Dim Sum Set Feb.1st-3rd

Cultural Tea:

A 14-year-old boy, wearing an Armani suit, joined Shenzhen’s CPPCC session and called for less school work, spurring wide-range online discussions and attacks (http://shanghaiist.com/2016/02/01/spotted_armani_kid.php)

armani_kid

Commentary: Interesting incident with a couple of keywords engaged in discussions of contemporary Chinese society: social mobility, class and fair education. The college entrance examination remains the only safeguard for social and education equity. The proposal of a “talent-based” or “comprehensive” review of a teenagers’ talents, though much appreciated in some advanced economies, is not an option for China. It is also a sensitive topic for any Chinese education departments to actually consider a reform in college entrance, considering the current retreat of “self-appraisal” within universities in Shanghai.

Market Appetizer

1. Technical analyst: Shenzhen A-shares steady (http://www.scmp.com/business/markets/article/1908749/chart-day-shenzhen-shares-steady)

A-share

Commentary: While not a fan of Fibonacci or technical indicators, if Shenzhen A-share really trades steadily, it is a good news for Chinese A-share as a whole, since it has dominated the market sentiment for more than two years.

2. Ken Rogoff: The great escape from China and RMB (http://www.ejinsight.com/20160203-great-escape-from-china-renminbi/)

Commentary: It is truly astonishing how US academics have degraded themselves to such a degree of insanity, saying “if just one of every 20 Chinese citizens exercised this option, China’s foreign exchange reserves would be wiped out“. Well guess what, if China really defends its currency, dumping your “precious” US treasuries, where will the market be? Given Mr. Rogoff’s history on commenting other countries’ “privatization”, it is really dubious what is his true purpose here.

Policy Bun:

  1. President Xi announces establishment of “theater commands”, cutting current seven military regions into five “battle zones” (http://news.xinhuanet.com/english/2016-02/02/c_135069056.htm; http://english.cntv.cn/2016/02/03/VIDEO3Hfl3MOHVuIKKejY8VA160203.shtml)

militaryzone

Commentary: An important step to fully execute disarmament plans, but to establish an efficient military forces able to deal with complicated situations. This is a natural “long” for investors interested in investing in Chinese military industry.

2. PBOC reduces mortgage down payment minimum threshold to 20% (http://www.reuters.com/article/china-property-mortgage-idUSL3N15H3DD)

Commentary: A way to destock the mounting inventories in lower-tier Chinese cities, but the demand is still not there: there needs to be more structural reform on re-allocating medical, education and administrative resources to make the move more substantial. Frankly speaking, it’s unlikely to happen now.

Corporate Dessert:

  1. Chemchina bought Swiss fertilizer giant Syngenta for $43 billion (http://www.wsj.com/articles/chemchina-offers-more-than-43-billion-for-syngenta-1454480529)

syngenta

Commentary: Valued at 17x EV/EBITDA, this is obviously not a very cheap valuation. But given the strategic value, it might not be the worst deal in China’s ODI history.

2. Vanke Chairman Wang Shi: We don’t welcome private enterprise to become our largest shareholder (http://news.hexun.com/2016-01-31/182107966.html, Chinese only)

Commentary: A sad, inconvenient truth in China business. Private enterprises are not designed to be trusted.

3. Shanghai Disneyland unveils ticket price at 370 RMB (http://blogs.wsj.com/chinarealtime/2016/02/03/rmb-our-guest-shanghai-disneyland-unveils-ticket-prices/)

Commentary: It will still be crowded at the beginning at such price level.

 

 

 

 

 

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