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Zhang Shidong

Azar Zaidi

It has been a rough, volatile week for markets globally, which woke up on Monday to US President Donald Trump’s tweets about raising tariffs on Chinese imports to America. 
And this volatility is set to continue on Thursday after another night of mixed signals, where Trump expressed his optimism over a trade deal, but Beijing signalled it would retaliate if the White House follows through with its tariff threat. 
Moreover, overnight, the US Trade Representative’s office took a formal step towards implementing the tariffs by publishing a Federal Register notice confirming the duties will increase.
And with China’s top trade negotiator, Vice-Premier Liu He, in Washington on Thursday and Friday for the high-stakes talks, it might be awhile before calm returns to bourses worldwide.
Join us, Zhang Shidong in Shanghai and Azar Zaidi in Hong Kong, for what promises to be another roller-coaster ride. 


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Stocks

Stocks Blog: Chinese stocks fall to 11-week low as credit data weighs

Business

Markets

China’s April aggregate financing and new lending both miss analysts’ forecast
Geely, WH Group push Hong Kong stocks to two-month low 


In Hong Kong, the Hang Seng Index dropped 2.4 per cent to 28,311.07 at the close on Thursday, its lowest close since March 8. 


China stock market

Hong Kong stock exchange

Live

* Overnight markets/what futures foretell:
– Overnight in US markets, S&P 500 dropped 0.2 per cent, Nasdaq fell 0.3 per cent and Dow Industrials added 0.01 per cent
– Hong Kong futures were 0.8 per cent lower, while the China A50 futures dropped 0.6 per cent
* IPO debuts: Guangdong Rifeng Electric Cable (002953 CH) to start trading in Shenzhen, while LKS Holding (1867 HK) and Viva Biotech Holdings (1873 HK) to debut in Hong Kong.
* Economic statistics/central bank action: China’s statistics bureau is due to release April inflation data at 9.30am on Thursday.
* Corporate events, earnings, meetings, news conferences: Nothing major
* Later this week: April data on money supply, new loans and aggregate financing may be out as early as tomorrow.


Morning Guidance

China’s consumer inflation accelerated to 2.5 per cent in April, the most since October, the statistics bureau said on Thursday morning. That matched the estimate of a 2.5 per cent increase in a Bloomberg survey. Producer prices increased 0.9 per cent, exceeding a projection of a 0.6 per cent increase.
– Zhang Shidong


China’s April consumer prices rise at fastest pace in five months

Stocks in mainland China and Hong Kong edged lower at the start of trading on Thursday after China’s commerce ministry said it will retaliate against tariff increases by the Trump Administration. The Shanghai Composite Index fell 0.2 per cent to 2,887.11 and the Hang Seng Index lost 0.6 per cent to 28,830.77. Technology companies were a bright spot, defying declines after China’s State Council said it will extend tax breaks for integrated circuit makers and software developers.
– Zhang Shidong


 China, Hong Kong stocks open lower amid signs of escalating trade war

Guangdong Rifeng Electric Cable (002953 CH), a cable supplier for the telecommunications industry, surged 44 per cent to 15.15 yuan on its first day of trading in Shenzhen. The 44 per cent jump is the maximum allowed by the mainland’s exchanges for initial public offering share debuts. LKS Holding Group (1867 HK) added 0.4 per cent to 25 Hong Kong cents in the city, while Viva Biotech Holdings (1873 HK), the latest biotechnology company to list in Hong Kong, gained 5.7 per cent to HK$4.66.
– Zhang Shidong and Eugene Tang


IPOs rise on China, Hong Kong debuts

Geely Automobile Holdings (195 HK) dropped 4.5 per cent to HK$13.72 after sales decreased 19 per cent from a year earlier in April. Sales also declined 17 per cent on a month-on-month basis. The stock is heading for its lowest close since March 14.
– Zhang Shidong
 


Geely falls to eight-week low on weak sales

The latest data on aggregate financing and new lending in China is weighing on stocks, as both numbers have fallen short of analysts’ estimates. 
According to a report released on Thursday morning by China’s central bank, aggregate financing, the country’s broadest measure of credit supply, including shadow banking and bond sales, stood at 1.36 trillion yuan (US$200.2 billion) in April. This number misses an estimate of 1.65 trillion yuan suggested by a Bloomberg survey. 
New yuan loans stood at 1.02 trillion yuan against a projection of 1.2 trillion yuan. Given that these are leading indicators of economic activity, China’s economy will probably face headwinds in the coming months. 
The Shanghai Composite Index extended its decline to 1 per cent in morning trading.
– Zhang Shidong


China’s April credit growth trails estimates, stocks extend losses

Chinese traders have been adding to their holdings of Chinese debt, driving the yield of 10-year government bonds down to a four-week low of 3.323 per cent. Lower-than-expected credit growth, falling exports and signs of an intensifying trade war between China and the US all point to slowing economic growth ahead. 
Meanwhile, the Shanghai Composite Index has fallen 1.3 per cent in latest trading and the Hang Seng Index has lost 1.6 per cent.
– Zhang Shidong
 


Traders take shelter in Chinese bonds amid risk-off sentiment

The stock market’s risk-off sentiment has quickly spilled over to China’s currency market. The onshore yuan weakened to 6.8067 against the US dollar on Thursday morning, its lowest level since January, while the currency depreciated to 6.8276 against the US dollar in offshore trading, also a four-month low.
– Zhang Shidong
 


Yuan weakens, falls to four-month low against US dollar

The pickup in China’s April Consumer Price Index was “mainly attributable to a broad-based acceleration in food inflation” caused particularly by “retail pork prices as result of the breakout of swine fever” in the country, Chen Jingyang, economist at HSBC, said in an emailed note. 
“Supply-side inflation looks to be turning more moderate lately, as commodity prices have stabilised in May,” she said.
“The industrial sector still has a lot of slack and corporate investment has only started to stabilise. This suggests a gradual demand recovery and modest support to industrial sector inflation in the coming months.”
– Eugene Tang


 Pickup in April CPI attributable to acceleration in food inflation, HSBC says

China’s credit growth eased in April, with new loans lagging estimates by 15 per cent at 1.02 trillion yuan, while aggregate financing came in 17.5 per cent below forecasts at 1.36 trillion yuan. “Part of the slowdown is seasonal, as April is traditionally a weaker month for lending,” HSBC economist Julia Wang said in an emailed note. “In addition to the seasonality, there has also been some tightening of liquidity conditions in the interbank market over the month.
“Despite some fears of tightening, we believe that the underlying policy stance has not shifted,” Wang said.
 
“Broad credit growth is likely to continue to recover at a modest pace in the coming months. Borrowing cost for corporates are likely to continue to ease. And the renewed uncertainty in China-US trade relations is likely to add to policymakers’ determination to stay the course on policy easing.” 
– Eugene Tang


Slowdown in credit growth, financing partly seasonal, HSBC says

China’s “national team”, or state-backed funds created in the 2015 crash to prop up stocks, held at least 856.3 billion yuan (US$125.8 billion) worth of equities by the end of the first quarter, according to Sinolink Securities. The stocks were held by China Securities Finance, a major arm of the state-backed funds, and were equivalent to about 2 per cent of the free-floating market cap of the Chinese market, the brokerage said in a report dated Thursday. Banks, insurers and brokerages were its top holdings, making up 42 per cent of allocations, the report said.
– Zhang Shidong


China’s ‘national team’ held at least US$126 billion of stocks in first quarter, Sinolink says

Asia’s medical cannabis industry could be worth US$5.8 billion by 2024, and might quadruple by 2027, should a number of key markets legalise it, consulting firm Prohibition Partners said in a report. 
China and Japan are the two biggest markets for hemp in Asia and they will probably make up 90 per cent of the market share by 2024, according to the report. 
China is already a dominant force in hemp, accounting for about half of the world’s supply. A gauge tracking 42 Chinese hemp-linked stocks has surged 63 per cent this year, soundly beating the benchmark Shanghai Composite Index.
– Zhang Shidong


  Asian medial cannabis sector could be worth US$5.8 billion in 2024

The Shanghai Composite Index dropped 1.1 per cent to 2,861.29 in afternoon trading on Thursday, and is set for its lowest close since February 22. 
Foreign investors have been a major factor behind the sell-off, as they have sold Chinese stocks worth a combined 15.3 billion yuan (US$2.25 billion) through the exchange links between Hong Kong and Shanghai and Shenzhen so far this week.
– Zhang Shidong


China’s stocks head for their lowest close since February

Tahoe Group (000732 CH), a Shenzhen-listed property developer, has received a letter from the city’s stock exchange inquiring about its ability to repay its debt. The inquiry has highlighted the huge gap between its short-term debt and cash flows. Tahoe ran short-term debt totalling 57.4 billion yuan (US$8.44 billion) by 2018, while it had only 11.6 billion yuan in cash on its balance sheet, according to its annual results. The stock tumbled 8.5 per cent to 16.01 yuan on Thursday.
– Zhang Shidong


Property developer Tahoe questioned over ability to repay debt

The Shanghai Composite Index dropped 1.5 per cent to 2,850.95 at the close on Thursday, its lowest level since February 22. The Shenzhen Composite Index fared better, sinking 1.3 per cent. 
Weaker-than-expected aggregate financing and new lending numbers added to worries that economic recovery will falter. Liquor distillers and insurance companies paced the decline, with foreign investors appearing to pull out of some of their favourite names for a fifth straight day of net selling via the stock connect links.
“The credit data is adding uncertainty to the market and has roused concerns about the prospects of the economy,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “Eyes will also be on the coming US-China trade talks … lots of investors are on the sidelines now.”
– Zhang Shidong


China stock benchmark falls to 11-week low as credit data weighs

Shares of Hong Kong-listed events organiser Mega Expo Holdings (1360 HK) plummeted by 29 per cent before trading in its stock was halted at 2pm, following a short-seller report accusing the company of fraud that also said it had a valuation of zero.
Activist short-seller Blue Orca Capital alleged in a report on Thursday that Mega Expo had undergone a stealth reverse merger through sham acquisition transactions, and that “shadowy networks with ties to criminal enterprises such as prostitution” now controlled the company.
Mega Expo did not immediately reply to a request for comment.
The company organised more than 30 events in China during the second half of 2018, ranging from new product launches to music award ceremonies, according to its interim report published in March.
– Yujing Liu 


Trading in Hong Kong-listed firm Mega Expo halted after short-seller report

The Hang Seng Index dropped 2.4 per cent, or 692.13 points, to 28,311.07 at the close on Thursday, its lowest close since March 8. The Hang Seng China Enterprises Index, or the H-share gauge, lost 2.3 per cent.
Geely Automobile Holdings and pork processor WH Group were among its biggest decliners, falling by at least 5.8 per cent.
– Zhang Shidong


Geely, WH Group push Hong Kong stocks to two-month low 

Stocks Blog: Chinese stocks fall to 11-week low as credit data weighs

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}China’s April aggregate financing and new lending both miss analysts’ forecast Geely, WH Group push Hong Kong stocks to two-month low

China’s April aggregate financing and new lending both miss analysts’ forecast

Geely, WH Group push Hong Kong stocks to two-month low