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Zhang Shidong

Deb Price

Good day, traders --
Catch up on the day's action below.
Please help us improve our blog by taking this quick -- under 2 minutes! -- survey. Your feedback will really help us make the blog better for you!
Also, if you would like the Live Stocks Blog emailed to you each morning, shoot Deb a message at deb.price@scmp.com.

-- Zhang Shidong in Shanghai and Deb Price 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.
 


Hong Kong stocks rise as investors look for signs of fresh China stimulus

UBS likes US stocks and bonds as Trump’s pro-business policies float all boats

HSBC cuts New World price target, suggests debt plan, capital injection to calm investors

Hong Kong stocks climb amid tech optimism in best weekly gain since October

Stocks

Stocks Blog: Tencent falls on results miss; Wharf REIC declines as protests continue

Police fire tear gas at the Polytechnic University Chatham Road South entrance. Photo: SCMP  


Business

Markets

China's October industrial production and retail sales data missed estimates
Banks mixed, as many branches remain closed amid protest disruptions


China's October industrial production and retail sales data missed estimates, but Shanghai rose a bit. Cathay falls after saying second half results to be ‘significantly below’ first half.


China stock market

Hang Seng Index

Tencent

US-China trade war

Cathay Pacific

Hong Kong property

Wharf Reic

Live

Hong Kong’s Cathay Pacific Airways (293 HK) and Cathay Dragon saw a 7.1 per cent drop in passengers in October year-on-year, it said in an exchange filing after market close on Wednesday.
The city’s flagship airline group said Cathay Pacific and Cathay Dragon carried a total of 2.74 million passengers last month, down 7.1 per cent as compared to that in October 2018 as fewer tourists from mainland China travelled to Hong Kong.
Cathay also said it expects its second-half financial results will be significantly below those of its first-half.
“In October, demand for travel into Hong Kong remained weak with our inbound passenger traffic seeing a year-on-year decline of 35 per cent, consistent with the trend seen in both August and September,” said Cathay Pacific Group Chief Customer and Commercial Officer Ronald Lam.
“Mainland China routes in particular felt significant pressure with weak travel sentiment to Hong Kong by mainland tourists. Demand for premium class travel was also sluggish with passenger volume seeing a double-digit dip in October,” Lam added. 
  -- Pearl Liu    


Cathay sees passenger drop in October, expects painful second half results 

Chinese electric vehicle (EV) manufacturer XPeng said it has received US$400 million in Series C capital funding from a number of strategic and institutional investors.
The Guangzhou-based EV maker said on Wednesday that the funding was led by Chinese smartphone-maker Xiaomi (1810 HK). 
It comes at a tough time for the China’s EV sector which saw EV sales record a 46 per cent drop in October to 75,000 units compared to September.
It was the fourth consecutive month of slowing sales after the Chinese government cut subsidies by as much as 60 per cent on purchases of electric vehicles in late June.
-- Pearl Liu    


Xiaomi invests in Chinese EV maker XPeng

Internet giant Tencent Holdings (700 HK) reported a net profit of 20.4 billion yuan (US$2.9 billion) in the quarter ended September 30, down from 23.3 billion yuan in the same period a year ago, on weaker media advertising and desktop games results. 
That was below the 23.5 billion yuan average from analysts’ estimates compiled by Bloomberg.
Tencent, which runs the world’s biggest video games business by revenue, reported its results Wednesday after market close.
Total revenue increased 21 per cent to 97.2 billion yuan, up from 80.6 billion yuan a year earlier, but this was still below analysts’ consensus estimate of 99 billion yuan.
Tencent aims to step up international expansion through its growing video games empire, which could receive a boost with the roll-out of ultra-fast 5G mobile services that enable more advanced applications.
Read full story by Iris Deng and Celia Chen here.   


Tencent posts 13 per cent decline in 3rd Q profit, below estimates

* Overnight markets/ What futures foretell
  -- Overnight in US markets, the S&P 500 gained 0.1 per cent, the Nasdaq fell 0.1 per cent, and the Dow Industrials added 0.3 per cent
 -- Hong Kong futures were 0.3 per cent lower, while the FTSE China A50 futures climbed 0.1 per cent
* IPO debuts: Home Control International (1747 HK) and Orange Tour Cultural Holding (8627 HK) will debut in Hong Kong today, while Jutze Intelligent Technology (300802 CH) will start trading in Shenzhen.
* Economic statistics/Central Bank action: The National Bureau of Statistics will release the October data on industrial production, retail sales and fixed-asset investment at 10am today.
* Corporate events: earnings, meetings, news conferences  -- Nothing major
*Later this week: China’s October home prices are due tomorrow.


Morning guidance 

A gauge of Hong Kong’s bank funding costs spiked to its highest level in more than a month this week, as investors and financial institutions stashed away cash in anticipation of a massive secondary listing by Alibaba Group Holding in the city.
Alibaba, the parent company of the South China Morning Post, won approval this week to sell up to US$15 billion of shares on the Hong Kong stock exchange, five years after it chose New York over the city for a record US$25 billion initial public offering. The listing would the biggest globally this year, beating Uber Technologies’ US$8.1 billion IPO in New York in May.
The one-week Hong Kong interbank offered rate (Hibor) jumped 63 basis points to 1.92 per cent on Monday and stood at 2.57 per cent on Wednesday.
Read full story by Chad Bray here.    


Banks, investors hoard cash ahead of Alibaba IPO

Link Reit (823 HK), Asia’s largest real estate investment trust, is discussing rent relief with tenants at 10 of its malls in Hong Kong, it said during the announcement of its interim results on Wednesday. The city’s ongoing anti-government protests have disrupted transport and forced many shops to close early or stay closed for days.
“Out of the 126 properties that we have in Hong Kong, we have around 10 properties where we have seen the need to have discussions with our tenants, and we’re doing that on a tenant-by-tenant basis, depending on times of closure,” said Nicholas Allen, the chairman of Link Asset Management, Link Reit’s manager.
“We’re very conscious that some of our tenants are facing some hardship, and we’re trying very hard to work with them to help them through the process.”
The malls affected by the increasingly violent clashes between protesters and police are close to protest-hit areas, police stations or are frequented by mainland Chinese shoppers. Otherwise, sales at all of the trust’s shopping centres actually rose by about 1.5 per cent in the six months ending September.
Link Reit announced its net property income for the period rose 8.5 per cent to HK$4.07 billion (US$519.6 million), while revenue rose 7.8 per cent to HK$5.3 billion. The company declared an 8.3 per cent increase in interim distribution per unit to HK$141.47. On Wednesday, its shares closed at HK$81.1, down by about 1.5 per cent.
Read full story by property reporter Cheryl Arcibal here.   


Link REIT discusses rent cuts with tenants at 10 malls

All eyes will be on China’s October economic data due at 10am, with traders likely braced for a miss of the numbers.
Stocks are trading sideways, with the Shanghai Composite Index rising 0.2 per cent to 2,910.03 at the open.
Infrastructure-linked stocks are leading the pack of gainers after the State Council said Wednesday night that it will ease the capital requirement for key projects.
-- Zhang Shidong 


China’s stocks rise ahead of economic data release

The Hang Seng Index is see-sawing in early trading and has inched up by 0.03 per cent to 26,578.27.
HSBC (5 HK) declined 0.5 per cent to HK$57.95, Standard Chartered Bank (2888 HK) rose 0.9 per cent to HK$71.35, and Bank of China (3988 HK) climbed 0.3 to HK$3.18.
The three note-issuing banks in the city all declined Wednesday, as a record number of bank branches closed.
New World Development (17 HK), whose portfolio includes retail, and hotels and serviced apartments, rose 0.4 per cent to HK$10.50. 
It was Wednesday’s top percentage loser on the Hang Seng Index, falling 4.9 per cent to HK$10.46 and extending its losses into a fourth straight session.
Wharf REIC (1997 HK), which owns Harbour City in Tsim Sha Tsui and Times Square in Causeway Bay, dropped 1.2 per cent to HK$41.75. It recorded its fifth straight session of losses on Wednesday.
Tencent (700 HK), whose third quarter profits and revenue missed estimates after market close Wednesday, fell 1.6 per cent to HK$322.20.
  -- Deb Price    


Tencent falls after results miss 

Anhui Gourgen Traffic Construction (603815 CH) and other infrastructure-linked companies rallied after the State Council said Wednesday night that it will lower the capital requirement ratios for some projects.
The minimum capital requirement ratio for ports and shipping projects will be cut to 20 per cent from 25 per cent, and equity-backed financing can be used to fund construction of infrastructure projects, according to the cabinet.
That is seen as a move to cushion the slowdown in the economy, with consumer inflation accelerating and credit growth missing estimates.
Anhui Gourgen surged by the 10 per cent daily limit to 24.31 yuan, Xinjiang Beixin Road and Bridge Group (002307 CH) climbed 9.4 per cent to 6.05 yuan and China Design Group (603018 CH) added 4 per cent to 10.30 yuan.
-- Zhang Shidong


Chinese infrastructure stocks jump on loosening of capital requirements

Home Control International Limited (1747 HK) and Orange Tour Cultural Holding Limited (8627 HK) started trading on the Hong Kong Stock Exchange today. Home Control is on the  main board while Orange Tour is on the GEM.
Home Control International’s share price fell 8.8 per cent to HK$0.93 at the open, from the offering price of HK$ 1.02. The shares were oversubscribed by 15.14 times before debut. It then rose to HK$1.02.
Headquartered in Singapore, Home Control has businesses in North America, Europe, Asia, and Latin America. It is the world’s second-largest home solution provider, with a market share of 9.6 per cent and important telecommunication giants as customers, such as AT&T in the US and Sky UK, according to a Frost & Sullivan’s report.
Orange Tour Cultural’s share price rose 9 per cent to HK$0.3 at the open from the offering price of HK$ 0.275.  The shares were oversubscribed by 35.1 times before debut. It has risen to HK$0.31.
The marketing company provides event management and production services across China. In terms of revenue of 2018, it has a market share of 0.01 per cent in the event management industry and 0.03 per cent in the design and production service industry, according to a Frost & Sullivan’s report.
 
Home Control International Limited (1747 HK) and Orange Tour Cultural Holding Limited (8627 HK) debut on the Hong Kong Stock Exchange today -- the former is on the main board and the latter is on the GEM. @scmpbusiness @SCMPNews pic.twitter.com/htLOX73lZD
  — Snow Xia (@SnowXia05) November 14, 2019
--Snow Xia   


Home Control, Orange Tour begin trading in Hong Kong

China’s October key economic data is sending stocks down, with the Shanghai Composite Index erasing all the gains after the release by the statistics bureau.
Industrial output grew 4.7 per cent last month against the estimate of a 5.4 per cent increase.
Retail sales increased 7.2 per cent, missing the projection of 7.8 per cent growth, while fixed-asset investment rose 5.2 per cent in the first 10 months of the year, compared with the estimate of 5.4 per cent.
-- Zhang Shidong


China’s October economic data all trail estimates; stocks reverse gains

The Hang Seng Index has turned back down, falling 0.4 per cent to 26,469.26, after China data on industrial output and retail sales missed estimates.
More than 40 per cent of the benchmark is made up of mainland China companies.
Tencent (700 HK) is seeing its losses deepen. It declined 2.1 per cent to HK$320.60.
-- Deb Price    


Tencent losses deepen; Hang Seng turns down

Despite the escalating political turmoil in Hong Kong, the chief executive of Orange Tour Cultural Holding Limited (8627 HK), which started trading on the GEM board of Hong Kong stock exchange, is confident about the market.
“There are many factors that affect the stock price, and we are very confident because Hong Kong is a highly free and dynamic market in the long run,” said Chief Executive Zhou Yang.
While some analysts believe many investors have sold holdings to be ready to buy Alibaba once it is listed, Zhou said he is not worried about his share price.
“As long as we do well enough to make steady and long-term return to our investors, we will not worry. We are confident that Hong Kong itself is a highly liquid market,” he said.
Orange Tours is trading at HK$0.31, up from the offering price of HK$ 0.275.
— Snow Xia   


Orange Tour Cultural ‘confident’ about Hong Kong stock market

Jutze Intelligent Technology (300802 CH) surged by 44 per cent to 31.74 yuan on the first day of trading in Shenzhen.
The 44 per cent gain is the maximum gain for main-board debutants on the mainland’s exchanges.
The company makes automatic optical inspection equipment, laser engraving machines and light emitting diode testing equipment.
-- Zhang Shidong


Jutze Intelligent surges by daily limit in Shenzhen debut

Hangzhou Hikvision Digital Technology (002415 CH) dropped 3.5 per cent to 33 yuan in Shenzhen trading, putting it on track for the biggest loss since October 10, after the surveillance camera maker said two of its board directors were under regulatory probes for allegedly violating rules of information disclosures.
Hu Yangzhong and Gong Hongjia received the notice from the China Securities Regulatory Commission on Monday, Hangzhou Hikvision said in an exchange statement.
The stock is one of favourite stocks by overseas investors participating in the Stock Connect programme.
-- Zhang Shidong


Hangzhou Hikvision heads for biggest drop in month after directors probed

MTR services remain disrupted, as protesters have thrown railings and other objects on the tracks.
Meanwhile, police said “rioters” fired arrows at several officers near Polytechnic University at 6.45 this morning, prompting them to fire tear gas.
 A 20-year-old PolyU student is carrying a bow and arrows, and says he’s just defending the campus.
“We practiced how to use these yesterday at the gym,” he says. “We won’t shoot if the police don’t attack, this is like a last resort weapon.”
Catch up on the protest activity in the SCMP’s live blog here. 
The Hang Seng’s losses have deepened, falling 0.9 per cent to 26,321.23.



Protester fires arrows at police near Polytechnic U, prompting tear gas response, police say

AAC Technologies (2018 HK) leads gains on the  declining Hang Seng Index, as Citi Research raised its target price to HK$66 from HK$44 and maintained its “buy” rating following the Apple supplier’s third quarter results on Friday that beat estimates.
AAC rose 2.2 per cent to HK$49.55.
Of analysts tracked by Bloomberg, 14 rate it a “buy,” 17 a “hold” and five a “sell,” with a target price of HK$53.07.
AAC’s third quarter profit was 695 million yuan, a 106 per cent jump quarter-on-quarter but a 29 per cent decline year-on-year. Revenue rose to 5.01 billion yuan, which was a 31 per cent quarter-on-quarter rise and a 3 per cent year-on-year increase, according to its stock filing.
Communication services lead losses among sectors while information technology and heath care stocks lead gains on the Hang Seng Index.
Tencent (700 HK) is the top percentage loser on the benchmark, falling 2.6 per cent to HK$318.80 after its third quarter earnings miss after Wednesday’s market close.
The Hang Seng Index has fallen 1 per cent, with morning losses deepening, leaving it at 26,298.03. 
 -- Deb Price 


AAC Technologies is top gainer on declining Hang Seng

Senior executives will find it more difficult to trim their stakes in Chinese listed companies through exchange-traded funds.
The Shanghai and Shenzhen exchanges are getting tougher on the practice as the two bourses said that stake reductions by means of ETFs would be counted in quotas on insider selling.
The announcement came after some executives were found to bypass the rules by conducting insider selling through ETFs.
-- Zhang Shidong


China’s exchanges plug loophole in insider selling

Cathay Pacific Airways (293 HK) fell 1.1 per cent to HK$9.88, after announcing its and Cathay Dragon’s traffic in October decreased 7.1 per cent year-on-year. 
“It continues to be a challenging time for both the Cathay Pacific Group and for Hong Kong,” it said in its filing at the Hong Kong exchange. “In response to weakened travel sentiment to and from Hong Kong, we have so far reduced our passenger flight capacity against our original schedule by 2-4% between August and October, and 6-7% for November and December.”
It said it expects its second half results will be “significantly below” those of the first half, as the short-term outlook “remains challenging and uncertain.”
“Mainland China routes in particular felt significant pressure with weak travel sentiment to Hong Kong by mainland tourists. Demand for premium class travel was also sluggish with passenger volume seeing a double-digit dip in October, traditionally a peak month for business travel. Japan routes were the star in our network – the Rugby World Cup generated good demand, especially from England and South Africa when both teams advanced to the final,” it said.
“Looking ahead, our advanced bookings continue to show weakness in both inbound and outbound Hong Kong traffic for the rest of 2019, partly offset by moderately increased transit passengers via Hong Kong,” it said.
-- Deb Price    


Cathay falls after saying 2nd half results to be ‘significantly below’ first half 

Growth in China’s industrial economy fell sharply in October, as a broad-based slowdown in manufacturing was again clear in figures released on Thursday.
Industrial production, a measure of growth in sectors such as manufacturing, mining and utilities, expanded by 4.7 per cent cent last month, down from 5.8 per cent in September.
This was below analysts’ expectations of 5.4 per cent growth. September’s figure had rebounded from a 17-year low of 4.4 per cent, recorded in August.
In another piece of data released by China’s National Bureau of Statistics (NBS) on Thursday, fixed asset investment, purchases of capital goods, real estate and infrastructure, grew by 5.2 per cent in the first 10 months of the year, below analysts’ expectations of 5.4 per cent and down from September’s reading, also of 5.4 per cent. This was the lowest growth figure since records began in November 1999.
Retail sales, a key metric of consumption in the world’s most populous nation, grew by 7.2 per cent in October from a year previous, this was below analysts’ forecasts in a Bloomberg poll, which predicted no change from September’s 7.8 per cent growth. This was the lowest monthly growth rate since April.
Read full story by China economy reporter Finbarr Bermingham here.


China’s manufacturing growth slows sharply 

A Beijing-based think tank has become the first Chinese economic research institute linked to the government to predict that China’s economic growth rate will slow below 6.0 per cent next year.
The National Institution for Finance and Development (NIFD) on Wednesday said that China’s economic growth rate will slow to 5.8 per cent in 2020 from an estimated 6.1 per cent this year.
This is at the bottom end of China’s target range of 6 to 6.5 per cent growth for 2019, and further indicates the continued downward pressure on the economy from the trade war with the United States as well as domestic headwinds.
Read full story by Frank Tang here. 


China’s 2020 growth to drop below 6 per cent, says government-linked body

Link REIT (823 HK) fell 0.8 per cent to HK$80.45, putting it on track for its fifth straight session of losses after its interim first half results didn’t counter investor concerns about the outlook for shopping mall owners amid escalating protests. 
Since protesters broke into the LegCo, Link has dropped 15.5 per cent.
Link REIT is in talks with tenants at 10 of its malls in Hong Kong about rent reductions.
“Link REIT could continue to uphold modest growth in retail rents in the coming years, primarily due to tenants selling non-discretionary goods, despite Hong Kong’s weakening economic outlook,” Bloomberg Intelligence analysts write in a new note. 
“The landlord’s new target of achieving high single-digit (compound annual growth) for assets under management by 2025 would prompt the acquisition of more malls in mainland China, which have stronger growth potential than those in Hong Kong. Asia’s largest REIT by market value has a blueprint for property upgrades extending to 2023. Yet expansion in China could raise its currency-risk profile and limit share buybacks,” the analysts wrote.
Link Reit said at Wednesday’s lunch break that its its net property income for the first half of the year rose 8.5 per cent to HK$4.07 billion (US$519.6 million), while revenue rose 7.8 per cent to HK$5.3 billion. Profit declined 28 per cent year-on-year, it said.
The Hang Seng is down 0.9 per cent to 26,326.24 at the lunch break.

 
 -- Deb Price 


Link REIT falls as protests continue to disrupt mall traffic

UOB Kay Hian reduced the target price for Tencent (700 HK) to HK$412 from HK$416, but maintained its “buy” rating on the Chinese social media and online games giant.
Tencent has 38 buy ratings, five, holds and no sells, among analysts tracked by Bloomberg. 
It has fallen 2.4 per cent to HK$319.60 in the early afternoon session, making it the top percentage loser on the Hang Seng Index.
In its Wednesday after-market announcement, it reported that its third quarter profit attributable to shareholders was 20.38 billion yuan, a drop of 13 per cent from the same period in 2018, while revenue was 97.2 billion yuan in the period, a 9 per cent increase from the third quarter in 2018. Both were below estimates.
Total online games revenues increased 11 per cent year-on-year to 28.6 billion yuan, it said in its filing.
-- Deb Price 


UOB Kay Hian reduces Tencent target price but maintains ‘buy’ rating

361 Degrees International (1361 HK) slumped 17 per cent to HK$1.33, poised for the biggest drop since September 2017, after a Chinese sportswear maker said its auditor KPMG quit because the two parties could not reach a consensus on the audit service fee.
361 Degrees appointed Moore Stephens CPA as the new auditing firm starting yesterday, the company said in an exchange filing.
 

-- Zhang Shidong


Chinese sportswear maker 361 Degrees tumbles on replacement of auditor

China’s economic growth will probably decelerate to 5.9 per cent in the fourth quarter, as persistent gains in pork prices keep consumer inflation at levels that leave little room for policy loosening, according to Goldman Sachs.
Consumer prices may rise 4 per cent this month, unless pork and food prices fall significantly, the US investment bank said in a research note.
Less aggressive policy support after the National Day celebration and accelerating inflation were mainly blamed for the weaker-than-estimated economic data, the note said.
-- Zhang Shidong


China’s 4Q growth may fall below 6 per cent, Goldman says

Huobi Tech (1611 HK) shot up 10.9 per cent to HK$5.88, after announcing in an exchange filing that beginning today at 9am its name has been officially changed from Pantronics.
Since the Huobi cryptocurrency exchange announced on September 10 it would change the name of the Hong-listed Pantronics it acquired earlier, it has skyrocketed 71 per cent, as of Wednesday’s close.
The Singapore-based Huobi today ranks as the 31st top cryptocurrency exchange by trade volume, according to Coinmarketcap, a cryptocurrency market analysis website.   
Meanwhile, Singapore-based Grandshores Technology (1647 HK), which operates construction and blockchain business, shot up 13 per cent to HK$0.78.  
It has been on a spectacular run since President Xi Jinping put the spotlight on blockchain stocks by saying China should be a leader in the new technology. Since the close of October 25, right before the media report about Xi’s push, and Wednesday’s close, Grandshores has climbed 60.5 per cent. 
The company had submitted no exchange filings that would explain its big run-up today.
Analysts have urged investors to be cautious about the blockchain sector, in general, saying no clear leaders have emerged and profitable applications are years away.
Here is a feature for investors about blockchain by Yujing Liu. 
 

-- Deb Price     


Blockchain-related stocks shoot up again in Hong Kong

Poor economic data isn’t dampening traders’ spirits in late afternoon trading in China, as  traders are flocking to technology companies that are deemed able to resist the downward economic cycle.
The Shanghai Composite Index rose 0.2 per cent to 2,910 nearing the close, with electronics and software companies leading the decline.
Besides, the battered valuations of Chinese stocks, to some extent, have reflected the faltering growth outlook, according to Wang Chen, a partner at Xufunds Investment Management in Shanghai.
“Most of the pessimism over the economy has been priced in stock prices, so there isn’t too much panic in the market,” he said. “On the other hand, the chance is increasing that more growth-stabilising measures will be introduced.”
-- Zhang Shidong


China’s stocks hold on to gains as investors ride on tech names

Many banks remain closed in Hong Kong for a second day -- including the Central branch of Bank of Communications that saw its front glass window smashed by a brick Wednesday. 
Today, 13 banks with 73 branches remain closed.
That is better than Wednesday when there were 18 banks with 250 branches closed the whole day, while another 100 closed early, amid protests in Hong Kong that turned traffic to a standstill.
Among the list, Bank of Communications had 15 branches closed.
OCBC Wing Hang also closed 15 branches today, while HSBC kept closed 12 branches and premier centres. Its subsidiary Hang Seng Bank, which had 77 branches closed on Wednesday, opened all but nine branches closed today.
Citibank and Bank of East Asia each have five branches closed today, CMB Wing Lung and China Construction Bank Asia have three branches closed, Dah Sing Bank and ICBC Asia each have closed two branches, while DBS, Fubon and Standard Chartered Each have one closed.
The closed  branches are mainly in the universities, Festival Walk, Mong Kok, Hung Hom and Sheung Shui.
Of the three note-issuing banks, two declined and one was flat. 
HSBC (5 HK) fell 0.7 per cent to HK$57.85, Standard Chartered Bank (2888 HK) was flat at HK$70.70, and Bank of China (3988 HK) fell 0.63 per cent to HK$3.15.
Bank of Communications (3328 HK), whose Central branch’s front window was smashed, on Wednesday, fell 1.9 per cent to HK$5.17.
-- Enoch Yiu and Deb Price    


Many banks remain closed in city amid protest disruptions

Optimism that technology companies will weather from the slowdown in the economy helped lift sentiment on Chinese stocks today.
The Shanghai Composite Index added 0.2 per cent to 2,909.87 at the close, despite that all the October economic data missed estimates. Policy support aimed at stabilising growth is getting underway, with a State Council meeting announcing to loosen the capital requirement for infrastructure projects.
-- Zhang Shidong


China’s stocks brush aside poor economic data to finish day higher

HSBC Global Research maintained its “buy” rating on Tencent (700 HK), but trimmed its target price to HK$417 from HK$433, following the Chinese Internet giant’s profit and revenue misses in a report overnight.
“The updated corporate mission reflects Tencent’s continued commitment to prioritize creating value for users and will continue to invest to drive more sustainable longer-term growth. Hence we expect near-term revenue growth could be quite stable, and investments might offset operating leverage,” the HSBC research analysts wrote.
They liked Tencent’s profitability in Fin Tech, rising market share in Cloud and “still resilient” games. Meanwhile, its media ads revenue, down 28 per cent year-on-year, suggests the worst in this area is behind Tencent.
Its price-to-earnings ratio is higher than peers -- 25 times versus 19 times -- but the “premium is justified in our view given its earnings quality and visibility.”
Tencent’s downside risks, they said, are regulatory headwinds on games and content, and rising competition in advertising.
Tencent’s losses have stabilised as the day has worn on. It has fallen 2.4 per cent to HK$319.40.
-- Deb Price   


HSBC  Global trims Tencent’s target price but keeps its ‘buy’ rating

“The protests, especially in Central every day, have a huge impact on investors’ sentiment and mood, making people panic,” said Francis Lun Sheung-nim, chief executive of GEO Securities.
“As the unrest keeps going on, the Hong Kong stock market doesn’t have hope on protests ending. So it slipped today,” he said. 
The Hang Seng Index had fallen 1 per cent to 26,301.45 in late afternoon trading. It is on track for a third day of losses, with Monday’s drop the worst in three months.
Lun believes the negative sentiment due to protests outweights excitement about the coming listing of Alibaba, which some believe has led to investors pulling money out of the market to invest in Alibaba later. 
“Alibaba’s stock is expensive, around HK$160 per share. So it would be bought mostly by wealthy investors.”
Meanwhile, property stocks continued to fall.
“Real estate stocks will continue falling. So far, residential property prices have not dropped significantly. Recently, a flat in Tung Chung was sold for HK$3.7 million. When investors feel hopeless and the world is experiencing a disaster in stocks, housing cannot sustain high prices,” Lun said .
  -- Snow Xia


Protests weighing down Hong Kong, says Francis Lun

CK Life Sciences (775 HK) has jumped nearly 7 per cent today to 92 Hong Kong cents, after plunging 8.2 per cent on Wednesday after its 4.9 per cent tumble on Tuesday. 
Last week, it saw more than 200 per cent in gains in a two-day period on news of progress in clinical trials of its skin cancer vaccine.
-- Deb Price    


CK Life Sciences jumps 

Jefferies maintained its  “buy” rating on Cathay Pacific (293 HK) and its target price of HK$12.50 after an analysts briefing following the Hong Kong flagship airlines’ warning that its second half year earnings will be “significantly lower” than in the first half.
Jefferies noted that the decline in traffic from China, which accounts for 10 per cent of revenue, “remains the biggest problem.” Passenger traffic by revenue mile in October was 21.9 per cent lower year-on-year.
“Although we believe the operating conditions remain difficult with (passenger) traffic and yields likely to remain near-term headwinds, the stock is already trading at trough multiples and we are already estimating 2H19 losses,” the Jefferies analysts wrote.
“On a 12-month view, we note (passenger) traffic historically rebounds quickly,” it wrote.
Cathay closed down 0.8 per cent today at HK$9.91.
-- Deb Price 


Jefferies maintains ‘buy’ rating on Cathay, despite airline saying 2H earnings will be ‘significantly lower’

The Hang Seng fell for the second straight day, as protests led many banks to remain closed a second day and fierce battling occurred between protesters and police.
The benchmark dropped 0.9 per cent to 26,323.69, led by losses in communication services, industrials, consumer staples and real estate. Of the 50 stocks, 42 declined, six rose and two were unchanged.
Tencent (700 HK) was the leading loser, falling 2.3 per cent to HK$319.80, after its third quarter revenue and profit missed estimates.
The other two heavyweights on the benchmark declined as well.
AIA (1299 HK), the giant insurer and financial service provider, fell 1.7 per cent to HK$76.40, while HSBC (5 HK)  dropped 0.6 per cent to HK$57.90.
Apple supplier AAC Technologies (2018 HK) was the top percentage gainer, rising 3.7 per cent to HK$50.30.  
Bank of Communications (3328 HK), whose Central branch’s front window was smashed, on Wednesday, fell 1.5 per cent to HK$5.19.
Protesters blocked more than 20 traffic arteries, including in the Central business district, while train services at 15 MTR stations have been affected partially or fully, our SCMP live blog reported.
“The mob turned the Chinese University into a weapon factory, where they manufactured and stored large number of petrol bombs and offensive weapons, such as bows, arrows and catapults. The alarming trend has spread to other universities as well,” Chief Superintendent John Tse Chun-chung of the police public relations branch said at an afternoon news briefing.
The protesters demand free elections and investigation of police actions against them, among other things.   
-- Deb Price    


Stocks Blog: Tencent falls on results miss; Wharf REIC declines as protests continue

China's October industrial production and retail sales data missed estimates Banks mixed, as many branches remain closed amid protest disruptions

China's October industrial production and retail sales data missed estimates

Banks mixed, as many branches remain closed amid protest disruptions