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Zhang Shidong

Srinivasan Iyer

Good day, traders
Chinese and Hong Kong markets picked up from where they ended last week, as solid investor sentiment helped to boost stocks on the first day of trading this week. Tech stocks were the star performers today.
And if you would like the Live Stocks Blog emailed to you each morning, click here. 
- Zhang Shidong in Shanghai 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.


Hang Seng Index closes at eight-month high propelled by gains in Tencent, Alibaba    

The flags of Hong Kong stock exchange, China and Hong Kong are seen outside Exchange Square in Hong Kong. Photo: AFP

Business

Markets

Hang Seng Index climbs 1.1 per cent to its highest close since May 8 
Shanghai Composite gains 0.8 per cent to its best level since April 25    


Hong Kong investors shrugged off disappointing US employment data, while Taiwan stocks rose to a near three-decade high after President Tsai Ing-wen won a landslide victory in the re-election.


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Overnight markets/what futures foretell  - On Friday, the S&P 500 and the Nasdaq both slipped 0.3 per cent, while the Dow fell 0.5 per cent.  - Hong Kong futures were 0.6 per cent higher, while the FTSE China A50 futures rose 0.2 per cent   IPO debuts: Forward Fashion (International) Holdings (2528 HK) and China Hongguang Holdings (8646 HK) will start trading in Hong Kong today, while Hubei Heyuan Gas (002971 CH) will debut in Shenzhen.   Economic statistics/central bank action: China’s central may release the December data on new lending and aggregate financing as early as today.   Corporate events, earnings, meetings, news conferences: nothing major   Later this week: China’s customs office is scheduled to reveal December figures on foreign trade tomorrow, and the statistics bureau will release post a set of key economic data, including China’s full-year GDP growth on Friday.


Morning guidance

Online talent service platform Wise Talent Information Technology (6100 HK) said it expected to post a record increase in adjusted operating profit for the year ended December 31. The increase could range between 91.4 per cent and 111.4 per cent.
Adjusted operating profit does not include one-time listed expenses and share-based compensation expenses, the Beijing-based company said in a filing to Hong Kong stock exchange on Sunday evening.
The company, which offers online personal career files, job search, recruitment and other related services, said the jump was because of higher average revenue per user, as well as improved sales efficiency and strict spending control.
-- Louise Moon


Online talent firm expects bumper year

The Hang Seng Index rose 0.3 per cent, while the Shanghai Composite Index slipped 0.3 per cent at the start of trading. Investors are likely to have an eventful week, with Beijing and Washington expected to sign the much-heralded phase one trade deal and China’s key economic data due on Friday.
In the mainland, stocks linked to new-energy vehicles received a boost after a government official said over the weekend that subsidies for purchase of electric cars will not be cut significantly this year.
- Zhang Shidong


Hong Kong, mainland stocks head in different directions

Taiwan’s Taiex index, which tracks 909 stocks on the island’s exchange, rose 0.4 per cent to 12,068.48 in early trading on Monday after pro-independence President Tsai Ing-wen romped to a landslide victory in the election to secure a second term in office over the weekend.
Heavyweights Taiwan Semiconductor Manufacturing Co (2330 TT) and Cathay Financial Holding (2882 TT) contributed to the biggest gain on the Taiex, which is near its highest level since 1990.
Taiwan is regarded as a renegade province by Beijing and has been ruled separately since the civil war in 1949.
- Zhang Shidong
 



Taiwan stocks trade near three-decade high after Tsai’s re-election

Forward Fashion (International) Holdings (2528 HK) started trading on the main board of the Hong Kong stock exchange, and China Hongguang Holdings (8646 HK) debuted on the GEM board today.
Shares of apparel retailer Forward Fashion fell 24.5 per cent to HK$1.51 from its initial offer price of HK$2 per share. The company operates more than 200 retail stores for foreign luxury labels across Hong Kong, Macau and mainland China.
GEM board debutant China Hongguang, a construction glass maker, rose 11.7 per cent to HK$0.86 from its IPO price of HK$0.77.
- Kathleen Magramo
 
Forward Fashion (International) Holdings Company Limited (2528 HK) started trading on the main board of the Hong Kong stock exchange, and China Hongguang Holdings Company Limited (8646 HK) debuted on the GEM board today.@SCMPNews@scmpbusiness pic.twitter.com/RjyUnwPoIn
  — Kathleen Magramo (@kathmaemagramo) January 13, 2020


Two new stocks debut in Hong Kong

BYD (002594 CH) and other stocks linked to electric cars jumped after Miao Wei, Minister of Industry and Information Technology, said over the weekend that China will not significantly cut subsidies for buying such cars this year.
The comment was an additional boost to the sector, which has recently been on a roll after Tesla cut prices of its Model 3 cars in China.
BYD surged 9.4 per cent to 51.32 yuan, BAIC BluePark New Energy Technology (600733 CH) rose 8.9 per cent to 6.62 yuan and lithium battery maker Contemporary Amperex Technology (300750 CH) added 2.3 per cent to 115.88 yuan.
- Zhang Shidong


EV stocks climb on subsidy optimism

Hubei Heyuan Gas (002971 CH), which produces gases including oxygen and nitrogen for medical and industrial use, jumped 44 per cent from the initial public offering price to 15.58 yuan in Shenzhen today.
New shares on the mainland’s exchanges are subjected to a maximum gain of 44 per cent on the first day of trading.
- Zhang Shidong


Heyuan Gas surges by daily cap on debut

ZA Bank, one of Hong Kong’s first digital banks, has upped the stakes in the battle for consumer deposits, saying it will pay an introductory rate of 6 per cent.
The unit of  ZhongAn Technologies International Group said that it will pay a select group of depositors over 3 percentage points more than banks such as HSBC Holdings and Standard Chartered as part of a trial run.
Read full story here


Hong Kong digital bank offers 6 per cent on deposits

Air China led a rebound among carriers in the mainland and the city after crude oil retreated, alleviating concerns about rising fuel costs.
Air China (753 HK) rose 1.5 per cent to HK$8.02, China Eastern (670 HK) added 0.7 per cent to HK$4.33 and B (293 HK) gained as much as 0.2 per cent to HK$11.22.
Crude futures slid 6.4 per cent last week because of the escalating military tension between the US and Iran, which has since eased.
- Zhang Shidong


Airlines rebound as oil prices ease

Tencent Holdings (700 HK), the most valuable constituent on the Hang Seng Index, is on course to close above HK$400 for the first time since June 2018.
The stock traded 0.6 per cent higher at HK$400.80 on Monday. A relative calm in the city, which has been roiled by anti-government protests over the past seven months, and improving global growth outlook, have helped to lift sentiment on the Hang Seng Index. The benchmark has rebounded 14 per cent since August.
Alibaba Group Holding (9988 HK), which owns the South China Morning Post, rose for a third day session, adding 1.9 per cent to HK$222.20.
- Zhang Shidong


Tencent rises to 18-month high

Shares of Geely Automobile Holdings (175 HK), which owns 9 per cent of Daimler, advanced by as much as 2.3 per cent to HK$16.36, the highest intraday level in nearly nine months, after the Financial Times reported that China’s largest privately owned carmaker is in talks to buy the UK sports car producer Aston Martin.
Geely already owns the licence to assemble the iconic London black cab, and owns the Volvo cars brand, among others in its portfolio.
- Eugene Tang


Geely advances on reports of Aston Martin link

The Hang Seng Index rose 0.8 per cent, or 235.99 points, to 28,874.19, as investors look ahead to signing of the phase one trade deal between US and China.


Hong Kong shares end morning session higher

China is expected to post stronger export and import growth in December, helped by a rebound from a low base, a Reuters poll showed, signalling a modest recovery in demand as Beijing and Washington step closer to ending their trade war.
Exports by the world’s second-largest economy are likely to have risen 3.2 per cent in December from a year earlier, according to a median estimate from the survey of 31 economists, improving from a 1.3 per cent drop in November and marking the first pickup since a 3.3 per cent increase in July.
Imports are forecast to have jumped 9.6 per cent from a year earlier in December, the strongest pace since October 2018, the poll showed.


China’s December trade growth seen improving

BYD (1211 HK) has appointed Kevin Wale, former General Motors China president, as a senior adviser to the electric car maker’s chairman, Reuters reported today.
The Chinese carmaker, which is backed by US investor Warren Buffett, said that Wale will provide consulting services to BYD’s automotive business, including in areas such as marketing and brand building
Wale retired as GM’s China president in 2012.


BYD appoints former GM executive as senior adviser

Chinese search-engine operator Sogou (SOGO US) had its recommendation upgraded to buy and price target raised at Jefferies Financial Group.
Earnings growth may accelerate this year on cost controls, a stable increase in advertising revenues and additional contribution by AI tools, analysts led by Thomas Chong at the US investment bank wrote in a report.
Its American depositary receipts dropped 0.8 per cent to US$4.90 in New York on Friday, against the share-price estimate of US$5.72 set by Jefferies.
- Zhang Shidong


Sogou upgraded to buy at Jefferies

Bank of Shanghai (601229 CH) dropped 1.9 per cent to 9.22 yuan, after a property developer accused a vice-president of the lender’s Shanghai branch and Shenzhen Baoneng Investment Group of seizing assets worth about 20 billion yuan (US$2.9 billion) and obtaining loans of 26.5 billion yuan in violation of laws. It was headed for its biggest loss since October 29. 
Bank of Shanghai denied the allegations in a statement to the Shanghai exchange, saying the property developer had defaulted on loan payments and that all lending to Baoneng was legal.
- Zhang Shidong


Bank of Shanghai falls on allegations of improper dealings 

China’s state-owned fertilizer maker Qinghai Salt Lake Industry (000792 SZ), the country’s largest producer of potash, is set to post the largest loss in China’s history.
The company expects to report an annual loss of as much as 47.2 billion yuan (US$6.8 billion), it said in an exchange filing on Saturday night. This would be the biggest annual loss posted by a mainland-listed company, surpassing the 16.2 billion yuan loss reported by Aluminum Corp of China (601600 SH) in 2014.
Qinghai Salt Lake has suffered several consecutive years of heavy losses from its misjudged aggressive investments in the magnesium business. After six failed auctions to sell an asset package originally priced at 17.8 billion yuan, a state-owned investment firm has agreed to buy it for 3 billion yuan.
The firm started a court-led bankruptcy proceeding in September 2019, a rare case in China as regulators move towards a more market-driven approach with state-owned firms.
The company’s shares fell by as much as 5 per cent in early trading, before paring the losses to 0.2 per cent at 8.56 yuan.
- Yujing Liu


State-owned fertilizer maker set to post China’s biggest ever loss

The upcoming signing of a trade deal between Beijing and Washington is boosting the Chinese currency.
The yuan appreciated for a fifth day today, strengthening 0.2 per cent to 6.8995 against the US dollar for the highest level since July, in offshore trading in Hong Kong.
The onshore yuan strengthened 0.3 per cent to 6.9023 against the greenback, also the strongest level in five months.
- Zhang Shidong
 



China’s yuan rises to highest level in five months

China’s stocks are back on an upward trajectory amid buying interest in technology companies, driving up a key gauge to an almost nine-month high.
The Shanghai Composite Index advanced 0.8 per cent to 3,115.5 at the close, its highest since April 25. Technology stocks and companies linked to electrical cars led gainers on optimism over the development of the 5G network and government subsidies.
“With an abundance of liquidity in the system over the Lunar New Year, investors are zeroing in on a positive outlook for 5G which is supporting technology stocks,” said Stephen Innes, a strategist at AxiTrader. “The 5G story is just too big to ignore as it's estimated by 2025 some 600 million Chinese will be 5G-enabled, which will not only transform the domestic scene but will [also] revolutionise the global telecommunication industry. Indeed, investors could ride this wave for a while.”
-- Zhang Shidong


Tech stocks lead Shanghai index to near nine-month high

Hong Kong is experiencing a period of triple-short covering that’s helping drive stocks higher despite headwinds in the local economy, according to Jefferies Financial Group.
Improving sentiment in a trio of markets - the yuan, interest rates and initial public offerings - has left investors with short positions in equities forced to cover, strategist Sean Darby wrote in a note on Monday.
Months of political unrest have pushed the city into recession, yet equities have held their ground with the Hang Seng China Enterprises Index of mainland China shares listed in the city clawing back its losses since bottoming out in August. The gauge climbed on Monday, and has risen almost 2 per cent so far this year.
“While domestic political issues are still present, the shift in currency and interest-rate markets is overwhelming any pessimism over the economy,” Darby wrote. “The China H-share index is by and large the biggest beneficiary,” thanks in part to its sensitivity to moves in the yuan.


Triple-short covering driving Hong Kong equities: Jeffries

The Hang Seng Index climbed 1.1 per cent to 28,954.94 to close at the highest level since May 8.
Tencent Holdings (700 HK) topped HK$400 for the first time in 18 months and Alibaba Group Holding (9988 HK) rose to a record close for a third straight day. Smartphone maker Xiaomi (1810 HK) also gained on optimism over construction of China’s 5G networks.
- Zhang Shidong
