Live | China Markets Live - Shanghai and Shenzhen finish higher, Hong Kong up 0.5 per cent at close
Welcome to the SCMP's live markets blog. The intense volatility of recent weeks has every chance of remaining the core underlying theme of activity. Investors are increasingly focused the broader question of how this episode might affect the wider economy as many suspect the equity bubble has yet to fully deflate. We'll bring you the key levels, trading statements, price action and other developments as they happen.
4:12pm: Hong Kong trading was very quiet with just over HK$80 billion in shares bought and sold. China Mobile led turnover and made up more than half the gains on the Hang Seng Index, supported by China Unicom, Tencent and insurers AIA and China Life.
4:11pm: The Shanghai-Hong Kong stock connect was led by Hong Kong investors selling off China shares totaling 2.587 billion yuan, while purchases added up to 1.916 billion yuan. China investors bought and sold just over HK$1 billion each of Hong Kong shares.
4:05pm: Hong Kong’s benchmark Hang Seng Index closed up 0.52 per cent or 131.62 points to 25,536.43. The H-share index gained 0.83 per cent or 97.62 points to settle at 11,871.54.
4:04pm: On both China bourses today, companies posting gains outnumbered companies finishing down by about 3 to 1. Across the composite indices, 1,741 were up, 564 were down and 598 were unchanged – most of the latter being suspended from trading.
The banking sector initially performed well but tailed off and finished soft, investors taking profits as the Shanghai Composite Index crossed the 4,000-point mark.
3:07pm: The Shanghai Composite Index rose 0.64 per cent to close at 4,017.68. The CSI 300 Index climbed 0.13 per cent to settle at 4,166.01.
3:07pm: The Shenzhen Composite Index closed at 2,265.10, up 1.56 per cent. ChiNext Index ended at 2,882.90, up 1.22 per cent.
3:07pm: The Hang Seng Index rose 0.60 per cent or 153.42 points to 25,558.23, while the H-share Index was at 11,887.30, up 0.96 per cent or 113.38 points.
3:04pm: The rise, fall and rise in value of major indices since the start of 2015: Hang Seng Index (orange), H-shares index (purple), Shanghai Composite (green), Shenzhen Composite (red), CSI300 (blue) and ChiNext (yellow).
2:54pm: Credit Agricole report on impact of petrodollar recycling on forex market:
"Following last week's Iran agreement to remove supply restrictions, production...less understood however will be the resulting Petrodollar recycling influences felt upon the FX market."
"As capacity comes back online and the Petrodollar revenues increase, it is reasonable to expect a similar increase in FX diversification activity. USD-recycling could prove an important source of non-USD currency support (eg. EUR) in coming months."
"Iran has one of the highest breakeven prices among oil exporters meaning that if current oil prices were to prevail chances are that they will continue to use any oil revenues to fund their fiscal deficits. That should diminish any diversification impact, at least initially. Accordingly we remain of the view that the USD will stay mainly driven by rate expectations, which should make a case of the currency appreciating further."
2:38pm: China telecommunications companies remain the standout winners in Hong Kong today. China Mobile leads turnover with HK$1.35 billion gaining 3.87 per cent to HK$102, China Unicom is the Hang Seng’s top improver lifting 6.96 per cent to HK$11.68, and China Telecom is up 5.87 per cent to HK$4.69.
2:20pm: Shenzhen Composite Index stands at 2,270.18, up 1.79 per cent or 39.89 points. ChiNext edges up 1.53 per cent, or 43.56 points, to 2,891.86.
2:15pm: Shanghai Composite Index increases 0.95 per cent, or 37.81 points to 4,029.92. CSI300 Index up 0.60 per cent, or 24.93 points to 4,185.54.
2:10pm: Hang Seng Index goes up 0.82 per cent, or 209.28 points, to 25,614.09. H-shares Index is trading at 11,913.26, up 1.18 per cent, or 139.37 points.
1:06pm: Shenzhen Composite Index opens afternoon session at 2,255.10, up 1.11 per cent or 24.80 points. ChiNext goes up 0.81 per cent or 23.20 points to 2,871.51.
1:04pm: Shanghai Composite Index rises 0.50 per cent or 19.88 points to 4,011.99 at the opening of afternoon trade. CSI300 Index lifts 0.43 per cent or 17.89 points to 4,178.50.
1:02pm: Hang Seng Index adds 0.39 per cent or 99.26 points to 25,504.07 at the start of afternoon trade. H-shares Index stands at 11,846.39, up 0.62 per cent or 72.47 points.
12:20PM: Hong Kong market turnover is low again today, currently sitting at just over HK$40 billion with no stocks reaching HK$1 billion in trades as yet.
China Mobile is 2.8 per cent up at HK$101, propping up the Hang Seng Index to the tune of 53 points, while insurers Ping An and China Life are leading the H-shares index.
11:45am: The Hang Seng index maintained its gains late morning and is up 0.4 per cent or 100.66 points at 25,505.47. The H-share index rose 0.55 per cent or 64.52 points to 11,838.44.
11:45am: The Shanghai Composite index rose 0.26 per cent or by 10.53 points to end the morning session at 4,002.64. The CSI 300 index climbed 0.13 per cent or 5.3 points to 4,165.91.
11:45am: In Shenzhen, the main composite index rose 0.92 per cent or 20.47 points to finish the morning trade at 2,250.76. The ChiNext index also gained 0.6 per cent or 17.13 points to 2,865.43.
11:37am: Chinese telecoms are outstripping the Hang Seng Index (blue) today: China Unicom (purple), China Telecom (green) and China Mobile (orange).
11:24am: Gary Leung Wai-kei, deputy general manager of global markets at BOC Hong Kong, says demand for the fifth batch of inflation-linked bonds worth HK$10 billion offered by the Hong Kong government is expected to be well received by investors, but the return on the first day might be lower than previous offerings due to subdued inflation in the first half of this year.
“If a strong dollar persist and the oil prices to recover gradually in the second half, the inflation situation in Hong Kong may come back to about 4 per cent,” Leung said.
11:18am: Onshore spot yuan is trading at 6.2087 against the US dollar, stronger by 8 basis points from the Monday close. The offshore yuan stands at 6.2125, stronger by 7 basis points from Monday close.
11:16am: Hong Kong dollar is trading Tuesday at 7.7511 to the US dollar, near upper end of the currency peg. Euro/dlr stronger by 0.08 per cent at 1.0834. Dlr/yen at 124.35, firmer by 0.06 per cent. Pound/dlr stronger by 0.01 per cent to 1.5565. Australian dollar to US dollar weaker by 0.04 per cent to 0.7369.
The 350MW power plant will supply the company’s polysilicon plant, driving down production costs and offsetting lower than expected sale prices. This morning, Jefferies Hong Kong reiterated its ‘buy’ rating on GCL-Poly with a target price of HK$2.60.
10:39am: The Hang Seng index was trading up 0.39 per cent or 99.93 points at 25,504.74. The H-share index was also up at 0.45 per cent, 53.45 points, at 11,827.37.
10:39am: The Shanghai Composite index rebounded from an early fall to rise 0.09 per cent or 3.47 points at 3,995.58. The CSI 300 was down 0.06 per cent or 2.5 points at 4,158.11.
10:39am: The Shenzhen Composite index rose 1.06 per cent or 23.61 points to 2,253.90. The ChiNext index added 1.1 per cent to 2879.58.
10:27am: IT firm Changhong Jiahua Holdings has plunged 19 per cent to HK$1.90 after admitting a former employee of its wholly-owned subsidiary stole goods, misappropriated money and made unauthorized sales and purchases totaling up to HK$80 million – amounting to 43.1 per cent of the group’s net profits for calendar year 2014.
10:00am: In Hong Kong, China Zhongsheng Resources leaps 37 per cent to 38 HK cents on news of a new technical cooperation programe for titanium processing with the Russian Academy of Sciences.
9:59am: The positions of equity-heavy hybrid funds under China’s some 80 asset management firms slid to 53.09 per cent in the second quarter from 77.22 per cent in the first quarter, with about four fifths of the firms having reduced their overall equity positions for the assets they oversee, data compiled by TX database shows.
9:50am: The HSBC China Monetary Conditions Indicator (MCI) continued to improve in June.
“The improvement is positive news, as it indicates that the effects of the recent policy rate and reserve ratio cuts are feeding through to the economy. The mixed bag of second quarter GDP and June economic activity supports this view.
We believe that more aggressive policy easing measures are needed and forecast another 25 basis points policy rate cut and 200 basis points reserve ratio cut in the second half of 2015.”
9:45am: The Hang Seng index was 0.01 per cent lower to 25,403.16, and the H-share index slipped 0.48 per cent or 56.43 points to 11,717.49.
9:44am: DBS report on interest rate outlook
“Markets are generally expecting Asian policy rates to remain broadly stable over the next one year even as the Fed funds rate is priced to rise. This is in line with our view that Asian interest rates have been generally high relative to their developed market peers since the taper tantrums of mid-2013.
Over the next one year, the market expects the Fed funds rate to rise by 62 basis points (roughly two and a half Fed hikes). For Asia, only Singapore and Hong Kong should see their relevant short-term rates increase significantly (of comparable magnitude to the US). This is unsurprising given their respective monetary policy.”
9:42am: China Unicom leads the Hang Seng Index early in percentage gains, rising 2.93 per cent to HK$11.24. The company added just under a million mobile subscribers in June, according to operational statistics just released.
9:40AM: The Shanghai Composite index dropped 1.42 per cent or 56.55 points to 3,935.56. The CSI 300 fell 1.52 per cent or 63.11 points to 4,097.5.
9:40am: The Shenzhen Composite index fell 1.05 per cent to 2,204.64. The ChiNext shed 0.49 per cent or 13.83 points to 2,834.47.
9:24am: The Shanghai Composite index was indicated flat at 3,991.93. The Shenzhen Composite was also seen flat at 2,230.29. The CSI 300 traded 0.05 per cent lower at 4,158.56 in the pre-open.
9:21am: The Hong Kong government's fifth batch of HK$10 billion inflation linked iBonds will start to accept subscription via 21 banks and the 500 stockbrokers from 9am on Tuesday July 21 until 2 pm on Wednesday, July 29.
The subscription result will be announced on August 5. The bond will be launched on August 7 and list on the stock exchange on August 10.
9:17am: People’s Bank of China on Tuesday sets the mid-price of onshore yuan trading at 6.1199, weaker by 2 basis points against the US dollar from Monday’s close.
9:10am: Hang Seng index August futures contracts are trading 0.07 per cent lower at 25,329 Tuesday morning.
9:06am: Positive profits results are expected by China Pacific Insurance (CPIC), South China Financial Holdings, Sino-Tech International, Beijing Capital Juda and Pou Sheng International. All but CPIC incurred losses in the corresponding period last year.
Profits will be down for Dongfang Electric Corporation and Pacmos Technologies, while losses are forecast by Lee Hing Development and Kinetic Mines and Energy.
9:04am: Barclays Research on China property:
“With new home sales over the past two weeks running at close to the average level for May and June, we believe this should offer some relief to those investors who have been concerned that rising equity market volatility would have an adverse impact on sales in the physical housing market.
By the end of June, developers had met 43 per cent of their full-year contracted sales target on average. The China property sector outperformed the HSI by 1.7 per cent in the past week and thus the sector's Net asset value discount narrowed to 32 per cent. “
9:02am: Ten Shanghai-listed A-shares companies say they will resume trading on Tuesday, which means about 80 companies remain in suspension, representing about 7.5 per cent of all firms on the exchange.
In Shenzhen, there are a total of 26 listed companies who said they will resume trading on Tuesday while six firms applied to suspend trading on their shares. This will leave 380 firms in Shenzhen in voluntary suspension, representing about 22 per cent of the firms there.
9:00am: The combined profits of China’s public offering in the second quarter shrank by 26.32 per cent to 344.78 billion yuan (HK$436.31 billion) from a year earlier, data compiled by fund distributor and financial database provider TX shows.
8:45am: Heng Koon-how (pictured below), senior currency strategist of Credit Suisse, holds a negative view on the Australian dollar and New Zealand dollar.
“Both Australian dollar and New Zealand dollar remain vulnerable to weak prices of their countries’ key commodity exports.
Both AUD and NZD are now trading at their long-term fair value estimates. But given the negative drivers, they are likely to trade below fair value.
We reiterate our existing negative overall view for both AUD/USD and NZD/USD. Point forecasts for AUD/USD: 0.72 in 3 months and 0.69 in 12 months; for NZD/USD: 0.64 in 3 months and 0.62 in 12 months.” (See charts below)
8:30am: Below are charts on CNY direction, CNY-USD exchange rate, daily transaction volume and the offshore funding market from the HSBC report.
8:00am: HSBC report on the outlook for the yuan 10 years after delinking from the US dollar:
"There could be important changes to the onshore USD-CNY trading band via the reference rate, and/or the width of the band. The daily fixing should cease tracking the USD, be more transparent, market-determined, and less influenced by the PBoC. Such reforms will take time.
In the interim period, a wider trading band can diminish the significance of the fix and provide more
room for the spot exchange rate to move. Second, we expect onshore USD-CNY to eventually converge with the offshore USD-CNH into a single floating exchange rate, as cross-border capital flow channels are widened and the offshore market deepens. The offshore USD-CNH exchange rate is not bound by the trading band and is already very much market-determined. We have recently observed that it occasionally leads developments in the onshore exchange rate."
