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Gigi Choy

Kathleen Magramo

Srinivasan Iyer

Good day, traders --
Hong Kong stocks struggled for direction as traders stayed on the sidelines. However, Chinese equities clawed back losses made in the morning session to close in positive territory.
Catch up on the day's action if you missed some of the live coverage. 
And, hey, are you getting your Live Stocks Blog every morning via email? You can! Don't miss out on our coverage of Hong Kong and mainland markets each trading day! If you would like the Live Stocks Blog emailed to you each morning, click here. If you need to reach the stocks team, email deb.price@scmp.com.
-- Gigi Choy, Kathleen Magramo 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.



HSBC, AIA and Ping An weigh on Hang Seng Index as the benchmark ends just above 24,000 level

The Ladies Market in Mong Kok, Hong Kong, wears a deserted look as the coronavirus outbreak keeps shoppers away. Photo: Felix Wong

Business

Markets



Tech stocks Tencent and Alibaba made further gains


Shanghai Composite Index recoups day's losses to end on a high




Tech stocks Tencent and Alibaba made solid gains to close the day on a high


Live

CK Life Sciences International Holdings (775.HK) has signed an agreement to distribute Singapore-based Biolidics’ rapid test kit for the novel coronavirus in Hong Kong, it said on Wednesday. 
It is designed to test large groups of people whether they have the antibody produced in response to infection by the virus. It could help governments estimate the prevalence of the virus in their population, so that they can better devise strategies to contain the impact of the pandemic on social and economic activities. 
Although results are available in as few as 10 minutes, since antibodies take time to develop and may not be detectable in the early stage of infection, for diagnosis purposes, the results have to be interpreted in conjunction with clinical presentation as well as results of other tests, CK Life said.
Two weeks ago, CK Life announced a separate agreement to distribute another test kit developed by Singapore’s Agency for Science, Technology and Research and the city state’s Tan Tock Seng Hospital. 
-- Eric Ng


CKLife signs deal to distribute coronavirus rapid test kit 

Win Hanverky (3322 HK), an apparel manufacturer for international brands, said its same store sales growth stores decreased 51 per cent in the first quarter from a year earlier, while revenue dropped 27 per cent.
All of its offline stores in China have re-opened that were closed temporarily because of the coronavirus outbreak.
-- Louise Moon


Win Hanverky posts first-quarter drop in same store sales

Qingling Motors (1122 HK) posted a 10 per cent decrease in revenue to 4.7 billion yuan for 2019. Net profit dropped 23 per cent to 356 million yuan.
The Chongqing-based carmaker noted a changing macro economy, a lack of demand in the domestic market and decline of new energy subsidies as headwinds.
This year, it said the coronavirus outbreak has had a “negative impact” on its operations, as it suspended manufacturing services since late January before gradually resuming on February 14. It expects the group’s performance to be negatively impacted through 2020, without giving estimates.
-- Louise Moon   


Qingling Motors’ weak full-year results

Jewellery products manufacturer Hifood Group Holdings (442 HK) said it expects net losses for the 11 months through February to increase by HK$36.5 million, when compared to 2019.  It said a decrease in sales due to weaker market conditions globally, an escalation of US-China trade conflict and the outbreak of coronavirus has caused the decrease in revenue.   It also said there has been a significant reduction in orders, shipments and production since February this year because of the cancellation or postponement of international jewelery trade shows.
China International Marine Containers (2039 HK) said it expects to record a net loss of between 600 million yuan and 800 million yuan for the first three months of the year, compared to a profit of 405 million yuan in the same period last year.  All areas of business were affected by the outbreak of coronavirus in the first quarter, it said, and sales performances failed to reach expectations.
-- Louise Moon


Profit warnings

Here's what we are watching this morning:
US overnight markets/ What futures foretell
--The S&P 500 dropped 2.2 per cent, the Nasdaq fell 1.4  per cent and the Dow Jones Industrial Average slipped 1.9 per cent. 
-- Hong Kong futures dropped 0.2 per cent and the FTSE China A50 futures fell 0.3 per cent 
IPO debuts: HitGen (688222 CH) 
Economic statistics:  China’s March new home prices month-on-month
Central bank action: None to note
Earnings: Advanced Micro-Fab (688012 CH), China Satellite Communications (601698 CH), GoerTek (002241 CH), Hangzhou Tigermed (300347 CH), Hengli Petrochem (600346 CH), Huaxia Bank (600015 CH)
-- Kathleen Magramo


Morning guidance

Cosmetics retailer Sa Sa International (178 HK) said it will focus on Hongkongers’ needs after local customers were the largest revenue source in the fourth quarter, which runs from January through March. It said wholesale and retail sales declined by 56.5 per cent to HK$892.4 million in that period.
Those same sales declined 62 per cent to HK$657.6 million in Hong Kong and Macau which account for more than 70 per cent of its turnover. Local customers increased by 4.1 per cent year on year.
Read full story here


Sasa International to focus on Hong Kong after poor earnings

Japan’s Nikkei 225 slid 1.8 per cent, after declining 0.5 per cent on Wednesday.
The International Monetary Fund expects the country’s economy to contract 5.2 per cent this year because of the impact of the coronavirus.
South Korea’s Kospi was down 0.6 per cent while the tech-heavy Kosdaq rose 0.5 per cent.
Australia’s S&P/ASX200 fell 1.9 per cent, widening its losses from a 0.4 per cent drop on Wednesday. The country’s consumer confidence posted the biggest fall on record, according to Bloomberg.
New Zealand’s NZX 50 Gross gained 1 per cent, building on its 2.4  per cent rise the day before.
Meanwhile, in Singapore, the Straits Times Index dropped 1.1 per cent, after falling 1.5 per cent on Wednesday.
-- Kathleen Magramo


Most Asia markets lower

The Hang Seng Index declined 0.5 per cent to 24,025.45, after falling 1.2 per cent on Wednesday.
HSBC (5 HK) slipped 2.1  per cent to HK$39.75, while Standard Chartered (2888 HK) tumbled 4.5 per cent to HK$39.00.
Index heavyweight Tencent (700 HK) rose 1 per cent to HK$399.00. E-commerce giant Alibaba (9988 HK), which owns the South China Morning Post, gained 1.1 per cent to HK$200.
Also of note, cosmetics retailer Sa Sa International (178 HK) dropped 1.6 per cent to HK$1.26. The company said it will focus on Hongkongers’ needs after local customers made up the largest revenue source in the fourth quarter, which runs from Januar yto March. It said wholesale and retail sales declined by 56.5 per cent to HK$892.4 million in that period.
-- Kathleen Magramo


Hong Kong opens lower

The US March retail sales and industrial production data will add to the challenging economic picture of Covid-19’s impact, said Tai Hui, Asia chief market strategist at JP Morgan Asset Management.
March retail sales fell 8.7 per cent, the largest drop on record, according to the Commerce Department. That was mostly in line with an estimated 8 per cent decline from economists polled by Reuters.
New York, the state worst-hit by the coronavirus, saw its regional manufacturing activity hit an all-time low, plunging by negative 78.2 per cent. Industrial production slipped 5.4 per cent and manufacturing was down 6.3 per cent, reflecting the scale of production shutdowns in the country. 
“Investors will still need to adjust their expectations on corporate earnings in the next six to 12 months and this could be a source of equity market volatility, as we’ve seen in the US and Europe. This calls for an asset allocation that is more focused on managing volatility, rather than generating return tactically,” Tai said. “Assets that are directly supported by central banks, such as government bonds and high quality corporate debt, have already experienced a firm rebound as liquidity in the fixed income market steadily returns to normal. These assets should continue to appeal to investors in the near term as we wait for a sustained containment of the pandemic. Equities would appeal more to long term investors where earnings over the next three to five years should continue to deliver returns that would outperform high quality fixed income.”
Meanwhile, China’s first-quarter gross domestic product figures to be released on Friday should show the depth of economic damage during the peak of the outbreak in February, but it may not provide much optimism on a quick turnaround in economic recovery, Tai said.
-- Kathleen Magramo


Poor US economic data adds challenges to earnings and equities, JP Morgan Asset Management

CK Life Sciences International Holdings (775 HK) shot up 14.9 per cent to HK$1.08 after it signed an agreement to distribute Singapore-based Biolidics' rapid test kit for Covid-19 in Hong Kong, according to a press release on Wednesday.
CK Life is a subsidiary of multinational conglomerate CK Hutchison Holdings (1 HK), which slipped 2.3 per cent to HK$56.15.
-- Kathleen Magramo


CK Life Sciences jumps on coronavirus test-kit distribution deal

Biotech firm HitGen (688222 CH) surged 102.8 per cent to 41.62 yuan on its debut on Shanghai’s tech-focused Star Market.
There is no limit on the share price movement of IPOs in the first week of trading on the Star Market.
-- Kathleen Magramo


China IPO skyrockets

The Shanghai Composite Index inched up 0.1 per cent to 2,814.96.
The CSI 300 gauge of large-caps listed in Shanghai and Shenzhen rose 0.04 per cent to 3,798.99 and the tech-focused ChiNext gained 1.2 per cent to 2,001.86.
-- Kathleen Magramo


China markets turn up

Apple suppliers in China were muted despite the new release of a cheaper iPhone model tomorrow.
Luxshare Precision Industry (002475 CH) fell 0.8  per cent to 40.93 yuan and GoerTek (002241 CH) slipped 1.8 per cent to 17.62 yuan. They both make Apple AirPods.
Shenzhen Desay Battery (000049 CH) shed 0.7 per cent to 35.98 yuan.Touch panel maker Lens Technology (300433 CH) dipped 0.06 per cent to 15.87 yuan.
Apple-linked stocks slipped 0.3 per cent, according to a gauge by data provider Xuangubao.
The new second-generation iPhone SE will retail for US$399, a 40 per cent markdown from the most affordable iPhone 11 sold last year. Meanwhile, shipments of Apple iPhone to China jumped 19 per cent in March from a year ago to 2.5 million units, Bloomberg reported on Tuesday based on calculations from monthly data released by government think tank China Academy of Information and Communications Technology. 
-- Kathleen Magramo


Apple’s new iPhone release barely boosts China suppliers

The Shanghai Composite Index was down 0.2 per cent to 2,806.46 at the break after see-sawing in morning trade.
The CSI 300 gauge of large-caps listed in Shanghai and Shenzhen fell 0.4 per cent to 3,782.37. Meanwhile, the tech-focused ChiNext gained 0.5 per cent to 1987.74.
Liquor distiller Kweichow Moutai (600519 CH) stayed flat at 1189.59 yuan.
Luxshare Precision Industry (002475 CH) shed 1 per cent to 40.84 yuan and Goertek (002241 CH) declined 2 per cent to 40.84 yuan. They both make Apple AirPods.
B (601318 CH) slipped 0.9 per cent to 70.20 yuan. China International Travel Service (601888 CH) went up 0.7 per cent to 77.11 yuan.
Security equipment firms fell 1.4 per cent and the fertiliser industry shed 1 per cent, according to gauges tracked by EastMoney. 
-- Kathleen Magramo


Shanghai Composite down at the break

The world's largest pork processor WH Group (288 HK) slid 0.8 per cent to HK$7.45 after its subsidiary Smithfield Foods said on Wednesday that it was closing two additional US plants.
This comes after Smithfield shut its Sioux Falls plant in South Dakota - one of America's largest pork processing facilities - after hundreds of workers contracted the coroanvirus.
US Agriculture Secretary Sonny Perdue assured Americans the country has “plenty of food” after major meat-processing plants shut because of the coronavirus, putting pressure on supply chains.
-- Gigi Choy


WH Group slips after Smithfield closes two more US plants

The Hang Seng Index ended the morning session 0.8 per cent lower at 23,854.81.
HSBC (5 HK) fell 2.5 per cent to HK$39.60, while Standard Chartered (2888 HK) tumbled 3.6 per cent to HK$39.40.
Index heavyweight Tencent (700 HK) gained 1.4 per cent to HK$400.60, while Alibaba (9988 HK) rose 1.5 per cent to HK$200.80.
Insurers Ping An (2318 HK) went down 1.3 per cent to HK$75.80 and AIA (1299 HK) slipped 1 per cent to HK$69.60.
Also of note, cosmetics retailer Sa Sa International (178 HK) fell 0.8 per cent to HK$1.27 after first quarter sales fell over 56 per cent.
-- Gigi Choy


Hong Kong loss widens at midday break

Jefferies maintains its "hold" rating for Sa Sa International (178 HK) at a target price of HK$1.89, after the cosmetics retailer reported wholesale and retail sales had fallen by 56.5 per cent to HK$892.4 million (US$115.1 million) in the first quarter.
The investment bank said the sales trend is in line with the market and their estimates.
"Like other players, sales recovery in [Hong Kong] is not as obvious when compared to that of mainland China," analysts Anne Ling and Boya Zhen wrote in a note.
Sa Sa’s management said it will continue to cut costs and broaden its product offerings, catering for the change in consumer demand.
The brand's shares fell 1.6 per cent to HK$1.26.
-- Gigi Choy


Jefferies keeps “hold” recommendation for Sa Sa International

Daiwa Capital Markets remains “neutral” on China’s staples industry as they expect product demand to be resilient while recovery in dairy and beer segments to be strong despite the disruptions caused by the coronavirus pandemic.
“While supply-chain disruptions may cause uncertainty for food and grain supply in both China and globally, Chinese government measures like sales of preserves can help stabilise domestic prices of grains like rice and wheat, in our view,” Daiwa’s analysts said.
Most investors that spoke with Daiwa agreed that packaged food and household products would see the most stable revenue among their coverage in the first half of the year but may not record strong growth thereafter.
Daiwa reiterated “buy” calls for the earnings visibility of  Tingyi (322 HK) at a target price of HK$13.86, Hengan International (1044 HK) at a target price of HK$64.35 and WH Group (288 HK) at a target price of HK$7.76.
Instant noodles manufacturer Tingyi was down 1.5 per cent to HK$13.26. China's largest sanitary towels and baby diapers producer Hengan International rose 1.6 per cent to HK$65.35. The world’s largest pork producer WH Group shed 1.2 per cent to HK$7.42.
Analysts also affirmed “buy” calls for projected recoveries of Mengniu (2319 HK) at a target price of HK$28.8 and China Resources Beer (291 HK) at a target price of HK$37.25. 
Dairy company Mengniu gained 0.5 per cent to HK$28.15 while brewery China Resources Beer slipped 0.1 per cent to HK$35.95.
-- Kathleen Magramo


Daiwa Capital “neutral” on China staples industry

New economy stocks mostly increased, including Ali Health (241 HK), which rose 2.3 per cent to HK$16.60, and Ping An Good Doctor (1833 HK), which jumped 3.3 per cent to HK$97.40.
Maoyan Entertainment (1896 HK) tumbled 2.7 per cent to HK$9.20, while Chinese smartphone and home appliance maker Xiaomi (1810 HK) fell 1.3 per cent to HK$10.34.
NetDragon Websoft (777 HK), a Chinese online gaming company offering online learning products, rose 1 per cent to HK$20.25.
Kingsoft (3888 HK), a software company with cloud and business management services, jumped 2.8 per cent to HK$25.80.
Meanwhile, food delivery giant Meituan Dianping (3690 HK) rose 1.2 per cent to HK$99.
-- Gigi Choy


Most of Hong Kong’s new economy stocks see gains

Daiwa Capital Markets has maintained its "buy" rating for China Mobile (941 HK) but trimmed its target price to HK$75.70 from HK$76.60.
It said the state-owned telecom's low-risk and explicit 2020 dividend policy stands out.
Daiwa expects a 1.6 per cent year on year decline in China Mobile's net profit due to a 1.5 per cent year on year drop in service revenue in the first quarter.
China Mobile shares fell 1.4 per cent to HK$60.05.
-- Gigi Choy


Daiwa Capital keeps “buy” rating for China Mobile

The Shanghai Composite Index climbed 0.3 per cent to 2,818.16. The CSI 300 gauge of large-caps listed in Shanghai and Shenzhen rose 0.07 per cent to 3,800.03 and the tech-focused ChiNext gained 1.5 per cent to 2,007.31.
-- Kathleen Magramo


China benchmarks rise

Hong Kong's de facto flag carrier Cathay Pacific Airways (293 HK) rose 0.8 per cent to HK$9, despite a drastic decrease in passenger numbers last month.
Cathay Pacific and Cathay Dragon reported a 90 per cent year on year drop in passenger volume for March. For the quarter, passengers were down 52 per cent from a year earlier.
The group expects average daily passenger numbers to remain below 1,000 in April compared with the usual 100,000 as it operates at just 3 per cent of normal capacity.
Cathay made an unaudited loss of more than HK$2 billion (US$258 million) in February due to disruption caused by the coronavirus pandemic.
-- Gigi Choy


Cathay Pacific up despite reporting a 90 per cent year on year drop in passenger volume

Daiwa Capital Markets said positive growth in China's private vehicle retail sales and wholesale volume in the second week of April suggest initial signs of recovery. They rose 14 per cent and 11 per cent, respectively.
The firm expects the year on year decline to narrow significantly in April and sees possible year on year growth in May.
Daiwa recommends Geely (175 HK), which fell 1.6 per cent to HK$11.02, and BYD (1211 HK), which jumped 3.5 per cent to HK$44.10. It also suggests dealers Yongda (3669 HK), which gained 2.4 per cent to HK$6.83, and Zhongsheng (881 HK), which rose 0.3 per cent to HK$29.60.
-- Gigi Choy


Signs of recovery in place for China autos: Daiwa Capital

China's largest sportswear producer Anta Sports (2020 HK) posted a 20 to 25 per cent year on year retail sales decline in the first quarter after markets closed on Wednesday, beating Jefferies' expectations.
Fila retail sales recorded a mid single-digit year on year decline over the same period, which was also better than estimates.
The investment bank said Anta management indicated that retail sales had reached 70 to 80 per cent of level planned in the second quarter to date. This suggests the brand could already be delivering sales growth, assuming Fila's original target being up 40 per cent year on year.
Jefferies has a "buy" rating on Anta, which jumped 3.7 per cent to HK$63.90.
-- Gigi Choy


Jefferies: Anta beats expectations

Investors and fund managers are looking to buy the dip in Hong Kong now, as the worst of Covid-19’s impact on the market may have already passed, said Louis Tse, managing partner at VC Asset Management.
“The worst is over for Hong Kong but it will take a lengthy time to go back up to 26,000 to 28,000 points,” Tse said. “If global coronavirus cases go down or somewhat stabilise, the Hang Seng Index can fluctuate around the psychologically important 24,000-point level.”
Traditional high-yield and blue chip stocks such as China Mobile (941 HK) and HSBC (5 HK) have fallen since the stock market rout in early March, which now have attractive valuations and reasonable opportunities for medium to long-term investors, he said, adding that recovery may be gradual.
China Mobile shed 1.1 per cent to HK$60.2, while HSBC declined 1.8 per cent to HK$39.85.
He also highlighted new economy stocks which have slightly rebounded. Tencent (700) gained 2.3 per cent to HK$404 and Meituan Dianping (3690 HK) rose 1.3 per cent to HK$99.15.
Meanwhile, most investors have already braced themselves for dismal gross domestic product figures from China to be released on Friday, which is why sentiment is still cautious, he added.
-- Kathleen Magramo 


Dip an opportunity to buy for medium to long term investors

Japanese Prime Minister Shinzo Abe is preparing to expand the state of emergency that the government has declared for capital city Tokyo, Osaka and five other prefectures to the rest of the country in a bid to contain the novel coronavirus, the Yomiuri newspaper reported on Thursday.
The nationwide emergency would last until May 6, the same date the partial emergency will expire.
-- Gigi Choy


Japan set to expand state of emergency nationwide

The Shanghai Composite Index added 0.3 per cent to 2,819.94, after see-sawing during the day.
The CSI 300 gauge of large-caps listed in Shanghai and Shenzhen rose 0.1 per cent to 3,802.38 and the tech-focused ChiNext advanced 1.6 per cent to 2,008.39.
Kweichow Moutai (600519 CH), the world’s most valuable liquor company, climbed 0.6 per cent to 1197.10 yuan.
Luxshare Precision Industry (002475 CH) eked out a teensy gain of 0.02 per cent to 41.28 yuan, while Goertek (002241 CH) declined 0.3 per cent to 17.89 yuan. They both make Apple AirPods.
Ping An Insurance (601318 CH) closed down 0.7 per cent to 70.38 yuan. Meanwhile, China International Travel Service (601888 CH) rose 0.5 per cent to 77.00 yuan.
Medical industry stocks climbed 2.5 per cent, transmission and distribution electronics rose 2.3 per cent and software services picked up 2 per cent, according to gauges tracked by EastMoney.
-- Kathleen Magramo


China markets end with gains

Shares of Macau casino operators were mixed.
The world's biggest gambling hub has reported no new coronavirus infections since April 7 but travel restrictions on foreigners to the city are still tight.
Galaxy Entertainment (27 HK) rose 1.6 per cent to HK$48.70, while Sands China (1928 HK) went up 1.7 per cent to HK$30.50. 
MGM China (2282 HK) slid 0.8 per cent to HK$9.
Melco International (200 HK) rose 0.8 per cent to HK$13.28. Wynn Macau (1128 HK) dropped 1.5 per cent to HK$12.82. SJM Holdings (880 HK) slipped 0.4 per cent to HK$7.62.
-- Gigi Choy


Macau casinos mixed

The Hang Seng Index fell 0.6 per cent to 24,006.45.
Index heavyweight Tencent (700 HK) jumped 3 per cent to HK$406.80, while Alibaba (9988 HK) gained 2.5 per cent to HK$202.80.
But the Hang Seng was weighed down by HSBC (5 HK), which dropped 2.2 per cent to HK$39.70, and insurers such as Ping An (2318 HK), which slid 0.8 per cent to HK$76.15, and AIA (1299 HK), which lost 1.2 per cent to HK$69.45.
Also of note, the world's largest pork processor WH Group fell 0.8 per cent to HK$7.45, after its subsidiary Smithfield Foods shut two more US plants.
-- Gigi Choy


HSBC, AIA and Ping An weigh on Hang Seng Index as the benchmark ends just above 24,000 level

Tech stocks Tencent and Alibaba made further gains Shanghai Composite Index recoups day's losses to end on a high

Tech stocks Tencent and Alibaba made further gains

Shanghai Composite Index recoups day's losses to end on a high