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Daniel Ren

Deb Price

Good day, traders --
Lots of profit taking today, including from Monday's big run-up in blockchain stocks.
Catch up on the day's action below. 
And if you'd like to get the Live Stocks Blog each morning via email, shoot Deb a message deb.price@scmp.com and she'll add you to the list.
-- Daniel Ren in Shanghai and Deb Price in Hong Kong
 


Stocks Blog: HSBC drops again, WH Group posts big gain on strong profit results in Hong Kong 

WH Group, the world's largest pork processor, soared in Hong Kong after posting strong results for the first nine months of the year. Photo: Reuters 

Tsingtao reported a 23 per cent jump in profit in the first nine months of the year compared with the same period in 2018. Here, a worker inspects bottles of Tsingtao beer rolling out from one of its breweries in the eastern Chinese port city of Qingdao in August 2006. Photo: Agence France-Presse

Business

Markets

Tencent closes down after breaking three-day losing streak Monday
Meituan Dianping and Xiaomi both see losses after Monday jumps


Shanghai snaps two-day winning streak, ending day down by 0.9 per cent 


Stocks

China stock market

Hong Kong Stock Exchange

Tencent

HSBC

Hong Kong protests

US-China trade war

WH Group

Live

Net income for Tsingtao Brewery (168 HK) rose 23 per cent in the first nine months of 2019 from a year earlier to 2.59 billion yuan (US$366.5 million), according to an exchange statement.
The brewer attributed the profit increase to expanded markets at home and abroad, acceleration in innovation development and upgrading of product mix, the statement said.
-- Zhang Shidong   


Tsingtao Brewery’s quarterly profit increases

China Shenhua Energy (601088 CH), the nation’s biggest coal producer, posted a 4.4 per cent increase in third-quarter profit.
Net income rose from a year ago to 12.8 billion yuan in the period, according to an exchange statement.
Profits for the first nine months increased 5.1 per cent from a year earlier to 37.1 billion yuan and domestic sales of coal rose 2.7 per cent in the period, it said.
-- Zhang Shidong    


China’s biggest coal producer Shenhua reports quarterly profit increase

Third-quarter income for Henan Shuanghui Investment and Development (000895 CH) rose 24 per cent from a year earlier to 1.54 billion yuan (US$217.9 million) in the third quarter, China’s biggest pork processor said in an exchange statement.
For the first nine months, profit increased 7.9 per cent, it said.
Henan Shuanghui culled 11.2 million hogs in the nine-month period ended in September, a decrease of 6.4 per cent from a year ago, the statement said.
Hong Kong-listed WH Group (288 HK) owns a 74.3 per cent stake in Henan Shuanghui.
-- Zhang Shidong    


Henan Shuanghui’s profit increases despite rising pork prices

Leshi Internet Information and Technology (300104 CH), the embattled video live-streaming company, posted a loss of 147 million yuan (US$20.8 million) for the third quarter, according to a statement to the Shenzhen exchange.
Net loss for the first three quarters was 10.2 billion yuan, it said.
The company also forecast full-year loss as it made a provision worth 9.8 billion yuan for debts linked to collateral for affiliates, the statement said.
Shares of Leshi have been suspended since April because of posting negative net asset values for 2018.
-- Zhang Shidong   


Troubled Leshi Internet reports huge quarterly loss

The state shareholder of Gree Electric Appliances (000651 CH) chose Zhuhai Mingjun Investment Partnership as the buyer of its stake in the listed company, China’s biggest manufacturer of air-conditioners said in an exchange filing.
Zhuhai Mingjun outbid a consortium comprised by two other companies after the review by the appraisal committee, the statement said.
Still, the deal is pending the approval by the regulator overseeing the state-owned assets and other related government departments, it said.
-- Zhang Shidong    


Gree Electric finalizes buyer of state stakes

Third-quarter profit surged 370 per cent from a year earlier to 2.7 billion yuan (US$382.2 million), Chinese telecom equipment maker ZTE (000063 CH) said in an exchange statement.
Net income for the first nine months increase 157 per cent, the statement said.
The company is expected to return to profit between 4.3 billion yuan and 5.3 billion yuan this year, compared with a loss last year because of a US$1 billion paid to the US government, ZTE said in a separate statement.
-- Zhang Shidong    


ZTE says third-quarter net income jumps fourfold and forecasts full-year profit

Here's what we are watching this morning:
US Monday markets/ What futures foretell
--The S&P 500 rose 0.56 per cent, the Nasdaq gained 1.01 per cent and the Dow Jones Industrial Average edged up 0.49 per cent.
-- Hong Kong futures climbed 1.47 per cent lower, while the FTSE China A50 futures added 0.41 per cent
IPO debuts: Chongqing Rural Commercial Bank (601077 CH), Keeson Technology (603610 CH), Beijing Zuojiang Technology  (300799 CH) 
Economic statistics/Central Bank action: Communist Party’s mouthpiece People’s Daily stresses strengthened risk management to ensure healthy development of blockchain technology


Morning guidance 

The Hang Seng Index is barely above water, with 0.1 per cent gains to 26,915.31.
Tencent (700 HK) inched up 0.3 per cent to HK$323 in morning trading. On Monday, it broke a three-day losing streak, gaining 1.7 per cent to close at HK$322, above what has been a key support level this year of HK$320.
Index heavyweight HSBC (5 HK) fell 1.5 per cent to HK$59.35. On Monday, it dropped 2.3 per cent on worse-than-expected third quarter profits. 
Meituan Dianping (3690 HK) slipped 0.6 per cent to HK$93.15, while Xiaomi (1810 HK) slipped 0.5 per cent to HK$9.14. On Monday, they were included in the Stock Connect, making them available to southbound traders, and both rose.
Other noteworthy stocks:
Blockchain-related stocks soared in Hong Kong as well the mainland on Monday, after Chinese President Xi Jinping called for greater urgency in the development of blockchain technology.
This morning, here's how a few are doing:
Pantronics Holding (1611 HK) started ahead but now has plunged 4.3 per cent to HK$4.5. Grandshores Technology  (1647 HK) also started with gains but is trading flat at 51 HK cents.
  -- Deb Price    


Hang Seng opens a bit ahead; one Monday blockchain winner is dropping fast 

The three IPO debutantes on the A-share market surged after trading opened.
Beijing Zuojiang Technology (300799 CH), a maker of secure host and platform products, jumped 28.4 per cent to 28.36 yuan.
Chongqing Rural Commercial Bank (601077 CH) surged 44 per cent to 10.6 yuan and triggered a 30-minute temporary trading suspension.
Keeson Technology (603610 CH), an electric bed manufacturer, also jumped 44 per cent to 64.31 yuan, with a trading suspension triggered.
-- Daniel Ren


3 China IPOs surge 

The Shanghai Composite slipped 0.4 per cent to 2,970.
Here's how some heavily traded stocks by northbound investors on the Stock Connect are doing:
-- Ping An Insurance (601318 CH)  inched up 0.2 per cent to 88.83 yuan.
-- Jiangsu Hengrui Medicine (600276 CH)  fell 0.5 per cent to 90.60 yuan.
-- Kweichow Moutai (600519 HK) rose 0.7 per cent to 1,186.86 yuan.
-- Shanghai Pudong Development Bank (600000 CH)  inched ahead 0.1 per cent to 12.71 yuan.
-- Shandong Gold Mining (600547 HK)  fell 2 per cent to 32.42  yuan.
-- Deb Price    


Shanghai slips at open; Kweichow Moutai climbing 

Mainland-traded blockchain stocks maintained upward momentum in the morning following a strong rally on Monday.
Among the 172 A-share firms developing or using blockchain technology, 34 companies hit the 10 per cent ceiling after trading opened.
An index compiled by East Money Information that tracks the blockchain A-share stocks advanced 2.4 per cent to 849.22.
On Monday, the index bounced up 8.1 per cent buoyed by President Xi Jinping’s talks to encourage blockchain technology development.
-- Daniel Ren 


Blockchain stocks continue to soar in mainland markets

Tsingtao Brewery (168 HK) rose 2.1 per cent to HK47.80, after it reported its net income rose 23 per cent in the first nine months from a year earlier to 2.59 billion yuan (US$366.5 million).
-- Deb Price    


Tsingtao jumps on results for first nine months of 2019 

China Shenhua Energy (601088 CH), the nation’s biggest coal producer, rose 0.9 per cent to 18.43 yuan, after it posted a 4.4 per cent increase in third-quarter profit.
-- Deb Price    


China Shenhuan Energy rises on profit increase

Chinese telecom equipment maker ZTE rose in Hong Kong and on the mainland after it reported third-quarter net income jumped four-fold and it forecast a full-year profit.
On the mainland (000063 CH), it rose 0.8 per cent to 33.91 yuan. In Hong Kong (763 HK), it jumps 3.7 per cent to HK$22.35.
-- Deb Price    


ZTE rises on profit jump

HSBC (5 HK), the largest of Hong Kong's three currency-issuing banks and the biggest stock on the Hang Seng Index, extended its decline for a second day, dropping by as much as 1.8 per cent to a four-week low of HK$59.15 after its third-quarter results missed estimates.
The stock has a 9.8 per cent weighting on the 50-stock Hang Seng.
-- Eugene Tang 


HSBC continues to slide after Monday's results miss 

WH Group (288 HK) surged 8 per cent to HK$8.45 after reporting its revenue increased 3.7 per cent and profit rose by 8.5 per cent in the first nine months of the year. 
The world's largest pork processor's nine-month profit was US$874 million, while its revenue in the period was US$17.19 billion, it said in a stock filing. 
Citigroup upgraded it to buy from sell and raised its target price to HK$9.12, Bloomberg reported.
It is the top gainer in morning trading on the Hang Seng Index, which has slipped 0.3 to 26,804.40. 
-- Deb Price    


Pork processor WH Group surges on nine-month profit jump 

Be wary of the frenzied buying surrounding mainland China’s blockchain-themed stocks, which was triggered by President Xi Jinping’s call to throw more into the technology, analysts warned.
They said we are likely to see a  boom-to-bust cycle.
Only a small portion of the companies that saw shares surge on Monday and Tuesday would be able to effectively improve their fundamentals by better developing or using the technology, the analysts said.
“Valuation has turned out to be frothy in many of the stocks,” said Ivan Li, an asset manager with hedge fund Loyal Wealth Management. “Investors need to be cautioned about  increasing risks in chasing the rally.”
Blockchain can be used as an open, distributed digital ledger system that records transactions efficiently.
An index compiled by East Money Information that tracks 172 A-share companies that develop or use blockchain technology jumped 8.1 per cent on Monday with 107 of them hitting the daily upper limit of 10 per cent.
The surge, buoyed by Xi’s comments calling for accelerated research and applications added market capitalisation of about 200 billion yuan to the companies.
About 40 of the stocks continued to surge to the daily 10 per cent ceiling on Tuesday morning.
Brokerages singled out only a handful of firms to describe them as good buys.
Among them, Beijing Thunisoft (300271 CH) which develops e-government system software would be the top beneficiary of Beijing’s potential incentive to buoy blockchain technology, according to a research report by Northeast Securities.
Its shares jumped 7.15 per cent to 23.13 yuan on Monday before sliding 5.2 per cent to 22.02 yuan on Tuesday morning.
Ping An Securities said biotech development firm Beijing BGI Genomics (300676 CH) would be another A-share firm to benefit from Beijing’s supporting policies on blockchain.
Its shares jumped 5.25 per cent to 61.94 yuan on Monday before dropping 3.2 per cent to 59.95 yuan on Tuesday morning.
-- Daniel Ren    


Frenzy around blockchain stocks likely to go bust, analysts warn

Tencent (700 HK) reversed course and is now trading down 1.3 per cent to HK$317.80. 
On Monday, the Chinese social media and gaming giant broke a three-day losing streak, gaining 1.7 per cent to close at HK$322, above what has been a key support level this year of HK$320.
Index heavyweight HSBC (5 HK) is down 1.4 per cent to HK$59.40, after its worse-than-expected results Monday. Investors punished it then by sending it down 2.3 per cent.
Meituan Dianping (3690 HK) has seen its morning losses widen. It is now down 1.9 per cent to HK$91.95. Xiaomi (1810 HK) losses have also deepened since early morning. It is down 3.3 per cent to HK$8.89. On Monday, both of the stocks  were included in the Stock Connect, which means they can now be bought by southbound traders.
Other noteworthy stocks:
Blockchain-related stocks soared in Hong Kong as well the mainland on Monday, after Chinese President Xi Jinping called for greater urgency in the development of blockchain technology. They are still soaring on the mainland.
But in Hong Kong, Pantronics (1611 HK) started ahead but now has plunged 5.5 per cent to HK$4.44. 
The Hang Seng Index is down 0.4 per cent to 26,788.05.
-- Deb Price    


Tencent turns down; Meituan Dianping and Xiaomi morning losses deepen

WH Group (288 HK) continues to lead gains on the declining Hang Seng Index, rising 7.6 per cent to HK$8.42 on its 8.5 per cent profit jump for the first nine months of the year.
Nomura boosted its target price for the world's biggest pork processor to HK$10 from HK$9.50 and left it as a buy after it reported, according to a report by ET Net New Agency.
Here's a look at its rocky year, in which it has dealt with tariffs in China amid the trade war and deadly African swine fever, which has roiled China's pig market.
 

-- Deb Price    


Chart: WH Group soars on nine-month results 

Shares of Chongqing Rural Commercial Bank (601077 CH) stumbled some after hitting the daily trading cap of 44 per cent in the morning.
The IPO debutante surged 44 per cent to 10.6 yuan after trading opened, triggering a 30-minute trading suspension.
Shares of the rural lender in the country’s southwestern city of Chongqing have since retreated to 9.64 yuan, narrowing its gain to 31 per cent.
The other two IPO debutants, Keeson Technology (603610 CH) and Beijing Zuojiang Technology (300799 CH) continue to be traded at the prices that hit the 44 per cent limit on stocks on their first trading day on the mainland.
-- Daniel Ren 


Chongqing rural lender gives up some of its juicy first-day gains

Shares of Gree Electric Appliances (000651 CH), China’s largest air-conditioner maker, jumped 4.8 per cent after its state-owned parent agreed to sell a 15 per cent stake to a private equity fund backed by Hillhouse Capital.
Gree hit intraday low of 57.26 yuan in the morning, jumping more than 4 per cent to 59.6 yuan in the afternoon, up 4.8 per cent from Monday’s close.
On Monday, state-owned Zhuhai Gree Group, controlled by Zhuhai government, agreed to sell its 15 per cent stake of the listed company to Zhuhai Mingjun Investment Partnership, a unit of Hillhouse.
The price of the stake sale was not disclosed, but it could be worth US$7.5 billion based on the company’s valuation.
-- Daniel Ren    


Gree Electric rises on stake sale news

Chinese smartphone maker Xiaomi (1810 HK) and Meituan Dianping (3690 HK) -- both losing ground today -- are just experiencing normal profit taking after their gains Monday on being put onto the Stock Connect, says Kenny Tang Sing hing, chief executive at Royston Securities.
"I think Meituan will still benefit from the fund flow from mainland China and also the results are expected to improve a lot in the third quarter. So I think the prospect for Meituan is still looking good," he said of the Chinese ticketing and food delivery company. 
"But for Xiaomi, the fundamental is still not too attractive because the company still highly relies on the hardware business of which the gross profit margin is very low," Tang added.
Xiaomi has fallen 3.4 per cent to HK$8.88, while Meituan has dropped 2.4 per cent to HK$91.45.  
-- Deb Price    


Xiaomi and Meituan Dianping just seeing normal profit taking, says Kenny Tang

Mainland-listed blockchain stocks staged a correction in the afternoon as profit-taking set in with analysts warning about frothy valuations of the companies.
An index compiled by East Money Information that tracks the 172 blockchain A-share stocks lost 1.1 per cent to 820.09, following an 8.1 per cent rally on Monday when President Xi Jinping’s remarks on encouraging blockchain development sparked a buying spree.
On Monday, 107 A-share firms jumped to the daily 10 per cent upper limit, and the number dropped to 24 today.
Xinhu Zhongbao (600208 CH) which engages in the real estate industry, was among the few stocks among the 172 blockchain-related companies that soared to the 10 per cent daily trading cap for two consecutive days. Its shares closed at 3.5 yuan, up 21 per cent from the closing price of 2.89 yuan last Friday.
-- Daniel Ren 


 Blockchain stocks retreat in China

The Shanghai Composite Index fell 0.9 per cent to 2,954.18, snapping a two-day winning streak.
Only 281 stocks ended up with gains, while 1,208 lost and 42 were unchanged.
The CSI 300 Index of large stocks trading in Shanghai and Shenzhen fell 0.4 per cent to 3,910.23. 
Here's how several stocks popular with northbound Stock Connect traders did:
Kweichow Moutai (600519 CH) gained 1.3 per cent to 1,193 yuan.
China Merchants Bank (600036 CH) slipped 0.1 per cent to 36.15 yuan.
Shanghai International Airport (600009 CH) fell 2.7 per cent to 73.43 yuan.
Ping An Insurance (601318 CH) fell 0.5 per cent to 88.20 yuan.
-- Deb Price 


Kweichow Moutai gains but Shanghai falls, snapping two-day winning streak

The Hang Seng is finding it hard to crack the 27,000 level. It hasn't been above it since September 16.
"27,000 is a very strong resistance. Both yesterday and today, HSI retreated after hitting that level," says Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.
HSBC (5 HK), which is the biggest stock on the Hang Seng Index with a near-10 per cent weighting, fell 1.3 per cent to HK$59.45, marking a second straight day of losses after its third-quarter results missed estimates.
Wen doesn't see a significant downside risk to HSBC.
 

-- Deb Price    


Hang Seng finding 27,000 hard to crack again, says stocks strategist Kenny Wen

People’s Daily has called for stronger regulation of blockchain businesses amid an investment craze following President Xi Jinping’s positive comments on the need to accelerate development of the technology.
People.cn, website of the Communist Party's mouthpiece, published a commentary late in the evening on Monday after more than 100 blockchain-themed stocks skyrocketed to the daily 10 per cent trading limit.
It warned that lax regulation of blockchain could pose a threat to the healthy growth of the technology.
The mouthpiece also urged officials of all levels to be fully aware of the necessity in regulating blockchain businesses.
Xi said at a group study session for members of the Politburo last week that there is a  need for greater urgency in the development of blockchain technology because it could play an important role in the next round of technological innovation and industrial transformation.
However, blockchain technology has been linked by millions of mainlanders to speculation on digital currencies, such as bitcoin, over the past three years.
The technology is used as open, distributed digital ledger systems that record transactions efficiently.
The People’s Bank of China banned trading of digital currencies in early 2017.
-- Daniel Ren 


People's Daily calls for blockchain regulation

The Hang Seng Index dipped 0.39 per cent to 26,786.76 ahead of a possible interest-rate cut by the US Federal Reserve.
Index heavyweight HSBC (5 HK) which is the biggest stock on the Hang Seng Index with a near-10 per cent weighting, dropped 1.3 per cent to HK$59.45 following a 2.3 per cent fall on Monday.
Tencent (700 HK) shed 1.55 per cent to HK$317, closing below the key support level of HK$320 again after gaining 1.7 per cent  to snap a three-day losing streak on Monday.
Meituan Dianping (3690 HK) tumbled 1.8 per cent to HK$92.
-- Daniel Ren
