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CSCI Morning News Circular -20180528

1. Macro News

• S. Is Said to Press China to Sign Long-Term Import Pacts. U.S. pressing China to enter into multi-year contracts to buy agricultural and energy imports, FT reports. Push for long-term product-by-product contracts with China intended to insulate an eventual trade deal from political pressures on either side of the Pacific  [Bloomberg]        
• Job Security, House-Price Fears Erode U.K. Consumers' Confidence. K. consumer confidence slid this month as Britons felt less secure about their jobs and the value of their houses. A gauge by the Centre for Economics and Business Research and YouGov fell to 108.4 from 109.8 in April, according to a report Friday.  [Bloomberg]   
• China Consumer’s confidence reaches 10-year peak. Consumer confidence index in the first quarter reached its highest level in the past 10 years, buoyed by an improved macroeconomic outlook and better employment prospects, Nielsen's latest survey showed.  [China Daily]  

1. Industry News

• Big Oil Consumers Start to Lock-in Prices as Brent Surges to $80. The rise in oil prices to $80 a barrel is starting to cause concern across boardrooms, with some big industrial consumers, including airlines and shipping companies, starting to buy more insurance against rising energy prices.  [Bloomberg]    
• Auto tariff cut to fuel sales of SUVs, new energy cars. China's plans to slash its auto import tariffs are expected to fuel sales of premium SUVs and new energy cars. Tesla cut the prices of its models sold in China on the same day the policy was announced. Other premium brands said they are evaluating the impact and would act accordingly.  [China Daily]     
• E-commerce revenue growth stable on diversification efforts. From January to April, e-commerce companies' revenues increased 31.2 percent year-on-year. In April alone, key online retail companies that the ministry monitors grew 21.4 percent compared to last year.  [China Daily]    
• Corporate News
• Alibaba, Tencent, Baidu to hold big stakes in Foxconn unit after US$4.3bn IPO. Alibaba, Tencent and Baidu, mainland China’s three biggest internet conglomerates, will become major shareholders in Foxconn Industrial Internet after the technology firm’s upcoming US$4.3 billion initial public offering, China’s biggest domestic listing in three years. [SCMP]    
• Xiaomi's Hong Kong IPO will launch in July. Xiaomi, the world’s fourth-largest smartphone maker, is putting the finishing touches on a plan to make its US$10bn IPO available to investors by early-to-mid July, presenting the biggest global stock offer of 2018 as a birthday present of sorts to Hong Kong’s stock market.  [SCMP]    
• Foxconn unit’s US$4.27 billion IPO sparks Chinese buying frenzy. Foxconn Industrial Internet sparked a buying frenzy for its IPO shares among mainland Chinese investors, buoyed by expectations that its price will surge after listing. It priced its 1.8bn IPO shares at 13.77 yuan apiece, slightly below the 14.04 yuan predicted by the market.  [SCMP]    
• Lenovo Making a Splash With Flashy Gaming Rigs. Lenovo’s making inroads in a field not normally associated with the co: showier gaming computers. It intends to plow more resources into gaming as it struggles to convince investors it can once more deliver the sort of growth that made it China’s global tech standard-bearer a decade ago.  [Bloomberg]   
• Trump Says China's ZTE to Pay $1.3 Billion Fine to Re-Open. Donald Trump said the U.S. would allow Chinese telecommunications-equipment maker ZTE Corp. to remain in business after paying a $1.3bn fine, changing its management and board and providing “high-level security guarantees”.  [Bloomberg]   
• China Railway Group to Expand PPP Dominance with New Funding. China Railway Group's offer to swap debt for equity could showcase its ability to secure a new source of funding to maintain PPP investments. Smaller players with weaker state support may be squeezed out.  [Bloomberg]    
• China’s COFCO In Talks to Buy Grains Port in Russia. Chinese state-owned company COFCO began negotiations to acquire grains terminal in Southern Russia with capacity of up to 10m tons per year, RBC newspaper reports, citing CEO of Russia-China Investment Fund for Regional Development Rustam Temirgaliev.  [Bloomberg]    
• Sina Corp Is Said to Plan Secondary Listing in H.K. The company is working with advisers on secondary listing that may take place in the fourth quarter, Reuters report, citing 2 unidentified people with direct knowledge of the matter. Offering size yet to be finalized.  [Bloomberg]   
• Kunlun Energy Plans to Add LNG Terminals in China. The company is in talks with governments in provinces including Shandong, Liaoning, Guangdong and Fujian to add more LNG terminals, Executive Director Zhao Zhongxun says at briefing in Hong Kong.  [Bloomberg]   
• ZTE Crackdown Measures Advance in Congress, Pressuring Trump. Congress is increasing pressure on President Donald Trump not to weaken sanctions on ZTE Corp., the Chinese telecommunications equipment maker accused of violating trade- sanction agreements and posing a threat to U.S. national security.  [Bloomberg]   
• IDG-Backed Shenogen Said to Interview Banks for $300 Million IPO. Shenogen Pharma Group, the Chinese cancer drug developer backed by IDG Capital, is interviewing banks for a Hong Kong initial public offering that could raise as much as $300mn.  [Bloomberg]  
• BYD to increase market presence of SkyRail. BYD is speeding up plans to expand the market for its SkyRail monorail mass transit system as it is under growing pressure due to electric vehicle subsidy cuts. The Shenzhen-based firm told China Daily it is in discussions over eight SkyRail deals in the Americas, including the US, and expects to finalize at least two deals this year.  [China Daily]  
• Geely Auto: Import Car Tax Cut Impact Insignificant to Group. Regarding Chinese government's downward adjustments on import car tax rate, CEO Gui Sheng Yue stated the group relies on its products, instead of national subsidy, for its development. Accordingly, the impact on Geely Auto is insignificant due to difference in its class.  [AAStocks]   
• Xiaomi Reportedly Seeks Listing Hearing on Jun 7th. Xiaomi plans to have the listing hearing for its IPO to be held on June 7th, sources quoted as saying by Bloomberg. The sources also mentioned Xiaomi has been looking at an estimated valuation of US$60 - US$70 billion for its IPO.  [AAStocks]    
• CSPC Pharma 1Q Net Profit $910M, Up 42.6% YoY. CSPC Pharmaceutical announced first quarter result ended March 2018. The turnover rose 55.2% year on year to HK$5.387 billion. The net profit amounted to HK$910 million, up 42.6% yearly. EPS was HK14.57 cents. No dividend was declared.  [AAStocks]   
• China Comm Cons Buy of Canadian Construction Company Aecon Ceased. China Communications Construction announced that the Company received an order of the Governor in Council in Canada directing the Company not to implement the investment in the construction company Aecon. As the conditions precedent under the Arrangement Agreement could not be fulfilled, the proposed acquisition has been terminated.  [AAStocks]