Daily Dim-sum Set 2015-12-30

Cultural Tea:

  1. Star Wars debut in Shanghai ignites crowd with key casts joining the party, expecting to bring 1.6 billion RMB in box office (http://www.chinadaily.com.cn/business/2015-12/29/content_22848753.htmMtime.com

Commentary: May the force be with Disney! The premiere of Star Wars in Shanghai joint forces with the soon-to-be-open Disneyland in Shanghai, presenting how energising  entertainment sector will be in the coming decade. The audience feedback, just like everyone else in the world, has been fantastic for the film. Buy some Disney stock, will you?

Market Appetizer:

  1. CNY-CNH exchange rate gap widens due to capital outflow jitters (http://www.bloomberg.com/news/articles/2015-12-29/china-market-meddling-widens-divide-for-onshore-offshore-prices)

Commentary: Bloomberg’s biased view on this was laughable to be honest. CNH offshore deposits were a mere fraction of the onshore CNY deposits, and you are regarding CNH as important as CNY? For any country the size of China, without the status of exorbitant privilege like the USD, certain capital control is required until the capital system is fully integrated between offshore and onshore. This will certainly not be completed overnight.

2. China bond investors see bull run ending in six month (http://www.bloomberg.com/news/articles/2015-12-28/china-bond-investors-see-record-long-bull-run-ending-by-mid-2016)

Commentary: The only bear scenario for the bond market in China is that the Fed rate hike becomes consistent, and further loosening in China’s monetary policy becomes risky for FX and real assets.

Policy Bun

  1. State Council approves Shanghai’s administrative reform trial scheme, which separates business licenses from administrative permits (http://www.shanghaidaily.com/business/economy/Shanghai-to-trial-program-for-efficiency/shdaily.shtml)

Commentary: Among the 116 items that loosens control, 16 of them no longer needed any approval. With the rest following a “Inform and commitment”(告知承诺制) mechanism that simplifies the process. Some of the notable items, include foreign investment in movie theaters, online healthcare platforms, etc.

2.PBOC upgrades macro prudential framework, taking into consideration more aspects when evaluating risks (http://www.chinadailyasia.com/business/2015-12/29/content_15365122.html)

Commentary: MPA (Macro prudential assessment) will look at capital and leverage, asset and liability, liquidity, pricing, asset quality, external debt, as well as credit policy execution. CAR under macro prudential framework will take an even more important role in assessing financial risks in the future.

Corporate dessert:

  1. Central Huijin sets up asset management branch and transferred all of its investments during the stock market crisis to this particular subsidiary (Source: http://www.huijin-inv.cn)

Commentary:  Transferring shares in ABC, BOC and Shenwan Hongyuan, it resembles a Chinese version of tracker fund in Hong Kong. It will likely take years before it actually exit its position, but it’s a meaningful move to divert the pressure away from the main company.

2.  Anbang’s Wu Xiaohui stated that insurance companies’ buyout frenzy is for the sake of the real economy (http://company.cnstock.com/company/scp_dsy/tcsy_rdgs/201512/3669387.htm, Chinese only)

Commentary: While Wu is not alone in his action plan to buyout listcos, who will be the next in pipeline? For the sake of corporate governance, the “invasion of the barbarians” might be a good wake-up call for management teams in China.





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