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Georgina Lee

Deb Price

Good day, traders.
Lots of twists and turns today in markets, including a mystery surge on the Hang Seng and a big drop in consumer stocks, including Kweichow Moutai, on the mainland.
Catch up on the action below.
If you have any feedback about our blog, please send it to deb.price@scmp.com. And, due to a number of reader requests, we are doing an experiment and sending out the blog each day by email. If you'd like to get the blog that way, shoot Deb a note.
-- Georgina Lee and Deb Price in Hong Kong 


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Stocks

Stocks Blog: Wharf, Sun Hung Kai, other Hong Kong property developers surge after being weighed down by protests 

Protesters, like these in Moko shopping mall in Mong Kok, gathered at shopping arcades Tuesday to sing the movement's newest theme song, "Glory to Hong Kong." Photo: Yujing Liu

Business

Markets

Global Times editor says China to introduce 'important' measures to ease impact of trade war
Hengan is good China buy amid trade war, protests, says Morningstar's Allen Cheng


Global Times editor says China to introduce 'important' measures to ease impact of trade war
 


China stock market

Hong Kong stock exchange

Hang Seng Index

Tencent Holdings

Kweichow Moutai

Hong Kong protests

Live

Drug maker Guangzhou Baiyunshan Pharmaceutical (874 HK) has approved to spin off subsidiary Guangzhou Pharmaceutical and to eventually list it to the Hong Kong Stock Exchange.
In a filing made to the exchange after trading hours, Guangzhou Baiyunshan said the board approved to start the preparation for the spin off and listing of GP in Hong Kong. 
Founded in 1951, GP is 80 per cent owned by Guangzhou Baiyunshan and is a wholesaler and retailer of both western and Chinese medicines, and retailer of other medical supplies and equipment. 
Guangzhou Baiyunshan ended Tuesday's session down by 1.53 per cent to HK$28.95 on a day when the benchmark Hang Seng index eked out a 0.01 per cent gain. 
-- Cheryl Arcibal 
 


 Guangzhou Baiyunshan eyes HK listing of subsidiary

A subsidiary of film production company Transmit Entertainment (1326 HK) has acquired a controlling 60 per cent stake in Shanghai-based talent management company  Wenlan (Shanghai) Cultural Communication for 96 milllion yuan (HK$105.8 million). 
Transmit Entertainment's  acquisition of Wenland Shanghai will allow it to "expand its business landscape vertically rather than horizontally and extend its footprint to the booming popular idol group industry" in China. 
Wenlan is the management company of popular teen idol Yang Chaoyue of the music band group CH2 Girls Group. 
Yang was named by China Newsweek as one of the most influential Chinese people in 2018. 
Transmit Entertainment closed unchanged on Tuesday at HK$0.19 per share. 
-- Cheryl Arcibal 


Unit of Transmit Entertainment buys controlling stake in talent management company

Here's what we are watching this morning:
Overnight markets/ What futures foretell
--The S&P 500 gained 0.03 per cent, the Nasdaq lost 0.04 per cent, and the Dow Jones Industrial Average rose 0.28 per cent.
-- Hong Kong futures are up 0.7 per cent, while the China A50 futures are up 0.5 per cent
IPO debuts: None to note
Economic statistics/Central Bank action: 
China August foreign direct investment year-on-year in CNY
Good reads: China scrapped two equity investment limits for foreigners, giving global traders unfettered access to the world’s second-largest capital market in another move in the country’s economic liberalisation. Meanwhile, landlords in Hong Kong’s Russell Street, the most expensive shopping address on the planet, are likely to slash rents after fashion house Prada declared it would not renew the lease on its flagship store next year, according to market observers.
 


Morning guidance 

Hengan International Group (1044 HK) is at an attractive price, trading about 25 per cent below its fair value, says Allen Cheng, Morningstar's China consumer staples analyst.
Hengan makes and sells tissues, sanitary napkins and disposable diapers in China, making it attractive when investors are looking for safety from the Hong Kong protests and the US-China trade war, Cheng says. 
It closed Tuesday at HK$52.85 but Cheng says its fair value is HK$66. He rates it a 'buy." 
And asked to pick his favourite two China stocks right now, he chose Henan and Jiangsu Yanghe Brewery  (002304 CH), a premium baijiu maker that trades through the Stock Connect. He likes Jiangsu Yanghe's push outside its home province and propects for its premium "Blue" series products.   
"Why I like it is that Hengan will continue to deliver sustainable growth on their business on the back of their costs advantages and competitive lower cost per unit," Cheng said. 
"They are making similar margins on sanitary napkins (to their rivals) but with a much lower selling price on the street," he said. 
Hengan is China's largest manufactuer of diapers and sanitary napkins. But it is facing fierce competition -- especially with diapers -- in its home market from P&G and Kimberly-Clark of the US, and Kao and Unicharm of Japan. 
The stock is down 7.4 per cent year to date. On August 22, it reported that in the first half, its revenue increased 6.3 per cent at 10.78 billion yuan, which beat the Bloomberg estimate of 10.56 billion yuan. Investors, however, wanted more. 
"We think the stock weakness is attributable to the weakness of its sanitary napkin business (down 5 per cent year on year in the first half of the year), as the business underwent a process of sales reforms on its traditional sales channels, in which it reduced the numbers of underperforming dealers," said Cheng. "Instead, it expanded the small sales team to sell products directly to retailers. We expect the transformation will last until first-half 2020 and anticipate sales growth will reaccelerate after the channel optimization."
Of analysts tracked by Bloomberg, 19 call it a buy, three a hold and three a sell, with a consensus target price of HK$65.01.
 

-- Deb Price 
 


 Hengan is good China buy amid trade war, protests, says Morningstar's Allen Cheng

Landlords in Hong Kong’s Russell Street, the most expensive shopping address on the planet, are likely to slash rents after fashion house Prada (1913 HK) declared it would not renew the lease on its flagship store next year, according to market observers.
Prada’s landlord has offered to cut the rent for its next tenant at Plaza 2000 on Russell Street, by a staggering 44 per cent as luxury vendors come under increasing pressure from a marked slowdown in sales.
Analysts expect other landlords to follow suit, and warn there could even be an exodus of other global retailers from the famous shopping area in Causeway Bay.
They expect retail rents in the street – famous for its luxury goods – to tumble by as much as 30 per cent this year as leases come up for renewal. Customer footfall, already on the slide because of the rise of online shopping, has taken a further hit from the three months of often violent street rallies that have gripped Hong Kong.
Read full story here by Sandy Li and La Ka-sing. 


Landlords on Hong Kong's Russell Street likely to slash rents

Hong Kong’s monthly leases for ultra luxury residences have fallen by almost a third, as three successive months of street protests and the ongoing drought of high-paying financial jobs have deterred expatriate and mainland Chinese renters.
Three-storey town houses of around 3,000 square feet (279 square metres) at the South District and on The Peak are now available for between HK$150,000 and HK$200,000 (US$25,000) per month, up to 30 per cent less than what they were going for three or four months ago, according to Louis Wong, senior director at Landscope Christie’s International Real Estate.
“Besides expatriates, mainland Chinese renters are also hesitating to move to Hong Kong, and those living in Hong Kong are also considering whether to continue living here,” he said. “Some who were looking for places have also stopped.”
Hong Kong’s property market – the world’s most expensive city in 2018, for the ninth consecutive year – is trying to find its footing after the year-long US-China trade war and three months of protest rallies knocked a real estate bull run off its pace. The anti-government protests, sparked by a controversial extradition bill, have persisted even after the local government withdrew it, crimping retail sales and forcing visitor numbers to plunge by 40 per cent in August.
Read full story by Martin Choi here.


Rents for ultra luxury residences drop by a third amid protests 

China scrapped two equity investment limits for foreigners, giving global traders unfettered access to the world’s second-largest capital market in another move in the country’s economic liberalisation.
The investment quota limits under the Qualified Foreign Institutional Investors (QFII) scheme, and the Renminbi Qualified Foreign Institutional Investor (RQFII) programme will both be removed, the currency regulator said on Tuesday, without divulging when the changes would take effect. QFII, set up in 2002, lets foreign funds invest onshore in China’s yuan-denominated A shares. The RQFII programme, introduced in 2011, gives investors access to offshore renminbi to buy mainland-traded stocks.
The removal of the first quota, after 17 years of a gradual, regulated opening of China’s equities, removes one of the major vestiges of the country’s closed capital markets. It is also a nod to the ongoing negotiations to resolve the year-long US-China trade war, which has sought to remove restrictions on foreign investments, address American concerns of China’s track record on intellectual property, among other trade issues.
“The move is an important measure that China has taken to further open up the financial markets,” said Min Liangchao, a strategist at HSBC Jintrust Fund Management in Shanghai. “In the long run, it will attract more overseas funds to the A-share market. It’s a positive move, either in terms of increasing liquidity or further establishing the value investing concept.”
Read the full story by Zhang Shidong and Daniel Ren here. 


China scraps foreign investment quota limits

Hong Kong stocks opened 0.4 per cent higher, at 26,790.64.
In China, the CSI 300, which tracks blue chips listed on both the Shenzhen and Shanghai bourses, opened 0.1 per cent higher at 2964.65, while the Shanghai Composite Index gained 0.1 per cent at 3,025.66.
China’s currency regulator said Tuesday that the investment quota limits under the Qualified Foreign Institutional Investors (QFII) scheme, and the Renminbi Qualified Foreign Institutional Investor (RQFII) programme will both be removed, without divulging when the changes would take effect. QFII, set up in 2002, lets foreign funds invest onshore in China’s yuan-denominated A shares. The RQFII programme, introduced in 2011, gives investors access to offshore renminbi to buy mainland-traded stocks.
The move, which will give unfettered access to the onshore securities market, is seen as taking  China another step further in its effort to open up access to its capital market.
In Hong Kong, AAC Technology (2018 HK) rose 2.4 per cent, Sinopec was up 2.1 per cent at HK$4.88, while Citic (267 HK) was up 1.6 per cent at HK$10.08.
In Shanghai, Citic Securities (600030 CH) was up 0.7 per cent at HK$24.37, Ping An Insurance (601318 CH) was up 0.3 per cent at 89.58 yuan, and Nanjing Securities (601990 CH) was up 1.4 per cent at 9.45 yuan .
-- Georgina Lee 
 


Hong Kong and China stocks open slightly higher

Transmit Entertainment (1326 HK) shot up 9.3 per cent to HK$0.21 after it announced that its subsidiary had acquired a controlling 60 per cent stake in Shanghai-based talent management company  Wenlan (Shanghai) Cultural Communication for 96 milllion yuan (HK$105.8 million). 
Transmit Entertainment said the acquisition of Wenland Shanghai will allow it to "expand its business landscape vertically rather than horizontally and extend its footprint to the booming popular idol group industry" in China. 
Wenlan is the management company of popular teen idol Yang Chaoyue of the music band group CH2 Girls Group. 
-- Deb Price 
 


Transmit Entertainment soars after subsidiary buys stake in talent company

Drug maker Guangzhou Baiyunshan Pharmaceutical (874 HK) is trading up 1.6 per cent to HK29.40 after it approved spinning off subsidiary Guangzhou Pharmaceutical and eventually listing it on the Hong Kong Stock Exchange.
In a filing made to the exchange after trading hours Tuesday, Guangzhou Baiyunshan said the board approved to start the preparation for the spinoff and listing of GP in Hong Kong. 
-- Deb Price 


Guangzhou Baiyunshan Pharmaceutical trading up after approving spinoff of subsidiary

Just how much money is being held back and waiting to pour into China's stock markets?
The question arises because of China's decision after market close Tuesday to scrap its foreign foreign investment quota limits through two programmes for institutional investors.
A second way of trading is through the Hong Kong-mainland Stock Connect programme, which makes select China stocks available for institutional and mom-and-pop investors. 
The Hong Kong Stock Connect’s “northbound” trading into mainland stocks is subject to a daily quota of 52 billion yuan for each of the Shanghai and Shenzhen exchanges.
Additionally, the quota only applies to net buying.  Investors are always allowed to sell their A shares. 
Not since the early days of the Shanghai-Hong Kong Stock Connect, launched in November 2014, has the quota been hitting, stopping the buying of A shares.
A rough calculation by this blog shows that this year, only four out of the eight months saw net inflow into A shares through the Shanghai northbound. The highest net inflow – whereby the buying turnover exceeds that of selling -- was recorded in January. It amounted to 34 billion yuan, considerably short of the 52 billion yuan limit.
The other four months saw net outflows.
At least, for now, demand isn't outstripping supply of A shares on this trading platform.
That indicates that the scrapping of quotas in the Qualified Foreign Institutional Investors (QFII) scheme and the Renminbi Qualified Foreign Institutional Investor (RQFII) programme doesn't appear to address a problem of entrance bottleneck for foreign investors. Although it should be noted that a broader range of A shares can be bought through the QFII and RQFII programmes.
Hong Kong Exchanges and Clearing (388 HK), operator of the city’s stock exchange which operates the Stock Connect programme, is trading down this morning by 2 per cent to HK$240.40.
-- Georgina Lee 
 


Too little supply of A shares? 

China scrapped two equity investment limits for foreigners on Tuesday, giving global traders unfettered access to the world’s second-largest capital market in another move in the country’s economic liberalisation.
Here are some thoughts from Fidelity on the move: 
"This will further attract capital inflows into China and it is also a move to ensure they are well positioned for the full inclusion of China A-shares into MSCI," said Raymond Ma, portfolio manager at Fidelity International, which was granted US$1 billion in investment quota in 2015. "Furthermore, it is a positive move in-line with China’s move to open up markets by increasing transparency and flexibility.”
“This is an additional step to further open up domestic financial market," said Fidelity's portfolio manager Jing Ning. "The year to date inflows into both domestic stock and bond markets have been very strong following MSCI’s widening the A share inclusion. We do not believe this policy alone will create tremendous liquidity flow into domestic financial market since current QFII utilization rate is low while Stock Connect and other mechanism offer equally easy market access. Nonetheless, it indicates Chinese regulators’ determination to further sweeten the infrastructure for foreign investors to get access to Chinese stocks.”
 


Fidelity says China wants to 'sweeten' access through step to scrap quota on foreign A share buying 

AAC Technologies (2018 HK), which supplies Apple with miniature electronic components, is trading up 1.7 per cent to HK$39.65.
Overnight, Apple launched three versions of its iPhone 11, which include a “Pro” model with triple cameras, starting at US$999 and US$1,099.
Apple also cut the entry-level price for its iPhone 11 to US$699. It will have a dual-lens rear camera. The latest models come with three screen sizes: 5.8 inches, 6.1 inches and 6.5 inches. The launch event, at Apple's headquarters in Cupertino, California, included a surprise launch of its video streaming service, “Apple TV +”  at US$4.99 a month. It is to be available in over 100 countries, as Apple seeks to diversify from its flagship iPhone, whose sales has been slowing recently.
-- Georgina Lee 
 


iPhone supplier AAC Technologies climbs after Apple unveils latest products 

“On paper, a 4G iPhone won’t look up to snuff in China, considering how aggressively we’ll see 5G being pushed there in the upcoming quarters,” said Bryan Ma, vice-president of client devices research at IDC. “That will make iPhone users think twice, or perhaps delay their replacements until next year in the hopes that Apple has a 5G model available by then.”
Such a reaction would not augur well for China’s overall smartphone market, which has been on the decline because of longer replacement cycles and growing channel inventories.
While the launch of new 5G Android smartphones and the roll-out of ultra-fast, next-generation mobile services suggest growth opportunities, concerns remain about domestic consumption amid an escalating US-China trade dispute that saw the mainland’s economic growth reach a record low of 6.2 per cent in the second quarter. 
Smartphone shipments on the mainland fell 6 per cent to 97.9 million units in the second quarter, down from 104.2 million units a year earlier, according to data released last month by research firm IDC.
Apple plans to hold off until at least 2020 before offering an iPhone that can connect to 5G networks, according to a Bloomberg report in December, citing people familiar with the US technology giant’s plans.
“Since a number of players have started launching their flagship 5G smartphones, we could expect more affordable phones with 5G capability to become available, too,” said Kiranjeet Kaur, senior research manager with IDC Asia-Pacific’s client devices group.
“The lack of 5G support on phones released in countries where 5G has already launched, or is expected to launch soon, will make 4G-only phones less attractive.”
Read tech reporter Li Tao's full story here, and a quick look by him of what's ahead on 5G in China here. 
 


 How will Apple's new i-Phones do in unfolding 5G China?

MTR (66 HK), the operator of Hong Kong's subway system, is finally having a good day, after seeing its stock battered over the past two months amid a series of outbreaks of violence and vandalism at stations.
Today, it is up 2.2 per cent to HK$47.05.
As of Tuesday's close, it had dropped 15 per cent since a mob of men in white T-shirts beat up protesters and passengers at the Yuen Long MTR station on July 21. Violence has broken out between police and protesters at stations since then. On Sunday, some protesters set fires at the Central subway station.
-- Deb Price 
 


MTR picks up after 15 per cent fall over two months amid escalating protester attacks

Pantronics (1611 HK) took off like a rocket after saying it is changing its name to Huobi Technology Holdings. 
Huobi, written in Chinese characters  -- 「火 幣 -- reads as "currency on fire," and cryptocurrency traders in Asia are very familiar with the Huobi cryptocurrency exchange.
In August 2018, Huobi acquired a 71.67 per cent in Paltronics for HK$586.4 million.
Pantronics said it would change its name in a stock exchange announcement Tuesday.
The change is subject to shareholders’ approval at an extraordinary general meeting.
“While the group continues to develop the relatively stable manufacturing businesses, it is looking into further expansion to the fast growing technology related businesses. The proposed Change of Company Name will better reflect the Group’s future strategic direction and development plan,” it stated in the exchange filing.
Prior to Huobi’s acquisition, Pantronics was principally engaged in contract manufacturing, covering a wide range of electronic and power-related products.
Founded in China, the Singapore-based Huobi today ranks as 25th top cryptocurrency exchange by trade volume by Coinmarketcap, a cryptocurrency market analysis website, with trading volume totalling US$558.7 million.
Shares of Pantronics surged 63 per cent, at HK$5.05, but are now trading up 41.9 per cent at HK$4.4.

 
-- Georgina Lee 


Pantronics takes off like a rocket after proposed name change to reflect cryptocurrency business

The editor in chief of Global Times,  a nationalistic state-run newspaper, tweeted that China would announce policies to ease the impact of the US-China trade war, as the year-long conflict had taken its toll on the global economy.
"Based on what I know, China will introduce important measures to ease the negative impact of the trade war," said Hu Xijin in his Twitter feed, without specifying what the policies will be. “The measures will benefit some companies from both China and the U.S."
Based on what I know, China will introduce important measures to ease the negative impact of the trade war. The measures will benefit some companies from both China and the US.
— Hu Xijin 胡锡进 (@HuXijin_GT) September 11, 2019
-- Eugene Tang 


Global Times editor says China to introduce 'important' measures to ease impact of trade war

Several Hong Kong-focused property developers are up, with Wharf REIC (1997 HK) up 4.4 per cent, at HK$45.85, New World Development (17 HK) up 4.1 per cent at HK$10.6, Sun Hung Kai Properties (16 HK) up 4 per cent at HK$118.7, Hang Lung Properties (101 HK) up 3.9 per cent at HK$18.56, and Henderson Land (12 HK) rising 3.8 per cent to HK$38.6.
The city’s biggest developer, Sun Hung Kai Properties, priced the first 235 flats at its Cullinan West III project in Nam Cheong at an average of HK$21,722 (US$2,770) per square foot after discounts – a quarter less than units sold for  recently in nearby estates.
The price is about the same as it was two years ago for units in the second phase of the same development.
“These prices are a step back in time. As the local housing market has slowed down in recent months, we have adjusted the prices of Cullinan West III,” said Victor Lui, deputy managing director at Sun Hung Kai Properties. “Affected by social unrest and the US-China trade war recently, the wait-and-see sentiment among potential buyers has increasingly prevailed.”
-- Georgina Lee 

 


   Property stocks leading gains in Hong Kong blue chip index

The protest-hammered stocks we've been looking at are seeing gains today. 
 
-- Deb Price


Chart: Bargain hunters snap up beaten-down stocks in Hong Kong 

The surge in property stocks in Hong Kong today is being driven by investors looking for stocks with cheap valuations, said Alex Wong, a director at Ample Finance Group.
“Share prices of many of the Hong Kong property developers and landlords have dropped by over 10 per cent since June (when protests first began). While there are still uncertainties over how much longer the three-month long protests will go on, some investors are beginning to see value among some of these property stocks,” said Wong.
The Hang Seng properties sub-index is the best performing sub-index today.
The switch to buy on valuation was driven by a change in investors’ view of the global economic outlook -- that it might not be as bad as earlier thought.
Sentiment around the US-China trade war might also have improved, now that Chinese negotiators are heading to Washington in October to continue with the suspended negotiations.
Looking at one guage is helpful. The price-to-book ratio compares a company’s share price to its book value per share. The lower the ratio, the less the price an investor is paying for the company’s net asset value.
Price-to-book ratios of Wharf REIC  (1997 HK) for the full year of 2019 is at 0.63, Hang Lung Properties (101 HK) at 0.6, while Sun Kung Kai Properties  (16 HK) is at 0.63, according to Bloomberg data.
This compares to the higher price-to-book ratios of Chinese properties, such as Shimao Property (813 HK), at 0.98 ; and  Country Garden (2007 HK), at 1.33.
The Hang Seng is up 1.5 per cent, at 27,081.84.
-- Georgina Lee 
 


Property stock surge driven by investors looking for stocks with cheap valuations

The CSI 300, which tracks blue chips listed on Shenzhen and Shanghai, closed down 0.7 per cent at 3,930.1, while the Shanghai Composite Index was down 0.4 per cent at 3,008.81.
Leading the market down was liquor distiller giant Kweichow Moutai ( 600519 CH), which closed down 4.8 per cent at 1069.52 yuan, after Chinese media reported that the selling price for a bottle of the fiery liquor has dropped by 100 yuan in a single day in Hangzhou. Meanwhile, in Beijing it has fallen to 2,100 yuan per bottle recently, from a peak of 2,400 yuan.
In fact, the entire liquor sector seems to be affected, with its smaller Shenzhen-listed rivals falling hard. Wuliangye Yibin (000858 CH) closed down by 5.8 per cent at 129.26 yuan. Luzhou Laojiao (000568 CH) plunged 5.6 per cent to 87.51 yuan. Jiugui Liquor (000799 CH) sank 5.3 per cent to 31.33 yuan
“With the improved sentiments about the US China trade tension, now that Chinese and US officials have confirmed resumption of talks in Washington in October, investors now are switching capital out of stocks which once were considered immune to the trade war, such as liquor and other domestic consumption stocks,” said Alex Wong, a director at Ample Finance Group.
Elsewhere, Foshan Haitian Flavouring (603288 CH) fell 2.33 per cent to 109.8 yuan. Jiangsu Hengrui Medicine (600276 CH) fell 3.1 per cent to 78.09 yuan. Muyuan Foods (002714) was down 4.4 per cent to 69.8 yuan.
-- Georgina Lee


Kweichow Moutai tumbles 4.8 per cent, other Chinese consumer stables fall as well on improved trade sentiment

The Hang Seng closed up 1.8 per cent, the biggest percentage gain in a week, as investors snapped up property stocks at a bargain after their recent falls. It closed at 27,159.06.
Wharf REIC (1997 HK) rose 4.6 per cent to HK$45.9; Hang Lung Properties (101 HK) rose 3.4 per cent to HK$18.46.
MTR Corp (66 HK) rose 3.4 per cent at HK$47.6, snapping the previous four straight days of declines. The city’s railway operator has been battered by the three-month long protests, in which rioters set fires at one of its stations and committed other acts of vandalism.
Analysts said investors snapped up Hong Kong property stocks after some of them had racked up over 10 per cent losses since June, when the protests began.
Banks also bolstered the blue chip index.
HSBC (5 HK) rose 3.1 per cent to HK$60.75, Hang Seng Bank (11 HK) gained 4.6 per cent to HK$179, and China Construction Bank (939 HK) climbed 2.8 per cent to HK$6.2.
Alex Wong, a director at Ample Finance, said globally investors’ anxiety about the impact of the US China trade dispute on the global economy has eased.
This has, in part, driven long-dated  US treasury yields up, whereby those of the 10-year treasury rose to 1.706 per cent Tuesday, the highest level since August 9. Bond yields move inversely to price.
“This has, in part, led to a return of investors’ appetite towards banking stocks,” said Wong. Higher long-dated yields are often viewed as beneficial to banks, which make money by borrowing short term funding, such as deposits, to fund their longer term loans to customers.
In fact, Hu Xijin, editor in chief of Global Times, a nationalistic state-run newspaper, tweeted that China would announce “important measures to ease the negative impact of the trade war”, adding that these will benefit “some companies from both China and the US”.
-- Georgina Lee 


 Hong Kong stocks rise as trade war sentiment improves

The Hang Seng Index ran up 1.1 per cent between 11:07am and 11:31am, jumping from 26,814.42 to 27,119.87. It continued to stay up after the lunch break, and closed up 1.78 per cent, at 27,159.06.
Analysts said there was much talk about what was behind the 24-minute surge.
One theory was that it was tied to an apparent chatroom discussion in which a participant falsely stated that the South China Morning Post had published a breaking news story that the city would meet another of the protesters demands. But a screenshot of that message -- which then circulated on Twitter and the internet -- suggests it was posted at 11:34:19, or after the big runup had gotten under way.
The South China Morning Post posted a denial on its website that it had published such a story. That was at 2:32pm.
It meant index heavyweights ran up, too, including Sun Hung Kai (16 HK), Ping An Insurance Group (2318 HK), and Tencent (700 HK), the latter of which had been under water much of the morning.  
The day was full of speculation and rumours, stock insiders said, as traders continue to deal with jitters amid three months of at-times violent protests in the city and additional economic damage from the US-China trade war. 
Other speculation swirling was about the possibility chief executive Carrie Lam might soften her stance on using the Lands Resumption Ordinance to take back farmland to build public housing, apparently sparked by a news article in a local business publication.
Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, attributed the Hang Seng's rise today to a number of factors rolling up together: The fake "story", plus President Donald Trump ousting his national security adviser John Bolton (overnight), Global Times editor in chief Hu Xijin saying China will introduce "important measures to ease the negative impact of the trade war" (tweeted at 12:01pm)  and speculation about possible changes in the government's land policies.
Alan Li, portfolio manager at Atta Capital, said the market was "very confused" by rumours and speculation today.
"The spike of the Hang Seng today should be an overshoot and a good chance for profit taking," he said, adding that he expects the Hang Seng will slide Thursday or Friday.
-- Deb Price 
 


What was behind Hang Seng's mysterious surge today?  

Hong Kong Exchanges and Clearing offered to buy the London Stock Exchange for US$36.6 billion, the operator of Asia’s third largest market announced on Wednesday.
“The proposed combination would strengthen both businesses, better position them to innovate across markets and geographies, and offer market participants and investors unprecedented global market connectivity,” the Hong Kong Exchanges and Clearing – the operator of the city’s stock market – said in a stock exchange filing.
It would mark the second overseas acquisitions of the HKEX after its took over the London Metal Exchange in 2012 to step into commodities.
Full story here.


Stocks Blog: Wharf, Sun Hung Kai, other Hong Kong property developers surge after being weighed down by protests

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Global Times editor says China to introduce 'important' measures to ease impact of trade war Hengan is good China buy amid trade war, protests, says Morningstar's Allen Cheng

Global Times editor says China to introduce 'important' measures to ease impact of trade war

Hengan is good China buy amid trade war, protests, says Morningstar's Allen Cheng