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Yujing Liu

Azar Zaidi

As the Hong Kong and mainland China markets enter the home stretch leading up to the Lunar New Year holiday starting this week, some of themes we will keep an eye on include the flu outbreak in Wuhan, the ongoing protests in Hong Kong and whether stocks can hold on to their strong start to 2020.
 
Meanwhile, the phase one deal between Washington and Beijing – signed, sealed and priced in – might recede in significance and not play a big determining role, but never say never. 
 
The Shanghai and Shenzhen markets will close on Friday for Lunar New Year holiday, while Hong Kong will trade until lunch on Friday.
And if you would like the Live Stocks Blog emailed to you each morning, click here. 
– Yujing Liu and Azar Zaidi 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.


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Business

Markets

Hang Seng Index falls the most in over a month
ChiNext Index surges to three-year high


The Hang Seng Index declined by 0.9 per cent to close at 28,795.91 on Monday, recording its biggest daily loss since December 4, as profit taking set in ahead of Lunar New Year. Stocks listed in Shanghai and Shenzhen advanced, however, in a strong start to the four-day trading week.


Hong Kong Stock Exchange

Stocks

Live

Overnight markets/ what futures foretell:  – The US markets surged to a record high on Friday, boosted by strong US housing data. The Dow Jones Industrial Average rose 0.2 per cent, the S&P 500 gained 0.4 per cent and the Nasdaq Composite climbed 0.3 per cent  – The Hang Seng Index futures were up 0.1 per cent, while the China A50 futures were 0.1 per cent higher on MondayIPO debuts: Shares of Chinese semiconductor manufacturer Fuzhou Rockchip Electronics will be traded in Shanghai (603893 SH) for the first time.Economic statistics/central bank action: None to note.


Morning Guidance

China Life Insurance (2628 HK) expects its net profit attributable to equity holders for 2019 will increase by as much as 420 per cent. It said preliminary estimates of its net earnings will increase by a range of between about 45.58 billion yuan (US$6.5 billion) and 47.85 billion yuan, according to a filing with the Hong Kong stock exchange on Sunday. “The company’s preliminary financial estimates for the year 2019 contained in this announcement have not been audited,” it said.
Hong Kong developer China Merchants Land (0978 HK) said on Sunday it had won a commercial site in Xian, in China’s central Shaanxi province, for 160.2 million yuan. In a filing with the stock exchange, it said the site will yield a total gross floor area of 88,727 square metres. The price tag represents an average price of about 8,125 yuan per square metre in terms of total site area, it said.
The number of property transactions dropped 13 per cent over the weekend compared with the previous week, according to Hong Kong property consultancy Midland Realty. It said on Sunday that 13 deals were done at the 10 major housing estates it tracks in the city, on January 18 and 19. “There are still prospective buyers actively visiting flats even before Lunar New Year, ” Sammy Po, the chief executive of its residential department, said. Among the estates, two – Kornhill and Tsuen Wan Centre – reported no deals, compared with three estates previously. 
– Sandy Li


Overnight filings

The outbreak of a new coronavirus strain in China has led to more infections and deaths, with the first cases identified in Beijing and Guangdong province.
  Authorities in Wuhan, the central Chinese city where the virus originated, said 136 new cases of infection as well as a third death case were confirmed over the weekend, according to a statement.
  Health authorities in Beijing said two local patients who had travelled to Wuhan have been found to be infected, in a social media post on Weibo, China’s equivalent of social-media site Twitter. Meanwhile, Guangdong province in southern China has also reported its first case.
  These cases mark the first officially confirmed instances of the illness spreading beyond Wuhan.
– Yujing Liu


Wuhan pneumonia outbreak widens

The People’s Bank of China, the country’s central bank, announced it would keep the one-year loan prime rate (LPR) unchanged at 4.15 per cent in January. It also maintained the five-year rate at 4.8 per cent, the same level from December. LPR is China’s new benchmark lending rate, after the PBOC revamped its quoting method to make it more market-driven in August.
– Yujing Liu


China central bank keeps key rate unchanged

The Hang Seng Index reversed from gains to losses in early trading on Monday, and is currently down 0.1 per cent at 29,033.35. In China, the Shanghai Composite Index has swung between gains and losses to trade 0.1 per cent higher at 3,077.99. The Shenzhen Component Index has gained 0.2 per cent, while the ChiNext Index of start-ups in Shenzhen has risen 0.6 per cent.
– Yujing Liu


Markets see-saw in early trading

Shares in Chinese pharmaceutical companies are rising fast after authorities confirmed this morning a significant increase in the spread of the Wuhan coronavirus over the weekend. Shenzhen Neptunus Bioengineering (000078 CH), Shandong Lukang Pharmaceutical (600789 CH) and Jiangsu Sihuan Bioengineering (000518 CH) are all up by the daily cap of 10 per cent, to 4.03 yuan, 8.55 yuan and 4.13 yuan, respectively. 
  – Iris Ouyang


Chinese pharmaceutical companies rise on coronavirus spread news

Traditional Chinese medicine maker Dong-E-E-Jiao Co (000423 SZ) plunged after forecasting its first annual loss since listing 27 years ago. The company, which makes mainly donkey hide gelatin, said it expects its 2019 net loss to be as much as 459 million yuan (US$67 million), compared with a 2.1 billion yuan profit in 2018, in a stock exchange filing on Sunday. Dong-E-E-Jiao has long been considered a blue-chip stock with steady earnings, or a “white-horse” stock, by the market. Shares of the company plunged by as much as 8.9 per cent before paring losses to 5.6 per cent at 34.87 yuan.
– Yujing Liu


‘White-horse’ pharma stock falls on first annual loss forecast

China Life Insurance (2628 HK, 601628 SH), one of the country’s biggest insurers, rose after forecasting a jump in its 2019 net profit. The number is expected to increase by as much as 47.9 billion yuan (US$7 billion), or 420 per cent, from 2018, it said in a stock exchange filing on Sunday. The company’s Hong Kong-listed shares rose 3.6 per cent to HK$22.8, while its Shanghai-listed shares gained 4.4 per cent.
– Yujing Liu


China Life Insurance gains on profit jump forecast

Stocks related to tourism, including travel agencies and tourism attraction operators, dropped in early trading after the outbreak of a new coronavirus strain in China worsened over the weekend. The outbreak could lead to less demand for sightseeing and travel during the upcoming seven-day Lunar New Year public holiday in China.
  Theme park operator Songcheng Performance Development (300144 SZ) led the declines, with a 9.2 per cent drop to 28.52 yuan. Beijing Jingxi Culture and Tourism (000802 SZ) fell 9.1 per cent to 10.34 yuan.  A gauge tracking 54 tourism-related stocks compiled by data provider Xuangubao dropped 2.2 per cent.
– Yujing Liu


Tourism-related stocks decline on worsening pneumonia outbreak

Film producers declined broadly on fears that the outbreak of a new coronavirus strain in China will sap the demand for movies over the upcoming Lunar New Year holiday. Investors are also taking profit after a one-month rally in the stocks, on expectations of strong openings of holiday movies.
  Wanda Film Holding (002739 SZ) plunged by the 10 per cent daily limit to 19.73 yuan. It had previously soared by 21 per cent, from the beginning of the year to Friday. Beijing Enlight Media (300251 SZ) declined by 7.9 per cent to 11.41 yuan.
– Yujing Liu


Film producers plummet on pneumonia fears after extended rally

Technology companies edged up on Monday, with semiconductor manufacturers leading the gains. Suzhou Secote Precision Electronic (603283 CH) was up 10 per cent to 38.84 yuan, Shenzhen Fine Made Electronics Group (300671 CH) added 8.5 per cent to 23.7 yuan, while Wingtech Technology (600745 CH), a research and development mobile terminals and smart hardware producer, gained 10 per cent to 121 yuan.     Tianfeng Securities raised the target for Wingtech’s stocks to 187 yuan from 155.82 yuan after Wingtech announced on Saturday to the Shanghai Stock Exchange that it expected its net profit for 2019 to rise by between 1,949 per cent to 2,358 per cent to between 1.25 billion yuan to 1.5 billion yuan. 
– Iris Ouyang


Tech stocks edge up, semiconductor makers lead gains

The Shanghai Composite Index reversed early losses and gained 0.4 per cent to 3,088.59 by the lunch break on Monday. The Shenzhen Component Index advanced by 1 per cent, and the ChiNext Index rose 2 per cent.
  Pharmaceutical stocks led the advance after the outbreak of a new coronavirus in central China, which has spread to more regions in the country and led to more infections. A gauge of 253 drug makers compiled by Xuangubao rose 1.7 per cent, with six stocks including Jiangsu Sihuan Bioengineering (000518 SZ) surging by the 10 per cent daily limit.
  Semiconductor makers were also among the top gainers, after officials at the Ministry of Industry and Information Technology vowed once again on Monday to accelerate the development of 5G networks in 2020.
– Yujing Liu


China markets advance, driven by pharmaceuticals and semiconductor makers

The Hong Kong market is in correction mode now after positive factors, including the phase one US-China trade deal, have been fully absorbed, Alan Li, portfolio manager at investment management firm Atta Capital, said.
  “All good news has come out already, and there is not much stimulus that the market can expect in the near future,” he added.
  Profit taking ahead of the Lunar New Year holiday is also weighing on the market, while the Chinese central bank’s decision to keep its benchmark loan prime rate unchanged has disappointed some investors, he said.
  Li expected the Hang Seng Index to consolidate at the 28,500 points level. 
– Yujing Liu


Hong Kong market lacks momentum, in correction mode

The Hang Seng Index dropped 0.4 per cent to 28,942.57 by the lunch break. Property developers led the declines, with China Resources Land (1109 HK) down 2 per cent at HK$36.65. Pharmaceuticals bucked the trend and surged broadly. China Traditional Medicine Holdings (0570 HK) jumped 6.6 per cent to HK$4.18.
– Yujing Liu


Hong Kong stocks dip in morning trade

China’s onshore market is showing signs of a lack of new funds to extend gains after a recent rally, ICBC International analyst Qiu Zhicheng said in a report issued on Monday.
“We believe it is difficult for A shares to rise significantly in the short term, and high-risk sectors have downward pressure.
  “[T]he recent deterioration of Wuhan pneumonia may weigh on the consumer sectors” of both mainland China and Hong Kong markets, he added.
– Yujing Liu


China stocks unlikely to rise significantly in near future: ICBC International

Da An Gene of Sun Yat-sen University (002030 SZ), a medical equipment maker, surged by the daily 10 per cent cap to 12.31 yuan, after local media reported it has developed a test kit for the new coronavirus strain first reported in Wuhan in central China. The company has not yet obtained the necessary licence to sell the kit, The Beijing News newspaper reported.
– Yujing Liu


Medical equipment maker soars on new virus test kit

Major companies in Hainan rose on Monday after the provincial government said over the weekend that it will further support the province’s development into a free-trade port, and that it expected outbound trade from the province to grow at a pace faster than the national rate this year. Hainan Haiqi Transportation Group (603069 CH) rose almost by the daily limit of 10 per cent to 12.57 yuan, Hainan RuiZe New Building Material (002596 CH) rose 9.6 per cent to 6.37 yuan and Hainan Expressway (000886 CH) added 7.7 per cent to 4.75 yuan.
– Iris Ouyang


Hainan firms rise on provincial government’s development pledge

Airline and casino operators declined in Hong Kong on fears that the outbreak of the Wuhan pneumonia virus could weaken holiday demand over Lunar New Year.
  Air China (0753 HK) plunged by 7.6 per cent to HK$7.2, while China Eastern Airlines (0670 HK) was down 7 per cent at HK$3.98.
  Macau casino owner SJM Holdings (0880 HK) fell 6.7 per cent to HK$9.79, and MGM China Holdings (2282 HK) decline by 6 per cent to HK$13.88.
– Yujing Liu


Hong Kong-listed airlines, casinos weaken on pneumonia fears

The ChiNext Index of start-ups listed in Shenzhen soared by 2.6 per cent to close at 1,982.18, its highest level since January 2017.
  An extended rally in technology shares driven by expectations of further state investment in semiconductors and 5G networks boosted the market.
  Meanwhile, China’s securities regulator also said it would push for reforms to implement a registration-based initial public offering system on the ChiNext board in a work conference on Friday. This will allow market forces to play a bigger role in IPOs and is likely to lead to a greater supply of new listings.
– Yujing Liu


ChiNext Index surges to three-year high

Stocks listed in Shanghai and Shenzhen advanced, posting a strong start to a four-day trading week before the Lunar New Year holiday.
  The Shanghai Composite Index gained 0.7 per cent to 3,095.79, its biggest daily gain in five sessions. The Shenzhen Component Index advanced 1.5 per cent, and the ChiNext Index soared by 2.6 per cent to a three-year high.
– Yujing Liu


China stocks post strong start to week

Positive sentiment on the mainland failed to boost the Hong Kong market on Monday, which widened losses in afternoon trading. The Hang Seng Index declined by 0.9 per cent to close at 28,795.91, recording its biggest daily loss since December 4. Profit taking has set in ahead of Lunar New Year, while the market searches for new stimulus after the signing of the US-China trade deal.
  Blue-chip stocks declined broadly. Insurer AIA Group (1299 HK) fell by 2.1 per cent to HK$84.8, taking 62 points off the Hang Seng in what was the biggest drag on the benchmark.
– Yujing Liu


China stocks rise in strong start to week, but fail to lift Hong Kong market

Hang Seng Index falls the most in over a month ChiNext Index surges to three-year high

Hang Seng Index falls the most in over a month

ChiNext Index surges to three-year high