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Zhang Shidong

Deb Price

Good day, traders.
Catch up on the day's action below. If you have questions or feedback, please shoot them to deb.price@scmp.com . And welcome to our first reader from the Czech Republic!
— Zhang Shidong in Shanghai and Deb Price in Hong Kong


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Stocks

Stocks Blog: Hong Kong closes down a bit, while Shanghai ekes out gain as trade worries keep lid on markets

The Hong Kong Stock Exchange flag, China flag and Hong Kong flag are seen outside of the Hong Kong Stock Exchange in Central. Photo: Dickson Lee


Police clear a road Thursday morning after demonstrations against a proposed extradition bill disrupted traffic and prompted some banks to temporarily shut down. Photo: Winson Wong

Business

Markets

Alibaba said to have filed for second listing in Hong Kong: Bloomberg
Newly listed China Tobacco Hong Kong is on fire


Alibaba said to have filed for second listing in Hong Kong: Bloomberg


China stock market

Hong Kong stock exchange

Live

* Overnight markets/ What futures foretell
  -- Overnight in US markets, both S&P 500 and Dow Industrials dropped 0.2 per cent, and Nasdaq fell 0.4 per cent.
   -- Hong Kong futures were 0.3 per cent lower, while the China A50 futures slid 0.5 per cent
* IPO debuts: Catering company Tai Hing Group Holdings (6811 HK) and Kato Hong Kong Holdings (2189 HK) will start trading in Hong Kong today.
* Economic statistics/Central Bank action: The National Bureau of Statistics is scheduled to release May data on industrial production, retail sales and fixed-asset investment tomorrow.
* Corporate events: earnings, meetings, news conferences
-- The annual Lujiazui financial forum kicks off in Shanghai today, in which central bank governor Yi Gang, chief of the banking regulator Guo Shuqing and head of the stock-market watchdog Yi Huiman are expected to deliver keynote speeches. The forum will last two days.
Good reads: Stocks reporter Georgina Lee looks into stock picking managers and whether they will help deliver US$85 billion to China's A-share market. An ex-chemistry teacher is poised to become China's third-richest woman, as her Hansoh Pharmaceutical Group gets ready to go public in Hong Kong Friday. 


Morning guidance 

Kingston Financial Group (1031 HK), the flagship of Hong Kong billionaire Pollyanna Chu Yuet-wah, issued a profit warning, saying it anticipates to report “a significant decrease in its profit” attributable to owners of the company for the year to the end of March, according to a stock exchange filing on Wednesday night. 
The company did not share any number. It is expected to announce its results later this month. Last year, the company reported a profit attributable to shareholders at HK$1.35 billion.
“Such a year-on-year significant decrease in net profit was primarily attributable to a one-time write off of the group’s intangible assets relating to cancellation of the mineral leases, which were non-core assets of the group,” the company announcement said.
Chu, who was Hong Kong’s richest woman last year, lost the crown to Sung Hung Kai Properties co-founder Kwong Siu-hing this year.  Her wealth was down 72 per cent from US$12 billion last year to US$3.3 billion this year, according to Forbes’ Hong Kong rich list 2019 issued in February.

— Enoch Yiu 


Kingston Financial issues profit warning

Xiaomi has had trouble this year convincing investors it has a breakout strategy. But analysts have largely seen its shares positively.
The latest pair to weigh in offer mixed assessments.
OTR Global downgraded it to negative. But Oceanwide Securities initiated coverage with a buy recommendation, and a price target of HK$15. It closed at HK$9.54 Wednesday, down 2.1 per cent. 
Of analysts tracked by Bloomberg, 25 call it a buy, seven a hold and two a sell. 
Xiaomi posted two consecutive quarters of sequential gross-profit declines, but boosted its first-quarter net income. Bloomberg Intelligence analyst Anthea Lai wrote in a note that the smartphone maker needs to increase R&D spending and offline stores "before it can take premium smartphone market share from a Huawei struggling to procure U.S. components." 

 
— Deb Price
 


Smartphone-maker Xiaomi gets mixed ratings 

Kato Holdings and Tai Hing Group rang the gong today @HKEXGroup pic.twitter.com/EGjJcCzX4H
— Joy Pamnani (@joypamnani) June 13, 2019
Hong Kong welcomed two new company faces on its stock exchange today: Tai Hing Group Holdings (6811 HK), a multi-brand casual dining restaurant group, and Kato Holdings (2189 HK), the third largest private residential care home for the elderly operator in Hong Kong.
The restaurant group debuted in a HK$694.7 million (US$88.78 million) initial public offering, from the first-time sales after selling the stock at an offer price of HK$3 per share.
Tai Hing owns multiple restaurant chains in the city, including TeaWood, Trusty Congee King, and Meng Wah Bing Teng, and has a network of 191 restaurants all over Hong Kong, Macau, Taiwan and mainland China. Offering a wide range of cuisines, the company ranked first in terms of revenue and occupies a 4 per cent market share in Hong Kong's self-operated casual dining restaurant market, according to the Frost & Sullivan Report.
Proceeds will mainly be used to open new restaurants and factories, as well as renovate them.
Meanwhile, the elderly home operator debuted in a HK$118.4 million (US$15.13 million) initial public offering, from the first-time sales after selling the stock at an offer price of HK$0.60 per share.
In addition to accommodation, Kato Holdings provides multiple services to its elderly residents, such as nursing, medical and therapeutic services. The group operates eight care and attention homes for the elderly with 1,129 residential care places operating across four districts in the city.
The proceeds will be allocated to expanding of Kato Holdings's elderly home network and hiring and training staff for new care and attention homes.
Tai Hing is at HK$2.59, while Kato Holding is at HK$0.53 in early morning trading.
 
— Joy  Pamnani 
 


Kato Holdings and Tai Hing Group join Hong Kong stock exchange

Liu He, who headed rounds of the China-US trade talks, is making a keynote speech on the opening day of the ongoing Liujiazui Forum in Shanghai.
His speech touches on issues from further opening up of the financial industry and China’s leverage ratio to the upcoming new technology board on the Shanghai exchange. Liu is also China’s vice premier and President Xi Jinping’s top economic adviser.
-- Zhang Shidong 


China’s top trade negotiator Liu He speaks in Lujiazui forum

Only health care and consumer staples stocks are trading up on the Hang Seng this morning.
The city's benchmark index is down 1.7 per cent to 26,844.36, after protests that began Sunday have unnerved investors already battling jitters over slowing global and China growth and ongoing trade and tech tensions between Beijing and the US.
The real estate and industrials sectors led declines, with stocks falling in each 1.7 per cent.
CK Asset Holdings (1113 HK) was the leading loser in early morning trading, down 2.7 per cent. Other property companies down included Hang Lung (101 HK), down 2.5 per cent, New World Development (17 HK), down  2.4 per cent, Wharf Real Estate Investment (1997 HK), down 1.8 per cent, and Sun Hung Kai Properties (16 HK), down 1.7 per cent.
Cusson Leung, lead property analyst at J.P. Morgan, recently sat down with us to discuss the outlook for Hong Kong property. You can watch the studio interview here.
— Deb Price
 
 


Real estate, industrials weigh down Hang Seng 

China will have an opening ceremony of its Nasdaq-like technology board in Shanghai today, the Xinhua News Agency reported, citing information from the ongoing Lujiazui Forum in the city.
So far, the Shanghai Stock Exchange has received applications from 122 companies to list on the board.
— Zhang Shidong


Opening ceremony of China’s tech board starts in Shanghai today

Beijing officially launched its new technology innovation board, China’s Nasdaq-style market, reports Daniel Ren.
The launch comes as the US-China trade war has spread to the technology sector, threatening huge home-grown stars like Huawei and others.
The idea behind the board is to encourage investment in domestic tech innovators, ensuring they have resources to develop and also have an incentive to list at home. It also will make those companies easy for mainland investors to trade in, after complaints that mega stars like Alibaba chose to list in the US. (Alibaba owns the South China Morning Post.)
Vice-premier Liu He pressed the button at the Lujiazui Forum in Shanghai to start the much-hyped market of the SSE STAR market, as it is officially called.
It is not clear when trading will begin on the market, but it is highly expected that a first batch of more than 20 companies will debut on the board within one month once it does.
Read full story here. 


China officially launches new technology board

The Shanghai Composite Index will start the afternoon session with a bit of gains, after digging itself out of a hole in the early morning. It was up 0.1 per cent at the lunch break.

Communications services led gains, up 0.8 per cent. Also up were financials, information technology, health care, industrials, consumer staples, consumer discretionary and real estate.
Only energy, utilities and materials were down at the lunch break. 
Thirteen companies hit or nearly hit the upside 10 per cent limit in China, many of which are in the construction and design fields, as traders continued to pile into infrastructure-linked stocks they hope will benefit from Beijing fiscal stimulus steps.
They included Lanzhou LS Heavy Equipment (603169 CH), which manufactures heavy machinery, Suzhou Architecture Research Institute (603183 CH), which provides engineering services, and Longjian Road and Bridge (600853 CH), a contractor for highway construction projects.
Despite a fall in May as tensions escalated between the US and China, the Shanghai Composite is up 16.8 per cent this year. That compares with the US' S&P 500's 14.9 per cent gain this year. Hong Kong's Hang Seng is up just 3.9 per cent for the year.
 
-- Deb Price   
 


Shanghai will go into afternoon session trying to hold skimpy gains 

The Hang Seng ended the morning session down 0.86 per cent to 27,072.99. But it pulled up from deeper lows shortly before 11:30, as the city began to return to normalcy after protests against a proposal that would allow extraditions to mainland China.
All sectors except health care were down, with energy and consumer discretionary down the most.
Kingston Financial Group (1031 HK) fell 1.9 per cent to HK$1.52 after issuing a profit warning. 
Meanwhile, Xiaomi (1810 HK), which got a new buy and a negative rating,  was down 0.5 per ent to HK$9.49.
Index heavyweight Tencent (700 HK) fell 1.8 per cent to HK$331.40. 
China Rare Earth (769 HK), which has seen a pile-in, rush-out recently by speculators amid a craze set off by President Xi Jinping over rare earths, was down 1.6 per cent to HK$0.63.
-- Deb Price 
 


Health care is lone gainer on Hang Seng

The Shenzhen Composite Index will head into afternoon session up 0.3 per cent, led by gains in communication services, whose shares were up 2.3 per cent. 
Three sectors were down — real estate, consumer staples and consumer discretionary — but marginally so. More than 30 companies hit or nearly hit the daily limit of 10 per cent gains. 
Traders were buoyed by the official launch of the tech innovation board in Shanghai and upbeat comments out of a gathering of top Chinese officials including China’s Vice Premier Liu He there about China's capital markets.
Pan Gongsheng, head of the State Administration of Foreign Exchange, said China will push for reforms of the programmes for overseas institutions to trade Chinese stocks and bonds, Bloomberg reported.  They are the Qualified Foreign Institutional Investor and Renminbi Qualified Foreign Institutional Investor programmes. China is considering relaxing or removing the management of quotas, Pan said, according to Bloomberg.
Meanwhile, People’s Bank of China Governor Yi Gang said Shanghai should be a center for financial technology and “provide a world-class business environment,” Bloomberg reported.
— Deb Price 
 


Shenzhen boosted by communication services, officials' upbeat comments on markets 

Shares of some hydrogen-linked companies climbed today, after Wan Gang, called China's father of electric cars, said the next era is "establishing a hydrogen society."
In a lengthy feature by Bloomberg, Wan —  now a vice-chairman of China’s national advisory body for policymaking — said a move to hydrogen would realise a vision of having electric cars dominate inner-city traffic, while buses and trucks filled with hydrogen tanks hit the highways for long-distance travel.
The adoption of fuel-cell vehicles has been slow in spite of China having an abundant supply of hydrogen, Wan told Bloomberg. There are only about 1,500 such vehicles in use there today, compared with more than two million purely electric vehicles, he said.
Jiangsu Huachang Chemical (002274 CH), which develops hydrogen pumping stations, rose 8.3 per cent to 7.34 yuan.
Beijing Shouhang Resources Saving (002665 CH) rose 2.8 per cent to 3.70 yuan. It received government backing for a hydrogen fuel cell business in a deal with the Datong city government in Shanxi province, according to a May 15 report by financial news outlet Caixin Global. It aims to set up three hydrogen production plants and more than 10 hydrogen stations for vehicles in Datong, Caixin reported.
Shanghai Tongji Science & Technology Industrial ( 600846 CH) rose 2.4 per cent to 8.96 yuan, while Lanzhou Great Wall Electrical (600192 CH) is up 5.6 per cent to 6.23 yuan. They make electrical products.
— Deb Price


Hydrogen shares jump in China 

Alibaba Group Holding has filed confidentially for a Hong Kong second listing, Bloomberg is reporting, citing people familiar with the matter. 
If the e-commerce giant makes a secondary listing in Hong Kong, that would be the city’s biggest share sale since 2010, Bloomberg said.
Alibaba, which trades in the US under the ticker BABA and owns the South China Morning Post, filed a stock listing application with the exchange this week without the need for financial disclosures, the people told Bloomberg. Alibaba didn't respond to Bloomberg's request for comment.
The IPO could raise as much as $20 billion, though Alibaba hasn’t finalized its fundraising target, the people told Bloomberg. 
The transaction could bolster the city’s status as a destination for Chinese tech listings and boost the online retailer’s cash pile as it wages a costly war of subsidies in food delivery and travel with Meituan Dianping, Bloomberg said.
Shares of the operator of the Hong Kong exchange, the Hong Kong Exchanges and Clearing (00388), rose on the news by 0.2 per cent, to HK$259.60
 


Alibaba said to have filed for Hong Kong  second listing: Bloomberg

China Tobacco International (6055 HK), a subsidiary of the world's largest cigarette producer, has shot up 33.6 per cent to HK$7.15.
The tobacco company debuted in Hong Kong on Wednesday in a HK$734.9 million (US$93.7 million) initial public offering.
The international unit procures overseas tobacco leaf from such countries as Brazil, Argentina and Canada for the state monopoly. It derives its revenue mostly from a 6 per cent fixed mark-up on overseas tobacco leaves when selling them to domestic cigarette manufacturers, according to the company filing.
 — Deb Price 
 


Newly listed China Tobacco Hong Kong is on fire 

Trade, trade, trade.
It is keeping a lid on markets, says Dai Ming, a fund manager at Hengsheng Asset Management in Shanghai.
“The market is still cautious as there’s no progress made on the trade war,” Dai said. “Even if there’s a chance for the leaders from the two countries to meet at the G20 Group summit at the end of the month, the process will still be unpredictable given the capriciousness of the Trump administration.”
Presidents Donald Trump of the US and Xi Jinping of China will attend the G20 on June 28-29, but it isn't clear they will meet separately on trade.
The Shanghai Composite has a teeny gain for the day.
— Zhang Shidong 
 


Trade still driving sentiment in Chinese markets, says Hengsheng Asset Management fund manager 

China's new Nasdaq-style technology board will probably start trading in mid-July and 25 companies are expected to be among the first batch to debut, said Li Lifeng, a strategist at Sinolink Securities in a report today.
— Zhang Shidong


China’s new tech board may start trading next month, Sinolink says

China's new tech innovation board's relaxation on listing requirements will attract more new-economy names to list on the mainland, says Michelle Qi, chief investment officer of China equities at Eastspring Investments.
The Nasdaq-style tech board known as the STAR board was officially launched today.
“STAR’s differentiating edge versus traditional markets is a relaxation on listing requirement. In terms of financials, it no longer asks for a three-year track record of positive earnings, instead the potentially eligible companies have to meet one of five criteria which include market cap, revenue, earnings, cash flows and innovative capabilities. In terms of company structure, it allows those companies structured as VIE or with multi-share classes to get listed. These changes will help to attract more new-economy names to list in onshore market," she wrote in a note e-mailed out this afternoon.
She pointed out that restrictions on who can trade the stocks — institutional investors and retail investors with bigger portfolios and experience — show the regulators’ effort to reduce reduce volatility.
"For corporates, it means greater access to funding. ... For equity investors, it is a larger investable universe. This will attract more global investors to flow into the onshore market to get exposure to Chinese new economy names, and provide more investment options for onshore institutional investors such as the pension funds and other asset managers, so that they can diversify their investments with a better risk-return profile."
— Deb Price  
 


Tech board to attract global investors to China new economy companies, says Eastspring Investments

A gauge of the mainland-traded brokerages added 0.7 per cent today on expectation the start of the new technology board will boost revenues from broking and investment bank businesses.
Among them, Tianfeng Securities rose 4 per cent to 10 yuan and China Galaxy Securities climbed 3.4 per cent to 11.09 yuan.
— Zhang Shidong


Chinese brokerages rally as opening of tech board bolsters business outlook

Markets dislike uncertainty.
And uncertainty in the region remains, from both the Hong Kong street riots as well as the trade war between China and the US, said Louis Wong, executive director of Phillip Capital Management Hong Kong.
Wong gave two more reasons dragging the markets down: the Hong Kong interbank offered rate ticking higher and the Hong Kong dollar weakening.
“If the Hong Kong dollar continues to weaken, Hong Kong assets will come under pressure, and foreign investors will likely try to reduce their exposure to Hong Kong dollar assets,” he said.
— Daryl Choo
 


Uncertainly weighs on Hang Seng, says Louis Wong of Phillip Capital 

The Hang Seng Index ended down just 0.05 per cent at 27,294.71, pulling up from early morning declines as deep as 1.7 per cent. Information technology, real estate, health care, materials and utilities posted gains.
A return to normalcy in a city hit by protests over a controversial extradition bill helped boost sentiment. Of the 50 stocks on the Hang Seng, 27 ended up, 21 down and two unchanged. On Wednesday, when police shot rubber bullets and tear gas at protesters, the Hang Seng fell 1.7 per cent.
A number of property companies rose, including Country Garden Holdings (2007 HK) ended up 5.1 per cent, China Overseas Land and Investment (688 HK) rose 2 per cent, China Resources Land (1109 HK) climbed 1.5 per cent, while Henderson Land Development (12 HK) closed up 1.5 per cent.
— Deb Price     

 


Hang Seng ends with slight loss as normalcy returns to city

Stocks Blog: Hong Kong closes down a bit, while Shanghai ekes out gain as trade worries keep lid on markets

Alibaba said to have filed for second listing in Hong Kong: Bloomberg Newly listed China Tobacco Hong Kong is on fire

Alibaba said to have filed for second listing in Hong Kong: Bloomberg

Newly listed China Tobacco Hong Kong is on fire