Live | China Markets Live - Shanghai, Shenzhen and Hong Kong shares zapped to weak finish
Hang Seng Index drops 1,440 points the past 2 days; losing 872 on Wednesday and 568 points on Thursday
Welcome to the SCMP's live markets blog. The intense volatility of recent weeks has every chance of remaining the core underlying theme of activity. Investors are increasingly focused the broader question of how this episode might affect the wider economy as many suspect the equity bubble has yet to fully deflate. We'll bring you the key levels, trading statements, price action and other developments as they happen.
Here’s a summary of market action Thursday, with analyst views:
- Shanghai and Shenzhen extend losses in afternoon to settle lower
- Hong Kong retreats further, loses 2.57 per cent by the close of Thursday
- Wall Street down overnight, as fall in Apple shares and soft energy complex weighed on stocks
- Market looks toward meeting a week from now by US Federal Reserve to see if they will decide on raising interest rates for first time in a decade
4:07pm: The Hang Seng Index expanded its losses in the afternoon and closed down 2.57 per cent or 568.81 points to 21,562.5.The H-shares index finished at 9,780.16, down 1.96 per cent or 195.37 points.
3:05pm: The Shanghai Composite Index finished 1.39 per cent lower, 45.2 points, at 3,197.89. The CSI 300 Index sank 1.23 per cent, 41.75 points, to 3,357.56.
3:05pm: The Shenzhen Composite Index lost 1.58 per cent, 28.47 points for the day, closing at 1,770.38. The ChiNext Index fell 1.57 per cent, 32.6 points, to 2,039.12.
3:03pm: Shanghai Gold Exchange issued a notice today allowing its clients and members to use A shares, foreign currencies and listed-mutual funds as deposits for trading, according to its website.
12:01pm: The Hang Seng Index closed the morning session down 2.15 per cent, or 476.46 points, to 21,654.85, while the H-share Index gave up 2.06 per cent, or 205.67 points, to 9,769.86.
11:52am: Bank of China became the most heavily traded stock on Thursday morning as it was down 2.76 per cent to HK$3.53, with turnover hitting HK$920.62 million.
Tencent came next, as its price fell 2.25 per cent to $130.6 and turnover reached 802.35 million. CRRC was in third position as Hong Kong media reported local stock guru and chairman of Himalaya Capital Management Li Lu bought $198 million worth of CRRC shares last month when the benchmark index hit a historical low.
China Construction Bank came forth with turnover of $549.52 million, as its share price fell 2.55 per cent to $5.36. Ping An came the fifth as turnover surpassed $496 million. Its share price was down 0.39 per cent to $38.7.
11:37am: Gerry Alfonso, a director with Shenwan Hongyuan Securities, commenting on A share’s morning session:
“The economic figures were mixed and had a relatively small impact on the market. The PPI figure was more troublesome, pointing perhaps to some moderate softness in the economy.
The banking sector held better than most other sectors in the morning as bank stocks rallied less in recent days and hence were less exposed to profit taking today. The defense sector, particularly high tech stocks, had a positive performance as it is likely that spending in the modernization of the armed forces will continue to be significant.“
11:33 am: The Shenzhen Composite ended the morning session at 1,783.92, down 0.83 per cent. The ChiNext Index shed 0.86 per cent or 17.79 points to 2,053.93.
11:32am: The Shanghai Composite Index slipped 0.961 per cent, or 31.16 points, to end the morning session at 3,211.93, and the CSI 300 Index stood at 3,370.09, down 0.860 per cent, or 29.22 points.
11:30am: The Hang Seng Index stood at 21,627.73, down 2.28 per cent or 503.58 points. The H-share Index slid 2.21 per cent or 220.27 points to 9,755.26.
11:26am: Information technology companies sank in Shanghai, dragging the benchmark, after Wall Street fell overnight with Apple shares and a soft energy complex weighing on stocks. Beijing Xinwei Telecom Tech Group dropped 9.99 per cent to 29.28 yuan and reached its daily downward limit. Universal Scientific Industrial Shanghai Co Ltd dropped 6.65 per cent to trade at 14.31 yuan.
11:17am: Steel producers are among the top losers in mainland equity markets. Beijing Shougang Co slumped 9.04 per cent to 4.53 yuan while Chongqing Iron & Steel plunged 8.16 per cent to 4.05 yuan.
11:15am: Hong Kong dollar is trading Thursday at 7.751 against the US dollar, near upper end of the currency peg. Euro/dlr strengthened 0.05 per cent at 1.1213. Dlr/yen at 120.44, weakened by 0.05 per cent. Pound/dlr weaker by 0.09 per cent to 1.5354. Australian dollar to US dollar weakened by 0.21 per cent to 0.7003.
11:05am: Consumer goods distributor IDT International, film and television series producer Pegasus Entertainment are the leading winners during the morning session. IDT International surged 28.85 per cent to HK33.5 cents, with HK$1.64 million turnover. Pegasus Entertainment shot up by 24.53 per cent and traded at HK33 cents, with turnover of HK$19.49 million.
11:00am: A research report on 61 mainland companies prepared by ratings agency Moody's should not fall under Hong Kong regulations concerning codes of conduct argued a barrister for the US firm in opening remarks at an appeal tribunal.
"Don't let anyone conflate or blur (the two). As a matter of fact this was not a methodology seen in our credit rating services," Adrian Huggins QC, representing Moody's, told Justice Michael Hartmann, chairman of the Securities and Futures Appeal Commission.
Moody's argues that the it's July 2011 report named "Red Flags for Emerging Market Companies: A Focus On China" was not connected to the firm's standard credit rating services in an appeal against a HK $ 23m fine imposed by the Securities and Futures Commission.
The two day tribunal has yet to hear from the SFC counsel. The regulator is arguing the report, which highlighted potential concerns at a number of Hong Kong listed mainland firms, breached the code of conduct to which SFC regulated firms, which include credit rating agencies, are subject.
Huggins pointed out that Moody's regularly issues research reports outside the firm's credit rating work.
"Moody's should be on a level playing field with the likes of Reuters and Bloomberg and it would be wrong for the SFC to create codes of conduct that limit us."
10:47am: In mainland Chinese markets, the performance of brokerages weighed on benchmark indices, sliding as much as 1.84 per cent. Changjiang Securities declined 2.87 per cent to 10.15 yuan while Guosen Securities dropped 3.10 per cent 16.27 yuan.
10:45am: People’s Bank of China will further inject 80 billion yuan of liquidity through seven-day reverse repurchase agreements.
10:36am: Shenzhen Composite Index stands at 1,794.21, down 0.26 per cent or 4.63 points.
ChiNext tumbles 0.16 per cent or 3.23 points to 2,068.48.
10:34am: Shanghai Composite Index down 0.538 per cent or 17.44 points to 3,225.65. CSI300 Index down by 0.507 per cent or 17.24 points to 3,382.07.
10:33am: Hang Seng Index sinks to 21,658.38, down 2.14 per cent or 472.93 points. H-shares Index down 202.10 points or by 2.03 per cent to 9,773.43.
10:42am: Onshore yuan trades at 6.3847 to the dollar, from the previous close at 6.3768. Offshore yuan trades at 6.4722 to the dollar, against previous close at 6.4646.
10:33am: Almost all the sectors in Hong Kong are in the red Thursday’s morning. Oil giants are dragging the benchmark. CNOOC is 4.58 per cent down and traded at HK$8.75. Petro China lost 4.56 per cent to HK$5.94. Kunlun Energy is down 3.27 per cent to HK$5.63. Sinopec retreated 2.72 per cent and traded at HK$5.22.
Oil futures dipped below $45 a barrel on Wednesday, settling at the lowest level in nearly two weeks after the US Energy Information Administration lowered its crude-oil price forecasts for this year and next.
10:30am: ANZ Bank’s economists Liu Li-gang and Louis Lam commenting on China's CPI data:
“In our view, the cyclical rise in pork prices and the recent RMB devaluation will not swing China’s price trend. While the headline CPI may rise modestly owing to surging pork prices, the underlying inflation, excluding pork, should remain subdued.
Meanwhile, the one-off currency devaluation in August will also have limited impact on China’s CPI inflation. We believe that 3 per cent RMB nominal devaluation will only have a modest impact on China’s import prices. The pass-through to CPI inflation could be largely ignored given a large decline of the factory-gate prices.
“Meanwhile, authorities should encourage both corporates and local governments to tap into the bond market, replacing high yield maturing debt with longer tenor bonds with lower interest.”
10:13am: DBS report:
"Positive sentiment in Asia and Europe failed to follow through in US trading hours, with US stock indices ending down despite a strong open. With faltering market sentiment, 10Y UST yields swung between 2.17 per cent to 2.25 per cent before closing at 2.2 per cent. 2Y UST yields were considerably less volatile and closed near to the top of its nine months trading range at 0.74 per cent.
If sentiment returns to normal, we suspect that 10Y UST yields would trade in the upper half of the 2.0.2.5 per cent trading band. For yields to break decisively above 2.5 per cent, however, Fed normalization may not be sufficient.
Instead, there has to be clearer signs of price pressures with some much needed stabilization in commodity prices. Notably, the CRB index (which measures a basket of commodity prices) is still 14 per cent below levels seen in the beginning of July.
10:00am: Shares of China Resources and Transportation Group were suspended from trading from 9:00 am on Thursday, pending the release of an announcement in relation to a proposed rights issue. Shares of the company closed up 1.75 per cent to HK$0.058 a share on Wednesday.
9:55am: China Investment and Finance Group dropped 32.4 per cent to HK 9.6 cents, after the company said in a filing to the HKEx this morning that its proposed share consolidation basis that every five issued and unissued shares of HK 1 cent each will be consolidated into one consolidated share of HK 5 cents each.
The company also proposed proposes to change the board lot size for trading of the shares from 8,000 to 10,000. It also proposes to raise approximately HK$418.1 million subject to the consolidation becoming effective.
9:50am: China’s August consumer price index (CPI) climbed two per cent from a year earlier versus market expectations of a 1.8 per cent rise. The producer price index (PPI) declined 5.9 per cent year-on-year, compared with the consensus target of a 5.4 per cent drop, according to data released Thursday by the National Bureau of Statistics.
9:40am: SG report:
"China’s inflation report is expected to show CPI strengthening from 1.6 per cent yoy previously to 1.9 per cent yoy in August, while PPI likely fell further to -5.7 per cent yoy from -5.4 per cent yoy.
Money and credit data are likely to have normalised lower in August in China, after the surprisingly strong readings in July given stock-market rescue measures.
We expect M2 growth to have moderated to 12.6 per cent yoy in August from the surprisingly strong rate of 13.3 per cent yoy in July. New bank lending likely dropped to CNY1000bn, from CNY1,480bn in July. However, considering the CNY400bn LGBs issued under the debt-swap programme in August, the actual increase in bank loans was probably close to CNY1.4trn. Part of it should have been continued support to financial institutions’ stock market rescue action."
Click on chart to enlarge.
9:35am: The Shenzhen Composite Index opens at 1,776.59, down 1.24 per cent, or 22.25 points. The NASDAQ-style ChiNext Price Index falls 1.36 per cent, or 28.28 points to trade at 2,043.44.
9:34am: Shanghai Composite Index drops 54.83 points or 1.691 per cent, to 3,188.26 at the preopening session. CSI300 Index loses 52.42 points, or 1.542 per cent at 3,346.89.
9:32am: The Hang Seng Index opens at 21,638.12, down 2.23 per cent or 493.19 points. The China Enterprises Index (H-share index), which track Hong Kong listed Chinese companies, opens at 9,694.76, down by 2.81 per cent or 280.77 points.
9:17am: The PBOC set the yuan's mid-price at 6.3772 to the dollar, from the mid-price yesterday at 6.3632. The onshore yuan ended Wednesday at 6.3768 to the dollar.
9:14am: A company owned by Hong Kong billionaire Henry Cheng Kar-shun was given approval by London authorities to develop the largest single regeneration project.
Greenwich Peninsula, which will have a gross development value of £8.4 billion, has been given the go-ahead by the Royal Borough of Greenwich, the developer Knight Dragon said on Thursday.
Knight Dragon is owned by Cheng, chairman of Hong Kong developer New World Development. The UK company has already invested £500 million on the site since gaining overall control in 2013.
9:12am: Hong Kong-listed GCL New Energy Holdings has entered into an agreement with Ping An Trustee to secure a loan of 1.2 billion yuan to invest in certain photovoltaic power stations of Suzhou.
GCL is enagaged in the development and construction of photovoltaic power station projects as well as providing energy storage, intelligent micro-grid and energy distribution solutions. It is a subsidiary of GCL-Poly Energy Holdings, the world’s largest maker of polysilicon, the raw material for solar power panels and silicon wafers.
9:08am: The Hang Seng Index futures spot September contract loses 1.79 per cent or 394 points to 21,577 in the pre-opening session.
9:00am: Seven Shanghai listed A-share companies will resume trading today and three companies applied for voluntary suspension in the trading of their shares. The number of companies in trading suspension in Shanghai is 114 on Thursday, representing 10.64 per cent of the total.
Five Shenzhen listed A-share companies resume trading today while one company suspended trading in its shares. The number of suspended companies in Shenzhen is 205 on Thursday, representing 12.40 per cent of the total.
8:15am: A subsidiary of Founder Securities called China Minzu Securities is being probed by the securities regulator for a matter involving 2.05 billion yuan, Founder said in a regulatory filing late on Wednesday.
Founder, along with three other major mainland brokers, announced late last month that the securities regulator was investigating it for not carrying out know-your-customer procedures.
8:15am: China Cosco Holdings said late on Wednesday that it entered into four agreements to buy 11 ships worth about US$1.5 billion.
8:15am: China Citic Bank received approval from the mainland banking regulator to issue up to 35 billion yuan in preference shares with the purpose of replenishing the banks tier-1 capital, the bank said in a regulatory filing late on Wednesday.
8:06am: Onshore spot yuan (CNY) closed at 6.3768 on Wednesday, versus the previous day's close of 6.3657. The offshore yuan (CNH) traded at 6.4654, against the Tuesday close at 6.4536. The mid-price fix yesterday set by the People's Bank of China was at 6.3632.
8:03am: Sunlight Reit (yellow) will announce its final result for the year ending in June today. The company closed on Wednesday at HK$3.84, up 2.67 per cent. The company outperformed the Hang Seng Index (purple) the past three months. Click on chart to enlarge.
8:00am: Sun Hung Kai Properties (yellow), the city’s largest developer, will announce its final result for the year ending in June today. The company’s executives will meet the media at 4:45pm. The company is trading in line with Hong Kong's Hang Seng Index (purple) the past three months. Click chart to enlarge.
7:58am: Hong Kong's Securities and Futures Appeal Tribunal will hold the first day of hearings today on an appeal by ratings agency Moody’s against the decision by the Securities and Futures Commission to impose a fine of HK$23 million and publicly reprimanded the agency for breaching the code of conduct by issuing a "red flags" report on Chinese companies in July 2011.
The first day of the two-day is expected to last from 9:30 am to 4:30 pm today.
