Hopes of Fiscal Stimulus and Earnings Growth Keep China Market Indexes Elevated

Li Chen
23 Oct, 2024
Hong Kong

Stocks in China and Hong Kong advanced for the second day in a row amid continued hopes of large fiscal stimulus measures to revive consumer confidence and support the flailing property market. 

The Hang Seng index jumped 1.7% and the CSI 300 index advanced 1%, as positive earnings supported market enthusiasm. 

Market indexes have traded volatile in the last two weeks after politicians failed to follow through on promises of large fiscal stimulus following a raft of monetary stimulus measures from the People's Bank of China. 

The Hang Seng index has soared 24%, and the CSI 300 index has advanced 18% in the year so far as of the close of trading on Wednesday. 

Domestic and international investor frenzy pushed market indexes to highs not seen in the last eighteen months, as investors believed that the central government was finally ready to provide necessary support to revive the ailing property market. 

However, those measures will require the central government to assume additional debt and channel funding to local governments to finance residential construction, which also raises the prospects of wasteful spending. 

The legislative committee of the National People's Congress is likely to approve the debt increase between 2 trillion yuan and 4 trillion yuan and the issuance of new sovereign bonds at its next meeting over the next two weeks. 

China has increasingly relied on excessive government spending to meet its high economic growth target with weak returns, which also leads to large-scale corruption and wateful infrastructure projects that are not needed for the local economy. 

Despite Beijing's leadership's efforts to prop the economy, China's economic growth is estimated to slow down to below 3% over the next three years, which will put additional pressure on the central government to increase debt-funded spending. 

On the earnings front, 22 companies are slated to release their quarterly results over the next two weeks, and investors are hoping that earnings growth will surpass market expectations. 

China Stock Movers 

The Hang Seng index jumped 1.7% to 20,852.12, and the mainland China-focused CSI 300 index advanced 1.0% to 3,995.81. 

China Resources Beverage advanced 14% to HK $16.50 after the soft drink maker sold 347 million shares in a global offering priced at HK$14.50 per share. 

The soft drink maker raised HK$4.9 billion, and the company's Hong Kong tranche, covering 40% of the offering, was over subscribed by 234.5 times and the international tranche by 24.5 times.    

China Unicom increased 3.5% to HK $7.09 after the telecom carrier said third quarter earnings rose 7.9% from a year ago. 

Chow Tai Fook Jewellery Group jumped 9% to HK $7.92 after comments from Morgan Stanley suggested same-store sales decline in the current month narrowed. 

Alibaba Group increased 0.7% to HK $97.90, JD.com advanced 3.1% to HK $159.10, Tencent Holdings added 2% to HK $430.20, and Baidu rose 0.7% to HK $88.95. 

BYD gained 2.2% to HK $290.80, Li Auto added 7.5% to HK $108.60, and Xiaomi Corp. added 5.1% to HK $25.70. 

India Movers: Adani Green, Bajaj Finance, Indus Towers, Persistent Systems, Zensar Technologies, Zomato

Arun Goswami
23 Oct, 2024
Mumbai

Stocks in Mumbai struggled to advance amid persistent selling by foreign investors. 

Bajaj Finance, Persistent Systems, Adani Green, and Zomato reported rising revenue and earnings in the September quarter. 

The Sensex index increased by 0.2% to 80,404.32, and the Nifty index rose by 0.2% to 24,522.30. 

On the Mumbai stock exchange, 31 stocks traded at their 52-week highs, and 139 stocks traded at their 52-week lows.

The yield on the 10-year Indian government bonds inched higher to 6.83%, and the Indian rupee eased to 84.07 against the U.S. dollar.

Zomato Ltd. decreased 4.2% to ₹245.70 despite the company reporting a surge in revenue and earnings in the September quarter. 

Consolidated revenue in the fiscal third quarter increased 68.5% from a year ago to ₹4,799 crore, and net income soared nearly fivefold to ₹176 crore. 

The food delivery company also announced its plans to raise as much as ₹8,500 crore through an institutional offering. 

Adani Green declined 2.5% to ₹1,644.80 after the company reported its quarterly results. 

Consolidated revenue in the fiscal third quarter increased 38% from a year ago to ₹3,055 crore, and net profit advanced 39% to ₹515 crore. 

Bajaj Finance increased 3.8% to ₹6,914.0, and the financial service company reported a rise in revenue and earnings in the September quarter. 

Revenue increased 27.7% from a year ago to ₹17,095 crore, and net income advanced 13% to ₹4,014 crore. 

Net interest income advanced 23% to ₹8,838 crore, and assets under management increased 29% to ₹3.73 lakh crore.

Indus Towers decreased 1.7% to ₹361.65 after the communication infrastructure company reported weak growth in revenue. 

Consolidated revenue in the September quarter increased 4.7% to ₹7,465 crore, and net income soared 71.8% to ₹2,223 crore. 

Persistent Systems advanced 6.9% to ₹5,509.75 after the company reported a sharp jump in revenue and earnings in the September quarter. 

Consolidated revenue increased 20.1% to ₹2,897.1 crore from ₹2,411.7 crore, and net income advanced 23% to ₹325 crore from ₹263.6 crore a year ago. 

The software services provider reported sequential revenue growth for the 18th quarter in a row. 

Zensar Technologies increased 0.2% to ₹657.65 after the company reported weak revenue growth in the September quarter. 

Consolidated revenue increased 1.6% to ₹1,308 crore, and net income decreased 1.3% to ₹156 crore. 

General Motors increased 9.4% to $53.51 after the vehicle maker reported better-than-expected quarterly results and  lifted its annual outlook. 

Revenue in the third quarter increased 10.5% to $48.7 billion from $44.1 billion, net income edged 0.3% lower to $3.0 billion, and diluted earnings per share increased to $2.68 from $2.20 a year ago. 

The company tightened its annual net income attributable to shareholders outlook to a new range between $10.4 billion and $11.1 billion from the previous estimate between $10.0 billion and $11.4 billion. 

The company revised its annual diluted earnings per share range to between $$9.14 and $9.64 from the previous estimate between $8.93 and $9.93.  

22 Oct, 2024

Sherwin Williams declined 3.5% to $368.38 after the paint company reported weaker-than-expected third quarter results. 

Consolidated net sales increased 0.7% to $6.16 billion, net income increased to $806.2 million from $761.5 million, and diluted earnings per share advanced to $3.18 from $2.95 a year ago. 

The company reaffirmed its full-year diluted earnings per share range between $10.30 and $10.60, including acquisition-related amortization expense of 80 cents per share. 

22 Oct, 2024

3M Company declined 1.4% to $132.94 after the diversified industrial company reported its quarterly results. 

Revenue in the third quarter increased 0.4% to $6.3 billion, net income attributable to shareholders swung to a profit of $1.4 billion from a loss of $2.1 billion, and diluted earnings per share were $2.49 billion compared to a loss of $3.74 a year ago. 

The company revised its adjusted sales growth outlook to an increase of 1% from the previous estimate between a decline of 0.25% and an increase of 1.75%. 

The company also estimated adjusted annual earnings per share to range between $7.20 and $7.30 from the previous estimate between $7.0 and $7.30. 

22 Oct, 2024

American Express declined 5% to $271.68 after the financial service company reported weaker-than-expected quarterly results. 

Total revenue net of interest expenses in the third quarter increased 8% to $16.6 billion from $15.4 billion, net income advanced 2% to $2.50 from $2.45 billion, and diluted earnings per share rose 6% to $3.49 from $3.30 a year ago. 

The company reiterated its full-year revenue growth at around 9% and lifted its annual earnings per share outlook to between $13.75 and $14.05 from the previous range between $13.30 and $13.80. 

18 Oct, 2024

CVS Healthcare declined 7.5% to $58.90 after the drugstore chain announced preliminary third quarter earnings and replaced its chief executive. 

The company estimated diluted earnings per share to range between 3 cents and 8 cents and adjusted earnings per share between $1.05 and $1.10. 

The company appointed longtime executive David Joyner as the new chief executive and president, replacing Karen Lynch effective October 17. 

The drug retailer said it plans to take a restructuring charge of $1.2 billion in the third quarter, related to incremental store closure costs and previously disclosed cost reduction actions. 

18 Oct, 2024

Netflix increased 10.2% to $759.70 after the streaming services provider reported better-than-expected quarterly results. 

Revenue in the third quarter increased 15% to $9.8 billion from $8.5 billion, net income rose 26% to $2.3 billion from $1.7 billion, and diluted earnings per share advanced 45% to $5.40 from $3.73 a year ago. 

Global streaming paid net members increased 14.4% to 282.7 million, and the company added 5.07 million new net paid members. 

18 Oct, 2024

Procter & Gamble declined 1.8% to $168.53 after the consumer products company reported quarterly results. 

Revenue in the fiscal first quarter ending in September declined 1% to $21.7 billion from $21.9 billion, net income decreased 12% to $3.9 billion from $4.5 billion, and diluted earnings per share dropped 12% to $1.81 from $1.61 from $1.83 a year ago. 

The company reiterated its full-year revenue growth to range between 2% and 4% and diluted earnings per share to increase between 10% and 12% from $6.02 in 2024, or between $6.91 and $7.05. 

18 Oct, 2024

Discover Financial Services increased 1.4% to $149.64 after the company reported higher-than-expected third quarter results. 

Total revenue net of interest expense increased 10% to $4.5 billion from $4.0 billion, net income rose 41% to $965 million from $683 million, and diluted earnings per share advanced 42% to $3.69 from $2.59 a year ago. 

The total net charge-off rate was 4.86%, up 134 basis points from a year ago and up 3 basis points from the previous quarter "reflecting continued seasoning of recent vintages and the student loan accounting classification change." 

The credit card net charge-off rate was 5.28%, up 125 basis points from a year ago and down 27 basis points from the previous quarter.

22 Oct, 2024

CSX Corp. declined 5% to $33.71 after the railroad transportation company reported weaker-than-expected quarterly results. 

Revenue in the third quarter increased 1% to $3.62 billion from $3.57 billion, net income increased 8% to $894 million from $828 million, and diluted earnings per share rose to 46 cents from 41 cents a year ago. 

Total volume of 1.59 million units for the quarter was 3% higher from a year ago, but lower fuel surcharges and a reduction in other revenue negatively impacted overall revenue.

17 Oct, 2024

Taiwan Semiconductor Manufacturing Company increased 12% to $210.36 after the company reported sharply higher sales and earnings in the third quarter. 

Revenue increased 36% to $23.5 billion, and gross margin expanded to 57.8% from 54.3% a year ago. 

Net income in the quarter jumped to NT 325.08 billion, or $10.05 billion, from NT 210.8 billion a year ago. 

Gross margin for the quarter was 57.8%, operating margin was 47.5%, and net profit margin was 42.8%. 

In the third quarter, shipments of 3-nanometer accounted for 20% of total wafer revenue; 5-nanometer accounted for 32%; 7-nanometer accounted for 17%. 

Advanced technologies, defined as 7-nanometer and smaller chip technologies, accounted for 69% of total wafer revenue. 

The company guided fourth-quarter revenue to fall between $26.1 billion and $26.9 billion. 

17 Oct, 2024

Lucid Group dropped 14.9% to $2.80 after the electric vehicle company announced a stock offering to sell 262.5 million. 

The company also said its major stockholder, Ayar Third Investment, and an affiliate of the Saudi Arabia-controlled sovereign wealth fund have agreed to purchase 374.7 million shares in a concurrent private placement. 

17 Oct, 2024

Retail and food services sales increased at an annual rate of 1.7% in September, but the pace of increase was the slowest in eight months, according to the U.S. Census Bureau. 

Sales are adjusted for seasonal factors but not adjusted for inflation. 

Preliminary retail and food services sales increased 0.4% from the previous month to $714.4 billion. 

Sales at food services and drinking places increased 1% from the previous month; miscellaneous stores advanced 4%, but declined 3.3% at electronic and appliance stores and fell 1.6% at gasoline stations. 

Sales at auto dealers were flat. 

However, sales excluding food services, auto dealers, building materials stores, and gasoline stations, which are used to calculate gross domestic product, jumped 0.7%. 

17 Oct, 2024

Morgan Stanley increased 7.5% to $120.50 after the financial services company reported better-than-expected revenue and earnings in the third quarter. 

Revenue increased to $15.4 billion from $13.3 billion, net income advanced to $3.2 billion from $2.4 billion, and diluted earnings per share rose to $1.88 from $1.38 a year ago. 

Revenue in the institutional securities division increased to $6.8 billion from $5.7 billion, wealth management jumped to $7.2 billion from $6.4 billion, and investment management advanced to $1.5 billion from $1.3 billion a year ago. 

The wealth management unit attracted $64 billion in new assets, increasing total client assets to $6 trillion. 

Investment management unit received a net long-term asset flow of $7 billion, and assets at the end of the quarter increased to $1.6 trillion. 

16 Oct, 2024