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Georgina Lee

Deb Price

Good day, traders:
Catch up on the day's action below.
Always happy to hear from you at deb.price@scmp.com as we try to make our live blog your must go-to site for our region's markets.
— Georgina Lee and Deb Price


Stocks Blog: China, Hong Kong markets fall ahead of high-stakes meeting of Donald Trump and Xi Jinping at G20 

A Chinese investor checks out a rare earths company's stock price at a securities brokerage house in Beijing on June 13, 2019. Photo: EPA-EFE 

Business

Markets

Bosideng (3998 HK), which plunged 25 per cent after short-seller claims, jumps as it resumes trading
Gold stocks in China continue to rise 


Bank stocks tumble after news report that they are in possible breach of US sanctions against North Korea. The three Chinese banks spotlighted denied the allegations.


Stocks

China markets

Hong Kong Stock Exchange

Live

Bosindeng International Holdings (3998 HK), the Chinese clothes maker whose stock plunged 25 per cent Monday before being suspended in the wake of a short-seller attack, said it was the victim of an "outright malicious attack" for personal gain. It said it will resume trading today.
In a detailed response filed at the Hong Kong Stock Exchange, it denied the short seller Bonitas Research's  accusations, claims that included that it fabricated its net profits, overpaid for acquisitions, and paid insiders significant dividends.  
"The Report comprises statements which are misleading, biased, selective, inaccurate and incomplete as well as groundless allegations and irresponsible speculations," said Bosindeng in the filing, in which it invited the short seller to visit the company to have a better understanding of it and reserved the right to sue.
It asked that trading be halted on Monday, as it was at 11:16 am. It says it resumes trading today.      
— Deb Price 
 


Bosindeng, which plunged after short seller claims, to resume trading

China Mobile (941 HK) offers significant value to investors and is likely to offer a higher dividend than expected, Jefferies analysts Edison Lee and Timothy Chau write in a new note. They gave it a "buy" rating with a price target of HK$104.11.
"We believe (China Mobile's) dividend policy is the most significant driver of its stock price. While near-term market concern is about revenue and thus earnings growth pressure, CM has the ability to maintain or even boost dividend per share even if there is a profit decline. Beyond 2019, we are confident that CM's profit growth will recover despite 5G buildout since 1) government pressure on mobile pricing is easing off as the tariff level is already very low, both on an absolute basis and relative to China's income, 2) CM's 5G spectrum allocation at 2.6GHz will likely result in lower-than-expected (capital expenditures), and 3) the (State Council's, or China's cabinet) recently put pressure on centrally-owned (state-owned enterprises) to maintain healthy profit growth to counter the country's economic slowdown."
It  closed Monday at HK$70.45. 
— Deb Price


Jefferies calls in a 'buy' rating for China Mobile

Here's what we are watching this morning:
Overnight markets/ What futures foretell
-- Overnight in US markets, S&P 500 was down 0.17 per cent,  Nasdaq lost 0.32 per cent, and the Dow Jones Industrial Average edged up by 0.03 per cent.
 -- Hong Kong futures are up 0.12 per cent , while the China A50 futures down 0.62 per cent.
IPO debuts:
Jinxin Fertility (1951 HK)  in Hong Kong
Economic statistics/Central Bank action:
 
NoneCorporate events: Annual general meetings
 
China Merchants Shekou Industrial Zone (001979 CH) China Cinda Asset Management (1359 HK) Aluminum Corporation of China (2600 HK) China Railway Group (390 HK) CRRC  (601766 CH)
CSC Financial (6066 HK)  China Resources Power Holdings (836 HK)
Good reads: Hong Kong's local malls are seen as a solid investment bet, reports Lam Ka-sing. Meanwhile, tech reporters Meng Jing and Celia Chen take a look at the Chinese supercomputer companies added to the US trade blacklist. 
 


Morning guidance 

Hong Kong media giant Next Digital (0282 HK), owned by media mogul Jimmy Lai Chi-ying, on Monday night reported a net loss for the year to the end of March at HK$340.19 million (US$43.56 million). That's a fourth consecutive annual loss, but it was a smaller one, narrowed by 29 per cent from HK$476 million losses a year earlier. The basic loss per share stood at 13.1 HK cents, slimmed down from 19.6 HK cents a year earlier.
The company, which publishes the popular Chinese language newspaper Apple Daily and magazines in Hong Kong and Taiwan, suffered from a drop in circulation income and  advertising revenue. The loss was softened by the group's sales of two office buildings in Taiwan in February at a gain of HK$258.6 million. 
— Enoch Yiu 
 


Next Digital reports smaller net loss for year 

Hong Kong stocks opened lower,  with the Hang Seng down 0.23 per cent, or 65.04 points, at 28,477.96. Property stocks extended gains seen on Monday, capping the losses in the benchmark. China Resources Land (1109 HK) was the top gainer among blue chips, up 2.16 per cent at HK$35.50; while Wharf Real Estate Investment (1997 HK) was up 1.53 per cent at HK$56.45.
Weighing down the Hang Seng were Tencent (700 HK), down 1 per cent at HK$352.2, and casino operator  Sands China (1928 HK), falling 2.17 per cent to HK$36.06.
In China, the CSI 300, which tracks blue chips listed on the Shenzhen and Shanghai bourses, was down 0.29 per cent, 11.25 points, to 3,840.02. The Shanghai Composite Index was down 0.33 per cent, or 9.83 points at 2,998.32.
All eyes are on the high-stakes meeting between president Xi Jinping and president Donald Trump later this week, at the sidelines of the G20 summit in Osaka.
On Monday, Vice-Minister of Commerce Wang Shouwen, a top deputy in the China’s trade negotiation team, said  both Beijing and Washington will need to compromise if they are to reach a trade deal.
Leading the Shanghai index down were selective banks, which saw investors taking profit after their gains seen on Monday:  China Merchant Bank (600036 CH) fell 3.37 per cent at 36.68 yuan, while Industrial and Commercial Bank of China (601398 CH) was down 0.51 per cent at 5.85 yuan.
— Georgina Lee 


Hong Kong and China stocks open lower on caution ahead of Xi-Trump meeting

Jinxin Fertility Group (1951 HK) started trading on Hong Kong’s main board today.
 
Jinxin Fertility Group banged the gong today @HKEXGroup pic.twitter.com/TFMaltJvCf
— Joy Pamnani (@joypamnani) June 25, 2019
It is an assisted reproductive services (ARS) provider in China and the US. The company ranks third in China’s ARS market, with a market share of 3.1 per cent and a total of 20,958 in vitro fertilization (IVF) treatment cycles performed, according to a report by F&S in 2018. In the United States, HRC Medical (which was recently acquired by Jinxin Fertility Group) ranked first in the western ARS market last year, with a 7.5 per cent market share and completing 4,500 IVF treatment cycles.
The company debuted in a HK$2.8 billion (US$359 million) initial public offering, and the offer price was set at HK$8.54 — at the top of the price range.
The shares opened at HK$9.90, or a 15.9 per cent premium from its IPO price. It was last trading at HK$9.99. 
The ARS provider aims to direct the proceeds to expanding and upgrading existing assisted reproductive medical facilities in China, recruiting medical professionals to increase capacity, expanding service offering and market share, acquiring additional assisted reproductive medical facilities in China’s provinces and ARS service providers and businesses along the ARS service chain established in the Greater Los Angeles Area, and investing in research and development in assisted reproductive treatment.
— Joy Pamnani 
 


Jinxin Fertility Group bangs the gong and debuts in Hong Kong

A gauge tracking gold-related stocks in China was the top performer in China, with 30 stocks in the index rising and one unchanged.
Several, such as Shandong Humon Smelting   (002237 CH) at 16.37 yuan, and  YanTai Yuancheng Gold (600766 CH), at 10.49 yuan, hit their daily 10-per cent up limit within few minutes of trading. Other top gainers include Shandong Gold Ming  (600547 CH), up 5.51 per cent at 42.68 yuan, and Hunan Gold (002155 CH)  up 5 per cent at 10.49 yuan.
Their rally came after gold futures for August delivery traded at a six-year high overnight, at US$1,424.9 per ounce, and settled Monday 1 per cent higher at US$1,418.2 at COMEX, which is the main exchange for gold futures.
— Georgina Lee 
 


Gold stocks in China continue to surge

Bosindeng International Holdings (3998 HK), the Chinese clothes maker whose stock plunged 25 per cent Monday before being suspended in the wake of a short-seller attack, is soaring.
It resumed trading today and is up 12.7 per cent to HK$1.95. It dismissed claims by Bonitas Research that it fabricated net profits among other things as "outright malicious attack" for personal gain.
— Deb Price 


Bosindeng soars after resuming trading and dismissing 'malicious' short-seller claims

The Shanghai Composite Index has turned decidedly negative in morning trading, with all sectors down, ahead of the highly anticipated meeting of presidents Donald Trump and Xi Jinping on the G20 sidelines in Japan. It was down 1.8 per cent to 2,955. 
Information technology was the top loser, down 2.5 per cent, with communication services behind it, falling 1.7 per cent.  Financials and real estate were also faring poorly. Of stocks on the benchmark, 1,324 posted losses recently, while only 165 were up and 26 were unchanged.
China Merchants Bank (600036 CH) was one of the stocks hammered the hardest, falling 6.9 per cent. Insurers were down, led by Ping An Insurance (601318 CH), falling 3 per cent, and China Life Insurance (601628 CH), down 2.8 per cent.
Kweichow Moutai (600519 CH), one of the most popular stocks with foreign traders, fell 1 per cent to 976.60 yuan. 
First Tractor (601038 CH) continued its jaw-dropping run, hitting another 10 per cent upside limit to 11.87 yuan. That's seven straight days at the limit for the maker of farm machinery like tractors and harvesting machines.
The CSI 300 of blue chips on the Shanghai and Shenzhen exchanges was down 2 per cent.  The Shenzhen Stock Composite Index fell 2 per cent in early trading.
— Deb Price 


Chinese stocks hammered as traders rush for exits

Shares of Li Ning (2331 HK) shot up 13.9 per cent, at HK$17.4, on an exchange announcement it filed after Monday's market close that it is expecting to record a net profit of no less that 440 million yuan for the six months ending June this year, up 64 per cent from 268.57 billion yuan a year ago.
The company, founded by Chinese celebrated gymnast-turned-entrepreneur Li Ning, attributed the better performance to an at least 90 per cent improvement in operating profit, and a 30 per cent increase in revenue.
The improvement was also helped by a one-off income of 200 million yuan, derived mainly from investments related with an associated company. It will release its six-month results in August. The stock traded at HK$19.28 in December 17, 2010.
 

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— Georgina Lee

Sports apparel maker Li Ning rises to 8-year high after positive profit alert

A gauge tracking 43 stocks related with the rare earth sector was down 4.58 per cent, with  Chengdu Galaxy Magnets  (300127 CH) down close to 10 per cent, at 20.64 yuan; BGRIMM Technology (600980 CH) down 8.06 per cent at 18.48 yuan; and Rising Nonferrous Metals (600259 CH) down 6.83 per cent at 39.99 yuan. China Northern Rare Earth (600111 CH) was down 4 per cent, at 12.67 yuan. JL Mag Rare-Earth (300748 CH) fell 7.21 per cent at 65.01 yuan.
China is the world’s biggest refiner of the metals, accounting for 90 per cent of global production, while the US is the largest importer, with 59 per cent of its imports sourced from China. Some traders have said a detente in the US China trade war, if signs point to it from the Xi-Trump meeting later this week, could mean that the recent rally seen by rare earth stocks could reverse quickly.
— Georgina Lee 


Once high-flying rare earth stocks fall  

Chinese banks held in contempt by a US judge related to a probe into North Korean sanctions violations were pounded in early trading.
The state-owned banks, according to a  Washington Post report, are Bank of Communications, China Merchants Bank and Shanghai Pudong Development Bank.  They worked with a Hong Kong front company accused of laundering more than US$100 million for North Korea’s sanctioned, state-run Foreign Trade Bank, the Washington Post reported.
As of the lunch break, China Merchants (600036 CH) was trading down 6.8 per cent, while its Hong Kong shares (3968 CH) were down 8.5 per cent. Shanghai Pudong (600000 CH) was down 3.2 per cent, while Bank of Communications was down 4 per cent. 
— Deb Price 
 


Chinese banks fall after US judge holds them in contempt in North Korea probe

China Merchant Bank (3968 HK) — after a news article saying it was cited by a US court with contempt in a North Korea sanctions probe — said it complies with Chinese laws and isn't under investigation for potential violations of US sanctions, the mainland paper 21st Century reported.
Hong Kong-listed China Merchant Bank (3968 HK) was down 6.6 per cent at HK$38.95 and was the most–traded stock in turnover terms, with HK$3.09 billion traded. In China, its Shanghai-listed stock was down 4 per cent, to 36.44 yuan.
The news, coming on a down day in both the mainland and Hong Kong, didn't help other Hong Kong-listed Chinese banks. Industrial and Commercial Bank of China (1398 HK) fell 1.5 per cent at HK$5.6, leading the Hang Seng Index down as the biggest loser in index point . China Construction Bank (939 HK) also fell 1.21 per cent, to HK$6.51, while Bank of Communications (3328 HK) was down 3.87 per cent at HK$5.94.
— Georgina Lee


China Merchant Bank denies being investigated over North Korea sanctions, as shares continue to slide

Leading Chinese benchmarks all ended lower, with the CSI 300, which tracks blue chips listed on the Shenzhen and Shanghai bourses, down 0.91 per cent, or 35.12 points at 3806.15.
In Shanghai, banking stocks dragged down the Shanghai Composite Index, down 0.74 per cent or 22.18 points at 2985.97 points.
The fall in the banking sector came after a report by The Washington Post that US investigators are probing three Chinese banks for their potential involvement in knowingly helping finance North Korea’s nuclear-proliferation network.
One of the banks mentioned, China Merchant Bank (600036 CH), was the top loser in the Shanghai index, dropping 4.82 per cent to 36.13 yuan. It issued a denial to the 21st Century Business Herald. Another bank, Shanghai Pudong Development bank (600000 CH), dropped 3.1 per cent at 11.66 yuan, after the Washington Post report said it is one of the three banks involved and could even lose access to the US financial system.
The spillover affected also Industrial and Commercial Bank of China (601398 CH), down 0.85 per cent at 5.83 yuan, and Ping An Insurance (601318 CH), down 1.79 per cent at 86.63 yuan. The other bank mentioned in the report, Bank of Communications (601328 CH), dropped 3 per cent at 6.1 yuan.
“It’s likely that such news flow would be used to increase the bargaining chip by the US side when president Donald Trump meets with President Xi Jinping at the sidelines of this week's G20 Summit. But the falls in the stock market today reflect also the fact that, if they were found to be involved in such violations, the impact to some of these Chinese banks could potentially be bigger than the US clampdown on Huawei,” said Castor Pang, head of research at Core Pacific- Yamaichi.
A Chinese bank that lost access to the US dollars would face the risk of losing customers in China, even if it has limited business exposure in the US, he said.
— Georgina Lee
 


Bank stocks drive Shanghai losses 

The Hang Seng Index closed down 1.15 per cent, or 327.02 points lower at 28,185.98, pushed lower by Chinese banks after a report by an American news outlet noting three of them have been spotlighted in a US probe of alleged North Korea sanctions violations. The three banks said they haven't violated the US' North Korea sanctions.
The news came ahead of the high-stake Xi-Trump meeting in Osaka, Japan, at the G20 summit in Osaka. The news of the US probe compounded traders’ worry about whether talks between the heads of the world’s two biggest economies will create a path to end the US-China trade war.
The losses in Chinese banks listed in Hong Kong mirrored those of their A-share listed counterparts.  Industrial and Commercial Bank of China (1398 HK) was down 1.32 per cent at HK$5.60, China Construction Bank (939 HK) fell 1.21 per cent to HK$6.51, and Bank of China was down 1.22 per cent at HK$3.23.
Two of the three banks mentioned are listed in Hong Kong. The Bank of Communications (3328 HK) lost 3.71 per cent to HK$5.95; while China Merchant Banks (3968 HK) plunged  7.67 per cent to HK$38.5, becoming the biggest turnover of the main board, at HK$4.76 billion.
Also, main board debutante Jinxin Fertility Group (1951 HK), ended at HK$9.28, lower than its opening at HK$9.90, or 15.9 per cent higher  than its offer price at HK$8.54 at market opening.
— Georgina Lee 


US spotlight on three Chinese banks weighs on Hang Seng 