Dim Sum Set Feb 15th-17th

Market Appetizer:

  1. Mainland market rallied on Wednesday but Hong Kong fell (http://www.scmp.com/business/markets/article/1913623/mainland-china-markets-rise-second-day-row-hong-kong-falters)

Commentary: I don’t think HK market is expecting any considerable rebound unless earnings improved dramatically. The market liquidity has been bad for quite some time, and southbound stock connect is not helping either.

2.  Signs of a shift in the FX regime, according to Nomura (http://www.fxstreet.com/news/forex-news/article.aspx?storyid=406ff86e-e12e-4315-bd64-39a7c88bff41)

Commentary: The reading is quite biased to be honest. The offshore rate has risen to 6.50 level the day before, and the PBoC seems to have just responded to that. Another key issue is “basked of currencies”, which is not in the picture of discussion somehow.

3.  China prioritizes growth over de-leveraging, as TSF growth surged (http://www.ft.com/intl/cms/s/3/83ff9bfa-d4ed-11e5-8887-98e7feb46f27.html#axzz40PtBl5rR)


Commentary: A relatively more balanced take on the issue. Just one point here: the overall M2 growth, though elevated, has been relatively mild compared to loan growth. Why? Because forex purchases (外汇占款) by the banks used to be the dominant source of monetary supply in the past, with the trend reversed, it is necessary for banks to step in the close this gap. That said, they may have got a bit too aggressive, due to policy uncertainty going forward.

Policy Bun:


  1. Li stressed employment as key to 2016 growth targets (http://www.gov.cn/xinwen/2016-02/16/content_5041958.htm, Chinese only)

Commentary: “If there are signs that the economy has fallen out of reasonable range, we will definitely intervene…””We can only use ‘public eyes’ and ‘minds’ to expand our ‘vision’ and ‘insights'”. Time and time again, it is inadvisable to short China during the first year of their FYP, at least they got enough ammunition and the Keynesian mindset now…

2. Increase financial support for industrial sector, a bold and clear message by eight administrative sections of the State Council (http://www.gov.cn/xinwen/2016-02/16/content_5041671.htm, Chinese only)

Commentary: Reduce down payment for EVs have driven BYD’s A-shares up a bit today. Distressed ABS and more convertible issuance were the other highlights in the whole message.There are also some mentioning on tax benefits for NPL loss reduction, which should also be a focus on the market for a bit.

Corporate Dessert:

  1. Applepay will initiate in China tomorrow, casting a shadow on Alipay and Tenpay (http://www.wsj.com/articles/apple-pay-to-launch-in-china-this-week-1455669396)

Commentary: I somehow disagree with the argument that Apple is directly seeking contest with Alipay or Tencent. Apple is choosing the strongest partner in the offline POS business and NFC field, and just want to earn money under the radar… More detailed analysis will be available on Cnspoon soon.

2. Alibaba enhanced rural coverage as it announced cooperation with the NDRC (http://www.chinadaily.com.cn/bizchina/2016-02/17/content_23524869.htm)

Commentary:Alibaba’s rural strategy has been one of the bright spots in their overall development plan. At least on a political level, their attempts to going to the rural area will certainly meet no obstacles…

3. Online insurance growing at a rapid speed in 2015 (http://insurance.hexun.com/2016-02-17/182287696.html, Chinese only)

Commentary: Funde Sino Life Insurance ranked the top among online life insurance, with the whole category tripled last year. But my question is: what is the additional value offering apart from the channel upgrade into the internet?

Cultural Tea:

3.56 billion box office sales during the Chinese New Year Holiday, with Stephen Chow’s Mermaid accounting for 1.8 billion, more than half of the total box office (http://chinafilminsider.com/china-box-office-sets-new-weekly-record-led-homegrown-trio/)


Commentary: Mermaid is a mediocre story, but with all the right elements: right ideology, good pack of comedy actors/actresses, easy enough storyline, short duration (1.5 hours only). Meanwhile, the market has growth to a size where any films can touch 1 billion RMB line….


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