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Thursday January 25, 2018

Chinese RMB

100 Hong Kong dollars 81.75 100 U.S. dollars 639.16 100 Japanese yen 5.7979 100 Euros 786.3100 British pounds 895.15100 Swiss francs 667.59100 Canadian dollars 514.61 100 Australian dollars 511.17 100 Singapore dollars 485.35

Hong Kong dollar 7.8188Japanese yen 110.03 Euro 0.8123 British pound 0.7129 Swiss franc 0.9553 Canadian dollar 1.2413 Australian dollar 1.2479 Singapore dollar 1.3152

U.S. dollar

Shanghai Composite Index

Shanghai B

Shenzhen Component Index

Shenzhen B

Last 346.12 Open 344.17 High 346.15 Low 344.12 Change 0.59%

Last 11,607.57 Open 11,548.21 High 11,613.95 Low 11,456.26 Change 0.45%

Last 1,219.30 Open 1,217.54High 1,219.30 Low 1,212.84 Change 0.19%

Last 3,559.47 Open 3,553.48 High 3,569.49 Low 3,527.11 Change 0.37%

Exchange Rates (Wednesday)

Stock Indices (Wednesday)

AS Hong Kong’s booming equity market smashes one record after another, signs of overheating are popping up everywhere.

But good luck fi nding anyone who’s willing to say sell.

“Do not freak out when you see some worrying short-term indi-cators — fundamentals are still good,” said Hong Hao, a strategist at Bocom International Holdings, echoing the advice given by many of his peers in Hong Kong.

“Who would want to hold cash in such an exuberant market?”

While strong global growth and buoyant corporate earnings have boosted stocks around the world in recent weeks, Hong Kong’s rally stands out. The benchmark Hang Seng Index has outpaced peers in all of the world’s 20 largest equity mar-kets this year, jumping almost 10 percent for its best start in more than three decades.

The boom is in many ways reminiscent of past market peaks. Measures of momentum, market turnover, analyst senti-ment and valuation are all near levels last seen at the end of the Hang Seng’s surge in mid-2015.

Optimists argue that’s no reason to pull out. They note that some indicators have room to rise before reaching their 2015 extremes and that equity valua-tions in Hong Kong are still well

below those in other developed markets. The Hang Seng index could climb another 4.8 percent by the end of June from Tues-day’s close, according to Peter So, co-head of research at CCB International Securities Ltd.

Still, even bulls such as So and Hong say a temporary pullback is possible. But some indicators suggest it could come sooner rather than later.

Relative strength indices (RSIs) for the Hang Seng and the Hang Seng China Enter-prises Index have climbed to the highest levels in more than a decade, far above thresholds that suggest an overbought market. RSIs for the two gauges are also the highest among 70 benchmark indexes tracked by Bloomberg worldwide.

Hong Kong’s market turnover jumped to the highest since July 2015 Tuesday. While trading activity is still below levels seen at the peak of the equity frenzy 2-1/2 years ago, it looks similar to the booms of 2007 and 2015.

The rally has pushed the Hang Seng China Enterprises index to the highest since mid-2015 relative to analysts’ share-price targets. The projected 12-month index level in the chart above is derived from the consensus fore-casts for stocks that make up the index. (SD-Agencies)

Warning signs for HK stocks emerge

Shares of Leshi plunge as trading resumesThe logo of LeEco is seen at its headquarters in Beijing in this fi le photo. Shares of Leshi Internet Information and Technology Corp., the Shenzhen-listed unit of LeEco, tumbled by the daily limit of 10 percent yesterday as the stock resumed trading after a nine-month suspension. The fi rm asked in April for trading to be suspended pending an acquisition of LeEco’s fi lm unit for 9.8 billion yuan (US$1.53 billion), a plan it eventually scrapped last week. SD-Agencies

MUTUAL funds in China earned a total of 130 billion yuan (US$20 billion) by investing in stocks, bonds, commodities and money market instruments in the fourth quarter of 2017.

The funds reversed a loss of 27.9 billion yuan in the same period in 2016, said market data provider TX Investment Consulting Co. in a report.

In the quarter, money market funds raked in 68.8 billion yuan,

still the largest money maker for fund investors.

Due to rises of consumer stocks and a recovery in the bond market, earnings of equity, hybrid and bond funds also surged.

Consumer stocks, such as leading liquor makers Kweichow Moutai and Wuliangye Yibin and milk producer Yili, were among the top 10 stock holdings for the publicly offered funds, TX Investment Consulting said.

In the quarterly reports of the mutual funds, many fund man-agers still showed optimism in the stock market, particularly in e-consumer stocks, said TX Investment Consulting.

Shen Kun, a Shanghai-based fund manager at Guotai Asset Management Co., said her top picks in 2018 would mainly be among consumer staples, medicine and high-end manu-facturing. (Xinhua)

Mutual funds earn US$20b in fourth quarter

BEIJING Automotive Group (BAIC) will list its electric vehicle unit by injecting it into another listed subsidiary, boosting its fi nancial muscle as the battle for the country’s hotly contested green car market heats up.

The backdoor listing values the unit, Beijing Electric Vehicle Co., at US$4.5 billion and comes as China engineers a dramatic shift away from conventional gasoline cars with strict quotas for elec-tric and hybrid vehicles set to come into effect next year.

The shift has prompted major investment and a spate of deals between global automakers, tech fi rms and local rivals as compa-nies rush to bring out new vehicle models and set up local ventures and facilities in the world’s big-gest car market.

The deal is also a rare listing for China’s green car sector and marks the fi rst time that a State-owned manufacturer of so-called new energy vehicles (NEVs) will debut on one of the country’s main stock exchanges.

Beijing Electric, established in 2009, said this month that sales jumped 98 percent in 2017 to 103,199 vehicles.

That puts it just behind BYD Co., whose NEV sales last year rose 13.5 percent to 113,669.

Under the deal, ChengDu QianFeng Electronics Co., one of the listed arms of BAIC, will buy the electric car unit and then sell 761.1 million shares at 37.66 yuan (US$5.88) per share. Beijing Electric will become the listed entity. (SD-Agencies)

CHINA’S fi ve State-backed mutual funds, launched during the 2015 stock market crash, cut their equity holdings in the fourth quarter as they reduced exposure to the banking and manufactur-ing sectors, latest fi lings show.

The share reduction by the fi ve hybrid funds, which cur-rently manage a combined 250 billion yuan (US$39.1 billion) on behalf of the government, has triggered speculation of an exit, as China’s blue-chip CSI300 index hit the highest level since July, 2015, when these funds were set up to stem market slides.

“These funds were launched to rescue the market, not to make money. Sooner or later, the money needs to be returned, and I suspect the funds are heading

toward an exit,” said Yang Hai, strategist at Kaiyuan Securities.

The funds’ moves contrast with that of many other mutual funds who remain bullish about the stock market.

One of the State-backed funds, China Southern Con-sumer Vitality Flexible Fund, cited tighter liquidity as a reason for caution in its newly published quarterly report.

China’s economic funda-mentals were “neutral” to the equity market, while interest rate conditions had a negative impact on stocks, fund manager Shi Bo said.

The fund, which cut its equity holdings to 24.2 percent from 32.3 percent during the fourth quarter, and nearly halved its exposure to fi nancials to 5.3

percent, said it would continue to take a “neutral” position on equities, with a focus on blue-chips with low valuations.

Other State-backed funds, including ChinaAMC New Economy Flexible Fund, E Fund Ruihui Flexible Fund, Harvest New Opportunities Hybrid Fund and CMF FengQing Flex-ible Allocation Fund, all cut their equity exposure while boosting their holdings in cash and fi xed-income instruments.

CMF FengQing, for example, nearly halved its equity exposure to 7.47 percent.

The Harvest New Opportuni-ties fund slashed its stock hold-ings to 19.1 percent from 26.8 percent. Its exposure to manu-facturing and fi nancial sectors more than halved. (SD-Agencies)

State-backed funds slash equity exposure

BAIC plans backdoor listing for electric car unit