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Yujing Liu

Deb Price

Good day, traders.
Markets in the mainland and Hong Kong continued to fall amid the trade war flare-up.
Catch up on the latest action below. If you have questions, please send them to deb.price@scmp.com .
-- Yujing Liu and Deb Price in Hong Kong 
 


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Stocks

Stocks Blog: Battered China, Hong Kong markets tumble amid trade war flare-up

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

Photo: Shutterstock

Liu Shiyu, China’s former top securities regulator, turns himself in as part of corruption investigation

Liu Shiyu, the former chairman of the China Securities Regulatory Commission, in 2017. He has become the subject of a graft probe. Photo: Bloomberg

Mr. Liu Shiyu, Chairman of the China Securities Regulatory Commission( CSRC ) speaks at a press conference about the issues on promoting the reform, stability & development of capital market in a coordinated way held at the State Council Information Office in Beijing on Feb. 26, 2017. 26FEB17 SCMP/Simon Song

Business

Markets

Economy

Hong Kong stocks give up all gains since end of January
Crystal Ball: Chinese telecom firms to fly as Huawei likely to promote domestic suppliers, CSC Financial says


Chinese markets could be experiencing the biggest monthly outflow of foreign capital ever


Hong Kong stock exchange

China markets

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Former China Securities Regulatory Commission (CSRC) chairman Liu Shiyu has turned himself in and is under investigation for suspected violations of laws and regulations, the corruption watchdog of the Communist Party said in a statement late Sunday night.
Soon after he took over at the CSRC in 2016, Liu launched a series of investigations in a bid to snare “crocodiles” – a name given to the high-powered financiers who pocketed billions by manipulating the market.
The probes were seen as part of Chinese President Xi Jinping’s crackdown on the financial sector after the stock market rout in the previous year.
Read full story here.
 
 


Former head of Chinese securities watchdog under investigation

China International Capital Corp. (3908 HK), a financial services provider, had its H shares rated a new buy at China Merchants, with a price target of HK$18.70.
CICC has had a very uneven year, starting at HK$14.70, climbing to HK$19.56 on March 4, and closing Friday at $15.30. Of analysts tracked by Bloomberg, 13 call it a buy, one a hold and none a sell, with a consensus price target of HK$21.31.
-- Deb Price
 


CICC rated new buy at China Merchants

China oil and gas giant Cnooc (883 HK) was upgraded to overweight from neutral at JPMorgan, with a price target of HK$16.20 from HK$14.80. That would be a 21 per cent increase from its last close.
Of analysts tracked by Bloomberg, 17 call it a buy, six a hold and none a sell, with a consensus target price of HK$16.37.
"Cnooc has the greatest leverage to the oil-price changes among the three Chinese oil majors and an increase earnings per share by most in terms of incremental amount of oil prices rise, as crude oil and liquids account for over 80 per cent of its production," Miranda Wang wrote in a Bloomberg Intelligence note on March 22.
-- Deb Price 
 


Cnooc upgraded to overweight by JPMorgan

Property developer and manager Henderson Land Development (12 HK) is a recommended buy at BOCOM International Holdings, which reinstated coverage.
Its price target was raised to HK$53.50 from $HK50.09, or 11 per cent up from its last close.
Analysts tracked by Bloomberg vary widely in their assessment of the developer. Eight call it a buy, seven a hold and two a sell, with a consensus price target of HK$51.70. It closed at HK$48.20.
-- Deb Price 
 


Henderson Land rated buy at BOCOM

Chinese electricity generator Huaneng Power International (600011 CH) was upgraded to overweight by JPMorgan. 
The stock plunged on Friday, a painful day for Chinese markets amid the flare-up in the US-China trade war, falling 4.8 per cent to 6.14 yuan. That was its biggest drop since January 30, when it fell 5.4 percent. 
 "Huaneng Power International continues to increase its investment in clean-power capacities to improve its profit outlook and pare dependence on coal operations," Bloomberg Intelligence wrote on April 26, after the company reported its earnings. "Its coal-generation business faces many challenges, including a supply glut and grids prioritizing clean energy, as well as environmental-protection costs and pricing pressure."
-- Deb Price
 


Huaneng Power A shares upgraded to overweight by JPMorgan

Here's what we are watching this morning:US markets/ What futures foretell
-- US stocks closed lower on Friday. The S&P 500 shed 0.6 per cent, The Nasdaq Composite was down 1 per cent, and the Dow Jones Industrial Average lost 0.4 per cent.
-- Hong Kong futures are up 0.1 per cent at 27,753, while the China A50 futures are up 0.8 per cent at 12807.50 in the latest trading.IPO debuts:
Nothing major.Economic statistics/Central Bank action:
Nothing major.Corporate events: earnings, meetings, news conferences:
Smartphone and home appliance maker Xiaomi (1810 HK) to announce first-quarter earnings.
Good Reads:
A look at how a Chinese oilfield equipment maker targeted by US tariffs for the last 10 years has adapted and thrived, by Eric Ng. The bull run in Hong Kong’s residential property market took an unexpected break on Saturday when a weekend launch by the city’s biggest developer failed to sell out, reports Louise Moon.
 


Morning guidance 

A senior Chinese central bank official said over the weekend the bank was confident and capable of maintaining a stable yuan, following a sharp depreciation of the Chinese currency against the US dollar this month.
The remarks by Pan Gongsheng, deputy governor of the People's Bank of China (PBOC), were published on the front pages of several major state securities papers today. An opinion piece by the official China Securities Journal says the comments indicate that the yuan is unlikely to weaken past the key 7-per-dollar level.
The onshore yuan has weakened 3 per cent since the beginning of May to 6.92 per US dollar today.
-- Yujing Liu 


China’s central banker out to talk up up yuan

Major Chinese benchmarks opened lower, as the market reels from the latest development of the US ban on telecom giant Huawei Technologies and news of an investigation of the former securities watchdog chief Liu Shiyu.

The Shanghai Composite Index lost 0.2 per cent to 2875.46, while the Shenzhen Component Index was down 0.9 per cent. The Nasdaq-style ChiNext Index fell 0.3 per cent.

In Hong Kong, the Hang Seng Index was little moved at 27,953.34.
-- Yujing Liu 


China stocks decline in market open

Chinese semiconductor companies bucked the downward trend and surged in early trading, after Huawei Technologies said said new US restrictions will have limited impact on its growth.
The telecom giant targeted by a US export ban ranks the third in chip consumption globally.

Ren Zhengfei, founder and chief executive of Huawei, said Huawei’s growth this year may slow but only slightly, Nikkei reported on Saturday. The private firm’s revenue growth may fall short of 20 per cent this year, he said.
Previously, a chipmaking subsidiary of Huawei said it had prepared a “plan B” for the scenario that it won’t be able to buy chips from the US, and is quickly ramping up self-sufficiency.
A gauge tracking 31 semiconductor-related companies listed in Shanghai and Shenzhen jumped 3.8 per cent in the latest trading. Five stocks surged by the daily limit of 10 per cent, including Jilin Sino-Microelectronics (600360 SH) and Jiangsu Changjiang Electronics Tech (600584 SH).
-- Yujing Liu 


Semiconductors surge after Huawei says US ban will cause only slight impact

Commercial banks based in the eastern province of Jiangsu declined, after media reports linked the listings of the banks to the investigation of the former securities watchdog chief Liu Shiyu.
Chinese financial media outlet Caijing reported that Liu had been widely criticised for accelerating the listing approvals of a slew of Jiangsu banks during his tenure – the province is also his hometown – and his investigation could be related to the banks.
Jiangsu Suzhou Rural Commercial Bank (603323 SH) fell 5 per cent, and Jiangsu Zijin Rural Commercial Bank (601860 SH) declined 5.5 per cent. Jiangsu Changshu Rural Commercial Bank (601128 SH) dropped 2.3 per cent.
-- Yujing Liu 


Jiangsu banks drop after media reports suggest links to former securities watchdog chief’s investigation

Pig-feed makers fell broadly in China markets.
Shenzhen Jinxinnong Technology ( 002548 CH) plunged 8.6 per cent to 13.50 yuan, while Tangrenshen Group (002567 CH) fell 6.9 per cent to 8.96 yuan, Tecon Biology (002100 CH) fell 7 per cent to 8.95 yuan, and Fujian Aonong Biological Technology Group (603363 CH) plummeted 9 per cent to 18.12 yuan.
China's pork sector has been rocked by the African swine flu. The disease, fatal to pigs, has spread to all 31 mainland provinces, municipalities and autonomous regions since its discovery in August. China is the world's largest producer and consumer of pigs.

There is no vaccine for the highly contagious disease, which has driven up pork prices and forced cullings. 

-- Deb Price  
 


Pork-related stocks plunge

Chinese gaming and internet giant Tencent Holdings (0700 HK) fell as much as 2.8 per cent to HK$345.8 in early trading, its lowest intraday level since March 8.
The stock looks set to record a third straight losing session since it reported first-quarter earnings last Wednesday. Its revenue grew at the slowest pace in history amid heightened regulatory scrutiny of its games, even though net profit beat estimates with a 17 per cent year-on-year increase.
-- Yujing Liu 


Tencent slides to 10-week low

The Shanghai Composite Index declined 0.6 per cent to 2865.25 by its lunch close, while the Shenzhen Component Index was down 1 per cent. The Nasdaq-style ChiNext Index lost 0.6 per cent.
Steep losses in pork producers and stocks related to meatless meat  -- mostly companies farming and processing soybean – led the decline.
In Hong Kong, the Hang Seng Index was 0.5 per cent lower at 27,794.61 in the latest trading, dragged down by index heavyweight Tencent Holdings (700 HK), which is on track to fall for a third session following its first-quarter results.
-- Yujing Liu 


China, Hong Kong stocks extend losses 

The Hang Seng Index fell as much as 0.9 per cent to 27,699.23 at one point, the lowest intraday level since February 8.
The benchmark has lost 8 per cent since an April high, battered by the re-escalation of trade tensions between China and the US and a lack of clear signals on China’s economic recovery.
-- Yujing Liu 


Hang Seng Index records a 14-week intraday low

A group of Jiangsu-based banks listed during the tenure of Liu Shiyu, the former chief of China’s securities regulator currently under investigation for suspected violations of law, continued to decline amid rumours that the banks’ listings prompted the investigation.
Jiangsu Suzhou Rural Commercial Bank (603323 SH) lost 4 per cent by the lunch close, the worst hit by the announcement last night that roiled the market. Chinese media reports suggested Liu’s investigation by the Communist Party’s corruption watchdog was linked to the listing of the banks based in his hometown.
Jiangsu Zhangjiagang Rural Commercial Bank (002839 SZ) fell 3.8 per cent, and Jiangsu Zijin Rural Commercial Bank (601860 SH) dropped 3.3 per cent. Other Jiangsu commercial banks also declined, including Bank of Jiangsu, Jiangsu Jiangyin Rural Commercial Bank, Wuxi Rural Commercial Bank, and Jiangsu Changshu Rural Commercial Bank.
-- Yujing Liu 


More Jiangsu banks drop by lunch break

Chinese telecommunication equipment suppliers will enter a golden era of growth once Huawei Technologies overcomes the current difficulties related to the US export ban, analysts at Chinese brokerage CSC Financial say.
The privately-held telecom giant Huawei has been stockpiling inventories since a year ago and taking steps to diversify its supply network. So the risk to its operation linked to US steps against it is small, the analysts wrote in a new report. Huawei is likely to focus on helping and promoting domestic suppliers to replace the US ones, which will provide unprecedented opportunities for the Chinese firms.
Analyst Liu Shuangfeng recommended chipmakers Unigroup Guoxin Microelectronics (002049 SZ) and SG micro (300661 SZ), as well as electronic circuit base material producers Guangdong Shengyi Technology (600183 SH) and Zhejiang Huazheng New Material (603186 SH).
-- Yujing Liu 


Crystal Ball: Chinese telecom firms to fly as Huawei likely to promote domestic suppliers, CSC Financial says

Smartphone component makers declined in Hong Kong, following media reports that Google has decided to cut off Huawei’s license to use its Android operating system on its smartphones.
A Google spokeswoman said the company is complying with the US export ban on Huawei, but the Google Play app store will continue to function on existing Huawei devices. The statement came after Reuters reported that Google had suspended providing hardware, software and technical services to Huawei and cut off its access to the Android system.
Q Technology (1478 HK), which supplies camera modules to Huawei, tumbled 8.8 per cent. Lens maker Sunny Optical Technology (2382 HK) declined 5.5 per cent, and AAC Technologies, which makes acoustic and haptic components, dropped 0.8 per cent.
-- Yujing Liu 


Uncertainties around Huawei’s Android license leads to decline in smartphone component suppliers

Companies related to rare earth elements surged after President Xi Jinping payed a visit to JL Mag Rare-Earth (300748 SZ), a producer of magnetic materials made from rare earth elements based in the southeastern province of Jiangxi.
During the site visit today, Xi learned the company’s operation conditions and the development of the local rare earth industry, the state broadcaster reported.
JL Mag Rare-Earth and six other rare-earth magnet producers surged by the daily limit of 10 per cent. A gauge tracking 38 companies related to rare earth minerals surged 3.9 per cent.
-- Yujing Liu 


Rare earth stocks soar on Xi’s visit

The Hong Kong stock exchange has moved the scandal-hit Chinese drug maker Kangmei Pharmaceutical (600518 SH) to a list of stocks that are eligible for selling only in cross-border trading through the Stock Connect programme, according to a statement.
Kangmei is facing a 600,000 yuan (US$86,775) fine for falsifying its cash position by as much as 29.9 billion yuan. The company said the disappeared cash holding was an “accounting error”. Trading of its shares was suspended today and will resume tomorrow.
-- Yujing Liu 


Offshore investors can only sell scandal-hit drug maker Kangmei through Stock Connect now

Foreign funds could be on track to record their biggest monthly outflow from China’s A-share market in history, as a net total of 38.8 billion yuan (US$5.6 billion) of shares have already been sold this month.
The outflow through the Stock Connect programme that allows mainland Chinese and Hong Kong investors to trade in each other’s market was prompted by decreasing risk appetite as trade tensions between China and the US flared up again recently. Even the index compiler MSCI’s announcement last week of a list of Chinese stocks to be included into its global indices did not help stem the capital flight.
-- Yujing Liu 


Chinese markets could be experiencing the biggest monthly outflow of foreign capital ever

Shares of Kerry Logistics Network (636 HK) fell after the logistic arm's former chairman was named for the first time in a court hearing this morning over corruption charges against a former JPMorgan Securities (Asia Pacific) managing director.
Hong Kong’s anti-graft body, the Independent Commission Against Corruption, is pursuing two charges against JPMorgan’s Catherine Leung Kar-cheung, 51, for allegedly "bribing" Ang Keng-lam, the then-chairman of Kerry Logistics’, by employing his son Ang Ren-yi in what turned out to be unsuccessful hopes of getting to work on the company's initial public offering.
This is the first time that the anti-graft body has pressed charges related to job hiring in exchange for favours leading to investment banking deals.
Kerry Logistics shares were last down 1.2 per cent.
-- Enoch Yiu


Kerry Logistics shares take a hit after it is named in court hearing

The Hang Seng Index closed 0.6 per cent lower at 27,787.61 -- the lowest level since January 30.
The benchmark rose as much as 9 per cent since the end of January to an April high, but has since given up all the gains as the return of trade tensions prompted weeks of sell-off.
Index heavyweight Tencent Holdings (0700 HK) fell by 3.8 per cent to the lowest price since March 1. The market is worried that Tencent’s revenue growth will continue slowing after it posted worse-than-expected revenue in the first quarter last Wednesday.
In mainland China, the Shanghai Composite Index lost 0.4 per cent to 2870.6. The Shenzhen Component Index declined 0.9 per cent, and the ChiNext Index ended 0.6 per cent lower.
-- Yujing Liu 


Hong Kong stocks give up all gains since end of January

Stocks Blog: Battered China, Hong Kong markets tumble amid trade war flare-up

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Hong Kong stocks give up all gains since end of January Crystal Ball: Chinese telecom firms to fly as Huawei likely to promote domestic suppliers, CSC Financial says

Hong Kong stocks give up all gains since end of January

Crystal Ball: Chinese telecom firms to fly as Huawei likely to promote domestic suppliers, CSC Financial says