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Zhang Shidong

Deb Price

Catch up on the latest action in China's markets below.
Hong Kong's market and the stock connects reopen Tuesday, following the Easter holiday.
-- Zhang Shidong in Shanghai and Deb Price in Hong Kong


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An investor walks past a screen at a securities company in Hangzhou in China's Zhejiang province on June 19, 2018. Photo: Agence France-Presse


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Visitors inspect cars during at the Auto Shanghai 2019 motor show, 16 April 2019. Photo: EPA

Charts for online

FILE PHOTO: FILE PHOTO: Tesla CEO Elon Musk attends the Tesla Shanghai Gigafactory groundbreaking ceremony in Shanghai, China January 7, 2019. REUTERS/Aly Song//File Photo

A man cleans a BYD e-SEED GT concept EV during the media day for the Shanghai auto show in Shanghai, China April 16, 2019. REUTERS/Aly Song

Nissan unveils the latest generation of its Sylphy vehicle during the Auto Shanghai 2019 show in Shanghai Tuesday, April 16, 2019.Automakers are showcasing electric SUVs and sedans with more driving range and luxury features at the Shanghai auto show, trying to appeal to Chinese buyers in their biggest market as Beijing slashes subsidies that have propelled demand. (AP Photo/Ng Han Guan)

Visitors look at cars during the 18th Shanghai International Automobile Industry Exhibition in Shanghai, April 16, 2019. Photo: Xinhua

Business

Markets

China pork stocks continue rewarding investors
Foreign buying to make up bulk of stock inflows this year, Citic says


Catch up on the action in China's markets today.


China stock market

China economy

Hong Kong stock exchange

Live

* Overnight markets/ What futures foretell
  -- US markets were shut Friday because of the Easter holiday. Hong Kong’s market and the stock connect were closed then as well today.
 -- The China A50 futures were 0.6 per cent lower at the open on Monday.
* IPO debuts: Shenzhen Zhilai Sci and Tech (300771 CH) to start trading in Shenzhen today.
* Economic statistics/Central Bank action: none
* Corporate events: earnings, meetings, news conferences:
-- The Communist Party’s highest decision-making Politburo held a meeting on Friday, signalling a subtle shift in the tone of its view on the economy. China International Capital Corp said policy makers were less concerned about growth stabilisation, while Goldman Sachs said the less dovish tone might hurt sentiment in the stock market.
-- The China Financial Futures Exchange announced on Friday after the market closed a slew of measures to ease restrictions on index futures trading, including cutting margin requirements and allowing openings of more new daily contracts for non-hedging purposes.
*Later this week: More than 3,000 Chinese publicly traded companies are due to release earnings results for 2018 or the first quarter of the year this week.
Good reads: China's auto industry may be a ticking time bomb, observers tell Ren Wei and Xie Yu. And developer Sun Hung Kai Properties sold just six out of 113 flats on offer at its Park Yoho Napoli project in Yuen Long – the worst for any builder since late November, Sandy Li and Zoe Low report.


Morning guidance 

China's automotive industry, operating at 43 per cent of capacity, is a ticking time bomb with the potential to hurt one in every six of China’s workforce if it blows up, Ren Wei and Xie Yu report.
China’s car sales declined last year for the first time since 1992. Sales fell 6.9 per cent in March from a year ago to 2.02 million cars, as the US-China trade war showed no sign of abating, they write.
The excess capacity now permeating the industry could potentially threaten the country’s economy and financial system as the billions of dollars worth of redundant facilities add to non-performing loans and job losses.
Full story here.
 


China's auto industry may be a ticking time bomb, observers tell SCMP

Sun Hung Kai Properties (16 HK), Hong Kong’s largest developer by market value, sold just six out of 113 flats on offer at its Park Yoho Napoli project in Yuen Long – the worst for any builder since late November when only two out of 27 units were sold at Jiayuan International Group and Stan Group’s T Plus micro flats project in Tuen Mun, Sandy Li and Zoe Low report.
Market watchers said the poor sales reflects prospective buyers’ wait and see attitude, as a huge supply of small flats gets ready to flood the market in the next few months, they write.
Hong Kong homebuyers have returned to the market since March, as commercial banks kept mortgage rates unchanged amid a dovish policy stance by the city’s monetary authority.
However, sales have shown signs of slowing down. On Tuesday, Henderson Land Development’s Reach Summit project in Yuen Long, just sold a third of 101 units.
Read full story here.
 


Flat sales in Yuen Long disappoint Sun Hung Kai Properties 

The China Financial Futures Exchange announced a raft of measures to loosen barriers on trading the nation’s index futures products on Friday after the market closed, making a step forward to normalise derivative transactions since the 2015 equity meltdown.
Starting today, the margin requirement on the futures contracts on the CSI 500 Index will be lowered to 12 per cent from 15 per cent and the maximum daily number of contracts that can be trade for non-hedging purposes will be raised to 500 from 50, the bourse said in a statement on its website.
The commission fees for intra-day position-closing will also be lowered, it said.
The move marked the fifth time the Chinese regulator has eased the restrictions on trading the derivatives since a crackdown in 2015, when shorting on indexes futures was blamed for a rout that wiped off US$5 trillion in market values.
Margin requirements were raised to as high as 40 per cent during the regulatory clampdown. Futures contracts on China’s CSI 300 Index and CSI 500 Index dropped at least 0.1 per cent in early trading today.
-- Zhang Shidong 



China eases index futures trading for fifth time since 2015 stocks crash

Midea Group (000333 CH) slipped 1.1 per cent to 53.99 yuan, after reporting full-year net income of 20.2 billion yuan (US$3 billion), which was 1.1 per cent below estimates. 
The world's largest appliance maker by revenue had soared by 52 per cent this year, as of its Friday close.
-- Deb Price 
 


Midea slips after full-year net income comes in below estimates

China Railway Group (601390 CH) was trading a bit up at 7.58 yuan, pretty much treading water after a downgrade by Goldman Sachs to sell from neutral. Its price target was lowered to 6.30 yuan from 7.40 yuan. 
The Chinese railway, road and tunnel builder trades in Hong Kong under the ticker number 390.  It is expected to announce earnings on April 29.
-- Deb Price 
 


China Railway downgraded to sell by Goldman Sachs 

China Communications Construction Research (601800 CH) was trading slightly down to 14.11 yuan, on the heels of a downgrade of its A shares to sell from neutral by Goldman Sachs, which also dropped its price target to 11.30 yuan from 11.50 yuan.

The builder of ports, waterways, highways and other infrastructure could see its revenue and profit growth accelerate in 2019-2020, though its dredging work may be limited by China's tougher environmental policies, Bloomberg Intelligence analyst Charles Shum wrote in a note on April 15.

"Overseas income could improve this year after the Malaysian government agreed to resume construction of the East Coast Rail Link," Shum wrote. "Yet growth may be moderate due to trade tension and as spending on new infrastructure, especially in Southeast Asia, is reduced to contain public debt."
 
Of analysts tracked by Bloomberg, eight call it a buy, four a hold and six a sell, with a consensus target price of 11.84 yuan.
Its next earnings announcement is on April 29.
It trades in Hong Kong under the ticker number 1800.
-- Deb Price
 


China Communications Construction's A-shares cut to sell by Goldman Sachs

China’s stocks fall as Politburo meeting brings policy headwinds
China’s Shanghai Composite Index dropped 0.7 per cent in early morning trading, with property developers leading the pack of decliners.
The headwinds facing stocks came from a Friday Politburo meeting chaired by Communist Party boss Xi Jinping. While hailing better-than-expected growth at the start to the year, policy makers also had a re-mention of “structure deleveraging,” a term that was missing in the top-level meeting for a year, at the conference.
Analysts interpreted the meeting as a hint that policies would probably be tightened on the margin.
Goldman Sachs pointed out that the tone of the meeting was less dovish than before, signalling top leaders’ concerns about asset bubbles. China International Capital said the government was now less concerned about growth stabilisation.
-- Zhang Shidong


China’s stocks fall as Politburo meeting brings policy headwinds

Privately owned Huawei Technologies, the world’s largest telecoms equipment vendor and a top 3 smartphone brand, said it registered strong growth in all business segments in the first three months this year, indicating resilience in the face of US pressure to curtail its participation in the roll out of global 5G network infrastructure, Li Tao reports.
Huawei generated revenue of 179.7 billion yuan (US$26.8 billion), an increase of 39 per cent year-on-year. The company's net profit margin in the first quarter was about 8 per cent, slightly higher than the same period last year, according to Huawei in its first quarterly release of business results ever, he writes.
In Q1 2019, Huawei also said it shipped 59 million smartphones. No revenue figures for specific business segments were announced.
Huawei said it maintained its focus on ICT infrastructure and smart devices, and continued to boost the efficiency and quality of its operations, which helped contribute to its solid performance in the first quarter, according to Monday’s statement.
Read full story here.
 


Huawei Q1 revenue jumps 39 per cent 

Hangzhou Hikvision Digital Technology, China’s biggest maker of surveillance cameras, fell 1.2 per cent to 34.47 yuan in Shenzhen trading after saying first-quarter profit dropped 15 per cent from a year earlier on revenues that increased 6 per cent.
The quarter’s growth in both net incomes and revenues was the worst since its listing in 2010.
Net income for the three-month period was 1.54 billion yuan (US$230 million), trailing the estimates of analysts surveyed by Bloomberg by 34 per cent. Profit for 2018 increased 21 per cent from a year earlier, the company said in a separate exchange filing.
-- Zhang Shidong


Stock connect star Hangzhou Hikvision falls on worst quarterly result

Leshi Internet Information & Technology (300104 CH), once the bellwether on the ChiNext market, slumped 9.2 per cent to 2.28 yuan in Shenzhen trading.
The cash-strapped company may post negative net assets for 2018, a condition that will lead to the suspension of its stocks according to the exchange's rules, Leshi said in an exchange filing last Friday.
Net assets may be as much as a minus 2.9 billion yuan (US$431.7 million) and net loss for the year was expected to be up to 3.97 billion yuan, it said. Its 2018 report is due this Friday.
-- Zhang Shidong
 



Leshi Internet tumbles on delisting risk

Overseas investors will probably make up a bulk of estimated 895.2 billion yuan (US$133.4 billion) inflows into Chinese stocks this year, Citic Securities said in a note today.
Inflows from overseas may reach 524.1 billion yuan, analysts led by Qin Peijing and Yang Lingxiu at the brokerage wrote in the note.
Stock buybacks and buying from insurance companies are likely to be the other two biggest contributors to inflows in 2019, which are estimated at 115.1 billion yuan and 80 billion yuan, respectively, it said.
Further buying from hedge and mutual funds will be limited going forward, because of their higher stocks positions and redemption from retail investors amid the market rebound. Meanwhile, insider selling may reach 252 billion yuan for the year, according to the report.
-- Zhang Shidong


Foreign buying to make up bulk of stock inflows this year, Citic says

Developers’ stocks traded on the Shanghai Stock Exchange fell to their weakest level since the end of March, losing 3.4 per cent as a whole in morning trading, the worst among the five major sub-sectors on the bourse.
Beijing Capital Development lost the most as its shares slumped 8.3 per cent, Gemdale (600383 CH) retreated 5.9 per cent while Seazon Holdings (601155 CH) dropped 5.7 per cent.
Among the biggest developers, China Vanke (000002 CH) lost 5.1 per cent and Poly Developments (600048 CH) slid 4.8 per cent.
A Politburo meeting on Friday chaired by Communist Party boss Xi Jinping issued a statement repeating's Xi's famous declaration, “houses should be for living in, not for speculation.” It was the first time the Politburo has used the phrase in a statement since last July.
China’s Ministry of Home and Urban-rural Development said it has warned a few cities that have recorded significant home and land price increases. Cities like Changsha and Hefei have imposed new curb measures to cool the market.
-- Zheng Yangpeng  


China’s developers fall on Beijing’s harsher rhetoric on property sector

The risk linked to pledged shares as collateral for loans has been fading, according to the Shenzhen Stock Exchange.
The number of listed companies with at least 50 per cent of pledged shares dropped to 128 in the first quarter, a decrease of 9.2 per cent from the end of 2018, the bourse said in an analytical report on its website.
Forced sales of the stock averaged 110 million yuan (US$16.4 million) on a daily basis, down 25 per cent from the fourth quarter, it said. Local governments and financial institutions allocated combined 500 billion yuan to ease liquidity squeeze among listed companies, it said.
-- Zhang Shidong
 


Shenzhen exchange sees détente in share pledge risk

Anhui Conch Cement led the decline among Chinese makers of the building material after Ccement.com reported that the government summoned six companies to a meeting on Wednesday to warn against monopoly practices in the industry.
The six asked to attend include Anhui Conch (600585), China National Building Material Group and Tangshan Jidong Cement (000401), it said. Anhui Conch dropped 4.1 per cent to 40.82 yuan, Jidong Cement tumbled 7.2 per cent to 17.26 yuan and Huaxin Cement (600801) lost 4.4 per cent to 12.90 yuan.
-- Zhang Shidong
 



Anhui Conch, other Chinese cement makers fall on report of monopoly meeting

China Oil HBP Science & Technology and other mainland-traded oil drilling companies were defying the downward spiral on the market today.
China Oil HBP (002554 CH), XinJiang Beiken Energy Engineering Stock (002828 CH) and LandOcean Energy Services (300157 CH) all jumped by the 10 per cent daily limit. China Oilfield Services added 4.1 per cent to 10.86 yuan.
The catalyst came from the rising oil futures, which climbed 2.3 per cent to a five-month high of US$65.5 a barrel on the New York Mercantile Exchange in Asia hours trading. Citic Securities expects crude oil to rise to as high as US$80 in the second quarter on a production cut by OPEC, the geopolitical risk in Venezuela and Libya and a pickup in China’s growth.
-- Zhang Shidong



Chinese oil service companies buck decline on crude prospects

China’s stocks benchmark dropped the most in four weeks, as a top-level meeting by the Communist Party signalled that policy makers will pare the package aimed at bolstering economic growth.
The Shanghai Composite Index retreated 1.7 per cent, or 55.76 points, to 3,215.04. Other major equity gauges retreated as well, with a measure of the 50 biggest companies on the Shanghai exchange shedding 2.4 per cent as the worst performer.
A Politburo meeting chaired on Friday by Communist Party chief Xi Jinping re-mentioned “structural deleveraging,” a term that was dropped from major government statements a year ago, and re-introduced the lines on curbing speculation in the property market. The shift in wording came after official reports last week showed China’s economy grew by a faster-than-expected 6.4 per cent in the first quarter, close to the high end of the range of the annual growth target set by the government.
China’s sovereign debts also fell, with the yield on the 10-year government bonds rising 2.2 basis points to 3.394 per cent.
-- Zhang Shidong 


China’s stocks sink most in four weeks on policy headwinds from Politburo meeting

China pork-related stocks shot up in a declining market following news that African swine fever was discovered on the island province of Hainan, meaning the deadly disease to pigs has spread to every province in the pork-loving country. 
Tangrenshen Group (002567 CH), Tecon Biology (002100 CH) and Fujian Aonong Biological Technology Group (603363 CH) jumped by the 10 per cent daily limit. Animal feed maker Jiangxi Zhenbang Technology (002157 CH) rose 9.7 per cent.
The disease, which is not harmful to humans, has spread to all 31 mainland provinces, municipalities and autonomous regions in less than nine months. China is the world's largest producer and consumer of pigs, and the disease has roiled the country's pig sector, driving up prices and forcing cullings that have led to a drop in number of sows. Investors, however, have found pork-related shares have been akin to a money tree this year. 
-- Deb Price 


China pork stocks continue rewarding investors

China has named a new chief for the Industrial and Commercial Bank of China, the world’s largest lender by assets, people with knowledge of the matter told Bloomberg.
Chen Siqing, chairman of Bank of China, was appointed as party secretary of Beijing-based ICBC at an internal meeting on Monday, the people said, asking not to be identified as the matter is private, Bloomberg reported.
Chen is replacing Yi Huiman, who became chairman of the China Securities Regulatory Commission, the country’s top securities regulator, in January, Bloomberg continued.
Read full story here.
 


Comings and Goings: Chen Siqing named ICBC chairman, reports Bloomberg

Stocks Blog: China stocks fall, with developers leading decliners

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}China pork stocks continue rewarding investors Foreign buying to make up bulk of stock inflows this year, Citic says

China pork stocks continue rewarding investors

Foreign buying to make up bulk of stock inflows this year, Citic says