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CSCI Morning News Circular - 20180731

1. Macro News

• Russia Reportedly Slashes US Debt. The US Treasury unveiled that Russian's debt in the US slashed to US$14.9bn in May from US$96.1bn in Mar, down c. 84% in two months, CNBC reported. Bond market analyst said the sharp reduction was due to massive bond issue which was rare on American history, instead of Russia selling US debt.  [AAStocks]    
• Sound industrial profits growth thanks to supply-side reforms. China's industrial profits grew 17.2 percent in the first half, rising 0.7 percentage points than that of the Jan-May period, according to the National Bureau of Statistics (NBS). Industrial profits rose 20 percent in June, down 1.1 percent from that of May.  [China Daily]    
• Greece’s Plan to Return to Markets. Greece is planning a return to the markets in a bid to regain its status as a “normal” country. If the govt. can announce by end of the year its program for tapping the markets in 2019, and repeat this exercise each year for the following 12 months, the plan will have worked, an official familiar with the matter said. The target is for the country to issue no more debt than what matures each year, the official said.  [Bloomberg]     

1. Industry News

• Korea to Levy Capital Gains Tax on All Stock Index Derivatives. The government will impose capital gains tax on equity derivatives products linked to all Korean stock indexes, according to its 2018 tax revision plan announced by the finance ministry on Monday.  [Bloomberg]     
• $570B Swaps Stripped From U.K. in European Clearing Plan.K. clearing houses such as LCH.Clearnet may lose derivatives-clearing business after Britain leaves the EU. The bloc's plans to regulate non-EU CCPs' euro-denominated derivatives clearing would divert trading from the U.K., fragment markets and trigger U.S. retaliation.  [Bloomberg]        
• Consumption sector rides wave of growth. Final consumption expenditure's contribution to economic growth reached 78.5% in 1H18 with strong momentum in service consumption, People's Daily reported Monday. Service consumption in sports, health and travel has shown strong momentum and the national residents' per capita expenditure on physical fitness activities, medical, hotels and transportation increased 39.3%, 24.6%, 37.8% and 22.8%, respectively.[China Daily]    
• Corporate News
• Samsonite shrugs off short seller attack as it plans to add more stores in Asia-Pacific. Two months since the surprise short seller attack on Samsonite, which wiped out more than US$1bn from its market value at end of May, the company says that the incident has had no major impact on its operations and that it was still looking to expand.  [SCMP]     
• SAIC Volkswagen to become second JV to produce Audi cars. SAIC Volkswagen Automotive Co has decided to set up an Audi division, becoming the second joint venture to localize and sell cars with the four-ring emblem in China after FAW-Volkswagen.  [China Daily]    
• Daimler, Baidu bolster research partnership in automated driving. Daimler AG is furthering its partnership with China's internet giant Baidu Inc in automated driving and connected vehicles, consolidating their cooperation in aspects that are believed to be the future of the automotive industry.  [China Daily]    
• Didi lowers its offer to acquire Ofo, claims report. A deal between Chinese bike-sharing startup Ofo and its potential buyer ride-hailing giant Didi Chuxing was stuck in a stalemate as the latter was only offering $1.5bn and continued to lower the price, according to a report by online technology media platform 36Kr.  [China Daily]    
• Cathay Pacific to Cut Jobs in Overseas Operations. Cathay Pacific Airways plans to cut jobs in its overseas operations as it presses on with restructuring efforts to claw its way back into profitability, South China Morning Post reports. Changes will involve “consolidation” of overseas sales,marketing, cargo and airport-based operations. [Bloomberg]    
• PetroChina Sees Earnings More Than Doubling as Oil Prices Surge. PetroChina Co. projected 1H profit more than doubled, hitting the highest in more than 3 years as a rally in global crude prices buoyed returns.Net income probably surged between 107% and 122% in first 6 months of 2018 from a year ago, it said in a filing Monday.  [Bloomberg]    
• Sinochem Group Unit Files for Hong Kong Initial Public Offering. Sinochem Energy Co. Ltd., a unit of state-owned Sinochem Group, filed an IPO to the HK stock exchange. For the three months ended March 31, the unit generated revenue of 120bn yuan ($17.6bn) compared with 106.6 billion yuan in the year earlier period.  [Bloomberg]    
• China Comm Cons, China Harbour Win $1.52b Panama Project. The consortium of China Communications Construction and China Harbour Engineering won a project to build a bridge over Panama Canal, according to a statement.The project will be completed in 60 months.  [Bloomberg]         
• China Tower, Alibaba Said to Discuss Business Cooperation. The two companies are discussing possible cooperation in sectors including cloud computing and the Internet of Things, Hong Kong Economic Journal reports. Both sides may also explore opportunities in 5G, autonomous driving and new energy. [Bloomberg]         
• BOCHK, JD May Bid for Virtual Bank License With Tencent. BOC Hong Kong and JD Finance will bid for virtual bank license in Hong Kong; may team up with Tencent in the final bid, Ming Pao reports. Ant Financial may apply for the license alone, and seek cooperation if needed in the future.  [Bloomberg]         
• Chalieco Postpones Shanghai IPO Subscription to Aug. 21. China Aluminum International Engineering Corp Ltd (Chalieco) says the price-to-earnings for its IPO is higher than industry average and that may pose risks to IPO investors, according to a statement to Shanghai stock exchange.  [Bloomberg]         
• BMW to Raise SUV Prices in China as Much as 7% Due to Tariffs. Bayerische Motoren Werke AG will raise the price of some mid-sized sport utility vehicles in China by as much as 7 percent beginning Monday, in a further rippling of the U.S.-China trade war through the global supply of products.  [Bloomberg]  
• Samsung Profit Misses Estimates as Smartphone Growth Stalls. Samsung Electronics Co.’s net income fell short of analysts’ estimates as slowing growth in the global smartphone market hits demand for its Galaxy devices, while Chinese rivals ramp up competition to supply displays.  [Bloomberg]     
• Xinyi Glass Unaffected by Trade Wars Now, Tariff Costs Transferable to Consumers. Regarding escalating trade battles, Executive Director Lee Shing Kan said that the company remained unaffected at the current stage and emphasized that it maintained its close ties with the consumers. Besides, Lee opined that the relevant costs would be transferable to the customers in case of increases in duties, while no impacts were experienced in terms of orders.  [AAStocks]          
• Agile Group Buys Heyuan Commercial/Residential Site at RMB1.09Billion. Agile Group announced that it has acquired a commercial and residential site, in gross floor area of 113,000 sq. m., in Heyuan City at total consideration of RMB1.09bn.  [AAStocks]          
• Alibaba Senior Mgmt & Directors' Shareholdings Lowered to 9.5%. As Alibaba disclosed in the 20-F report, the Chairman Jack Ma and Executive Vice Chairman Joseph Tsai holds 6.4% and 2.3% stakes in the company as of 18 July. All directors and executive officers as a group own 9.5% shareholdings.   [AAStocks]