Daily Dim-sum Set 2016-01-04

Happy New Year to our dear readers, wish you all the best in 2016!

Market Appetizer:

  1. China halts trading during 2nd half of the first trading day after triggering “circuit breaker” mechanism -(http://www.reuters.com/article/us-china-stocks-trading-halt-idUSKBN0UI0CU20160104)shanghaihalt.png

Commentary: A sad, if not ironic, opening for 2016. The biggest joke(truth) on China’s weibo today is that it took almost 10 years for the US stock market to actually trigger the mechanism since its inception, whereas only 2 and a half hours for China. Well, that might suggest our superior speed of learning capitalism, but it also shows how fragile and weak institutional investors are in this market. When the market participants are irrational, any “mechanism” cannot be the savior but rather the ignition point of market failures.

2. Offshore renminbi drops to five-year-low, but see no signs of a PBoC rescue as of yet (http://www.ft.com/fastft/2016/01/04/offshore-renminbi-drops-to-5-year-low/)

Commentary:  PBoC can live up with a mild, gradual depreciation and is still testing waters as of now. Another interesting angle is, will CNH and HKD become one currency someday? At least for now, more dollar strength plays to the benefits of large corporates in China, who have already built huge books on dollar-hedging.

Policy Bun:

  1. New year resolutions for multiple departments of China’s State Council (in Chinese with brief translation, Source: gov.cn)

i) NDRC: 100 million rural residents will find it easier to settle in cities-                                                                                                                                          NDRC

ii) MOFCOM pledges to upgrade consumption; MOF will launch full VAT reform in construction, real estate and financial industry.


iii) Less delays in 2016, said CAAC; farming reform initiated by MoA


Commentary: On a personal note, less delays will be most welcomed by ordinary citizens in China, who have suffered more or less from it.

2)    State Council’s no.1 document of the year calls for modernization of agriculture industry, encourages private investments and modern corporate governance of rural enterprises (http://news.xinhuanet.com/fortune/2016-01/04/c_1117664729.htm, Chinese only)

Commentary: A flurry of new enterprises, including family farms, IT for agriculture, as well as rural finance will become new spotlights in the real economy.

Corporate dessert:

  1. Suning invested 2 billion in ZTE Nubia, ZTE’s flagship mobile product. Suning currently accounts one third of Nubia’s ownership, while ZTE is still the largest shareholder. (http://finance.sina.com.cn/roll/2016-01-04/doc-ifxncyar6244544.shtml, Chinese only)

(Madame Peng Liyuan uses Nubia during a foreign state visit)


Commentary: More pressure on xiaomi, as Suning is also a shareholder in Smartisan. Alibaba also invested in Meizu, a local mobile phone brand. The war on cellphone manufacturing is more than intensified nowadays.

Cultural Tea:

  1. Mr. Six (老炮儿) , telling a story of generations in Beijing, tops box office board with 436 million in mere three days of New year holiday. The Gouls (寻龙诀) also achieved 336 million at the beginning of 2016, totalling 1.5 billion in box office.(http://news.mtime.com/2016/01/04/1550930.html, Chinese only)


Commentary: As both films were produced by Huayi Brothers (300027-SZ), they are likely the biggest winners in the current cycle of films.

2. Xiaomi steps in film industry, as heavy investments have been made in content (http://www.jiemian.com/article/496756.html)

Commentary: Not surprising given the cur


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