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CSCI Morning News Circular - 20180511

1. Macro News

• Mainland to grow at 6.6% in 2018, says IMF. The International Monetary Fund raised its forecast for economic growth on the Chinese mainland in 2018 to 6.6 percent from 6.5 percent, but warned that the simmering Sino-US trade dispute would negatively affect global economic growth and investment.  [China Daily]  
• China's CPI up 1.8%, PPI 3.4% in April. China's CPI rose 1.8% in April YoY, data from the NBS showed on Thursday. The growth of consumer inflation in April was slower than expected, down by 0.3ppt from the previous month. The slower growth of inflation was mainly led by the steady decline of food prices, according to NBS.  [China Daily]    
• China Says Trade Talks Continuing, Tells U.S. to Stop Threats. China urged the U.S. to withdraw its trade threats and confirmed that negotiators continue to talk before President Xi Jinping’s top economic adviser returns to Washington. “China will firmly defend the interests of the nation,” Commerce Ministry spokesman Gao Feng told reporters.  [Bloomberg]    

1. Industry News

• Fitch Sounds Warning on HK Banks, Citing China Risks. Fitch Ratings cut its assessment of Hong Kong banks’ operating environment due to the territory’s tighter links to the mainland economy. “We believe that HK' growing connectivity with China’s economy and financial system creates risks,” Fitch said in a statement Thursday, adding that China’s governance standards, as measured in the World Bank’s indicators, are substantially lower than HK’s.  [Bloomberg]    
• Italy to Seek 6-Mth Extension of Bad-Loan Guarantee Plan. The Italian Treasury is seeking European regulatory approval for a six-month extension of its state-guarantee program for banks’ bad loans. Italian banks are weighed down by c.270bn euros of non-performing loans, prompting the ECB to press lenders to make plans to reduce that figure.  [Bloomberg]    
• China Agrees to Grant Japan 200bn Yuan RQFII Quota. China has agreed to grant Japan RMB Qualified Foreign Institutional Investors quota of 200b yuan, Premier Li Keqiang says during meeting with Japanese Prime Minister Shinzo Abe. Li says China, Japan reached consensus on signing local currency swap agreement as soon as possible. [Bloomberg]       
• Corporate News
• ZTE in bid to calm staff after business grinds to a halt amid US blockade. ZTE Corp regards the next two weeks as crucial to resolving a US blockade that has brought its main businesses to a standstill and choked off revenue, signaling the potential collapse of one of the world’s largest makers of phones and networking gear.  [China Daily]  
• Li Ka-shing Retires, Ending Career of Hong Kong’s Top Tycoon. Billionaire Li Ka-shing formally stepped down Thursday as head of a business empire he built during a span of nearly seven decades. The tycoon resigned as chairman of CK Hutchison Holdings Ltd. and CK Asset Holdings Ltd. at the companies’ annual general meetings Thursday.  [Bloomberg]   
• S. Biotech Firm Stealth Is Said to Eye Hong Kong IPO This Year. Stealth BioTherapeutics Inc., a U.S.-based biotechnology firm, is planning an initial public offering in Hong Kong as soon as this year. Stealth could seek to raise around $200 million, though preparations are at an early stage and details of the offering could change.  [Bloomberg]   
• Tencent Music Is Said to Pick Banks for $1 Billion-Plus U.S. IPO. Tencent Music Entertainment Group, controlled by China’s biggest social network operator, has picked banks to advise on a planned initial public offering in the U.S. that could raise at least $1 billion.  [Bloomberg]
• AviChina Gets CSRC Nod for H Shr Full Circulation Pilot Project. The company is allowed to convert and list up to 3.6bn domestic shares into H shares, according to a Hong Kong exchange filing. The company’s application got formal approval to participate in the pilot project.  [Bloomberg]
• China Food Giant Is Said to Expand in Brazil Amid U.S. Tensions. Cofco Int’l is positioning itself to increase soybean purchases from Brazil as trade tensions escalate between the U.S. and the Asian nation. Cofco has strengthened its team that buys, stores and sells farmer crops in the South American country, recently hiring as many as 12 people to work directly with farmers in Mato Grosso, Goias, Parana and Rio Grande do Sul states.  [Bloomberg]
• China’s ZTE Ceases Major Operations After U.S. Trade Ban. China’s ZTE Corp. said it has ceased major operating activities after U.S. authorities imposed a ban on the telecommunications gear maker’s ability to buy components from American suppliers.  [Bloomberg]
• Anbang Unit to Transfer 50% of Beijing Developer to Sino-Ocean. A unit of Anbang Insurance Group agrees to transfer 50% stake in Beijing Bangbang Zhiye to Sino-Ocean Group, Sino-Ocean says in Hong Kong stock exchange filing. Sino-Ocean says the deal can deepen cooperation by leveraging Anbang’s real estate resoures.  [Bloomberg]
• China Increases EU Footprint With Slovenia Gorenje Bid. China’s Hisense Group Corp is seeking to take over appliance maker Gorenje d.d., a key Slovenian exporter. The company offered 12 euros ($14) a share for Gorenje, valuing the Slovenian company at almost 293 million euros, according to Bloomberg calculations.  [Bloomberg]
• Alibaba acquiring big online retailer in southern Asia. Alibaba is spreading its wings further into South Asia by acquiring the region's largest e-commerce platform. The buyout of Daraz Group will make the co. a wholly owned unit of Alibaba, following in its footsteps of recent purchases in shopping portals and digital wallets across the region.  [China Daily]
• JD to focus on logistics, R&D. JD will continue to increase its investment in logistics, offline retail and R&D, amid stiff competition with its archrival Alibaba. The e-commerce giant plans to establish a logistics real estate fund this year to boost more logistics and warehouse construction, said Liu Qiangdong, founder and CEO of the company.  [China Daily]
• Swire Pacific Continues to Pump Beverage Biz; Cathay Pacific Airways May Mull Shorter-term Fuel Hedge. Swire Pacific A chairman John Slosar stated at the shareholders' meeting that the company will continue to invest in real estate and beverage businesses, on the ride of their growth potential. Slosar also said the group will continue to mull over the policy and may shorten the hedging contract.  [AAStocks]
• Swire Pacific: Investment More Meaningful than Repurchase; Not Intend to Change A/B Structure. At the shareholders' meeting, chairman John Slosar said the company has no intention to change the long-implemented A/ B share structures as they are different: B shares have discount to A shares given higher liquidity of A shares.  [AAStocks]
• Stephen Ng Admits Wharf Holdings Profit Base Stability Lower after Spin-off; Satisfied with Investment Performance. As to shareholders' dissatisfaction about the share price of Wharf REIC after spinning off from Wharf Holdings, chairman Stephen Ng admitted that the profit base stability of Wharf is lower after the spin-off, hoping the company can identity promising investment projects to bring shareholders return.  [AAStocks]
• Wynn Macau books US$204mn loss on US$436m legal settlement cost. Wynn Macau reported a loss of US$204.3mn for the 1Q, compared with a profit of US$100.8mn for the same period of 2017, due to US$463.6mn legal settlement cost and a US$69.3mn million increase in the redemption note fair value to its principal amount.  [The Standard]