FREE

CSCI Morning News Circular - 20180727

1. Macro News    

• Trump administration plans to send billions in emergency aid to US farmers affected by tariffs. The US government will provide up to $12 billion in aid to American farmers hurt by the retaliatory tariffs imposed by trading partners, US Agriculture Secretary Sonny Perdue announced.  [SCMP]          
• Australia’s Inflation Remains Subdued, Signaling Rates on Hold. Australia’s inflation remained subdued in the three months through June, suggesting the central bank’s interest-rate pause will extend into a third year. The key annual core measure, trimmed-mean inflation, came in at 1.9% and has now undershot the central bank’s target for 2-1/2 years, a govt. report showed.  [Bloomberg]        
• Economists See China Growth Holding Up in Face of Trump Standoff. China’s economic expansion will maintain its expected course this year, even in the face of an escalating trade war with the U.S., according to economists surveyed by Bloomberg. China will grow by 6.6% this year, according to the median of 62 estimates in a poll conducted July 16-24. That’s even a slight improvement from the outlook the previous month, which saw 6.5% growth.  [Bloomberg]    

1. Industry News

• China Said to Ease Bank Capital Rule to Free Up More Lending. China took another step to ease the pressure from its deleveraging campaign, as authorities try to mitigate increasing risks to the economy from the trade war with the U.S. The PBOC told some banks on Wed. that a specific capital requirement will be eased to support lending.  [Bloomberg]    
• BRICS bank approves $600m in loans for infrastructure, sustainable projects. The New Development Bank, set up by BRICS member states, has approved two loans of $600 million in total for sustainable infrastructure projects, one each in China and South Africa. The loan was approved before the 10th BRICS Summit in Johannesburg.  [China Daily]  
• China Pledges $14.7 Billion in Investments to South Africa. China pledged to invest $14.7 billion in South Africa and grant loans to its state power utility and logistics company as the two nations seek to strengthen economic ties and increase trade.  [Bloomberg]             
• Corporate News
• Huawei to raise minimum annual R&D spending to at least US$15 billion. Huawei Technologies said on Thursday its annual research and development (R&D) spending will be increased to between US$15 billion and US$20 billion, as the company races to become a global leader in 5G technology.  [SCMP]          
• Chinese biotect firm Ascletis Pharma ‘raises US$400m in HK float’. Chinese firm Ascletis Pharma raised US$400 million after pricing its IPO in the middle of an indicative range, the first such listing in the city under rules designed to attract early-stage biotechnology companies.  [SCMP]          
• China Tower gets lukewarm response from retail investors. China Tower saw a lackluster response from retail investors on the second day of its US$8.7bn Hong Kong initial public offering, as potential buyers took a cautious approach owing to market volatility and global trade tensions.  [SCMP]      
• Huawei leads Chinese smartphone sales in second quarter, while Xiaomi has a tougher time. Huawei Technologies continued its leadership of China’s smartphone market in the latest quarter while Xiaomi was the worst performer among top Chinese vendors, according to a report from international research firm Canalys.  [SCMP]              
• China Is Said to Approve IPO That May Be ChiNext’s Biggest Ever. China’s securities regulator has approved the IPO of a Shenzhen-based maker of medical equipment. Shenzhen Mindray Bio-Medical Electronics Co. aims to raise about 6.34bn yuan ($930mn). That would top Contemporary Amperex Technology Co.’s 5.46bn yuan float in June.  [Bloomberg]  
• Alipay, Tenpay to Fork Out Fines for Sketchy Forex Practices. China’s foreign exchange regulator has fined the firms behind the country’s two biggest payment platforms, Alipay and Tenpay,for irregularities in cross-border transactions.  [Bloomberg]  
• Sinopec to Supply China VI Fuel at Yangzi Refinery From Aug. 1. Plant in east China started trial production of China VI spec. standard fuel on July 20, according to newsletter posted on co.’s website. Refinery will start supplying diesel and gasoline of such quality from Aug. 1.  [Bloomberg]  
• Fosun Is Said to Weigh Takeover of $10 Billion-Insurer Ageas. Fosun International Ltd. is considering an offer for all or parts of Belgian insurer Ageas in what could be the Chinese conglomerate’s boldest move to expand its international footprint.  [Bloomberg]  
• Sinopec expects 27b yuan profit. Sinopec expects first half net profit increase by 50% from a year ago to 27.10bn yuan (HK$31.29bn). Following a rise in international oil prices in the first half of 2018, Sinopec's upstream business went up "significantly," it said in a filing to the stock exchange of Hong Kong.  [The Standard]        
• Chinese automaker rolls first car off production line from S. Africa plant. BAIC on Tuesday rolled the first car off production line in its South African plant. The plant is a JV between BAIC and South Africa's state-owned Industrial Development Corp., with planned investment of $800mn and expectation to build 50k cars annually.  [China Daily]   
• JD acquires 30% stake in Allianz Insurance for $71m. China Banking and Insurance Regulatory Commission gave green light to China's e-commerce giant JD to invest 483 million yuan ($71.12 million) into Allianz China General Insurance Company Ltd for a 30 percent stake in the company on July 24.  [China Daily]   
• Sands China Ltd. 2Q US GAAP Adjusted Property EBITDA Grows 25%. On a US GAAP basis, the adjusted property EBITDA added 25% to US$750mn. The company experienced strong growth in both the VIP and mass table game segments, enabling it to grow its market share of gaming revenue both YoY and sequentially.  [AAStocks]        
• HOPE Education International Placing Over-Subscribed by Several Times. As reported by market sources, HOPE EDU (1765.HK) recorded several times of over-subscription at nearly the upper limit of the offer price range in the international placing. The company plans to list on 3 August.  [AAStocks]        
• CNPC Intends to Invest Over RMB150B in Xinjiang in 3 Yrs. As CNPC quoted from the Chairman Wang Yilin, the group plans to invest over RMB150 billion in Xinjiang three years after the National 13th Five-Year Plan, in order to push the ongoing steady growth of gas-and-oil volume at above 50 million tonnes.  [AAStocks]        
• Tencent Pumps Fund in Indian Budget Hotel Chain 'Oyo Rooms'. Tencent s in talks on a US$300-500 million investment in Oyo Rooms, a budget hotel chain in India, The Times of India cited sources. If succeeded, the valuation of Oyo Rooms will reach US$2 billion.   [AAStocks]   
• Bocom Int’l Expects Interim Profit to Double Up. Bocom International delivered a profit alert, suggesting over 100% yearly growth in profit for the six months ended June 2018, mainly owing to the significant increase in fair value during the period.  [AAStocks]