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CSCI Morning News Circular - 20180426

1. Macro News

• Trump Says Mnuchin Going to China to Negotiate Trade in Days. Treasury Secretary Steven Mnuchin will depart for China to negotiate over U.S. trade disputes within days. If the two sides can’t reach agreement, he said, proposed U.S. tariffs on billions of dollars in Chinese goods will take effect as planned, Trump said.  [Bloomberg]   
• Central bank eases liquidity pressure. China's central bank yesterday cut cash reserve requirements for financial institutions by 1ppt. The cut should free up about 1.3tn yuan ($206bn) in liquidity. The PBOC said c.900bn yuan of MLF will be repaid and 400bn yuan will be required to be loaned out by banks as a low-cost funding source. [Bloomberg]    
• ECB Officials Signal Confidence Inflation Weakness to Pass Soon. European Central Bank policy makers brushed off concerns over recent weakness in economic data, including inflation, saying they’re increasingly optimistic about reaching their goal.  [Bloomberg] 

1. Industry News

• Hong Kong exchange overhaul days away. As of next Monday, enterprises with a dual-class shareholding structure or weighted voting rights; biotechnology companies that have yet to take in revenue; and companies that are already listed overseas and plan to seek a secondary listing in Hong Kong, can apply to list in the city.  [China Daily]         
• China to cut coal production by 150m metric tons. China is committed to the goal of cutting 150 million metric tons of coal production capacity and will deepen supply-side reform with a focus on "zombie enterprise" withdrawal in 2018, according to the National Energy Administration.  [China Daily]
• China Regulator Raises QDLP, QDIE Quota to $5bn in Trial Cities. State Administration of Foreign Exchange has raised the quota for Qualified Domestic Limited Partner and Qualified Domestic Investment Enterprise trial to $5bn each, according to a statement from the forex regulator.  [Bloomberg]     
• Corporate News
• Cathay, Qatar Plan to Fly to Duterte’s Hometown, Official Says. Cathay Pacific wants to have direct flights from Hong Kong to Davao, while Qatar targets to fly to hometown of President Rodrigo Duterte as early as July, according to Transportation Undersecretary Antonio Tamayo.  [Bloomberg]   
• Geely Automobile, Aisin Seiki to Set Up Transmission Venture. Zhejiang Geely Luoyou Engine, Geely Automobile’s 99% indirectly owned unit, and Aisin Seiki unit entered agreement to set up a JV in China to make and sell front-wheel drive 6-speed automatic transmissions and related parts and components, according to statement.  [Bloomberg]  
• Yunnan SASAC to Buy 61.5% in Techcomp at 32.8% Premium Per Share. Baodi International Investment, whose ultimate controller is Yunnan provincial govt’s State-Owned Assets Supervision and Administration Commission, to buy 61.5% stake in Techcomp at HK$3.267 per share, according to statement to Hong Kong stock exchange.  [Bloomberg]
• BAIC Motor to Raise Max Net Proceeds of HK$3.27bn in Placement. BAIC Motor agreed to sell 420mn new H shares at HK$7.89 apiece. Placement shares represent 5.24% of total enlarged issued share capital. Proceeds to be used for replenishing working capital and for general corporate purposes.  [Bloomberg]
• Guangzhou Auto, Aisin to Set Up Transmission Joint Venture. A unit of Guangzhou Auto and Japan’s Aisin AW signed an agreement to set up an automatic transmission joint venture with registered capital of $117m in Guangzhou, according to a statement to Shanghai Stock Exchange.  [Bloomberg]
• Wynn Tops Profit Estimates on Macau Gain as Revenue Misses. Wynn Resorts Ltd.is getting a boost from gambling in the casino enclave of Macau. Buoyed by its newest Macau property, Wynn’s first-quarter earnings rose to $2.30 a share, excluding some items, the Las Vegas-based casino company said.  [Bloomberg]
• VW Teams With Chinese Partners for $18bn Technology Push. Volkswagen AG’s world-leading development budget is shifting into overdrive, bolstered by spending at its Chinese joint ventures as the German carmaker seeks an edge in producing electric, self-driving autos.  [Bloomberg]
• Huawei Shrugs Off China Tech Woes as Prepares First Euro Bond. Huawei Technologies Co. Ltd is planning to offer its first bonds in euros, persisting with a deal even as investors flee China’s technology stocks. The company may sell euro benchmark-sized five-year bonds in the coming days and is considering 10-year notes in U.S. dollars.  [Bloomberg]
• CEFC China May Cut Half Its Workers But Rosneft Deal Still Alive. CEFC China Energy Co. may cut half of its 30,000-strong workforce as it faces increased financial pressures and scrutiny from Beijing. A deal to buy 14% of Rosneft PJSC, however, remains viable despite being impacted by the company’s recent troubles.  [Bloomberg]
• Hong Kong bourse chairman regrets 2014 loss of Alibaba mega listing. Chow Chung-kong, who stepped down as chairman of Hong Kong Exchanges and Clearing (HKEX) at its annual shareholders meeting on Wednesday, said he hoped that reforms to listing rules announced this week would bring big tech firms like Alibaba to the city’s market.  [SCMP]
• Taiwan biotech firm eyes Hong Kong IPO for push into mainland China market for cornea transplants. ACRO Biomedical, a Taiwan-based developer of skin, bone and cornea graft materials, plans to restructure via a reverse takeover and seek an initial public share offer in Hong Kong so that it can tap into the mainland China market.  [SCMP]
• Xiaomi caps hardware profit margin at 5pc in move to limit 'greed'. Xiaomi pledged to cap its net profit margin on its hardware business at 5 per cent starting this year, as part of a move by founder Lei Jun to ensure that its products remain affordable to the masses.  [SCMP]
• Volkswagen sells China-made cars in Southeast Asia, helping partners scale export readiness. Volkswagen plans to sell China-built vehicles in Southeast Asia, in a step that would help its Chinese partners FAW Car and SAIC Motor scale their capacity to export.  [SCMP]
• Agreement allows China's telecoms, power grid to share towers. China Tower Corp. has signed a strategic cooperation agreement with China's two major power grid operators, State Grid Corp of China and China Southern Power Grid Co Ltd, to share the latter two's transmission towers for construction of its communication base stations.  [China Daily]      
• DiDi in talks for IPO as early as this year, says report. DiDi Chuxing Technology Co, China's largest ride-hailing provider, plans an initial public offering as early as this year, The Wall Street Journal reported. The move would fetch a valuation of $70bn to $80bn and would make it one of the largest technology IPOs ever, the Journal said.  [China Daily]     
• Chinese carmaker FAW releases new Hongqi model. FAW Group, China's oldest automaker, has released a new sedan model, the Hongqi H5, to target private buyers, the group announced Wednesday. FAW plans to open more than 100 Hongqi dealerships this year. The figure is expected to reach 170 by the end of 2020.  [China Daily]