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Martin Choi

Deb Price

Welcome back, traders!
Shanghai and Hong Kong stocks closed with small gains.
Catch up on the day's action below.
And if you'd like to receive our Live Stocks Blog every morning via email, shoot Deb an email at deb.price@scmp.com.
-- Martin Choi and Deb Price in Hong Kong
 


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Stocks

Stocks Blog: Hong Kong Exchanges and Clearing jumps as it backs away from bid for London Stock Exchange 

Commuters queue up at Tiu Keng Leng MTR Station after a chaotic weekend in which protests led to the closing of more than a dozen stations. Photo: Winson Wong

Sha Tin Wai station is vandalised on Monday evening. Photo: Sam Tsang

Business

Markets

MTR, Sa Sa, Chow Sang Sang and Chow Tai Fook lose ground after days of violent protests 
Trading halted of Hikvision, Dahua after they were placed on US blacklist


Shanghai Composite ekes out gain on first trading day since long Golden Week holiday


Hong Kong stock exchange

China stock market

Hong Kong protests

MTR Corporation

Tencent Holdings

Trade war

Donald Trump

Live

– Overnight in US markets, the S&P 500 fell 0.45 per cent, the Nasdaq dropped 0.33 per cent and the Dow Jones Industrials fell 0.36 per cent.
– Hong Kong futures were 0.36 per cent higher, while the FTSE China A50 futures climbed 0.5 per cent
IPO debuts: Chinese mobile game developer FriendTimes (6820 HK) starts trading on Hong Kong’s mainboard today.
Economic statistics/Central Bank action: 
September Caixin China PMI Composite, and China PMI Services
Corporate events, earnings, meetings, news conferences: Nothing major


Morning guidance 

Hong Kong Exchanges and Clearing said on Tuesday that it would not proceed with its bid to buy the London Stock Exchange, declining to sweeten its £29.6 billion (US$36.4 billion) offer ahead of a deadline later this week.
“The board of HKEX continues to believe that a combination of [London Stock Exchange Group] and HKEX is strategically compelling and would create a world-leading market infrastructure group,” HKEX said in a regulatory statement on Tuesday morning.
“Despite engagement with a broad set of regulators and extensive shareholder engagement, the board of HKEX is disappointed that it has been unable to engage with the management of LSEG in realising this vision, and as a consequence has decided it is not in the best interests of HKEX shareholders to pursue this proposal.”
By not making a formal offer ahead of Wednesday’s deadline, the HKEX will not be able to pursue a bid for the London bourse operator for at least six months, according to UK takeover rules.
Read full story here by Chad Bray. 


HKEX drops bid for London Stock Exchange 

The Hang Seng Index is trading down 0.07 per cent at 25,802.25, after three days of protests and vandalism at MTR subway stations following Friday's ban on wearing of masks in public. 
Of noteworthy Hong Kong-listed stocks that have been hard hit by the protests:
MTR (66 HK) is down 1.9 per cent at HK$42.80.
Sa Sa International (178 HK) fell 2.3 per cent to HK$1.71.
Chow Sang Sang (116 HK) dropped 0.35 per cent to HK$8.51.
Chow Tai Fook (1929 HK) fell 1 per cent to HK$6.47.
Here's a feature by stocks reporter Louise Moon on what analysts are saying about Hong Kong-listed retail stocks. 
-- Deb Price   


Hang Seng Index opens down slightly 

The Shanghai Composite Index is up 0.3 per cent at 2,915, as US-China trade talks are set in Washington later this week.
US President Donald Trump said something "bad" happening related to the handling of Hong Kong protests could be "very bad" for the trade talks.
The Hang Seng, which opened under water, has now turned up. It is trading ahead 0.2 per cent at 25,870.96.
-- Deb Price    


Shanghai opens up, Hang Seng turns positive

Hong Kong Exchanges and Clearing (388 HK) is trading up 2.1 per cent at HK$230.80 after it announced it will not proceed with a sweetened bid to buy the London Stock Exchange.
-- Deb Price 


HKEX gains after saying it won't sweeten offer for London Stock Exchange

Chinese mobile game developer FriendTimes (6820 HK) started trading on Hong Kong’s main board today.
Its share price rose nearly 2 per cent to HK$1.55 from its initial public offering price of HK$1.52. It is now trading at HK$1.46.
The company was the third biggest in the Chinese female-oriented mobile game market by revenue in 2018, accounting for about 3 per cent of the market.
It made 1.5 billion yuan in revenue in 2018 and attracts about 235,000 monthly paying players.
It was named one of the top 50 internet enterprise in Jiangsu Province in 2019 by the Ministry of Industry and Information Technology and Jiangsu Internet Association.
 
Chinese mobile game developer FriendTimes Inc (6820 HK) started trading on Hong Kong’s mainboard today. pic.twitter.com/NocUQH1eCU
  — Holly Chik (@hollycwchik) October 8, 2019
-- Holly Chik


FriendTimes bangs the gong in Hong Kong 

Kweichow Moutai (600519 CH), the world's most valuable liquor company, is trading up nearly 2 per cent to 1,172.77 yuan.
-- Deb Price    


Kweichow Moutai investors piling in

Wheelock & Co. (20 HK) inched up 0.1 per cent HK$44.60, despite poor sales on Monday at its project in Tseung Kwan O.
Wheelock Properties sold just 20 out of 101 newly offered units at its Grand Marini project in Lohas Park. 
The sales were the first since the ban on face masks, a step by the government on Friday to try to combat ongoing violence by hardcore protesters. Wheelock went ahead with its sales event despite vandalism forcing the closing of many stations on the Chung Yeung Festival public holiday.
Read a full story here by Holly Chik about Wheelock's sales event.
-- Deb Price    


Wheelock up a bit despite poor sales event in Tseung Kwan O

HSBC Holdings (5 HK) is up 0.9 per cent to HK$58.80, after news of its latest cost cutting.
Up to 10,000 jobs could be eliminated -- most of them in Europe or higher-paid jobs globally-- as part of HSBC's latest round of cutbacks, the Financial Times reported on Monday. 
Asia is still considered a growth engine by HSBC’s top management, said a person familiar with the matter. 
Asia accounted for 55 per cent of the company’s employees last year and nearly 80 per cent of HSBC’s US$12.5 billion in adjusted profit before tax in the first half of this year.
Read a full story here by Chad Bray about the latest cost-cutting move by HSBC.
-- Deb Price 


 HSBC rises after news of latest cost cutting

Caixin Media and IHS Markit's Composite Purchasing Managers' Index rose to 51.9 in September from 51.6 in August. 
A reading above 50 signals expansion while one below 50 signals contraction.
Meanwhile, the private gauge's Services Purchasing Managers' Index slipped to 51.3 in September from 52.1 in August. That was its lowest reading since February.
-- Deb Price    


Caixin manufacturing PMI rises to 51.9 in September

During China’s seven-day National Day holiday that began on October 1, China saw 782 million domestic travelers, an increase of 7.81 per cent from the same period last year, according to the Ministry of Culture and Tourism of the People’s Republic of China.
Domestic tourism amounted to 649.71 billion yuan during the holiday known as Golden Week, an increase of 8.47 per cent from the previous year.
-- Martin Choi


Domestic travel jumps in China during Golden Week

The Hang Seng Index is being pushed up by big gains in health-care stocks, up 3.7 per cent, followed by financials, energy, consumer discretion and consumer staples. The Hang Seng is up 1.1 per cent to 26,105.30.
Among top gainers: Geely Auto (175 HK) shot up 3.6 per cent to HK$13.66. Geely and Volvo Cars are merging their engine operations, according to a Bloomberg report. 
Sino Biopharmaceutical (1177 HK)  jumped 4.9 per cent to H$10.70, while CSC Pharmaceutical (1093 HK) shot up 4.5 per cent to H$16.72. 
Apple supplier AAC Technologies (2018 HK) is up 0.1 per cent to HK$43.55, after news that Apple told suppliers to boost production for its new iPhone 11.
-- Deb Price    


Hang Seng gets frisky, with jumps by Geely, Sino Biopharmaceutical  

Hong Kong-based supply chain company Li & Fung (0494 HK) is trading up 2.3 per cent at HK$0.89 after it announced a successful completion bond tender offer and also issued a US$400 million five-year medium-term bond, at a 4.375 per cent interest rate.
The tender offer resulted in a buyback of US$375.8 million, representing 50.1 per cent of its outstanding US$750 million bond that matures in May 2020, according to a release.
“The bond tender and offering allow us to actively extend maturity in financing our debt and manage our balance sheet,” said Ed Lam, chief financial officer of Li & Fung. “Together with Temasek’s US$300 million investment in our Logistics business in June this year, we are in a very strong cash position with low gearing ratio and sound financial footing.”
-- Louise Moon


Li & Fung gains after successful bond tender offer 

After spending the early morning in negative territory, MTR (66 HK) is up 0.15 per cent at HK$43.80.
The owner of the city’s subway system has been hammered by protests, in which its stations have been vandalised.
Cosmetics and jewellery retailers have also been hugely affected by the social unrest in Hong Kong.
Cosmetics retailer Sa Sa International (178 HK) is down 1.7 per cent to HK$1.72.
Jeweller Chow Sang Sang (116 HK) dropped 0.35 per cent to HK$8.51, while its rival Chow Tai Fook (1929 HK) fell 0.9 per cent to HK$6.48.
-- Martin Choi    


MTR turns up 

The Shanghai Composite Index rolled into the lunch break up 0.8 per cent to 2,930, boosted by real estate, consumers staples and financials.
Five stocks hit or nearly hit their 10 per cent upside limits, including Hunan Fangsheng Pharmaceutical (603998 CH), Zhejiang Jinghua Laser Technology (603607 CH), which makes laser holographic security products, and Nanjing Huamai Technology (603042 CH), which makes telecommunications equipment. 
Liquor companies were doing well. Anhui Golden Seed Winery (600199 CH) was up 3.2 per cent to 6.53 yuan, while Kweichow Moutai (600519 CH) was up 2 per cent to 1,173.56 yuan. 
Kweichow Moutai, one of the most popular stocks on the Stock Connect, has a current target price of 1,178.28 yuan among analysts covering it, according to Bloomberg. Of those analysts, 40 rate it a buy, one a hold and one a sell. It has stayed above 1,100 yuan since September 18. Its price has nearly doubled this year.
 

-- Deb Price    


Shanghai will start afternoon with gains; Kweichow Moutai up 2 per cent

Hangzhou Hikvision Digital Technology (002415 CH) and Zhenjiang Dahua Technology (002236 CH),  makers of video surveillance equipment, were suspended from trading after the US added them to its trade blacklist.
The US said it was taking the step over Beijing's treatment of Muslim minorities, adding human rights to its trade war with China.
Twenty governmental and eight commercial companies were added to the US list, which means they can't buy components from US companies without special approval from the US government.
Also put on the list was iFlytek (002230 CH), which makes voice recognition software. It was trading down 2.4 per cent to 31.09 yuan.
Jefferies maintained its buy rating on Hikvision after the US move, keeping its price target at 38 yuan per share. While it said there could be a 10-15 per cent downside to the company's earnings per share in 2020 as a result of being placed on the list, Jefferies analysts said they don't expect any operation risks and that less than 5 per cent of Hikvision's revenue comes from the US.   
The US move comes ahead of high-stakes talks in Washington due to begin on Thursday.
-- Deb Price    


Hikvision, Dahua suspended from trading after being placed on US trade blacklist

Chinese stocks are trading up due to upbeat numbers on "Golden Week" holiday consumption, said Kenny Tang Sing-hing, chief executive of China Hong Kong Capital Asset.
“Chinese consumer stocks have been doing well because ‘Golden Week’ consumption figures in the mainland are looking good,” said Tang.
Stocks of China food delivery platform Meituan Dianping (3690 HK) rose 4.9 per cent to HK$88.85.
“I don’t think the Hong Kong markets will fall by much more. The bad news has always been the same recently. The Hang Seng Index won’t see a huge increase, but it may go back up to 27,500 and come back down again in the near future,” said Tang.
Also, Chinese investors think US President Donald Trump may want to come up with a trade deal with China to boost his popularity, he said. "So he may not have such a strong stance towards China,” Tang said.
The Shanghai Composite Index is trading up 0.44 per cent at 2,918, while the Hang Seng Index is up 0.7 per cent to 26,005.73.
-- Martin Choi    


Golden Week's healthy consumption is boosting sentiment in China, says Kenny Tang Sing-hing 

The Shanghai Composite Index closed up 0.29 per cent at 2,914, pushed up by property stocks.
Investors are waiting for the high-stakes trade talks that begin in Washington on Thursday.
-- Deb Price


Shanghai ekes out a gain in first day of trading since Golden Week break

During the first six days of the "Golden Week" holiday, around 520 million travellers used China’s transportation systems, according to the Ministry of Transport of the People’s Republic of China.
About 87 million people travelled by railway -- a 5.2 per cent increase from the same period last year -- while 10.9 million travelled by China’s civil aviation services, a 4.5 per cent increase. Meanwhile, 13 million travelled by waterway, a 6.8 per cent increase, and 409 million travelled by road, a 2.3 per cent increase.
High-speed rail service operator China Railway Group (390 HK) rose 0.63 per cent to HK$4.76, while Guangshen Railway (525 HK) rose 1.7 per cent to HK$2.45.
Beijing Capital International Airport (694 HK) increased 4 per cent to HK$7.05.
-- Martin Choi 


Transportation stocks get lift from boost in travel during 'Golden Week' holiday

Hong Kong and China markets got a boost from investors' expectations that the US will further lower rates this month to stem a possible recession, said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.
Investors are also betting that China will inject more liquidity into the system through the medium-term lending facility (MLF) and the new loan prime rate (LPR), and help smaller private businesses through lower rates.  
Wen doesn't think the four days of violent reaction to the mask ban on Friday was driving sentiment in Hong Kong.
The Federal Reserve next meets October 29-30. 
-- Deb Price 
   


Markets got boost from expectation of new US Fed rate cut, says stocks analyst Kenny Wen

The Hang Seng Index closed up 0.28 per cent to 25,893.40, with a boost by health care stocks. Property and information technology stocks kept gains in check.
CSPC Pharmaceutical Group (1093 HK) was the day's big winner, up 6.9 per cent to HK$17.10.
Sino Biopharmaceutical (1177 HK) rose 2.75 per cent to HK$10.48, and Geely Automobile Holdings closed up 2.6 per cent at HK$13.52.
Hong Kong Exchanges and Clearing (388 HK) closed up 2.3 per cent after saying it would not sweeten is bid to buy the London Stock Exchange. 
Property stock losses were led by New Development (17 HK), down 2.5 per cent to HK$10.14 and Link REIT (823 HK), which closed down 2.4 per cent at HK$85.35. Property stocks have been hammered by protests. MTR (66 HK), which owns the city's subway system and a number of malls, ended down 0.1 per cent at HK$43.60.  
AAC Technology Holdings (2018 HK) lost ground, falling 1.2 per cent to HK$43 after gaining three straight sessions on investor expectations it will benefit from a boost in orders from Apple for its popular iPhone 11.
-- Deb Price    


Property stocks keep gains on Hang Seng in check

Stocks Blog: Hong Kong Exchanges and Clearing jumps as it backs away from bid for London Stock Exchange

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}MTR, Sa Sa, Chow Sang Sang and Chow Tai Fook lose ground after days of violent protests Trading halted of Hikvision, Dahua after they were placed on US blacklist

MTR, Sa Sa, Chow Sang Sang and Chow Tai Fook lose ground after days of violent protests

Trading halted of Hikvision, Dahua after they were placed on US blacklist