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Yujing Liu

Deb Price

Good day, traders.
So, markets loved Donald Trump and Xi Jinping saying they'll be talking trade next week.
Catch up on the action below. If you have questions, please shoot them to deb.price@scmp.com .
— Yujing Liu and Deb Price in Hong Kong 
 


Stocks Blog: Markets get boost as Trump and Xi say it's time to talk trade

An Indonesian jockey rides two bulls with a cart during a traditional sport bull race in West Sumatra on December 1, 2018. Photo: Agence France-Presse


Aerial cityscape of Osaka, Japan, where the G20 will be held, and presidents Donald Trump and Xi Jinping have agreed to talk trade. Photo: Shutterstock

Business

Markets

'We’re not out of the woods yet,' says Louis Tse Ming-kwong, managing director of brokerage VC Asset Management
Hopes of improvement in US-China relations lift electronic and telecom shares


Chinese port operator Rizhao Port Jurong (6117 HK) soared as much as 276 per cent in its Hong Kong trading debut


Live

Morning guidance
* Overnight markets/ What futures foretell
 -- US stocks jumped overnight, after US president Donald Trump said he had a “very good telephone conversation” with his Chinese counterpart Xi Jinping and confirmed they would meet at the G20 summit in Japan later this month. The Nasdaq Composite gained 1.4 per cent. The S&P 500 rose 1 per cent, and the Dow Jones Industrial Average advanced 1.4 per cent.
  -- Index futures are pointing to a strong start. Hong Kong futures climbed 1.7 per cent the latest, while the China A50 futures surged 2.1 per cent.
* IPO debuts: Chinese port operator Rizhao Port Jurong (6117 HK) will start trading on Hong Kong’s main board today. Oatmeal producer Guilin Seamild Foods (002956 SZ) will trade for the first time in Shenzhen.
* Economic statistics/Central Bank action: Nothing major.
* Corporate events: earnings, meetings, news conferences
-- Hong Kong jewelry brand Tse Sui Leun (417 HK) will announce full year results today.
Good reads: Next-generation 5G mobile technology is expected to drive efficiency in health care in China, which has an accute shortage of doctors and nurses, reports Sarah Dai. CK Asset says the impact of protests on Hong Kong’s property market will be minimal, but the trade war remains a long-term worry, reports Lam Ka-sing. 
 


Morning guidance 

Computer software developer Kingsoft (3888 HK) was upgraded to outperform by KGI Securities, with a price target of HK$19.70.
The consensus among analysts is a price target of HK$22.36 over the coming 12 months. Of those tracked by Bloomberg, 28 rate it a buy, three a hold and none a sell. 
It closed Tuesday at HK$16.90.
— Deb Price 
 


Computer software developer Kingsoft upgraded to outperform by KGI Securities 

Aquatic and animal feed and medicine producer Tongwei (600438 CH) was rated a new outperform at Credit Suisse, with a price target of 19 yuan.
Of the 23 analysts who have been covering it and tracked by Bloomberg, all rate it a buy, with a consensus target price of 18.34 yuan. It closed Tuesday at 13.89 yuan.
— Deb Price 


Tongwei rated new outperform at Credit Suisse

The phone call between president Donald Trump and Xi Jinping “slightly exceeded market expectations”, analysts at Chinese brokerage Wanlian Securities wrote in a note issued today.
“The market has a chance to correct its pessimistic expectations [on US-China trade relations] before the G20 summit,” analysts led by Song Jiangbo wrote.
“But as trade relations remain uncertain, an expectation correction is only likely to prompt a limited rebound in the market.”
Wanlian Securities recommends that investors stay cautiously optimistic before results come out of the G20 meeting. It recommended that investors look at sectors including domestic semiconductor makers, software and big data developers, as China continues to strengthen its self-reliance in technology.
Gold and other safe haven sectors also look appealing amid trade war uncertainties, according to the note. Agricultural products and basic consumption could be another opportunity as China’s inflation is set to heat up.
— Yujing Liu 


Trump-Xi call to cause 'limited rebound' in market, Wanlian Securities says

China and Hong Kong stocks jumped in market open, boosted by the Trump-Xi phone call.
The Shanghai Composite Index surged 2.2 per cent to 2,944.12. The Shenzhen Component Index soared 3.2 per cent, and the Nasdaq-style ChiNext Index advanced 3.3 per cent in the latest trading.
The Hang Seng Index climbed 2.6 per cent to 28,207.60.

 
— Yujing Liu 


Markets surge on Trump-Xi phone call on trade

Electronic and telecommunication stocks soared on signals of improving prospects on US-China relations that could ease the escalating technology rivalry between the two countries.
Sunny Optical Technology (2382 HK), which supplies smartphone components to Huawei Technologies – the Chinese telecom giant Huawei Technologies targeted by the US, jumped 10.5 per cent to HK$79.8 in the latest trading.
ZTE (763 HK), the telecom giant forced to suspend production for three months last year because of a temporary US ban, advanced 8.4 per cent to HK$21.95.
— Yujing Liu


Hopes of improvement in US-China relations lift electronic and telecom shares

“The market has suddenly made a big change in its judgement on the trade situation,” said Alan Li, portfolio manager at Atta Capital, a Hong Kong-based investment firm.
Before the phone call, the market’s expectations of a resolution during the G20 summit, or even a meeting between Trump and Xi, had “plunged to the lowest level”, Li said. Now, investors believe that the two sides must have already achieved certain agreement in order to make the meeting happen.
The Hang Seng Index is likely to rebound to the level of 28,500 based on the optimism, he said.
Sectors to benefit the most from the positive development in US-China relations include smartphone component makers such as Sunny Optical Technology and AAC Technologies, according to Li. Their share prices and valuation levels have tumbled to an one-year low since the US cracked down on Chinese telecom giant Huawei Technologies, a big customer to the component makers.
Other Chinese exporters of manufacturing goods are also likely to benefit, he said.
— Yujing Liu


Markets sees 'big change' in trade situation, says Alan Li of Atta Capital

Gold producers trended lower as risk appetite comes back to the market after unexpected phone call between presidents Donald Trump and Xi Jinping.
Chifeng Jilong Gold (600988 SH) declined 2.8 per cent, against a 1.3 per cent gain in the Shanghai Composite Index. Gansu Ronghua Industry Group (600311 SH) lost 2 per cent, and Eastern Gold Jade (600086 SH) shed 0.9 per cent. Hunan Gold (002155 SZ) tumbled 2.2 per cent.
Previously, gold miners bucked the overall market decline and advanced since May, when a breakdown in US-China trade negotiations dragged down most stocks. Chifeng Jilong Gold has climbed 34 per cent since the beginning of May, while the Shanghai benchmark recorded a loss of 5 per cent during the period.
 
Had a very good telephone conversation with President Xi of China. We will be having an extended meeting next week at the G-20 in Japan. Our respective teams will begin talks prior to our meeting.
— Donald J. Trump (@realDonaldTrump) June 18, 2019
 
— Yujing Liu 


Returning risk appetite weighs on gold stocks

Chinese contract drug research and development firm Wuxi Biologics (2269 HK) bucked the overall upward trend and declined by 2.7 per cent to HK$71 in the latest trading, after it said its controlling shareholder will cut its stake holding by 4.44 per cent.
Biologics Holdings, the controlling shareholder, will place 55 million shares of the company at a price of HK$69.3 apiece, 5 per cent lower than yesterday’s closing price of HK$72.95, according to a stock exchange filing.
The company is currently the most traded stock in Hong Kong today, with a turnover of HK$4.44 billion, exceeding that of index heavyweight Tencent Holdings (700 HK).
— Yujing Liu 


Wuxi Biologics tumbles as controlling shareholder cuts stake

Shares of Rizhao Port Jurong (6117), China’s largest port for grain and woodchip imports in 2018, shot up 29 per cent after it banged the gong this morning and joined the Hong Kong stock exchange.
Shares were trading at HK$2.06, up from the opening of HK$1.60.
The company debuted in a HK$546.7 million (US$ 69.8 million) initial public offering.
 
JH Educational Technology banged the gong today @HKEXGroup pic.twitter.com/L5FKF9c4lJ
— Joy Pamnani (@joypamnani) June 19, 2019
Located off the southern coast of the Shandong Peninsula at the Shijiu port area of the Port Rizhao, the company enjoys a well-connected transportation network at China’s seventh-largest coastal port and the 11th in the world according to 2018 statistics.
The company ranked first in China in terms of throughput imports of soybean and woodchip imports, and second in terms of throughput imports of dried tapioca, according to a report published by CIC.
Due to growing utilization rates of the company’s berths, increasing demand for throughput of imported grains and woodchips to China, and the company’s strategies to foster relationships with both new and existing customers, Rizhao Port Jurong hopes to use the funds to acquire the West-6 berth, a berth with capacity larger than the berths it currently operates and with favourable location, from Rizhao Port Group and Rizhao Port Container.
In addition to the acquisition, the group hopes to purchase additional equipment and machinery necessary for the West-6 berth with funds raised through the IPO, and other general working capital purposes.
— Joy Pamnani


Rizhao Port Jurong shares shoot up on debut

Hong Kong-listed event organiser Mega Expo Holdings (1360 HK), which plummeted by over 50 per cent last month after a short-seller attack, continued its downward trajectory even as it changed its company name to indicate a new business strategy.
Mega Expo, which has just changed its name to Nova Group Holdings, said it would focus on operating an “offline music entity supply chain platform”, which include music bars, self-service karaoke, music festivals and outdoor music events, in a statement issued Tuesday night.
The move came after activist short-seller Blue Orca Capital on May 9 alleged in a report that the company had undergone a stealth reverse merger through sham acquisition transactions. Blue Orca said a “shadowy networks with ties to criminal enterprises such as prostitution” controlled the company, whose value — Blue Orca said —should be zero.
Mega Expo said in a statement on May 24 that the short-selling report was “untrue and misleading”, and that its conclusions about the company’s financial results were incorrect.
Trading of the company was suspended from May 9 to 25, and the share price has plunged by 50.5 per cent since the publishing of the report. The stock was latest trading down 1.4 per cent at HK$2.08.

 
— Yujing Liu 


Event organiser under short seller attack keeps dropping despite efforts to shift focus

With the restart of US-China trade talks, the market will see a strong rebound in risk appetite that could exceed expectations, analysts at Chinese brokerage Capital Securities wrote in a note today.
The rivalry between China and US will become a long-term theme, which will make the market less sensitive towards trade tensions, analysts led by Wang Jianhui wrote.
“Even if China and the US could not reach a trade agreement in the short term and the US decides to impose tariffs on US$300 billion of Chinese goods, the possibility of a big plunge in markets is small,” the analysts wrote. This is because the market has already priced in an extremely pessimistic view on trade relations, according to the note.
Capital Securities recommends investors allocate assets in sectors including pork producers, car makers, food and beverage companies. It also advised them to increase positions in cheap stocks among the brokerage, telecom, computer and electronics sectors.
— Yujing Liu 


Recovery in risk appetite could exceed expectations, Capital Securities says

Chinese securities brokerages soared, after Chinese financial media Caixin reported that the central bank and stocks regulator demanded big banks to expand their financing to brokerages in order to prevent systemic liquidity risks.
At a meeting Tuesday, two vice chiefs of the People’s Bank of China and the China Securities Regulatory Commission asked China’s six big banks to provide further financing support to large brokerages, which shall then increase financing to smaller financial institutions, according to the Caixin report.
The move came as worries mounted that the reducing risk preference among financial institutions could lead to a liquidity crunch, after the regulators took control of Baoshang Bank due to serious credit risks.
A gauge of 39 brokerages surged 2.6 per cent by midday close. Chinalin Securities (002945 SZ) jumped by the daily limit of 10 per cent, while China Galaxy Securities (601881 SH) climbed 9.2 per cent.
— Yujing Liu


Brokerages surge on media report of regulators’ liquidity support

Stocks in China and Hong Kong maintained their big gains by the midday close, amid active trading on the back of the unexpected confirmation of a Trump-Xi meeting at the G20 gathering next week.
The Shanghai Composite Index was 1.5 per cent higher at 2,933.64 by the lunch break. The Shenzhen Component Index gained 2.3 per cent, and the ChiNext Index rose 2 per cent.
Turnover in Shanghai and Shenzhen reached 325 billion yuan, already exceeding the full-day volume of 321 billion yuan recorded yesterday, according to data provider Wind. Foreign investors bought a net total of 4 billion yuan of stocks through the Stock Connect programme.
Semiconductors surged broadly, as easing US-China tensions could lead to the US backing down on its crackdown on Chinese technology firms.
A gauge tracking 32 semiconductor-related stocks jumped 4.4 per cent, with three stocks surging by the daily 10 per cent limit.
In Hong Kong, the Hang Seng Index gained 2.4 per cent to 28,150.33, led by blue chips such as Tencent Holdings (700 HK) and Ping An Insurance (2318 HK), which gained 3.7 per cent and 3.6 per cent respectively.

 
— Yujing Liu 


China, Hong Kong stocks charge ahead on Trump-Xi meeting confirmation

Industrial hemp-related stocks shot up, after drug maker Zhejiang Conba Group (600572 SH) said it has finished planting 240 hectares of hemp in the southwestern province of Yunnan.
The traditional Chinese medicine and herbal medicine maker said the plantation is expected to lead to 3,000 tonnes of leaf materials, which could be turned into 20 to 30 tonnes of cannabidiol products, according to a statement on its official website.
Shares of Zhejiang Conba soared by the daily limit of 10 per cent, and so did two other related companies Zhuhai RUndu Pharma (002923 SZ) and Hunan Huasheng (600156 SH). A gauge tracking 53 hemp-related stocks rose 2.6 per cent.

 
— Yujing Liu


Hemp stocks take off on plantation news

The Shanghai Stock Exchange has given the green light for the first company to start book building ahead of its listing on the eagerly awaited technology innovation board, reports Daniel Ren.
It is likely to trigger a buying frenzy among investors keen to back promising young firms due to list on the new STAR Market, analysts told Ren.
Suzhou HYC Technology, a manufacturer of display and touch testing equipment, said this morning that it would begin price consultation with institutions for its initial public offering (IPO), which is expected to raise 1 billion yuan (US$144.9 million).
Following the price consultation, subscription for the new shares will start on June 27, HYC said in an exchange filing.
Read full story here.


Shanghai tells first company to get rolling for its coming IPO on new tech innovation board  

Chinese port operator Rizhao Port Jurong (6117 HK) continued soaring on its first day of trading, rising at one point to HK$5.50, which is 267 per cent higher than its offering price of HK$1.50.
The stunning performance could be a result of optimism that trade tensions are easing, as it is China's largest port for grain imports last year.
China slapped 25 per cent tariffs on US soybeans last year, which led to a drastic plunge in soybean imports.
The Shandong-based company debuted at HK$1.60 in Hong Kong earlier today, at a 6.6 per cent premium to the offering price. It was last trading at HK$3.23.
A number of port operators listed in mainland China also rose. Rizhao Port (600017 SH) surged by the maximum 10 per cent limit.
— Yujing Liu


Port operator skyrockets in Hong Kong trading debut

The Shanghai Composite Index gained nearly 1 per cent, driven up by optimism that a phone call between presidents Donald Trump and Xi Jinping could lead to a trade deal. It was the third straight day of gains for the index.
The index shot up at the open to 2953.331, but then began some rocky movement, before ending at 2,917.803. 
All sectors ended ahead, with information technology leading gains, up 2.1 per cent, on hopes the Xi-Trump meeting will result in the US backing down from its blacklisting of Huawei and some other Chinese tech companies. Next big gainers were industrials, health care and consumer discretionary, which rose at least 1.5 per cent. 
Thirty stocks on the Shanghai benchmark hit or nearly hit the 10 per cent upside limit. 
They included KPC Pharmaceuticals, which has soared by the limit three straight days on excitement in the drug sector about advances in creating a new malaria treatment to beat a strain resistant to artemisinin, a compound in a Chinese herb that has saved millions in Africa from the mosquito-borne illness. Scientist and Nobel laureate Tu Youyou said on Monday that her team had made a breakthrough in atemisinin resistance to treat malaria. 
While KPC earlier warned that its tie to artemisinin treatment is a teensy part of its revenues, today one of its executives said it is beginning a second phase of clinical development of its artemisinin tablets, according to a report in the China Securities Journal. Investors continued to pile into KPC. 
Semiconductor makers and others in information technology did well also. Among those hitting the 10 per cent limit were Will Semiconductor (603501 CH) and Shanghai Wondertek Software (603189 CH).
The CSI 300 Index of stocks traded in Shenzhen and Shanghai closed up 1.32 per cent. The Shenzhen Composite Index was up 1.5 per cent, with all sectors gaining, especially those in information technology, which were up 2.4 per cent. 
— Deb Price 
 


IT pushes up Chinese stocks

Sunny Optical (2382 HK) shot up 10.1 per cent on the Hang Seng Index, making it the top gainer of the 50 constituent stocks on the Hong Kong benchmark.
The Huawei supplier shot up after sticking to its forecast for 2019 at an investor meeting on Tuesday. It recieved a mixed bag of fresh reviews today. Rating it a buy were HSBC, CICC, UOB Kay Hian, Oriental Patron and
China Merchants Securities HK. Credit Suisse and Kingsway SW Securities rated it neutral, while China Renaissance recommended it be held.
The stock ended up at HK$79.50. The consensus analysts target price is HK$95.33.
All sectors on the benchmark ended up, with information technology shooting up 8 per cent, followed by consumer discretionary, with a 4.2 per cent rise.
Pork producer WH Group (288 HK) was up 5.3 per cent. Some Macau casino stocks did well, including Sands China (1928 HK), up 5 per cent, and Galaxy Entertainment Group, up 4.7 per cent. Benchmark heavyweight
Tencent (700 HK) was up nearly 4 per cent.
The Hang Seng ended up 2.56 per cent, at 28202.14. That marked its third straight day of gain, and its biggest daily gain since November 2 of last year, when it shot up 4.2 per cent. It also had a gain of 2.55 per cent on December 3 of last year. 
— Deb Price  


IT stocks send Hang Seng flying 

Sure, it was a great day for Hong Kong stocks and a not bad one at all for ones in China. But Louis Tse Ming-kwong, managing director of brokerage VC Asset Management, warns traders against thinking this is the start of a big roll.
“We’re not out of the woods yet. Mainland Chinese investors understand that,” he said, referring to how the Shanghai benchmark started the morning with big gains on news presidents Donald Trump and Xi Jinping had agreed to talk next week about trade, but then fell back to only nearly 1 per cent by the close. 
“They won’t be fooled by two leaders meeting and having perfect agreement on the trade dispute," he added. “Mainland Chinese investors don’t have strong confidence that this kind of meeting can render a [working] agreement,” he said.
— Daryl Choo 
 


Stocks Blog: Markets get boost as Trump and Xi say it's time to talk trade

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}'We’re not out of the woods yet,' says Louis Tse Ming-kwong, managing director of brokerage VC Asset Management Hopes of improvement in US-China relations lift electronic and telecom shares

'We’re not out of the woods yet,' says Louis Tse Ming-kwong, managing director of brokerage VC Asset Management

Hopes of improvement in US-China relations lift electronic and telecom shares