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Yujing Liu

Srinivasan Iyer

Good day, traders
Mainland markets stayed positive throughout the day, with a late burst sending the Shanghai Composite above the key 3,000 level again.
Catch up on the day's trading below.  
BTW, if you would like the Live Stocks Blog emailed to you each morning, click here. 
-- Yujing Liu and Srinivasan Iyer in Hong Kong 
Note: Information in this blog is on an "as is" basis and not a solicitation or offer to buy or sell any securities or otherwise; and is not investment/professional advice or services in this regard.  It is subject to our T&C.  SCMP (as defined in T&C) shall not be liable for any loss, damage and costs relating to any investments in securities or otherwise in this connection.


China stock markets powered higher by lithium battery makers, brokerages

An aerial view of the Lujiazui area in Shanghai. Photo: Xinhua

Business

Markets

Leading battery maker Contemporary Amperex Technology rises to fresh intraday high
Property developers rise after Beijing says it will ease restrictions for residency permits in smaller cities


Hong Kong is closed today for Christmas holiday; trading resumes tomorrow


Stocks

China stock market

A-shares

Live

Here's what we are watching this morning:
Overnight markets/ What futures foretell  -- The US markets were closed on Wednesday for Christmas. Trading will resume trading on Thursday.  -- China A50 futures edged up 0.1 per cent.
IPO debuts:  -- Industrial gas producer Guangdong Huate Gas (688268 SH) will start trading in Shanghai.
Economic statistics/Central Bank action:  -- None to note.
Corporate events:  -- None to note.


Morning guidance

China’s state asset authority will roll out a three-year plan in early 2020 to reform state-owned enterprises (SOEs) to increase competitiveness, according to a front-page report in the official China Securities Journal newspaper.
New metrics will be introduced to evaluate the profitability of SOEs as well as their investment in R&D, the report says, quoting Hao Peng, chairman of the State-owned Assets Supervision and Administration Commission.
The authority will focus on merging companies in industries such as petrochemicals and equipment manufacturing, he said. SOEs will also become more proactive in managing the companies that they own a stake in.
-- Yujing Liu


China poised to reform state-owned firms

The Shanghai Composite Index edged up 0.1 per cent to 2,983.71 at the start of trading.
The Shenzhen Component Index gained 0.2 per cent, and the ChiNext Index of start-ups added 0.1 per cent.
-- Yujing Liu


China market posts small gains at the open

Jiugui Liquor (000799 SZ), a Chinese distiller embroiled in a controversy over a banned additive, gained as much as 3.4 per cent in early trading after local authorities released three years of positive quality test results last night.
Jiugui’s products have met all requirements in a total of 64 tests since 2017, documents released by the market regulator in the southern province of Hunan – where the producer of fiery Chinese liquor baijiu is based – show, local media reported.
A distributor of Jiugui Liquor last week accused the company of having added an artificial sweetener, which is banned in baijiu products, to its products.
The company’s shares were on a downtrend this week, until this morning’s rebound.
-- Yujing Liu


Liquor maker recovers on positive quality test results

Chemicals producer Zhejiang Jiahua Energy Chemical Industry (600273 SH) advanced after officials from a government-backed semiconductor investment fund visited the company.
The company, which makes acid products used in the manufacturing of semiconductors, said that on Tuesday it had hosted research staff from institutions, including the Shanghai Integrated Circuit Industry Investment Fund.
Shares of the company surged as much as 9 per cent, before paring some of the gains to 3.2 per cent to 11.24 yuan in the latest trading.
-- Yujing Liu


Acid maker jumps on state chip fund visit

Lithium mining giant Tianqi Lithium (002466 SZ) soared after trading resumed today, following the successful raising of 2.9 billion yuan (US$415 million) in capital from a new share allotment.
The company, which controls nearly half of the world’s supply of lithium according to some estimates, issued 335 million shares at 8.75 yuan apiece to investors, it said in a stock exchange filing.
Shares of Tianqi Lithium jumped by the daily limit of 10 per cent to 26.9 yuan.
The company is under enormous debt pressure after it acquired a 23.77 per cent stake in Chilean lithium miner SQM for US$4.1 billion last year.
All of the funds raised from the allotment will go to repay debts it took on for the acquisition, the company said.
-- Yujing Liu


Lithium giant jumps on successful allotment

Property developers climbed broadly, after Beijing announced it would loosen restrictions for citizens of smaller cities to gain residency.
The government will drop all requirements for citizens to gain residency in cities with less than 3 million people, and drastically reduce the restrictions for cities with populations between 3 million and 5 million, according to a State Council document published by Xinhua today.
China’s decades-old household registration system – known as hukou – prevents people from moving freely within the country. Residents usually need to satisfy many requirements, such as paying a certain amount of tax, to enjoy government services in a particular city.
This could be a huge boost to developers, as China’s tight curbs on property prices often function by limiting the number of houses and non-local residents can buy. More people with urban hukou means more potential buyers.
A gauge of 134 property-related stocks gained 1.2 per cent, according to Wind data. Lushang Health Industry Development (600223 SH) and Shanghai Wanye Enterprises (600641 SH) jumped by the daily limit of 10 per cent.
-- Yujing Liu


Property stocks advance as residency curbs are relaxed

Stocks related to lithium battery soared in morning trading, as a continuing enthusiasm over electric vehicles spread to manufacturers of the key car part.
A gauge of 124 stocks in Shanghai and Shenzhen gained 1.1 per cent, with eight stocks surging by the daily maximum of 10 per cent, including lithium miner Tianqi Lithium (002466 SZ). Leading battery maker Contemporary Amperex Technology (300750 SZ) reached a fresh intraday high of 106.98 yuan.
A recent rally in Tesla shares in the US have partially inspired the craze for EV-related stocks. Investors have turned hopeful about the long-term prospects of EVs in China, even as the government has been reducing subsidies and a slowing economy are likely to result in negative sales growth for EVs this year.
The market also expects Tesla to invest in battery manufacturing in China, as its Shanghai factory pulls closer to mass production.
-- Yujing Liu


Lithium battery stocks jump on higher hopes for electric vehicles

The Shanghai Composite Index rose 0.4 per cent to 2,992.41 by lunch break, moving closer to test the key 3,000-point support level that it fell below on Monday.
The Shenzhen Component Index added 0.1 per cent, while the ChiNext Index dropped 0.1 per cent.
-- Yujing Liu


China markets post steady gains in morning session

Jiang Xiyun, former chairman of China’s troubled Hengfeng Bank, received a death sentence with a two-year reprieve – which often translates into life imprisonment – for corruption charges involving 800 million yuan (US$114 million).
Jiang siphoned out more than 283 million shares of Shandong-based Hengfeng – worth 754 million yuan – to shell companies controlled by him or his family during his tenure between 2008 and 2013, a Shandong court said in a ruling today.
He demanded and received bribes worth some 83 million yuan for providing loans to companies and individuals. On top of it, he also destroyed financial records of companies linked to his corruption.
China’s banking industry has looked vulnerable recently, with three lenders receiving state bailout. Hengfeng itself has has not produced accounts since 2016, and received a US$14 billion capital injection led by the country’s sovereign wealth fund earlier this month.
-- Yujing Liu


Former head of troubled Chinese bank given death penalty

China’s  target to boost electric vehicles (EV) sales to 25 per cent of overall sales by 2025 earlier this month has lifted investors’ expectations for EV-related stocks, according to a Guosheng Securities report published today.
“Even though the market is not entirely convinced the target will be achieved, the figure gave us an anchor to peg our hopes,” analyst Yao Jian wrote in the report.
Carmakers and battery makers will invest and expand production to reach the goal, he wrote. 
Guosheng Securities recommends leading battery maker Contemporary Amperex Technology (300750 SZ) and Wuxi Lead Intelligent Equipment (300450 SZ), a new energy equipment maker, for it is likely to win more orders from overseas clients.
-- Yujing Liu


Upbeat sentiment over electric cars boosts battery makers, Guosheng Securities says

Chinese securities brokerages skyrocketed in the last 30 minutes of trading today, as investors piled in on speculation the government will cut securities trading tax after the national legislature released the results of a survey that showed respondents were keen on lower securities trading tax. 
Tax income from securities trading stood at 97.7 billion yuan (US$14 billion) last year, official figures show.
Investors were also excited by market talks that the central bank will cut the reserve requirement ratio to inject liquidity into the financial system later this week.
Nanjing Securities (601990 SH), based in the eastern province of Jiangsu, led the advance with a 10 per cent jump to 12.71 yuan. The stock has surged by a stunning 66 per cent in the past two weeks on expectations of better earnings this year.
A gauge of 47 brokerages jumped 3 per cent.
-- Yujing Liu


Securities brokerages soar on speculation of tax cut

The Shanghai Composite Index widened gains in the final stretch of trading, climbing 0.9 per cent to 3,007.35.
The benchmark has rallied above the key 3,000-point level five times since June, but has failed to consolidate gains.
The Shenzhen Component Index added 0.7 per cent, and the ChiNext Index rose 0.5 per cent.
-- Yujing Liu


Shanghai benchmark back above 3,000 points

China and the US are going through a series of technical steps to sign the trade deal, including ensuring the legality of the document and the accuracy of translation, Ministry of Commerce spokesman Gao Feng said in a press briefing today.
The two sides are in close contact on the signing of the deal, he said, according to local media reports.
-- Yujing Liu


China, US working on technical details of trade deal