- Gold is generating a lot of buzz. Analyst Kenny Wen sees it hitting US$1,500 this year
- Innovent Biologics soars 3.9 per cent as Jefferies rates it a new buy, raves about its treatment pipeline
Mainland and Hong Kong shares fell again Thursday, as traders bailed out of liquor, oil and casino stocks on a day with no big policy news out of Beijing or signs of progress on the US-China trade war.
The Shanghai Composite Index fell 1 per cent to 2,901.18, dragged down by information technology stocks, though all sectors were down. It was the third straight day of losses for the benchmark.
Meanwhile, the Hang Seng Index closed down 0.5 per cent to 28,461.66, falling for a second day. Losers included internet giant Tencent Holdings, down 1.8 per cent to HK$356.60, and casino operators Sands China, which fell 1.3 per cent to HK$40.90, and Galaxy Entertainment, which slid 1.1 per cent to HK$56.45.
"We're in the summer doldrums," said Louis Tse Ming-kwong, managing director at VC Asset Management. "There is no incentive to go in (to the markets) at this time. … Whatever has been done has already been done. Donald Trump himself said it is going to be a long and winding road to agree on anything on the US and China trade talks."
Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi International Hong Kong, said the Hang Seng could slide to 28,000, its next support level, while the Shanghai index may be headed as low as 2,850.
"Investors are cautious right now. It seems like corrections will continue," Pang said.
Gold got some buzz after futures contracts on the yellow metal rose to a six-year high overnight in Chicago and influential billionaire Ray Dalio said it would be "both risk-reducing and return-enhancing to consider adding gold to one's portfolio."
Gold prices have been on a roll this year on optimism the US Federal Reserve will cut the benchmark interest rate as early as the end of this month amid signs of slowing growth there. Gold is up more than 11 per cent for the year, with a spot price at US$1,420.73.
Kenny Wen, wealth management strategist at Everbright Sun Hung Kai, predicts gold will hit US$1,500 this year and advised investors to hold it as insurance.
Gold producers were one of the few bright spots in China's stock market, led by Henan Yuguang Gold & Lead, which rose 3.4 per cent to 5.14 yuan, while Chifeng Jilong Gold Mining climbed 0.55 per cent to 5.45 yuan.
But Pang said he expect gold prices to peak "very soon," after getting a boost from the expected interest rate cut in the US.
Also in China markets, Kweichow Mao-tai ended down 1.66 per cent to 947.50 yuan after it posted its slowest quarterly sales growth in three quarters. That was its biggest percentage drop since July 3, when the world's most valuable liquor company fell 3.62 per cent.
Stocks Blog: China, Hong Kong shares fall amid US-China trade fight, other uncertainties
Other liquor makers also declined. Wuliangye Yibin fell 2.1 per cent to 121 yuan, while Anhui Golden Seed Winery, which has been suffering as drinkers turn to more expensive products, dropped 3.3 per cent to 6.51 yuan.
Meanwhile Hangzhou Hikvision, the Chinese video surveillance maker blacklisted by the US over national security concerns, was down 2.7 per cent to 26.17 yuan.
In Hong Kong, shares of Innovent Biologics soared 3.9 per cent to HK$25.20 after Jefferies rated it as a new buy, with a price target of HK$34.70.
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Jefferies analysts Cyrus Ng and Lois Zhou said the Chinese biopharmaceutical company has one of the strongest product portfolios among Chinese biotech companies. Innovent has produced a treatment called sintilimab for a deadly type of lymphoma that it says showed promising results in clinical trials.
"With its competitive pricing and wide applications, we believe sintilimab will become one of the major players in the market," the analysts wrote in a note.
Among top losers of the day was China oil major CNOOC, which fell 2.3 per cent to HK$12.88.
Daiwa downgraded it to hold from outperform, and lowered its target price to HK$13.80 from HK$15.70. Oil stocks have struggled amid big stockpiles in the US, falling oil prices and concerns about demand weakening amid the ongoing US-China trade war.
Jinshang Bank, the only provincial city commercial bank in Shangxi province, started trading on Hong Kong's main board. It closed at HK$3.82, falling from its opening price of HK$3.95.
Additional reporting by Daryl Choo
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