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China Stock Roundup: Yingli Completes 50 MW Project, JD.com Launches Channel for British Brands

Swarup Gupta

Markets gained significantly over the week, emerging completely unscathed from the fallout of Brexit. The benchmark index increased 1.5% on Monday gaining the most among all emerging Asian markets. The Shanghai Composite ended 0.6% higher on Tuesday after China’s government attempted to reassure investors worried by Britain’s decision to break from the E.U. The benchmark index emerged as one of the best post-Brexit performers, gaining 0.7% index on Wednesday. The Shanghai Composite Index moved 0.1% lower on Thursday following profit taking after the heavy gains made earlier in the week. The benchmark gained 0.1% on Friday following encouraging data on manufacturing and services.

Yingli Green Energy Holding Company Ltd YGE or Yingli Solar said that its subsidiary company Yingli Energy (China) Company Limited, also known as Yingli China, has finished work on a 50 MW project. JD.com JD said it is launching a special channel on its shopping platform which will enable consumers from China to buy a variety of products from leading brands of the United Kingdom which are authentic and of considerably high quality.

Last Week’s Developments

Last Friday, the Shanghai Composite index and the CSI 300 lost 1.3% each after Britain voted in favor of leaving the EU, which rattled global financial markets. China’s capital controls managed to reduce steep losses, even as other Asian markets suffered severe declines. Each of these indexes declined 1.1% over the week.

The ChiNext had lost more than 3% at one point but closed the session nearly flat. However, markets in Hong Kong were significantly impacted by the outcome of the EU referendum. The Hang Seng nosedived, losing 2.9%, which is its steepest loss since Feb 11. The Hang Seng china Enterprises Index also moved 2.9% lower.

Markets and the Economy This Week

The benchmark index increased 1.5% on Monday gaining the most among all emerging Asian markets. These gains were a result of raw materials stocks moving northward following speculation that efforts to cut overcapacity would lead to an increase in prices. As a result, small cap stocks moved upward.

The small cap heavy ChiNext index surged to its highest point in three weeks on expectations that the link with the Hong Kong exchange would commence soon. The CSI 300 added 1.4%. The Hang Seng China Enterprises Index advanced 0.5% after losing nearly 1.5% at one point.

The Shanghai Composite ended 0.6% higher on Tuesday after China’s government attempted to reassure investors worried by Britain’s decision to break from the E.U. Small cap stocks led the benchmark index to its highest point in three weeks. The Shanghai Composite also emerged as the best performer among the world’s indexes since Brexit. In a bid to calm nervous investors, Premier Li Keqiang said that short-term volatility was unavoidable but the government would ensure that the capital markets were shielded from drastic shocks.

The CSI 300 increased 0.5% while the Hang Seng declined only 0.3%. The Hang Seng managed to recover from a near 1.6% decline which sent the index to a month-low following speculation that policy makers were taking steps to reduce the fallout of Brexit. The Hang Seng China Enterprises Index declined 0.4%.

The benchmark index emerged as one of the best post Brexit performers, gaining 0.7% index on Wednesday. This advance took its gains since last Friday to 1.4%. Industrial stocks, consumer staples and pharma stocks were responsible for the major chunk of gains during this period.

In contrast, the MSCI All-Country World Index slumped 4.5%. The Hang Seng added 1.3% on Wednesday. The Hang Seng China Enterprises Index increased 0.4%.

The Shanghai Composite Index moved 0.1% lower on Thursday following profit taking after the heavy gains made in the rebound during the aftermath of Brexit. The CSI 300 increased 0.1%. Market watchers opined that the three-day rally was running out of steam. Investors were looking for clues about the economy’s health from data to be released on Friday.

In contrast, the Hang Seng advanced 1.8%, increasing 0.1% since Mar 31. This effectively negated a quarterly decline for the index. The Hang Seng China Enterprises Index surged 1.7%, reducing its second consecutive quarterly loss in three years to 3.2%. Additionally, both the Shanghai Composite and the CSI 300 have lost a minimum of 2% during the quarter.

The benchmark index gained 2.7% over the week after advancing by 0.1% on Friday. Encouraging data on manufacturing and services were the primary reason for the uptrend. The official manufacturing purchasing index came in at 50 for June, which indicates that the sector is expanding. Meanwhile, the official services PMI increased from 53.1 in May to 53.7 in June.

The CSI closed nearly flat on Friday. Materials stocks were the largest gainers while a gauge of healthcare stocks declined. Markets were closed in Hong Kong for a holiday. However, Asian stocks as a whole had their best week since April after investors speculated that central banks will act to contain the effects of Brexit. The Shanghai Composite gained 0.5% during June, the first monthly increase since March, which provided a much needed relief to China’s investors.  

Stocks in the News

Yingli Green Energy Holding Company Ltd or Yingli Solar said that its subsidiary company Yingli Energy (China) Company Limited, also known as Yingli China, has finished work on a 50 MW project located in Datong City, located in Shanxi Province in China. Additionally, the project was connected to the grid by the end of last month. This project is part of the “Top Runner” program of the country’s National Energy Administration (NEA)

JD.com said it is launching a special channel on its shopping platform which will enable consumers from China to buy a variety of products from leading brands of the United Kingdom which are authentic and of considerably high quality. These products will be a wide selection from several categories across food, beverages, sporting goods and cosmetics.

JD.com British Mall will feature brands like Cow & Gate, SMA and Liverpool FC, as well as several others to start with. The special channel was launched during an event in London where representatives from Tencent, Zitra and Santander were also present.

Daqo New Energy Corp. DQ said that it has listed its subsidiary company Xinjiang Daqo New Energy Stock Co., Ltd. or Xinjiang Daqoon on an emerging over-the-counter market in China. This New Third Board is formally known as the National Equities Exchange and Quotations. The Xinjiang Daqoon is the operator of Daqo New Energy’s polysilicon production facilities located at Shihezi in the Xinjiang Uyghur Autonomous Region.

The majority of the outstanding equity interest of Xinjiang Daqo is held by Daqo New Energy. The remainder of the 1% is held by another subsidiary of Daqo, called Xinjiang Daqo Investment Co., Ltd, which is wholly owned by the company.

Alibaba Group Holding Limited BABA has entered into a global business partnership with major food manufacturer Mars Incorporated. The partnership will enable Mars to effectively utilize Alibaba’s ecosystem to build an offline and online business model. This will allow it to serve its Chinese customers more effectively.

Per the deal, all of Mars’ iconic brands will be available through Tmall.com and Rural Taobao, both of which are Alibaba platforms. Additionally, the companies are coming together to establish a food safety program which will benefit both consumers and the consumer goods industry as a whole. This program will be implemented via collaboration with Mars' Global Food Safety Center (GFSC), which is based in China.

Performance of Most Actively Traded US-listed Chinese Stocks

The table given below shows the price movements of 10 Chinese companies with the highest three-month average trading volume on U.S. exchanges. Price movements over the last five days and during the last six months have been included.

Ticker

Last 5 Day’s Performance

6-Month Performance

JD

+2.5%

-28.1%

BABA

+4.2%

+3.7%

VIPS

+2.5%

-20.5%

VNET

-9.4%

-5.8%

CTRP

+3.6%

-8.9%

TSL

+7.2%

-28.7%

NTES

+16.4%

+12.3%

QIHU

-1%

+0.8%

EDU

+9.2%

+42.2%

BIDU

+8.4%

-10.3%

Next Week’s Outlook:

Markets remained unscathed by the fallout of Brexit and actually went on to notch up significant gains. Encouraging government data was another major positive for investors which helped the benchmark index to post a weekly gain and end in the green for the month.

In contrast, private data on manufacturing was not too optimistic in nature. Next week is bereft of crucial economic data but for two major releases. These are reports on a private services index and forex reserves, respectively. Encouraging news on both fronts will help markets chalk up more gains in the days ahead.

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