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Yujing Liu

Deb Price

Happy Friday, traders.
Catch up below on the action in the mainland and Hong Kong markets. If you have questions, please shoot them to deb.price@scmp.com .
— Yujing Liu and Deb Price in Hong Kong 
 
 


China’s Fosun Pharma eyes spin-off listing of vaccine unit in hot Hong Kong IPO market

Hong Kong stocks rise to 1-week high on China easing hope, resilient US data

Hong Kong stocks hold up on claimed Greenland deal, rebound in Japanese bonds

Harbour BioMed stake in US drug developer Spruce shows Chinese firms’ growing clout

Stocks

Stocks Blog: Shanghai posts biggest weekly gain in nearly four months 

A Chinese investor monitors stock prices at a brokerage house in Beijing on May 10, 2019.  Photo: Associated Press

Hong Kong developers slash home prices by up to 20 per cent to kick some tempo back into the downbeat property market

Chung Chi-lam (centre), executive director at Wing Tai Properties, on Thursday announces the launch of the OMA OMA residential development in Tuen Mun. Photo: Handout

Wheelock Properties offers 500 flats at its Montara development (in Lohas Park) on May 4th at The Gateway, Harbour City, Tsim Sha Tsui. 04MAY19 SCMP / Edmond So.

Business

Markets

Gold miners dig up some big profits for traders
Chip equipment maker Unisplendour jumps on stake sale


The Hang Seng Index – after sailing above 28,500 for the first time in six weeks on Thursday — weighed down by profit taking and fresh protests.


China stock market

Hong Kong stock exchange

Live

China’s securities regulator is preparing to relax controls on mergers and acquisitions (M&A) of listed companies that would open doors to backdoor listing on its start-up board of ChiNext.
The China Securities Regulatory Commission said in a statement late Thursday night that it is now seeking public opinion for its proposed revision of the regulation on the restructuring of listed companies’ assets.
The changes include allowing assets that are related to “high-tech industries of national interests and strategic emerging industries” to be restructured and listed on the Nasdaq-style ChiNext Board.
The CSRC also plans to scrap requirements for net profits of listings through restructuring and to speed up the approval process for acquisitions of listed companies.
— Yujing Liu 


Stocks regulator to deregulate M&A in the A-share market

* Overnight markets/ What futures foretell
 -- US stocks gained over night, extending a rally driven by the Federal Reserve’s signals that rate cuts may be coming. The Nasdaq Composite gained 0.8 per cent. The S&P 500 rose 1 per cent, and the Dow Jones Industrial Average advanced 0.9 per cent.
  -- Index futures are pointing to a subdued start, after China and Hong Kong stocks rallied to a level before trade war escalated in early May. Hong Kong futures dipped 0.1 per cent the latest, while the China A50 futures dropped 0.4 per cent.
* IPO debuts:
 
-- Shenzhen-based after-school education provider Scholar Education Group (1769 HK) and Chinese car beauty firm Precious Dragon Technology Holdings Limited (1861), spun off from China Alumcan (6898 HK), will start trading on Hong Kong’s main board today.
-- Guangdong Songyang Recycle Resources (603863 SH), a paper making and recycling firm, will be traded for the first time in Shanghai. Air conditioners maker Shandong Longertek Technology (300594 SZ) will be listed in Shenzhen.
* Economic statistics/Central Bank action: Nothing major.
 
* Corporate events: earnings, meetings, news conferences
-- Chinese natural gas distributor China Gas (0384) will announce full-year results today.
Good reads: The Chinese and US negotiating teams may meet in Osaka, Japan as early as Tuesday to prepare for the meeting between presidents of the two countries, Zhou Xin and Orange Wang report. Tencent Holdings looks set to put its gaming business back on track with an estimated US$1 billion in annual revenues from its new title Peacekeeper Elite, reports Iris Deng. Hong Kong developers on Thursday launched projects at prices that undercut rivals by up to 20 per cent to attract buyers, Pearl Liu reports.
 
 


Morning guidance 

The latest deregulation move by the securities watchdog has set the ChiNext board on fire.
The ChiNext Index of start-ups jumped by as much as 2.3 per cent in early trading, after the China Securities Regulatory Commission said it was preparing to revise a regulation that would essentially allow backdoor listing on the Nasdaq-style board.
A number of companies considered as potential “shell companies” that could be used for reverse takeovers soared. JS Huasheng Tianlong Photoelec (300029 SZ) climbed by the daily 10 per cent limit, as did Chengdu Techcent (300262 SZ).
The Shanghai Composite Index rose 0.7 per cent to 3,007.1, breaching the 3,000-point resistance level. The Shenzhen Component Index gained 1.3 per cent.
— Yujing Liu


ChiNext takes off on backdoor listing deregulation

Scholar Education Group (1769 HK) and Precious Dragon Technology Holdings (1861 HK) started trading on Hong Kong’s main board today. 
Scholar Education Group and Precious Dragon Technology Holdings banged the gong today @HKEXGroup pic.twitter.com/AUw7QSvoZB
— Joy Pamnani (@joypamnani) June 21, 2019

Scholar Education Group is a leading after-school education service providers in the Guangdong province. The company ranked fourth in terms of revenue in 2018 for after-school education service providers in Shenzhen and operates 61 learning centers across five cities in Guangdong and Fujian provinces, according to an F&S report.
The shares debuted at HK$4.09 in Hong Kong, from an IPO price of HK$3.68, or a 7.8 per cent premium. The stock was last trading at HK$3.70. 
The education group, with a HK$384.1 million (US$ 49.13 million) initial public offering, hopes to use  50 per cent of the funds to expand its learning center network in the Guangdong-Hong Kong-Macau Greater Bay Area, specifically to open 95 new learning centers across major cities in Guangdong and Fujian provinces. The remaining amount will be directed towards improving teaching quality through technological investments, renovations of existing centers and to purchase teaching equipment.
Precious Dragon Technology Holdings is an automotive beauty and maintenance aerosol products manufacturer in China. A CIC report shows they rank first in terms of revenue in the manufacturing of aerosol products used in the automotive beauty and maintenance market, occupying a market share of 13.2%.
The listing is a spin-off with its predecessor China Aluminum Cans (6898), which is a company involved in the manufacturing and sale of monobloc aluminum aerosol cans. 
The shares opened at HK$4.40. They were last trading at HK$3.77.
— Joy Pamnani 
 


 Scholar Education and Precious Dragon bang the gong in debuts in Hong Kong

The stocks regulator’s proposed changes to M&A and backdoor listing rules are an institutional improvement that will lead to big benefits for the ChiNext market, Chinese brokerage Citic Securities says.
“The policy will be a strong sentiment boost to the ChiNext board in the short term,” Citic analysts led by Qin Peijing wrote in a report today.
As Chinese private funds have lowered their stocks positions in May to 62 per cent of the overall portfolios, the same level around the end of 2018, investors and portfolio managers could be shifting their capital to the ChiNext market as sentiment improves, they said.
— Yujing Liu 


Backdoor listing rules a strong boost to ChiNext, Citic says

Semiconductor production equipment maker Unisplendour Technology (365 HK) soared by as much as 60 per cent after announcing its controlling shareholder may sell 68 per cent of the company’s total shares to a potential buyer.
The firm is a subsidiary of Tsinghua Unigroup, China’s top state chip manufacturer. Its shares were last trading up 33 per cent at HK$2.23.
— Yujing Liu


Chip equipment maker Unisplendour jumps on stake sale

Spot gold soared to US$1,405.6 per ounce in the latest trading, spiking to the highest level in six years, amid loosening global monetary policies.
A gauge of 13 gold miners and producers listed in Shanghai and Shenzhen gained 5.2 per cent, extending a huge rally from yesterday. Shandong Humon Smelting (002237 SZ) and Jinzhou Cihang Group (000587 SZ) jumped by the daily 10 per cent limit.
— Yujing Liu 


Gold miners dig up some big profits for traders  

Developers of online games extended a two-week rally on optimism the government is adopting a friendlier approach to the industry, with one stock hitting the 10 per cent gain limit for the eighth-straight session.
Local governments from Shanghai to Hainan have recently rolled out policies to support the development of e-sports. The Shanghai government said last week it aims to make the city “the world’s e-sports capital” in three to five years.
“The policy will undoubtedly bring benefits to the entire online gaming industry” in China, analysts at Shengang Securities wrote in a report on Monday.
“It shows the government’s tolerant attitude towards the online gaming, which is more precious than gold to the industry,” they said.
The government’s attitude directly affects the industry’s growth and valuation levels, according to the report. Last year, a temporary freeze on online game license approvals contributed to a loss of over 40 per cent in the share price of Tencent Holdings (700 HK), a leading player.
A gauge of 17 Shanghai and Shenzhen stocks related to e-sports rose 3.9 per cent in the morning session. The gauge has climbed by 16 per cent since a July 6 low.
Hangzhou Electronic Soul Network Technology (603258 SH) surged by the daily 10 per cent limit for the eighth session. The firm said last week it authorised Tencent to distribute one of its wuxia-themed games — a genre featuring Chinese martial heroes — in China and share the income generated from the game.
-- Yujing Liu


Online gaming stocks on a high as government signals support

A Chinese court has sentenced Zhang Xiaolei, the founder of one of China’s largest investment frauds Qbao.com – also known as Qianbao – to 15 years in prison and confiscated his personal wealth of 100 million yuan (US$15 million), according to Chinese media reports.
The court in Nanjing, Jiangsu province found Zhang guilty of fraudulent fundraising and defrauding investors of “a massive amount of money” in a ruling today, without specifying the amount. An estimated 30 billion yuan was lost, according to media reports. 
Zhang’s company lured investors with annual returns of as high as 60 per cent from their products. But most of the money instead went to pay for personal extravagances and other things unrelated to the core business, according to the court ruling.
— Yujing Liu


Mastermind behind major Chinese online financial Ponzi scheme sentenced to 15 years

A fresh round of protests is brewing in Hong Kong’s financial districts against a controversial extradition bill, which the government suspended last week.
Hundreds of protesters gathered in Admiralty today around the government headquarters to demand that the government fully retract the suspended bill, which would allow extraditions to China, after an estimated two million people took to the streets in a historic march on Sunday.
A Legislative Council meeting this afternoon was cancelled, and Hong Kong's government headquarters has been closed temporarily.
Read the latest development here.
 


Hundreds of Hong Kong protesters return to government headquarters

The Shanghai Composite Index rose 0.6 per cent to 3,005.36 per cent by the midday break, hanging onto the important 3,000-point resistance level that the benchmark had failed to test since the beginning of May, when trade war escalated.
The ChiNext Index of start-ups climbed 2.1 per cent, on the back of the stocks regulator’s move to deregulate backdoor listings in the ChiNext market. The Shenzhen Component Index added 1.1 per cent.
In Hong Kong, worries over the escalating fresh round of protests near the government headquarters – also the city’s central financial district – weighed on stocks.
The Hang Seng Index shed 0.3 per cent to 28,476.76 by the noon break, falling again below the 28,500-point level.
—Yujing Liu 
 


China stocks extend gain by midday break; Hong Kong weighed down by escalating protests

Hong Kong electricity company CLP Holdings (2 HK) plunged by as much as 5.5 per cent – its biggest intraday decline in more than a decade – after the company said it expected to record a loss for the first half of 2019.
The loss is expected to reflect a reduction in goodwill of HK$6 billion to HK$7 billion due to its Australian business, the CLP Holdings said in a statement Thursday night.
The Australian government’s plan to impose new retail power price caps in July is the main cause of the writedown, it said.
Shares of CLP Holdings were last trading down 4.6 per cent at HK$86.10.
— Yujing Liu 


CLP Holdings records largest intraday decline in a decade

Over 2.7 million investors have obtained permission to trade China’s new technology innovation board, according to Chinese media reports.
That number shows investors are very enthusiastic about the board and the market reforms it entails, Li Jizun, a director at the securities regulator, told the state broadcaster.
To be eligible to trade the STAR Market in Shanghai, investors need to have at least two years of trading experience with at least 500,000 yuan of daily average assets in their stocks accounts for the 20 trading sessions preceding their applications.
— Yujing Liu


Millions of Chinese investors waiting to trade on new tech board

China’s securities regulator drew up measures to rein in speculative trading on the coming technology and innovation board, China Central Television reported.
A bunch of companies will start trading simultaneously, stocks will be subjected to temporary halts and the regulator will strictly review the qualifications of participants, the state TV broadcaster reported Li Jizun, director with the market department of the China Securities Regulatory Commission, as saying.
About 2.7 million individual investors have opened accounts so far to trade on the new board, he said. That is roughly 2 per cent of China’s 140 million stock traders.
— Zhang Shidong


China drafts measures to curb speculation on tech board, CCTV says

China’s mainland-traded stocks will be included in global benchmarks of UK index compiler FTSE Russell for the first time after the close today, with a total of 1,097 companies to be added.
The change will attract foreign inflows of US$2 billion into Chinese equities this month, according to Sinolink Securities. As of the end of the first quarter, overseas traders held Chinese stocks worth combined market capitalization of 1.68 trillion yuan (US$244.4 million). That accounted for 3 per cent of the total market values of Chinese companies trading on the mainland’s two bourses.
— Zhang Shidong


China’s stocks to be officially added to FTSE Russell’s gauges after close today

China stocks extended gains for the fifth straight session, with the Shanghai Composite Index closing above the important 3,000-point resistance level.
The Shanghai Composite Index rose 0.5 per cent to close at 3,0001.98. It advanced 5 per cent for the week, its best weekly performance since March 1.
The ChiNext Index closed 1.7 per cent higher, after spiking by as much as 2.4 per cent during the day. The Shenzhen Component Index rose 0.9 per cent.
A total of 183 stocks jumped by the 10 per cent daily limit in Shanghai and Shenzhen.
Stocks that are potential “shell companies” for backdoor listings on the ChiNext board took off, after the stocks regulator lifted controls on reverse takeovers on the market. A gauge compiled by data provider Xuangubao.com of 67 related stocks jumped 8.8 per cent, with 53 of them rising by the 10 per cent daily limit.
— Yujing Liu 


Shanghai closes above 3,000, finishes best week in nearly four months

The Hang Seng Index has been weighed down by profit taking today more than the fresh protests against an extradition bill, says Royston Securities chief executive Kenny Tang Sing-hing.
“The market has been strong the past two days, so there’s some profit-taking pressure,” he said.
Investors are “focused more on the trade war than on the local politics”, and are waiting for the outcome of the trade meeting between Presidents Xi Jinping and Donald Trump at the Group of 20 summit in Tokyo next week.
The Hang Seng was last trading down 0.4 per cent, at 28,442.12.
In addition, Tang doesn't see gold continuing to rally and doesn't think investors should pile into it. It soared to a five-year high after the US Federal Reserve signalled on Thursday that it is open to cutting the key interest rate.  It recently traded at US$1,391.93, up 9.7 per cent year-to-date, putting it neck-and-neck with the Hang Seng's 2019 performance.
— Daryl Choo 


Profit taking weighs down Hang Seng

Just days before the heads of the world’s two biggest economies are expected to meet, China’s top financial regulator has played down the impact of US tariffs on the Chinese economy, saying it was “very limited” and could even backfire on the United States.
Guo Shuqing, chairman of the China Banking Regulatory Commission, the country’s banking watchdog, said today that the US would “pay a huge price” for the ongoing trade conflict, including losses in exports to China, costs to consumers and importers, lost income for hi-tech firms, and damage to the US dollar-led global financial system.
“The US can no doubt increase tariffs on us to the extreme, but this will have very limited impact on the Chinese economy,” he wrote in a commentary in Communist Party's People’s Daily. “By contrast, the US itself will be hit to almost the same degree.”
Read the full story here.
— Yujing Liu 


China's banking regulator chief says trade war impact 'limited' on economy

The Hang Seng Index dipped 0.3 per cent to close at 28,473.71, failing to hang onto the 28,500-point resistance level it reached on Thursday.
But the benchmark recorded its best weekly performance since November 2, with a 5 per cent weekly gain. It advanced four sessions this week.
CLP Holdings (2 HK) was one of the biggest drags on the benchmark today, falling 4.3 per cent. One of the two electricity companies in Hong Kong, CLP said yesterday it may record a loss in the first-half of 2019.
— Yujing Liu 


Hong Kong stocks dip, but still record best week since November

Stocks Blog: Shanghai posts biggest weekly gain in nearly four months

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Gold miners dig up some big profits for traders Chip equipment maker Unisplendour jumps on stake sale

Gold miners dig up some big profits for traders

Chip equipment maker Unisplendour jumps on stake sale