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Zhang Shidong

Deb Price

Welcome, traders --
Catch up on the main moves in markets today below.
If you'd like to receive the live stocks blog each day, shoot Deb an email at deb.price@scmp.com.
-- Zhang Shidong in Shanghai and Deb Price in Hong Kong 
 


 Stocks Blog: Xiaomi and Meituan shine as Hang Seng ends flat

Xiaomi shares soar after founder says it will launch 10 5G models. Above, customers at a Xiaomi store in Chennai, India. Photo: Xinhua

Packs of Budweiser’s beer are displayed in a Shanghai's supermarket on 20 October 2004. Photo: AFP

Business

Markets

New listing Anhui Gourgen jumps by daily cap in Shanghai
Hangzhou Hikvision rises most in seven weeks on profit guidance


Xiaomi's shares jump after the founder of one of the world's largest smartphone makers said on Sunday that Xiaomi will launch 10 models based on the 5G technology.


Stocks

China stock market

Hong Kong protests

Trade war

Live

* Overnight markets/ What futures foretell
-- Friday in US markets, the S&P 500 dropped 0.4 per cent, the Nasdaq fell 0.8 per cent, and the Dow Industrials slipped 1 per cent
-- Hong Kong futures were 0.1 per cent lower, while the FTSE China A50 futures climbed 0.4 per cent.
* IPO debuts: Anhui Gourgen Traffic Construction (603815 CH) will start trading in Shanghai today.
* Economic statistics/Central Bank action: The statistics bureau will release the September data on home prices in China’s major cities at 9:30am.
--China will also release the monthly loan prime rate at the same time. The rate, which is more market-based and decided by the quotes from a handful of commercial banks, stands at 4.2 per cent now.
* Corporate events: earnings, meetings, news conferences
--China Mobile (941 HK) and Ping An Bank (000001 CH) are due to release third-quarter earnings late today.
*Later this week: The statistics bureau will publish the September number on industrial companies’ profits.


Morning guidance 

Citic Pacific launched a HK$3 billion privatisation bid to buy out the 43 per cent shareholding it does not own at the distributor of motor and consumer products Dah Chong Hong Holdings.
It offered HK$3.7 per share – about a premium of 37.55 per cent over the last closing price of HK$2.69 --  to purchase 816.7 million shares, or 43.19 per cent  of Dah Chong Hong. Citic Pacific owns 56.81 per cent in the 70-year-old car distributor, which was listed on Hong Kong stock exchange in 2007.
“The liquidity of the DCH shares has been low over a prolonged period, which is approximately 0.07 per cent of the issued shares for the last 12 months up to and including the last trading date, with an average daily trading volume of approximately 1.40 million shares per day,” it said.
“This low trading volume could make it difficult for the scheme shareholders to execute on-market disposals within any given time frame outside of the proposal," it said in its filing.
"Citic Pacific therefore considers that the proposal offers the scheme shareholders an opportunity to realise their investment in DCH at an attractive exit price, which is a significant premium over the prevailing share price,” it said.
At the request of the company, trading in the shares on the stock exchange was halted from 15 October 2019 pending the release of this announcement. An application has been made by the company to the stock exchange for the resumption of trading in the shares today.
Prudential existing shareholders will be entitled to one share of M &G PLC, which will be listed on London Stock Exchange, according to the company statement filed to the Hong Kong stock exchange on Sunday.
It is expected that the deal will be completed and the M&G shares will be admitted to trading on the London Stock Exchange’s main market for listed securities no later than 8am on UK time on October 21.
“Shareholders will continue to own their existing Prudential shares unless they sell or transfer them in the usual course,” said the statement. 
 -- Sandy Li    


 Citic Pacific aims to buy remainder of Dah Chong Hong Holdings

China’s commercial banks set the 1-year loan prime rate at 4.2 per cent in October, unchanged from a monthly earlier, according to a statement from the central bank. 
That came even after growth at the Asian nation slowed to 6 per cent in the third quarter, the weakest pace since at least 1992. A major hurdle for lowering borrowing costs is inflation, which accelerated to a six-year high of 3 per cent last month.
-- Zhang Shidong    


China’s loan prime rate remains unchanged this month

Concern about the strength of China’s economy continued to rattle stocks today, with the Shanghai Composite Index falling 0.5 per cent at the open.
What unnerved traders was today’s release of the loan prime rate, which remained unchanged at 4.2 per cent this month and raised doubts if policymakers will ease policies to support growth. 
The Shanghai Composite is set for its fifth straight day of drops.
It dropped 1.3 per cent on Friday after China’s growth moderated to the slowest pace since at least 1992 in the third quarter.
Hong Kong’s Hang Seng Index fared better, rising 0.1 per cent so far.
-- Zhang Shidong


China’s stocks on track for fifth day of declines

Hong Kong-traded companies with weighted voting rights Xiaomi (1810 HK) and Meituan Dianping (3690 HK) rallied today after the mainland’s exchanges officially revised rules to allow such stocks to be traded in the connect programmes.   
Smartphone makers Xiaomi surged 6 per cent to HK$9.06, while internet service giants Meituan climbed 4 per cent to HK$96.45. The rules, which were unveiled on Friday, also lay down a slew of yardsticks for including companies with dual-class shares in the exchange link, such as a minimum market cap of HK$20 billion (US$2.55 billion).
--Liu Yujing and Zhang Shidong


Xiaomi and Meituan rally as dual-class shares allowed in cross-border trading

China’s securities watchdog relaxed rules regarding listed companies’ merger and acquisition on Friday, in a move to boost secondary fundraising for firms as the A-share market faces pressure from a slowing economy and the US-China trade war.
China Securities Regulatory Commission (CSRC) scrapped profitability requirements in M&A deals involving listed companies, according to a statement published on Friday evening.
The regulator also allowed backdoor listing of hi-tech companies or firms in industries of strategic importance to the country on the ChiNext board of start-ups.
The change, first put on the table for public comment in June, is likely to be a boost to the ChiNext market as well as stocks that could potentially become shell companies.
-- Yujing Liu 


China unwinds M&A requirements for listed companies

Anhui Gourgen Traffic Construction (603815 CH) surged by 44 per cent, the maximum allowed for any main board-traded stock on the first day of trading, from its offer price to 7.40 yuan in Shanghai.
The company is a constructor of infrastructure projects from highways and bridges to airport facilities. Anhui Gourgen sold its IPO shares at 23 times earnings, an unwritten requirement by the securities regulator.
-- Zhang Shidong


New listing Anhui Gourgen jumps by daily cap in Shanghai

China's September inflation, represented by the 3 per cent acceleration in the consumer price index (CPI) reported last Friday, is no cause for concern, said Issac Meng, Emerging Asia portfolio manager at PIMCO.
"September CPI does not reflect broad inflation pressure in the economy but rather a negative supply shock: African swine flu is spreading throughout the country, causing a 30 per cent loss in pork supply (15 million−16 million tonnes out of annual demand of 55 million tonnes)," Meng said in a blog. "The price of pork jumped 69.3 per cent year-over-year in September and 19.7 per cent from the previous month. Given a 2.4 per cent weighting in the CPI basket, the price of pork contributed 165 basis points (bps) to the 3 per cent rise in headline CPI.
"The negative pork price shock is unlikely to ease anytime soon, and we think meat prices will be the main factor driving headline CPI over the next six to 12 months," Meng said. "However, we expect headline CPI to peak around the Chinese New Year in late January before stabilizing."
SCMP feature: The world’s biggest pork eaters are developing a palate for beef and other substitutes
-- Eugene Tang 


China's September inflation not cause for concern, analyst says

Traders are braced for a bleak earnings season as Chinese companies release third-quarter results amid increasing pressure on the economy.
Out of the 1,309 mainland-traded companies that have already issued earnings guidance, 43 per cent said net profit for the three-month period ended September probably declined from a year ago, making it the worst third-quarter period since 2015 according to Bloomberg data. In the last reporting period ended June, 42 per cent of the companies had forecast lower profit compared to a year earlier.
The worsening earnings outlook falls in line with moderating expansion in the world’s second-largest economy.  China’s growth slipped to 6 per cent in the third quarter , the weakest pace since at least 1992 and trailing economists’ estimate of a 6.1 per cent increase, the National Bureau of Statistics said on Friday morning.
Please read the full story by Zhang Shidong here.


Chinese companies’ set for worst third-quarter earnings since 2015

Shares of Hangzhou Hikvision Digital Technology (002415 CH), the Chinese surveillance camera maker put on a trade blacklist by the US government for alleged human rights violations, are coming back.
The Shanghai-traded stock has risen 3.9 per cent to 31.63 yuan today, heading for the biggest gain since September 3, after the company forecast accelerating profit growth in the fourth quarter.
Net profit for the final three months of the year may increase by as much as 41 per cent from a year earlier, it said in a quarterly result. The median fourth-quarter growth would be 20 per cent, according to Shenwan Hongyuan Group.
Earnings growth was 17 per cent in the third quarter.
-- Zhang Shidong


Hangzhou Hikvision rises most in seven weeks on profit guidance

Troubled Chinese businessman Jia Yueting, who owns debt-ridden ChiNext-listed Leshi Internet Information & Technology (300104 CH), has filed for divorce, the National Business Daily reported, citing a bankruptcy document Jia filed in the US.
The document showed Jia filed to divorce his actress wife Gan Wei in a district in the southwest city of Chengdu early this month and the case is ongoing. 
Jia, who owns a 23 per cent stake in Leshi Internet and is in the US developing his new-energy vehicle business, is blamed for dragging the listed company into financial trouble by using it as collateral. Leshi, which has been suspended from trading since April, is facing delisting for posting negative net assets in the last fiscal year.
 
-- Zhang Shidong


Leshi’s troubled owner Jia said to file for divorce 

Budweiser Brewing APAC (1876 HK) has been serving up some serious gains for investors since it went public three weeks ago.
It shot up 5.1 per cent today to HK$31.70. That means it's now up 17.40 per cent.
 

-- Deb Price    


Budweiser shoots up in early trading 

The Hang Seng Index will start afternoon trading with some small gains, having risen 0.3 per cent in the morning to 26,806.18.
Financials and consumer staples were keeping the benchmark ahead, while information tech stocks were a drag.
China Life Insurance (2628 HK) was the top gainer, climbing 5.2 percent to HK$19.74 on its estimate for a 180-200 per cent profit jump for the first nine months of the year. 
Other winners were Hong Kong Exchanges and Clearing (388 HK), the owner of the city's stock exchange, which climbed 1.9 per cent to HK$242.80, and China Overseas Land and Investment (688 HK), which rose 1.7 per cent to HK$26.65.
Big early losers were Techtronic Industries (699 HK), which was down 2.3 per cent to HK$56.85, while Sunny Optical (2382 HK) dropped 2.2 per cent to HK$116.20, and Chinese social media and gaming giant Tencent (700 HK) declined 1 per cent.
-- Deb Price      


Hang Seng to start afternoon trading ahead, given lift by financials

Shares of Xiaomi (1810 HK) jumped by 6.8 per cent, their biggest one-day percentage jump since September 3, to an intraday high of HK$9.13 in Hong Kong, after the founder of one of the world's largest smartphone makers said on Sunday that Xiaomi will launch 10 models based on the 5G technology.
SCMP Feature: 'Made in China 2025': How 5G could put China in charge of the wireless backbone and ahead of the pack
SCMP Interactive Infographic: 5G offers world's biggest mobile market a gateway to the industrial internet
-- Eugene Tang 


Xiaomi shares soar after founder says it will launch 10 5G models

Despite the poor economic data, the rebound on Chinese stocks will not be derailed as earnings growth may have troughed in the third quarter and a slew of market reform measures may boost sentiment, according to Citic Securities, the nation’s biggest publicly traded brokerage.
Easing of listed companies’ mergers and acquisitions, the push for the registration system for IPOs on the ChiNext and tighter delisting rules will improve the quality of listed companies, it said in a note today. Chinese mutual funds will probably stick to holdings of leading consumer and technology stocks in the fourth quarter, according to the note.
-- Zhang Shidong


Citic Securities maintains bullish calls on Chinese stocks

Tianfeng Securities (601162 CH) plummeted by the 10 per cent daily limit to 6.98 yuan in Shanghai after the lock-up period of a 35.4 percent stake in the brokerage expired today, adding to concern about a glut of stock supply.
The 1.83 billion shares, which are held by 36 pre-IPO shareholders, have become available for public trading after Tianfeng’s debut in Shanghai a year ago.
-- Zhang Shidong 


Tianfeng Securities falls by daily cap on increased stock supply

Chinese fintech firm 51 Credit Card (2051 HK) plummeted by as much as 42 per cent in early afternoon trading, following media reports that police raided the company’s headquarters in Hangzhou city in eastern China.
The operator of credit card-managing mobile app, however, said operations remained normal, Sina Finance quoted chief financial officer Zhao Ke in a report.
Earlier, local newspapers reported that dozens of police officers entered the office building of 51 Credit Card in a raid.
Shares of the stock plunged by 35 per cent to HK$1.77 before trading was suspended.
-- Yujing Liu 


Fintech stock 51 Credit Card sink on police raid reports

A rally in banks and insurers ended a streak of four-day drops in Chinese stocks, helping the Shanghai Composite Index close 0.1 per cent higher at 2,939.62.
China Life Insurance (601628 CH) surged 5 per cent to 30.81 yuan after forecasting a jump in profit for the first nine months, while China Citic Bank (601998 CH) led the charge among lenders with a gain of 4.3 per cent after the loan prime rate stayed unchanged this month..
-- Zhang Shidong


Rally in financials helps China stocks snap four-day decline

Hong Kong’s Hang Seng Index rose less than 0.1 per cent to 26,725.68 at the close today. Xiaomi and Meituan surged at least 4.3 per cent in Hong Kong after onshore investors will be allowed to buy shares of companies with weighted voting rights next week.
-- Zhang Shidong


Hang Seng ends almost unchanged as Xiaomi and Meituan rally on trade link access