live

* Overnight markets/ What futures foretell
  -- Overnight in US markets, S&P 500 lost 0.2 per cent, Nasdaq slipped 0.1 per cent, and Dow Industrials Average was little changed.
 -- Hong Kong futures fell 0.4 per cent, while the China A50 futures were 0.5 per cent lower.
 -- Trading of the mainland-listed stocks via the northbound channel of the exchange link will be halted from today to Monday due to the coming Easter holiday observed in Hong Kong. The southbound trading will be open as usual today.
* IPO debuts: none
* Economic statistics/Central Bank action: March data on China’s foreign direct investment is due today and Hong Kong will release figures on unemployment rate in March.
* Corporate events: earnings, meetings, news conferences: Nothing major
* Good reads: New World Development is set to displace Four Seasons Place as the operator of Hong Kong’s most expensive serviced apartments, reports Sandy Li. The next two years will be “critical” for China’s new energy vehicles, reports Chad Bray. Zen Soo explains why the US and China are fighting over our 5G future. And Ryan Swift explains that pork prices in mainland China may rise by more than 70 per cent year on year to record levels in the second half of 2019, due to African Swine Fever.
 
 


Morning guidance 

Pork prices in mainland China may rise by more than 70 per cent year on year to record levels in the second half of 2019 following a drop in hog supplies, Ryan Swift reports.
Chinese farmers have had to cull their pig populations to combat an outbreak of African Swine Fever that began in August last year.
Meanwhile, the share prices of large meat processors in the country have risen thanks to optimism that higher prices will boost their bottom lines, according to Bloomberg analysis.
Shares in WH Group, a Hong Kong-listed meat-processing company, rose by 3.5 per cent in trading on Wednesday. Its stock stood at HK$9.20, climbing from HK$5.32 in September last year. China Yurun Food Group, another Hong Kong-listed meat supplier, reported an increase in its shares, from HK$0.64 at the beginning of the year to HK$1.67 on Wednesday.
Read full story here. 
 


China pork prices could soar 70 per cent in second half of 2019

China was considering unveiling plans to boost sales cars, home appliances and electronic products, which was in the consultation stage, the Shanghai Securities News reported today, citing sources from makers of new-energy cars.
-- Zhang Shidong


China mulls plan to bolster cars and appliances sales, Securities News says

The next two years will be “critical” for China’s new energy vehicle (EV) makers as the industry matures and Beijing slashes subsidies that have encouraged consumers to adopt the technology, a KPMG executive said on Wednesday, reports Chad Bray.
Philip Ng, head of technology at KPMG China, said that consolidation is likely in the industry in the next 18 months to two years, particularly as EV makers face tighter capital markets and challenges to build consumer trust in the world’s largest car market, Bray writes.
“All of those [new energy vehicle makers] require very large capital to fund them,” Ng said at a media round table in Hong Kong on Wednesday. “Currently, the capital market itself has become cautious on very large scale investment. There will be a mismatch between the capital available and the capital spent by the NEVs.”
Last month, the Chinese government moved to slash subsidies on new energy vehicles (NEVs) by as much as 60 per cent in hopes of encouraging the industry to boost its technology standards. Beijing, which has subsidised electric vehicle purchases since 2009, is expected to fully eliminate the subsidies next year, Bray explains.
Read full story here.
 


  China EV makers at 'critical' moment, KPMG says 

New World Development (17 HK) rose 1.3  per cent to HK$15.20, on news it is set to displace Four Seasons Place as the operator of Hong Kong’s most expensive serviced apartments.
The Hong Kong developer's shares had rallied 32 per cent as this year as of Wednesday's close. Goldman downgraded it to sell with a price target of HK$13.
There is a mix of assessment of the company.
New World is increasingly focusing on the Greater Bay Area, which should boost its profits, according to a Bloomberg Intelligence note. It also could see its rental revenue in the city go up by more than HK$2 billion due to its Victoria Dockside project in Tsim Sha Tsui, BI wrote at the end of February.
"New World Development is likely to meet its full-year Hong Kong contracted sales target of HK$10 billion in the fiscal year ending June, as improved market sentiment helps it sell more new apartments," BI wrote.
-- Deb Price


New World shoots up on news it will have Hong Kong's priciest serviced flats

Aucma and other Chinese appliances makers were adding positive mood to the broader market in morning trading.
The sector had a good reason to resist the decline. News circulated around the Chinese media today that the government was pondering a plan to bolster sales of white goods, electronic products and cars and the proposal already progressed to the consultation stage.
During the heydays of the global financial crisis a decade ago, China rolled out plans to boost consumption by subsidizing purchases of goods from TVs and mobile phones to cars.
Aucma, a maker of fridges and air-conditioners, jumped 5.1 per cent, Hisense Home Appliances Group added 5 per cent and Gree Electric Appliances rose 2.6 per cent.
-- Zhang Shidong


China’s home appliances makers lead stocks higher

Fosun Tourism Group (1992 HK)  was trading up 1.3 per cent at HK$15.20, after J.P. Morgan initiated coverage of the stock with an overweight recommendation and price target of HK$18. That would be 20 per cent higher than Wednesday's close.
The China-based Fosun focuses on tourism business, including managing resorts through Club Med and Club Med Joyview.
 
-- Deb Price
 


Fosun Tourism Group jumps after 'overweight' recommendation

Hang Lung Properties (101 HK) was trading 0.3 per cent at HK$18.64, on the heels of a downgrade from buy to neutral by Goldman Sachs, which raised its price target to HK$21 from HK$20.
The Chinese property developer has risen 28 per cent since the start of the year.
"Hang Lung Properties' new and upgraded shopping malls in China should drive earnings over the next three years," Bloomberg Intelligence analysts wrote on April 2. They noted upgrades at Shanghai Grand Gateway 66 will result in higher rents, and two high-end malls in Shanghai that have posted robust income, were among other positive momentum for the developer, the analysts pointed out.
-- Deb Price


Hang Lung Properties trading down on heels of a downgrade to neutral

Investors will have a new gauge of ChiNext companies on their radar screens starting today, as the Shenzhen Stock Exchange launched an index tracking the top 50 companies trading on the board for China’s start-ups.
The ChiNext big-cap index consists of the 50 biggest companies in market caps and had a base value of 1,000 points, the bourse said in a statement. The gauge will be adjusted twice a year, it said.
-- Zhang Shidong


Shenzhen exchange unveils new ChiNext index

China Mobile  (941 HK) is trading down 1 per cent to HK$75.25 on news the U.S. communications regulator is recommending rejecting the China network giant's pitch to offer telecommuications services in the US.
The chairman of the Federal Communications Commission said overnight he would hold a vote on May 9 on a measure denying the request of China Mobile USA on national security grounds, Bloomberg reported.
-- Deb Price
 


China Mobile trading down on news of opposition to it operating in US   

New World Development is set to displace Four Seasons Place as the operator of Hong Kong’s most expensive serviced apartments, reports Sandy Li.
Agents say NWD plans to offer leases at its K11 Artus serviced apartment development, part of the US$2.6 billion Victoria Dockside project in Tsim Sha Tsui, for a third more than what luxury hotel operator Four Seasons Place Hong Kong charges for its serviced suites in the IFC complex in Central, she writes.
The Hong Kong builder will offer leases for as much as HK$167 per square foot per month for its 287 units when they are ready in the third quarter of this year – 33 per cent more than Four Seasons’ HK$126 per sq ft, she writes.
With unit sizes ranging from 510 sq ft for a studio to 1,921 sq ft for a three-bedroom apartment, tenants would be paying between HK$57,000 (US$7,265) and HK$320,000 per month, Li writes.
Read full story here.
 


New World to operate Hong Kong's priciest serviced apartments

Morgan Stanley revised up its China growth forecasts for  this year and 2020 by 0.2 percentage points to 6.5 per cent and 6.3 per cent, respectively, due to the strong first quarter performance the world's second largest economy reported Wednesday.
"While we see a slower pace of acceleration in credit growth ahead, the ongoing improvement in the quality of credit amid the meaningful fiscal stimulus should ensure a growth upturn in 2Q-4Q19," Morgan Stanley analysts wrote in a note today.
China reported that its first quarter growth expanded 6.4 per cent year-on-year, above the consensus of 6.3 per cent.
-- Deb Price


Crystal Ball: Morgan Stanley bullish on China growth

China set a subsidy for buying smart and energy-saving home appliances at as much as 13 per cent, with the absolute amount capped at 800 yuan (US$119.5) for each unit, Huatai Securities said in a note dated today, citing a consultation paper issued by the State Council aimed to boost consumption.
The paper included seven measures, including a trade-in programme for household appliances, expansion of sales networks and standard services for smart furniture and appliances, it said.
--Zhang Shidong
 



China may offer up to 13% subsidy for appliances purchases, Huatai says

"Despite the stronger-than-expected data set, market response seems to be quite muted with a largely flat Shanghai Composite Index in the morning session," said Eastspring Investments' chief investment officer Michelle Qi in Shanghai. "Considering that the first quarter is already behind us, we believe market focus would then turn to potential changes in policy stance as well as the sustainability and strength of the ongoing economic recovery.”
-- Eugene Tang


Markets looking ahead to policies, strength of economic recovery, says Eastspring Investment

Daye Special Steel (000708 CH) 0.4 per cent to 15.10 yuan, after SWS Research initiated coverage with a buy recommendation.
The Chinese steel manufacturer, which makes such things as spring steel and ball steel, has been on a tear this year, shooting up 73 per cent as of Wednesday's close.
-- Deb Price


Daye Steel not seeing bump up on 'buy' recommendation

Anhui Kouzi Distillery jumped by the 10 per cent ceiling limit to 61.02 yuan in Shanghai trading after the Anhui province-based liquor producer said net income increased 38 per cent from a year earlier last year.
That exceeded the average estimate by seven analysts in a Bloomberg poll by 8.6 per cent.
-- Zhang Shidong


Liquor distiller Anhui Kouzi Distillery surges to daily limit on better-than-expected profit

Standard Chartered Bank maintained its GDP forecast for this year at 6.4 per cent, above the 6.3 per cent consensus, following China's better-than-expected first quarter performance announced Wednesday.
"We think the risk of optimism running ahead of reality is rising," it wrote in a note today.
"While China’s policy makers clearly remain vigilant not to over-stimulate the economy again, we do not expect them to shift away from a pro-growth policy stance just on a strong Q1 performance," it continued.
"Another cut to the required reserve ratio (RRR) before June is still likely in our view, to replace maturing medium-term lending facilities (MLFs) and prevent further rises in interest rates amid more dovish central banks globally. However, if the strength of China’s economic recovery is confirmed in Q2 and uncertainties surrounding the US-China trade negotiations are cleared, policy makers may begin to scale down policy stimulus from the middle of the year."
-- Deb Price


Crystal Ball: Risk of too much optimism about China, says Standard Chartered

China’s Shanghai Composite Index dropped 0.2 per cent to 3,255.67 at the break, set to close lower for the first time in three days.
BYD, Chongqing Changan Automobile and other car makers bore the brunt of sell-offs, as the sector was under pressure following yesterday’s rally spurred by speculation about government stimulus of vehicle purchases.
The Hang Seng Index slid 0.6 per cent, with Geely Automobile Holdings being the worst performer on the benchmark.
-- Zhang Shidong


Stocks in China and Hong Kong drop at break

Foreign investors bought a total of US$42.5 billion of Chinese stocks last year, a jump of 85 per cent from a year earlier, Wang Chunying, a spokeswoman at the State Administration of Foreign Exchange, said at a press conference in Beijing today.
Overseas buying amounted to US$19.4 billion in the first quarter of 2019, she said. Bond purchases by overseas investors surged 68 per cent to US$96.6 billion in 2018.
-- Zhang Shidong


Overseas buying of Chinese stocks jumped 85% in 2018, SAFE says

HKBN (1310 HK) jumped 9.7 per cent to HK$13.58, heading for its highest close since its listing in 2015 after the city’s communications authority essentially approved its buyout of WTT Holdings. The regulator will not start an investigation into the proposed deal, HKBN said in an exchange filing. The acquisition is expected to take place by the end of the month, it said.
-- Zhang Shidong
 



HKBN heads for record high after Hong Kong’s regulator nods its buyout of WTT

Negotiators from China and the United States will hold two more rounds of trade talks by early May as the countries’ attempts to end their months-old trade battle intensify, US media reported on Thursday.
Chinese officials were putting the finishing touches on the language they intend to use in their latest offers, diplomatic observers told the South China Morning Post.
But US businesspeople watching the talks cautioned against excessive optimism, saying “systemic issues” remain to be fixed.
Read full story here. 


2 more rounds of US-China trade talks set for early May

China’s stocks fell from a one-year high, as automakers ran out of steam following a rally spurred by speculation about government stimulus to bolster car sales.
The Shanghai Composite Index dropped 0.4 per cent to 3,250.20 at the close after rising on Wednesday to the highest level since March 2018. A gauge tracking auto stocks slumped 1.9 per cent for the day, according to data provider Shanghai DZH.
Home appliance makers bucked the decline across the board, as details were exposed on how the government will subsidize buyers to boost consumption.
-- Zhang Shidong


China’s stock benchmark drops from one-year high as auto makers weigh on sentiment

Of the 50 stocks on the Hang Seng, only 14 were trading up while 34 were down and two unchanged in late trading.
The top gainers are Sunny Optical Technology (2382 HK), up 1.8 per cent to HK$100.10,  and Techtronic Industries (669 HK), up 1.5 per cent to HK$58.15.
The top laggard is Geely Automobile (175 HK), down 4 per cent at HK$18.06. It and other Chinese auto makers soared on Wednesday on speculation that authorities were consider relaxing contols on the number of auto licences.
It was followed by China Overseas Land and Investment (688 HK), down 2.5 per cent to HK$28.75 and Sino Biopharmaceutical (1177 HK), trading down 2.4 per cent at HK$7.78.
The Hang Seng was trading down 0.6 per cent, at 29,938.65.
-- Deb Price


Hang Seng losers outweighing gainers

The Hang Seng Index lost 0.5 per cent to 29,963.26 at the close today. The Hang Seng China Enterprises Index, or the H-share gauge, shed 0.7 per cent. Markets will be re-opened on Tuesday.
Chinese carmaker Geely Automobile Holdings was the worst performer on the benchmark, sliding 3.7 per cent, while HKBN surged 9.9 per cent to a record after the city’s communications regulator cleared the way for its buyout of WTT Holdings.
-- Zhang Shidong


Stocks Blog: Auto makers drag down Shanghai benchmark from one-year high

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Crystal Ball: Risk of too much optimism about China, says Standard Chartered China may offer up to 13% subsidy for appliances purchases, Huatai says

Crystal Ball: Risk of too much optimism about China, says Standard Chartered

China may offer up to 13% subsidy for appliances purchases, Huatai says