Daily Dim-sum Set 2015-01-05

Market Appetizer:

  1. Rumor has it: state intervention stabilizes stock market and the FX market (http://www.bloomberg.com/news/articles/2016-01-05/china-s-terrible-start-to-2016-has-beijing-fighting-market-fires;http://www.ft.com/intl/cms/s/0/88e7264e-b380-11e5-aad2-3e9865bc6644.html#axzz3wMuRIdfp)

Commentary: In Texas Poker, sometimes you need to bluff to win . I tend to believe the regulatory is staying put while sending messages out that it is intervening in the markets. The least favorable scenario the government wants right now is what happened last year: they poured in real money, while the market was still tanking. That said, some companies’ valuation is still ridiculous, which needs some mean reversion to make it more rational.

2. Singapore exchange reports record volume in offshore RMB futures (http://www.financemagnates.com/institutional-forex/exchanges/sgx-reports-record-rmb-futures-volume-during-december/)

Commentary: The increase in volume of CNH trading helps to build a dynamic FX market for Renminbi in the future. That said, a unilateral depreciation may not be something PBOC endeavors. As everyone is betting on one side of the boat, it is sometimes necessary to look at the other side.

3. Eyes on Chinese media’s take on CNY movement (https://www4.dailyfx.com/forex/fundamental/article/special_report/2016/01/04/The-Butterfly-Effect-Begins-Chinese-Weakness-Drags-the-Market-Lower.html)

Commentary:  There might be a butterfly effect, but there might also be a central bank that is willing to stress-test its financial system.

Policy Bun:

  1. CSRC stabilizes market by stating potential restrictions on major shareholder’s exit of public company (http://news.hexun.com/2016-01-05/181596081.html, Chinese only)

Commentary: While the market sentiment is fragile in nature, it is necessary at least to stabilize the market via some administrative measures. But here comes the question: when should these guys exit? Are our regulatory bodies hijacked by the public media and the short-term reaction of a market?

2. Premier Li in coal mines – “you are the backbone of the country’s economy” (http://www.gov.cn/guowuyuan/2016-01/05/content_5030792.htm, Chinese only)


Commentary: Coal still accounts for majority of the country’s energy sources, and is unlikely to change in a short span of time. The significance of this visit, however, is to revitalize the areas where real economy has experienced sluggish downward trend, a stability concern in the long run.

Corporate Dessert

  1. LeTV-funded Faraday Futures launched its FFZERO1 concept race car (http://www.forbes.com/sites/davidkiley5/2016/01/05/faraday-future-an-ev-backed-by-billions-helps-but-no-guarantee-of-success/)


Commentary: At least Jia Yueting is willing to bet on new technology, while this might not be something close to a Tesla, it shows how eager Chinese entrepreneurs want to get access to the best technology in the States. They are also willing to pay a fat check on it as well.

2.  Ning Gaoning, legendary SOE manager, bids farewell to COFCO (http://weekly.caixin.com/2016-01-01/100895183.html, Chinese only)

Screen Shot 2016-01-06 at 8.43.59 am

Commentary: Ning said that his biggest regret was unable to launch an IPO of the COFCO Group. After he left, who will take up this huge responsibility? What about the future of the overseas investment vehicle? I bet no one knows until the new head is nominated.

Cultural Tea:

  1. China domestic box office reaches 44 billion RMB in 2015, up by 48.7% (http://www.chinadaily.com.cn/business/2016-01/01/content_22894475.htm)

Commentary: 81 features surpassed 100 million RMB landmark, of which 47 was domestic. This is just a beginning for the China movie industry.


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