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Zhang Shidong

Srinivasan Iyer

Good day, traders!
Hong Kong and China markets ended the week on a positive note, as investors remain optimistic that China's economic growth will pick up this year.
Catch up on the day's trading below.
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 rises to the highest level in eight months with investors optimistic over China's growth outlook 

An electronic ticker board displays stock prices outside the Exchange Square complex, which houses the Hong Kong stock exchange. Photo: Bloomberg

Business

Markets

China's growth has bottomed out, says JPMorgan Asset
Xiaomi jumps on upbeat 5G prospects


US markets once again end at record highs with Alphabet becoming the latest member to join the US$1 trillion club


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Overnight markets/what futures foretell  -- Overnight in US markets, the S&P 500 gained 0.8 per cent, the Nasdaq rose 1.1 per cent, and the Dow added 0.9 per cent.  -- Hong Kong futures were 0.4 per cent higher, while the FTSE China A50 futures climbed 0.2 per cent.   IPO debuts: Lvji Technology Holdings (1745 HK), Jiachen Holding Group (1937 HK) and Wah Wo Holdings Group (9938 HK) will debut in Hong Kong today. Xiamen Amoytop Biotech (688278 CH) will start trading in the Star Market in Shanghai.   Economic statistics/central bank action: China’s statistics bureau is expected to release the key December economic data and the figure on economic growth for 2019 at 10am.   Corporate events: earnings, meetings, news conferences - nothing major


Morning guidance

China Evergrande (3333 HK) has issued two bonds worth US$2 billion.
The  highly leveraged Chinese property developer issued a US$1 billion bond with a three-year tenor and a coupon rate of 11.5 per cent, and another US$1 billion bond due 2024 with a coupon rate of 12 per cent, according to a filing to the stock exchange.
Xu Jiayin, founder and chairman, has bought US$50 million of the bond maturing in 2024, while CEO Xia Haijun has purchased US$50 million of the bond that matures in 2023.
The funds will be used to pay down existing debt, including bonds worth US$1.6 billion maturing this year.
 
Kaisa Group Holdings (1638 HK) has issued a US$300 million bond with a coupon of 9.95 per cent.
The five and a half year senior note will be used to refinance its existing medium to long term offshore debt due within one year.
The Shenzhen-based developer also issued a five-year US$500 million bond with a coupon rate of 10.5 per cent. 
 
Luk Fook Holdings (0590 HK), a major Hong Kong jewellery retailer, said it plans to close shops in protest-hit areas in the city after posting sluggish sales for the quarter ending December 2019.
The jewellery chain said same store sales dropped 25 per cent year on year between October and December. Sales had fallen 37 per cent in the quarter ending September.
The company also said it plans to expand in Macau.
-- Pearl Liu


Overnight filings

Mirae Asset Global Investment listed three ETFs on the Hong Kong stock exchange.
All three products focus on the Chinese market with an ESG theme. They are Global X China Clean Energy ETF (2809/9809), Global X China Consumer Brand ETF (2806/9806), and Global X China Electric Vehicle ETF (2845/9845).
-- Kathleen Magramo


Mira Asset lists three ETFs

The Shanghai Composite Index added 0.3 per cent to 3,082.65 and Hong Kong’s Hang Seng Index rose 0.1 per cent to 28,924.01 at the open today, as traders await the release by the statistics bureau of key economic data at 10am.
-- Zhang Shidong


China and Hong Kong stocks drift higher before economic data release

Biopharmaceutical firm Xiamen Amoytop Biotech (688278 CH) surged 268 per cent to 30.22 yuan on the Science and Technology Innovation Board, or the Star Market, in Shanghai today.
The Nasdaq-style board has set no limit on how much new shares can rise or fall on the first five days of trading.
-- Zhang Shidong


Amoytop Biotech jumps more than threefold on Star Market debut

Three companies, Lvji Technology Holdings (1745 HK), JiaChen Holding Group (1937 HK), and Wah Wo Holdings Group (9938 HK) started trading on the Hong Kong stock exchange today.
Online tour guide company Lvji Technology opened 18.39 per cent lower at HK$1.73 compared to its IPO price of HK$2.12.
JiaChen Holding Group, which makes flooring products, fell 68 per cent to HK$0.38 from its IPO price of HK$0.53. 
Wah Wo Holdings Group, a Hong Kong-based construction and decoration firm, shed 6 per cent to HK$0.47 from its IPO price of HK$0.50.
-- Kathleen Magramo
 
Three companies, Lvji Technology Holdings Inc. (1745 HK), JiaChen Holding Group (1937 HK), and Wah Wo Holdings Group (9938 HK) started trading on the main board.
  Mirae Asset Global Investment listed three ETFs on the Hong Kong stock exchange.@SCMPNews @scmpbusiness pic.twitter.com/d4DhAbeBvq
  — Kathleen Magramo (@kathmaemagramo) January 17, 2020


All three debutants fall in Hong Kong

China’s economy expanded by 6 per cent from a year earlier in the fourth quarter, the National Bureau of Statistics said this morning.
That matches the estimate of 6 per cent growth in a Bloomberg survey. Industrial production increased 6.9 per cent last month and retail sales grew 8 per cent, while fixed-asset investment rose 5.4 per cent in 2019, the agency said.
-- Zhang Shidong


China’s fourth-quarter growth in line with estimates

Morgan Stanley (MS.NYSE) said on Thursday that its investment management revenue nearly doubled in the fourth quarter thanks to a private-equity investment in a Chinese consumer products company that went public on the Hong Kong exchange in the fourth quarter.
Bloomberg reported the investment was in China Feihe, the mainland’s biggest infant formula maker whose products are endorsed by the actress Zhang Ziyi, who starred in Crouching Tiger, Hidden Dragon. China Feihe raised US$855 million in an initial public offering in November.
Morgan Stanley chief financial officer Jonathan Pruzan, who did not name the company on the conference call, said the IPO “generated a significant amount of accrued interest revenue, the ultimate realisation of which will depend on the monetisation of the underlying position and the fund.”
Pruzan said the investment was made more than six years ago and was less than US$50 million. It has a current value of about US$2 billion.
“The company has been quite successful and grown quite nicely and it went public in the fourth quarter on the Hong Kong exchange and the IPO has performed quite nicely,” he said.
Shares of China Feihe have nearly doubled since the Hong Kong debut in November. The company’s shares rose 1.1 per cent to HK$11.10 in early trading in Hong Kong on Friday.
Morgan Stanley said on Thursday that its profit rose 53 per cent to US$2.1 billion in the fourth quarter, compared with US$1.4 billion in the prior-year period.
-- Chad Bray


Morgan Stanley makes a killing on its investment in China Feihe

Fuzhou Rockchip Electronics, a Fujian-headquartered semiconductor company, said it plans to raise 406.6 million yuan by issuing up to 42 million shares in Shanghai, according to a prospectus filed with the Shanghai Stock Exchange.
The company expects to issue the shares at 9.68 yuan each on January 20. Rockchip aims to use the funds for construction of its R&D centre, development of new technologies and upgrading its existing products.
-- Iris Ouyang


Fuzhou Rockship plans Shanghai IPO

Autel Intelligent Technology plans to launch an IPO on the Star Market of the Shanghai Stock Exchange.
Xian-based Autel, which makes car diagnostic products, said in a prospectus today that it expects to issue 50 million shares on February 3, without disclosing the amount it plans to raise.
It will invest the funds to build an R&D centre at its headquarters in the northwestern Chinese city and for a cloud service platform construction project.
-- Iris Ouyang


Car equipment maker plans IPO on Star Market

Markets are getting a boost from China’s better-than-estimated official December data that was just released.
The Shanghai Composite Index extended the gain to 0.5 per cent. Industrial output increased 6.9 per cent from a year earlier last month, exceeding the estimate of 5.9 per cent growth, while retail sales rose 8 per cent, beating the projection of a 7.9 per cent increase. Hong Kong’s Hang Seng Index added 0.1 per cent.
-- Zhang Shidong


Chinese stocks firm up gains as December data beats estimates

Margin traders have been increasing their wagers on mainland-traded shares in anticipation of a sustainable rally.
The outstanding balance of purchased stocks financed by debt reached 1.04 trillion yuan (US$152 billion) as of Thursday, the highest level since February 5, 2018, according to China Securities Finance.
A truce in the China-US trade dispute and better-than-estimated economic data from the Asian nation may add further fuel to the run-up this year.
-- Zhang Shidong
 



China’s leveraged buying tops 1 trillion yuan

China’s economy grew by 6.1 per cent in 2019, the lowest annual growth rate for 29 years, the National Bureau of Statistics announced this morning.
The gross domestic product figure came in a year in which the Chinese economy was hammered by US tariffs as a result of the trade war.
Full story here


China’s annual GDP growth slowest in 29 years

Hong Kong drinks maker Vitasoy International Holdings (0345 HK) declined in early trading, after an activist short seller accusing the company of fabricating financials renewed its attack.
Valiant Varriors, an anonymous group of activist investors, said in a new blog today that claims Vitasoy’s profit figures reported in its annual reports do not match those filed to the Australian Securities and Investment Commission.
Vitasoy denied all allegations in a statement on Thursday and accused the short seller of misleading investors. In response, Valiant Varriors said it stands by its statements in the report.
Shares of the company dropped 3.8 per cent to HK$28.15. They jumped 5.6 per cent on Thursday.
-- Yujing Liu


Vitasoy falls after short seller renews attack

The December economic data shows that China’s growth has troughed and economic activities have picked up, according to JPMorgan Asset Management.     “Monthly data showed that economic activities, including retail sales, industrial production and fixed-asset investment, have bottomed out in December,” said Zhu Chaoping, a Shanghai-based strategist at the money manager. “The economic data suggests that the counter-cyclical policies have come into play. More importantly, the uncertainties faced by corporates are diminishing along with the progress in US-China trade negotiation since December.”
Still, Zhu cautioned that there remains the risk of the government trimming its stimulus measures as the economy stabilises by tightening its grip on financing by local governments and continued controls on the property market.
-- Zhang Shidong


China’s growth has bottomed out, JPMorgan Asset says

The Shanghai Composite Index closed 0.1 per cent higher at 3,076.90 in the morning session, after China’s December economic data signalled that growth may have troughed.
Telecom and health care stocks gained, while utilities and consumer companies declined.
-- Zhang Shidong


China’s stocks nudge up after GDP data

Companies with ties to telecoms major Huawei saw big gains this morning.
Shenzhen Asia Link Technology Development (002316 CH), a third-party payment and telecoms technology provider, jumped by the daily limit of 10 per cent to 8.66 yuan. Shenzhen-based information technology company Avit (300264 CH), which cooperates with Huawei in virtual reality, rose close to the daily cap of 10 per cent to 7.94 yuan. Software developer and consulting services provider Guangzhou SiE Consulting (300687 CH) also jumped nearly 10 per cent to 18.39 yuan.
Last year, Huawei shipped more than 240 million smartphones worldwide despite a ban by the US government which prevent American firms from doing business with the Chinese tech giant.
-- Iris Ouyang


Huawei suppliers make solid gains

China Petrochemical Group (Sinopec Group) chairman Dai Houliang is set to become the new chairman of China National Petroleum Corp (CNPC), replacing Wang Yilin who is retiring, three people with knowledge of the matter told Reuters today.
Dai served the last decade as a senior executive of Sinopec Group’s listed arm, Sinopec Corp.
Zhang Yuzhuo, who once served as the chairman of China’s largest coal miner Shenhua Group, is set to replace Dai, according to one of the people.
Wang Yilin previously served as the chairman of China National Offshore Oil Corp.
A CNPC spokesman and Sinopec declined to comment.


China names chairmen for CNPC, Sinopec

Hong Kong shares fluctuated in morning trading to end the session lower. 
The benchmark Hang Seng Index fell 12.75 points, or 0.14 per cent, to 28,870.29 at the break.


Hong Kong stocks end lower at lunch

Global fund managers could spend a combined 300 billion yuan (US$43.7 billion) buying Chinese equities via the stock connect programme with Hong Kong this year, according to Citic Securities.
Money managers will raise the representation of Chinese stocks in the portfolios of their active funds to equal-weight from underweight, and passive exchange-traded funds may increase buying due to launches of new products, the brokerage said in a report today.
Overseas traders have already poured 50.3 billion yuan into mainland-traded shares this year through yesterday via the cross-border investment channel, according to Bloomberg data.
-- Zhang Shidong


Some US$44 billion may flow into Chinese stocks in 2020, Citic says

Henan City Development Environment (000885 CH), which manufactures cement and clinker, edged up 0.5 per cent in early afternoon trading to 12.14 yuan after the company said in a filing to the Shanghai exchange that it expects its 2019 net profit to rise between 1.3 per cent and 29 per cent to between 589 million yuan and 750 million yuan. Henan City reported a profit of 581.6 million yuan in 2018.
-- Iris Ouyang


Henan City’s profit forecast ranges between 1.3 per cent to 29 per cent

Shares of Chinese electric vehicle battery maker Guoxuan High-tech (2074 CH) jumped by the maximum daily limit of 10 per cent after it was reported that Volkswagen is set to take a 20 per cent stake in the company.
The top foreign automaker in China plans to acquire the stake in Shenzhen-listed Guoxuan via a discounted private share placement in the coming weeks, Reuters reported, citing two sources with knowledge of the matter said.
The deal would mark Volkswagen’s first direct ownership in a Chinese battery maker and comes as the Wolfsburg-based firm strives to meet a goal of selling 1.5 million new-energy vehicles a year in the world’s largest car market by 2025, including plug-in hybrid cars.


Electric car battery maker Guoxuan jumps on VW stake sale

BYD (1211 HK) and other Chinese carmakers bucked the weakness in Hong Kong.
BYD, the electric-car maker, jumped 7.3 per cent to HK$48.80, Great Wall Motor (2333 HK), China’s biggest SUV manufacturer, added 1.9 per cent to HK$5.93 and Brilliance China Automotive Holdings (1114 HK) rose 0.1 per cent to HK$7.67.
Traders are pinning their hopes on a turnaround in China’s car market this year, which analysts said will be supported by a low base in 2019 and the government’s pledge not to massively slash subsidies for new-energy vehicles.
-- Zhang Shidong


Chinese carmakers defy declines in Hong Kong

Dayu Water-Saving Group (300021 CH), a supplier of water saving products, fell despite the company’s announcement today that it expects to win a water conservancy and infrastructure construction contract worth 424.15 million yuan (US$61.72 million) projects in Yanshan county, Yunnan province.
The shares trended 0.2 per cent lower after the lunch break at 5.58 yuan.
-- Iris Ouyang


Shares of water-saving firm trend lower despite positive outlook

Shandong Lukang Pharma (600789 CH) and other Chinese drug makers climbed after the central city of Wuhan reported one more death linked to the newly discovered strain of coronavirus.
Lukang Pharma, which makes products including antibiotics, surged 6.5 per cent to 7.85 yuan in Shanghai, Jiangsu Lianhuan Pharmaceutical (600513 CH) climbed 9.6 per cent to 9.10 yuan and Guilin Layn Natural Ingredients (002166 CH) gained 2.9 per cent to 8.25 yuan. A gauge of pharmaceutical stocks on the CSI 300 Index advanced 1.5 per cent as the best performer among all the industry groups.
Wuhan has reported a total of 41 pneumonia cases caused by the virus, with 12 already discharged from hospitals and five still in critical condition, the city’s health commission said in a statement yesterday.
-- Zhang Shidong


Chinese health care stocks rally after one more case of Wuhan pneumonia

Smartphone maker Xiaomi (1810 HK) jumped 9.3 per cent to HK$13.36, reaching its highest level in more than a year.
The surge came as investors are increasingly optimistic about Xiaomi’s outlook who expect a high volume of mobile phone replacement as 5G services take off on the mainland. It is also widely expected that Xiaomi could be included as a constituent of the Hang Seng Index.
-- Iris Ouyang
 



Xiaomi jumps on 5G prospects

The Shanghai Composite Index added 0.1 per cent to 3,075.50 at the close on Friday, after China’s December economic data suggested growth at the Asian nation has troughed.
Health care stocks advanced after China reported one more death case of pneumonia linked to a new coronavirus. Utilities and consumer companies declined.
-- Zhang Shidong


China’s stocks end higher on sign growth to pick up

Luk Fook Holdings (00590 HK), the jewellery retailer, saw its highest level in more than six months, rising 5.2 per cent to HK$24.2 after Goldman Sachs maintained its “buy” rating on the stock and raised the target price to HK$25.
Goldman said Luk Fook’s third-quarter earnings were better than expected, noting that its plan to add 300 shops on the mainland would increase revenue and offset the negative impact of slowing sales in Hong Kong, according to Chinese media reports.
-- Iris Ouyang


Luk Fook rises to over six-month high

The Hang Seng Index rose 0.6 per cent to 29,056.42 at the close on Friday, the highest level since May 7.
Ping An Insurance Group (2318 HK) and CSPC Pharmaceutical Group (1093 HK) were among the biggest gainers, climbing at least 4.3 per cent.
-- Zhang Shidong
