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Georgina Lee

Deb Price

Welcome to a new week, traders.
 
So there was a big handshake between US president Donald Trump and top Chinese trade negotiator Liu He after the restart of trade talks.
Today we will get to see what you traders think about it. 
 
We'll be covering all of the news and moves in mainland and Hong Kong markets today.

And if you'd like to get the Live Stocks Blog each morning via email, shoot Deb an email at deb.price@scmp.com and she'll add you to the list!  
 
-- Georgina Lee and Deb Price in Hong Kong 
 


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Stocks

Stocks Blog: Casino stocks lead gains in Hong Kong index amid optimism in US-China trade detente

A pedestrian walks past the Bund Bull statue in Shanghai on October 24, 2018. Photo: Bloomberg 


Business

Markets

Asian markets rise across the region on the back of Friday's gains in the US market, amid optimism of an impending outcome in US-China trade talks


Hong Kong and mainland markets are trading up.


China stock market

Tencent Holdings

Hong Kong protests

Friday US markets/ What futures foretell:
– Overnight in US markets, the S&P 500 rose 1.09 per cent, the Nasdaq climbed 1.34 per cent and the Dow Jones Industrials rose1.21 per cent.
-- HK futures were up 0.56 per cent, A50 futures were up 0.58 per cent.
No important IPO debuts:
Economic statistics/Central Bank action: None to note.
 
   


Morning guidance 

Yep, it has been a hot start of the year for Chinese stocks. But don’t expect the final lap to be so sizzling.
Analysts who have made excellent calls this year are turning cautious.
They suggest investors look at undervalued banks and property developers, as economic growth risks moderating and the outlook of the trade talk remains elusive.
The US said on Friday there was a partial agreement on trade.
Despite a positive change on trade noted out of Washington on Friday, investors should be cautious, said Chen Li, chief economist at Soochow Securities in Shanghai.
His view was echoed by Hong Hao, Hong Kong-based managing director at Bocom International Holdings, who said investors should turn more defensive for the end of the year.
Chen correctly predicted early this year a rally in the mainland-traded stocks in the first quarter, while Hong accurately forecasted the boom-to-bust on Chinese equities in 2015.
Read full story by stocks reporter Zhang Shidong here.


What's ahead for Chinese stocks?

Foreign companies that already encounter difficulties in doing business in China are about to face an even starker reality as Beijing steps up plans for a corporate rating system.
In an ambitious undertaking, the Chinese government is building a so-called social credit system that aims to collect and analyse information on its 1.4 billion citizens and rate millions of corporations both domestic and foreign.
Its goal is to keep local governments, businesses and people in compliance with national directives. For international businesses, the programme will look at a host of data including business contracts, social responsibility, regulatory compliance and how many Communist Party members they employ.
Through a centralised platform using artificial intelligence, the system will rate firms for “credibility” or “sincerity”. Blacklisted companies could face punishments that include being denied access to cheap loans, higher import and export taxes and key personnel being prohibited from leaving China.
Read full story here. 


How those social credit systems will impact US companies

A proposal to set up an offshore yuan-denominated “Nasdaq” in Macau has been submitted to Beijing for consideration, according to a senior official from neighbouring Guangdong province.
He Xiaojun, director of Guangdong’s Local Financial Supervision and Administration Bureau, said he hoped China’s central government might give its blessing to the plan by mid-December, which marks the 20th anniversary of the city’s return to Chinese administration, the Sina Finance news portal reported on Sunday.
Guangdong, a hi-tech hub, is seeking to tap more capital for the sector.
The Monetary Authority of Macau said that a feasibility study was continuing into the establishment of a securities exchange. It reiterated it would “differentiate [itself] from incumbent financial centres nearby” and “serve the country’s needs”.
Beijing tasked Macau with carrying out a feasibility study on establishing a securities market – denominated and settled in yuan – in February when it revealed its outline development plan for the Greater Bay Area
 – a scheme to create an economic and innovation hub incorporating the cities of Hong Kong, Macau, Guangzhou and eight others in Guangdong.
Read full story here.


An offshore renminbi  Nasdaq in Macau? 

Hong Kong and China began the day ahead, after a US China tentative trade agreement gave it temporary support.
The Hang Seng Index opened 0.8 per cent higher, at 26,520.93.
The Shanghai Composite Index was up 0.6 per cent at  2,993.96;. The CSI 300, which tracks blue chips listed in both Shanghai and Shenzhen, was up 0.8 per cent at 3,944.86.
Leading the gains in percentage terms in Hong Kong was Country Garden (2007 HK), up 5 per cent at HK$1. Geely Auto (175 HK) was up 3.7 per cent at HK$14.4.
In Shanghai, Ping An Insurance (601318 CH) was up 1 per cent at 90.8 yuan.  Keda Group (600986 CH) was up 4.5 per cent at 5.2 yuan.
In what was characterized as “the phase one deal” reached late last week, the US will delay the implementation of US tariffs on Chinese imports initially scheduled for October 15, but those slated for December have not been resolved.
China agreed to purchases of US agricultural products worth US$50 million. But no concessions were made for China’s telecom equipment giant Huawei Technologies, which still faces restrictions on purchases from US companies.
The Ministry of Commerce said the two sides agreed to work together towards a final agreement.
-- Georgina Lee


Hang Seng opens higher on positive trade feeling

Don't pop the champagne too soon, cautions JPMorgan Asset Management.
The first tentative agreement reached between the US and China on trade last week should support risk appetite in the near term. That  will be positive for equities and stablize the renminbi, said JPMorgan Asset Management’s Asia chief market strategist Tai Hui.
“Such market optimism may not be well supported by economic reality...some of the more challenging issues, such as the US blacklisting of Chines tech companies and possible limits on US institutional investors investing in Chinese equities, don’t seem to be on the agenda,” he wrote in a note today.
The threat to global growth is weak corporate capex, a risk that could potentially spill over to the consumer sector.
“Chief executives are not going to restart investing again merely because the latest round of agreement between the two sides. The fundamental outlook to global growth has not changed on the back of the latest agreement,” he said.
-- Georgina Lee 


JPMorgan says threat to global growth lingers after last week US China 'mini-deal'

Stocks that have exposure in Greater Bay Area rose, after a proposal to set up an offshore yuan-denominated “Nasdaq” style exchange in Macau was submitted to Beijing.
He Xiaojun, director of Guangdong’s Local Financial Supervision and Administration Bureau, said he hoped China’s central government might give its blessing to the plan by mid-December, which marks the 20th anniversary of the city’s return to Chinese administration, the Sina Finance news portal reported on Sunday.
A yuan-based stock market could help Macau diversify away from gaming, its main revenue source.
The Greater Bay Area is a scheme by the central government to create an economic  and innovation hub incorporating the cities of Hong Kong, Macau, Guangzhou and eight others in Guangdong.
Guangdong JANUS Intelligent Group (300083 CH) was up 9.9 per cent at 3.78 yuan. Guangzhou Yuexiu Financial (000987 CH) was up 9.9 per cent, at 10.05 yuan. Zhuhai Huajin Capital (000532 CH) and Infund Holding (002141 CH) hit the daily 10- per cent up limit, at 3.94 yuan and 10.53 yuan respectively.
-- Georgia Lee


Stocks linked with Greater Bay Area surge on news of Macau’s bid for 'Nasdaq' style exchange

'Star Market”'debutante Bright Power Semiconductor shot up 77 per cent in Shanghai.
The Shanghai-based company is mainly involved in the research and development, design and sales of analog and mixed signal of intergrated circuits.
It focuses on LED lighting-related integrated circuit, and smart lighting solutions.
Unlike the main board -- where there is a 44-per cent first day trading price ceiling -- such restriction is absent for the Nasdaq-styled Science and Technology Innovation board (STAR Market) in Shanghai.
Bright Power Semiconductor (688368 CH) shot up 77.3 per cent, to 100.5 yuan, surging up from its offer price of 56.68 yuan.
-- Georgina Lee


'Star Market”'debutante Bright Power Semiconductor shoots up 77 per cent in Shanghai

An official from the financial bureau of the Guangdong provincial government said over the weekend that the proposed futures exchange in Guangzhou could get approval by the end of this year.
It is unclear what futures contracts the proposed exchange would offer. But the new exchange is expected to play a key role in supporting the Greater Bay Area, which is a scheme devised by the central government to create an economic and innovation hub incorporating the cities of Hong Kong, Macau, Guangzhou and eight others in Guangdong.
Local Chinese media has linked the exchange with contracts for trading carbon credits.
Several brokerages hit the daily 10-per cent up limit. These include Ruida Futures (002961 CH),  at 35.54 yuan, Guangdong Golden Dragon Development (000712 CH), which operates brokerage and investment banking business , at 13.66 yuan; Minmetals Capital (600390 CH), at 8.14 yuan; and Nanhua Futures (603093 CH) at 31.46 yuan.
-- Georgina Lee
 


Futures brokers hit daily up-limit on hopes of imminent approval of futures exchange in Guangzhou

China's September exports shrank 3.2 per cent in US dollar terms during, the biggest monthly drop since February, while imports declined 8.5 per cent compared with a year ago, leaving the country with a trade balance of US$39.65 billion, beating a consensus estimate of US$34.75 billion. Read SCMP's trade coverage here.


China's September import, export shrink as trade war bites

Shares of Lens Technology (300433), a manufacturer of optical lenses and electronic components for companies including Apple, soared by their 10 per cent daily limit on the Shenzhen stock exchange, to 13.49 yuan. The company, based in the Hunan provincial capital of Changsha, said on Friday that it expects its third-quarter profit to rise by between 105 per cent and 110 per cent, or to between 1.24 billion yuan and 1.27 billion yuan, due to increasing sales of its optical products including 3D glasses.


Apple's supplier Lend Technology jumps by 10-per cent daily limit in Shenzhen

Shares of MTR Corporation (66), Hong Kong's government-owned subway operator, fell by as much as 0.8 per cent to an intraday low of HK$44.20, after a spate of vandalism at its stations on Sunday, the 19th consecutive weekend of mayhem at the city's street protests. As many as 11 stations had to be closed for repairs, after vandals and anti-government mobs laid waste to turnstiles, security cameras and payment kiosks. Hong Kong's Financial Secretary Paul Chan Mo-po said MTR had agreed to help the city's businesses recover from losses incurred over four months of increasingly violent protests triggered by the government’s now-withdrawn extradition bill. These include offering rental adjustment proposals, such as rent rebates, to small and medium-sized enterprises which were affected to a relatively large extent. 



Hong Kong's subway operator MTR falls after another weekend of vandalism and mayhem

Bank of America-Merrill Lynch said it has revised its year-end renminbi forecast to 7.3 per US dollar, from 7.5 per dollar, although it maintains its year-end 2020 forecast at 7.6 per dollar. The revision comes after the US and China agreed late last week on a narrow “phase one” trade deal, whereby the US agreed to postpone tariffs originally slated for this Tuesday, which would have raised tariffs on Chinese goods to 30 per cent from 25 per cent.  With the proposed official deal to be signed between Chinese President Xi Jinping and US President Donald Trump at the APEC leader’s summit on Nov 16-17, the prospect of any yuan depreciation would come under close scrutiny ahead of the proposed meeting. The yuan was quoted at 7.0602, down 0.41 per cent Monday. Read here for why the partial deal has failed to give the yuan the lift-off, according to Goldman Sachs.


Bank of America-Merrill Lynch sees depreciation pressure easing on the yuan in the fourth quarter

Shares of Muyuan Foodstuff (002714), which have soared by as much as 190 per cent this year, may have more room to go, after China's largest brokerage raised its target price for the company. Citic Securities raised its target for Muyuan's shares to 120 yuan per share, implying a 46 per cent gain from its Friday closing price, citing the potential for the company to benefit from a recovery in its herd of breeding sows. China's pork supply had been decimated by an outbreak of the African swine fever, which had forced the world's largest herd of hogs to be halved. Muyuan, whose third-quarter net income more than tripled from a year ago, will probably have 200 million pigs for slaughter, Citic said. Muyuan shares rose 1.5 per cent today to 83.50 yuan on the Shenzhen exchange. Read here for SCMP's analysis of how Chinese diners are developing a new palate for alternatives to their favourite meat.


Muyuan Foodstuff's stock run has more legs to go, Citic says

Shares of casino operators rose on the Hong Kong exchange, after the government of Macau submitted an application to kick off a stock exchange in the former Portuguese territory, raising optimism that the world's gambling hub would is taking a step forward in diversifying its economy. Galaxy Entertainment (27), one of the biggest casino concessionaires in Macau, rose 4.5 per cent amid an advancing market to an intraday high of HK$51.35 on the Hong Kong exchange. Sands China (1928), a local unit owned by Las Vegas gambling mogul Sheldon Adelson, rose 3.4 per cent to HK$36.65. Wynn Macau (1128) was up 6 per cent at HK$16.02, while Melco International Development (200) was up 4.7 per cent at 19.54 and SMJ Holdings (880) rose 4.5 per cent at HK$7.91. Their gains contrasted a grimmer outlook for the gambling sector, after gross gaming revenue fell 8.6 per cent in August – its biggest monthly drop since June 2016 – to US$3 billion, according to the Macau Gaming Inspection and Coordination Bureau.  Sentiments might have improved from news that a proposal to set up an offshore yuan-denominated “Nasdaq” style exchange in Macau was submitted to Beijing for consideration last week, whereby its approval could be as imminent as mid-December. The yuan-based exchange is proposed as part of Macau's role in the Greater Bay Area, a scheme by the central government to create an economic  and innovation hub incorporating the cities of Hong Kong, Macau, Guangzhou and eight others in Guangdong province. 
The following is an interactive view of the Greater Bay Area:




Shares of casino operators rise on hopes for Macau's growing financial clout in Greater Bay Area

The Shanghai Composite Index rose 1.2 per cent to 3,007.88 while the CSI 300, which tracks blue chips listed on both the Shenzhen and Shanghai exchanges, rose 1.1 per cent to 3,953.254. The Shenzhen Composite Index advanced 1.4 per cent to 1.660.33.   Banks led Shanghai's gains, with the Industrial & Commercial Bank of China (601398) rising 1.4 per cent to 5.72 yuan while China Everbright Bank (601818) advanced 6.7 per cent to 4.6 yuan. Agricultural Bank of China (601288 CH) rose 0.9 per cent to 3.56 yuan in Shanghai.  China's A-share market received a boost from the yuan, which strengthened to 7.0611 per US dollar, said Prudential Brokerage's associate director Alvin Cheung.  “Expectation in the market is rising that China's central bank is unlikely to allow the yuan to weaken further as we go into the next meeting between the [US and Chinese] presidents, as the proposed official deal could be signed at the APEC leader’s summit on Nov 16-17,” said Cheung.


China's markets close Monday higher, as partial trade war detente boosted confidence

Stocks Blog: Casino stocks lead gains in Hong Kong index amid optimism in US-China trade detente

.css-1mniedq{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;}Asian markets rise across the region on the back of Friday's gains in the US market, amid optimism of an impending outcome in US-China trade talks

Asian markets rise across the region on the back of Friday's gains in the US market, amid optimism of an impending outcome in US-China trade talks