18-11-2020

Over the past couple of weeks, two U.S. pharmaceutical companies announced their COVID vaccine efficacy rate reaching 95% which is far above the Food and Drug Administration's required minimum of 50%. It is projected that after the official approval, about 50 million doses of vaccine can be produced and supplied by the end of this year, and it will contribute significant impact to the economy by next summer. This news boosted global stock markets by setting out a preliminary timetable for economic normalization. The International Monetary Fund (IMF) predicts that economic activity in the Asia-Pacific region will recover to 6.9% growth next year. Driven by a sharp rebound in domestic demand, China's gross domestic product (GDP) is expected to grow by 7.5% year-on-year in 2021. The debut of COVID vaccines may help companies plan ahead and increase inter-sector and economy-wide business investments. Optimism surrounding the vaccine induces investors to look forward to opportunities in traditional sectors. After experiencing this year's low comparison base, it is expected that cyclical stocks will have larger room for improvement next year in terms of earnings growth, propelling a wave of valuation rerating in the market. At this stage, we are optimistic in livelihood related sectors (i.e. food, clothing, housing and transportation), including properties (CIFI Holdings 884), automobiles (Guangzhou Automobile 2238), domestic consumption (Haier Electronics 1169, Yum China 9987, Mengniu Dairy 2319) as well as the cyclically-driven energy (PetroChina 857) sector for potential investment opportunities.


Reference:Bloomberg

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Market Analysis

Mainland property companies improve as the epidemic eases, respective stocks are expected to appreciate

With the easing of COVID epidemic, property sales in the Mainland improved. Under stress from the “three red lines” regulatory policy, the property sector valuation was relatively low, which actually provided a buying opportunity for investors. China's gross domestic product (GDP) in the third quarter increased by 4.9% year-on-year and 2.7% quarter-on-quarter. In August, the national property development was about 9 trillion yuan, a year-on-year increase of 4.6%, and the growth rate ...

11-11-2020

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Global aviation industry layoffs due to COVID

The global aviation industry has been hit hard by the epidemic. The global aviation industry laid off more than 350,000 employees in the past six months. It is expected that the total number of layoffs by the end of the year will be close to 500,000. Among those, the world's largest American Airline announced 19,000 layoffs and Lufthansa layoffs 22,000 in June. All Nippon Airways will reduce around 3,500 employees by 2022 and the number of airliners also reduced by approximately 30. Hong Kong Cathay Pacific announced the group would cut 8,500 jobs worldwide. It is the largest layoff plan for the aviation industry in East ...

04-11-2020

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14th Five-Year Plan sets new economic development framework

The Fifth Plenary Session of the 19th Central Committee was held in Beijing from October 26 to 29. The main agenda was to formulate the "14th Five-Year Plan" (2021-2025) outline and 2035 long-term goals. ...

28-10-2020

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Upon relaxed policy on bank profit reduction, investors should be cautious against excess optimism towards the Banking Sector

In order to cope with the risks of banks’ declining capital adequacy ratios and high bad debts, China’s financial regulatory authorities is set to relax the requirements on third-quarter profit reduction among large Chinese banks. This gives banks more discretion to show third-quarter growth. The news is favorable to the banking sector. However, there are plenty of adverse risk factors to bank stocks for the long run. Banks are under political pressure to yield to the real economy and take impact from the Covid pandemic. Chinese banks recorded the largest drop in net profit in at least a decade when it fell by 24% in the second quarter. Earnings declines led to rising capital pressures, which reduced the ...

21-10-2020

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Shenzhen 40th Anniversary Concept Stocks Become Popular

Chinese President Xi Jinping attended the 40th anniversary celebration of the Shenzhen Special Economic Zone this week. Going forward, Shenzhen will gain more reform autonomy, implements comprehensive authorized reform pilots to create a smooth domestic circulation. As the integration center of the Guangdong-Hong Kong-Macao Greater Bay Area (“GBA”), Shenzhen enables the development in high-technology, finance, market access and supports the construction of a data platform in the GBA in the future. Chinese government supports Shenzhen's capital market enlargement, promotes the internationalization of the renminbi, improves the foreign exchange management system, and moves forward on the reform of the Growth Enterprise Market (GEM) and the pilot registration system. Under the integrated development of the GBA, Chinese government supports Shenzhen on higher-level ...

14-10-2020

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Mid-Autumn Festival and National Day Holiday Boost Travel and Consumption

The Mid-Autumn Festival and National Day holiday brought on a recovery in tourism and the mobility of hundred millions of people. In the first four days of the National Day holiday, the country recorded 425 million domestic tourists and achieved tourism revenue of RMB 312.02 billion yuan. The Chinese government announced that the epidemic has been well controlled and adjusted the upper limit of tourist reception in various scenic spots from 50% to 75%. Much of the pent-up travel demands from the first half year is released during the holidays....

08-10-2020

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Mainland Regulators Formulate "Three Red Lines" to Control Debt Risk of Property Developer

Ministry of Housing and Urban-Rural Development and the People’s Bank of China formulate the “Three red lines” of the regulatory requirements for real estate companies based on the debt positions which refer to the asset load ratio after excluding advance receipts should not exceed 70%, the net debt ratio should not exceed 100%, the cash to short-term debt ratio should be less than 1.According to news report based on 2020 mid-year data, around 70% of the 220 listed real estate companies are "marginally on the line", and the institutions ...

30-09-2020

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Chinese National Day holidays drives domestic tourism

Due to restrictions on outbound travel, the eight-day holiday travel demand has turned to domestic travel, which is expected to be the first tourist peak period this year. As the first turning point of the post-Covid recovery in tourism, the three major mainland Online Travel Agencies, namely, Ctrip (TCOM.US), Meituan (3690) and Alibaba (9988)'s Fliggy have launched different travel promotion. For example, Meituan ...

23-09-2020

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The risk of Macau gaming licenses renewal

The Macau SAR government will reopen the gaming licenses for bidding, where all existing gaming licenses will expire in June 2022. The Macau government will start the "open consultation" process at the end of this year. The Sino-US trade friction will be the biggest factor influencing Macau's gambling license bidding results. Sands (1928.HK), MGM (2822.HK), and Wynn (1128.HK) are the three major US-owned companies operating in Macau. Among them, Sands (1928.HK) Chief Executive Officer Sheldon Adelson has a close relationship with President Trump of the United States and helped him raise funds for...

16-09-2020

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Retail Sales is Recovering in Beer industry

As the COVID-19 is under control, the preventive measures have been relaxed while the consumption in the Mainland China end-user market has recovered. The sales of the beer industry in the retail channel have generally recovered, as the data reveals that the dining channel has recovered to a good performance level 70% to 80% in August, while the night market channel has recovered slowly, at 20% to 30% in August. However, the on-going reopening of entertainment is expected to speed up the recovery of beer consumption. Accompanied with the policy of consumption upgrade in China, it is expected that the sales ...

09-09-2020

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Wave of mega IPOs in Hong Kong is expected to boost transaction volume

As Sino-US relations continue to be tense, a couple of Chinese companies listing in the US stock market has shown their intention to return to Hong Kong for listing and regard this as a "backup idea." Such trend is expected to persist as there is no signal showing that such tension would be relieved. This would bring increment transaction volume to the Hong Kong stock market. For instance, the second listing of Alibaba (9988), JD (9618) and Netease (9999) has not only injected diversity of the technology sector but also vitalize the atmosphere of ...

02-09-2020

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Milk Sales Performed Well Under Pandemic

Under the epidemic situation, China's dairy industry has grown against the trend In the outbreak of the epidemic, customers are encouraged to change their demand for consumer products, with high preference for healthier and high-quality milk. In order to support for the daily demands, the affiliated farms maintained normal operations during the pandemic. The production and sales of raw milk become unaffected, and the employees and cattle were not suspended from daily ...

26-08-2020

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Macao’s loosening traveling restrictions is stimulating gambling sector recovery

In mid-July, Macao loosened its boarder restriction by allowing visitors who tested negative for Covid 19 to enter casinos. Recently, Macao has further relaxed travel restrictions. Starting from 26th August, Guangdong province will resume Macao Travel Endorsements and such arrangement will further extend to the whole China from September 23th onwards. This means that the traveling between China and Macao will be resumed normal before the coming national holiday, during which is usually a peak season for Macao’s gambling industry....

12-08-2020

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Rapid Development of China’s Electric Car Industry Provides New Investment Opportunities

Due to China’s fast recovery from the coronavirus outbreak, the country’s automotive industry is rebounding with a steady pace. According to the statistics released by the China Association of Automobile Manufacturers (CAAM), China is leading the world in the automobile industry recovery showing resilience and recovery power. July auto industry sales is estimated to be 2.08 million. Although the figure was down compared to the previous month, it was up by 14.9% year on year basis. CAAM projects that the year on year drop that...

05-08-2020

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“Internal Circulation” economic policy in China stimulates consumer sector performance

Major consumer sectors performed well recently in the stock market. Analysis shows that this is propelled by the concept of economic internal circulation which stimulates domestic consumption. China’s YoY GDP growth rebounded from -6.8% in the first quarter to +3.2% in the second quarter, largely due to the massive size of the Chinese domestic market. Consumption has become the core driving force of China’s economic growth. The effects of China’s path to boost domestic...

29-07-2020

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Launching Hang Seng Technology Index, Focus on Technology sector

The U.S. Nasdaq is trending strongly and recently hit a record high of 10,700 points. In Hong Kong, technology stocks continue to be sought after by funds. Among them, the technology sector accounted for 33.75% and 27.6% of the market share and turnover respectively of the overall stock market in Hong Kong. Earlier, the Hang Seng Index announced that it would launch the Hang Seng Technology Index on July 27. The new index will track 30 technology companies listed in Hong Kong after screening, and will be regarded as the "Hong ...

22-07-2020

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China stock market actively traded, Focus on securities sector

The mainland securities market has launched GEM reforms and piloted a registration system which will increase the number of companies listed on the GEM. So far, 119 companies, including large corporations, have been listed on the Mainland’s Science and Technology Board, with a total net fundraising of 124.2 billion Yuan. The implementation of GEM registration will enhance market vitality, and as a result increase the amount of transaction in the market which will benefit commission revenue of securities firms. IPO in the GEM will also benefit securities firms by providing investment banking services. According to the...

15-07-2020

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Online consumption recording new high, Focus on E-commerce sector

Consumption and economy in China has shown a recovery after the pandemic.According to data from the National Bureau of Statistics, total retail sales of consumer goods went down by 2.8% in May, which was narrowed by as much as 5.5% from April. It shows that retail sectors in Mainland is gradually recovering. Among them, online consumption is a huge trend in Mainland. With the impact of epidemic, many physical stores and large corporations have moved from offline to online platforms, coupled with live streaming marketing, which has...

08-07-2020

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China’s home sales has rebounded, focus on property development sector

As the china pandemic situation has been generally controllable in the second season, the overall economy and sales in the mainland have gradually recovered. As a result, the sales of the mainland real estate industry have also gradually recovered from its lowest. According to report from CRIC, in June, the sales volume of mainstream property developers was 1.167 trillion yuan, up 31% quarter-on-quarter and 19% year-on-year. While, the sales area was 83.16 million square meters, up 32% quarter-on-quarter and 14% year-on-year.It is obvious that ...

02-07-2020

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Focus on Mobile Gaming Industry

Since the outbreak of COVID-19, people keep staying at home which has stimulated consumption on entertainment service including gaming. Therefore, time spent and consumption of users on mobile game has increased rapidly. According to the report from Sensor Tower, Chinese mobile game developers recorded a global revenue of US $1.94 billion in May, an increase of 11.5% over the previous period. Meanwhile, Chinese mobile game developers even account for 28.9% of total revenue of the global mobile gaming industry. It is also expected that Chinese game developer will attained sustainable ...

24-06-2020

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HUAWEI ban removal Focusing on 5G sector investment opportunities

Under the rapid development of the communications industry, companies from various countries have gradually developed and launched 5G technology to meet the needs of the industry. Last year, the United States introduced an administrative ban to prohibit companies from trading with Huawei. However, the U.S. Department of Commerce recently confirmed that the United States intends to revise the ban to allow U.S. companies to cooperate with Huawei in certain areas to formulate standards for 5G communication networks....

17-06-2020

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Capital chasing for underperformed second-and third-tier property management stocks

After the outbreak of the Covid-19 epidemic, the economies of various countries have been affected to a certain extent. Investors have been focusing on sectors supported by stable domestic demand. Among them, the property management sector has received widespread...

10-06-2020

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Consumption data in the post-epidemic phase shows a recovery Focus on big consumer sector under policy stimulus

China’s total retail sales of consumer goods in April fell by 7.50% YOY, but slowdown narrowed by 8.3% compared with March. The impact of COVID-19 on the consumer sector is narrowing quickly. Consumption is recovering rapidly, especially the consumer discretioanry sector, amid resumption of production. We expect the consumer staples ...

03-06-2020

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China's economic development focusing on "new infrastructure"

Since the outbreak of Covid-15, the economies of all countries have been affected. Stabilizing economic recovery and growth has become a top priority for all countries. Among them, China has proposed measures to develop ‘new infrastructure’, which includes 5G ...

27-05-2020

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The risks of airline and financial stocks have increased, adjust investment allocation under epidemics

Warren Buffett's investment company Berkshire Hathaway Inc previously cleared four U.S. airline stocks. Under the influence of the epidemic, the demand for tourism fell sharply. The business recovery of the airline companies was unsatisfactory and some even announced layoffs. The airline industry itself has structural problems, in addition...

20-05-2020

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Focus on sectors riding on "economic recovery" in the post-epidemic era

As the spread of the COVID-19 has started to slow, China's consumer spending is currently picking up. As of May 4th, the consumption recovery rate of China's life service industry has reached 91.5%, which highlights the recovery momentum of the consumer industry. The post-epidemic era shows the below characteristics in consumption: Firstly, Chinese consumption will gradually be released. During the Labour Day Golden Week in May, China recorded 115 million domestic tourists ...

13-05-2020

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Protectionism May Intensifies after COVID-19 Outbreak Focus on Domestic Demand to Avoid Trade Risks

The coronavirus outbreak has destroyed global economy and trade, and protectionism may intensify. Protectionism aims to protect domestic industry from external competitive pressure, such as restricting imports and exports from other countries, imposing tariffs on imports and exports, restricting import quotas, or implementing preferential ...

06-05-2020

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As the telecommunication industry undergoes upgrade and Internet of Things becomes popular, investors should focus on 5G investment opportunities

The development of telecommunication industry has accelerated in 2020. 5G technology has been officially launched and popularized in China. Related industry chain layout is completed. 5G network refers to the fifth-generation mobile communication network, which greatly...

29-04-2020

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Oversupply is still Exist after the Oil Reduction Meeting

In mid-March, oil prices plummeted by nearly 30% in a day since the price war between Saudi Arabia and Russia. The Organization of the Petroleum Exporting Countries (OPEC) and Russia agreed to reduce oil production by 10 million barrels per day in last Thursday (April 9), but oil prices fell significantly, in which WTI crude oil and brent oil dropped by 18% and 9% respectively from the day before oil cut meeting until today. There are two main reasons to explain this phenomenon. Firstly, the scale of oil cut was less than the market expectation of 15 ...

15-04-2020

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COVID-19 is Controllable in China, But China’s Supply Chain and Foreign Trade Might Still be Affected

After a large-scale outbreak of COVID-19 in China at the beginning of the year, the number of new cases in China has dropped significantly in April. The market believes that China has entered into the "post-epidemic" stage. According to the data from Ministry of Industry and Information Technology of China, as of March 28, 98.6% of industrial enterprises above designated size and 76% of SMEs in China have resumed operations, and 89.9% of employees have restarted work. ...

08-04-2020

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UK's Five Biggest Banks Skip Dividend, Dividend Investing Investors Need to Be Cautious

On the back of two “Black Swans”, Covid-19 virus and oil price plunge, stock markets of many countries have technically entered into bear markets. Countries, including South Korea, Thailand, Philippines, Indonesia, Brazil, USA, Canada, and Pakistan have triggered the “circuit breakers” in last week or early this week. In addition, due to the ...

01-04-2020

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Bear Market Rally: Unlimited Quantitative Easing Measures

On the back of two “Black Swans”, Covid-19 virus and oil price plunge, stock markets of many countries have technically entered into bear markets. Countries, including South Korea, Thailand, Philippines, Indonesia, Brazil, USA, Canada, and Pakistan have triggered the “circuit breakers” in last week or early this week. In addition, due to the outbreak of the epidemic, many companies stopped operating ...

25-03-2020

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Real Estate and Financial Sectors are Still Full of Risk

On the back of two “Black Swans”, Covid-19 virus and oil price plunge, stock markets of many countries have technically entered into bear markets. Countries, including South Korea, Thailand, Philippines, Indonesia, Brazil, USA, Canada, and Pakistan have triggered the “circuit breakers” in last week or early this week. In addition, due to the ...

18-03-2020

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Causes and Impacts of Oil Plunge

The oil output reduction talk between Saudi Arabia and Russia failed in disagreement, instead, both sides plan to drop prices and increase production. Prices of oil dropped sharply by 30%, and narrowed to 20% when the market closed on Monday (Mar 9). US stock markets also plummeted by more than 7% on Monday, triggering one of the “circuit breakers” for the first time since the financial tsunami in 2008.The large-scale outbreak of Coronavirus is the biggest reason behind the plunge in oil prices. Many factories in China have halted since the outbreak of Coronavirus, it might lead to the disruption of global ...

11-03-2020

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Is the Fed’s Emergency Rate Cut a Good News or a Bad News to the Market

Following the Dow's slump of more than 3500 points (about 12%) last week, US stock market rebounded more than 1,200 points on Monday, resulting from market expectations on interest rate cut on March 18.- However, the Fed announced an emergency interest rate cut of half a point yesterday (3/3), whose rate cut timetable was much faster than market expectations. The Dow Jones Industrial Average closed over ...

04-03-2020

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Spread of Coronavirus is Accelerating Overseas, It’s the Era of “Cash is King”

The outbreak of Coronavirus was primarily contained in China and Asian market in early February, the market sentiment in US and European stock market have not been affected, and the US stock market has been hitting record highs. However, with the sharp increase in confirmed cases in South Korea, Japan, Italy and Iran last week, WHO claimed the sudden increase in cases in countries outside China is "deeply concerning", the epidemic has gradually developed from a regional crisis to a global crisis. ...

26-02-2020

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Negative Data Starts to Appear, Reducing Risk is Imminent

Since the outbreak of Coronavirus, the Chinese government has introduced a series of measures to ease the turmoil in financial markets and the burden on enterprises, including injecting 1.2 trillion yuan into the financial market through reverse repo on Feb 3 , and lowering the rate on 200 billion yuan worth one-year medium-term lending facility (MLF) loans to financial institutions by 10 basis points to 3.15% from 3.25%. However, we believe that market risks are still exist. Recently, many companies such as Apple, HSBC and MGM have released their worries on business due to the epidemic. Also, Moody's ...

19-02-2020

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Asset Allocation under Market Fluctuations

Large fluctuations are still present in different asset markets since the outbreak of Coronavirus. In this article, we will discuss our views on stock, bond and commodity markets, hoping to help investors find opportunities in the volatile environment. For stock market, we expect that it will continue to fluctuate in the next few weeks, but we believe that the degrees of impact will varies among industries. Companies whose main business is related to people, including transportation ...

12-02-2020

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Risks and Opportunities under the Outbreak of Coronavirus

The progress of Coronavirus is our main focus this week. We believe that the epidemic is still in early stages, stock market will remain week in the next few weeks. In this article, we will explore the risks and opportunities brought by the epidemic.In terms of risk, companies whose main business is related to people, including transportation, retail, catering, leisure and gaming, are the first to be affected. According to the Macau government announcement, casinos are requested to be closed for at least two weeks. We believe that more business activities in other industries will be temporarily halted ...

05-02-2020

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De-risk Actively, Holding Cash for Opportunities

Statistically, HSI has rallied 8 out of 10 times in October with the average monthly return 5.1%. In addition, rebounds in the following October were stronger if the preceding quarter experienced a deeper decline: HSI tumbled over 20% in 3Q 2011 and 2015 but rallied 12.9% and 8.6% respectively in the following months. From the historical data, there is a decent probability of HSI going up after 8.6% down in 3Q this year. However, uncertainties remain in this month, including the unfavorable outlook towards the US-China trade talk and the forthcoming potential no-deal Brexit. ...

31-01-2020

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Data from China’s “Golden Week” implies a Strong Growing Trend of Online Consumption

According to China’s Ministry of Commerce, the overall revenue from retail and dining during the “Golden Week” rose 8.5% year-on-year to RMB 1.52 trillion, lower than the 9.5% growth during the same period last year and also the weakest since 2001. Data implies that the willingness to spend is dragged by the current uncertain economic outlook. However, a new consumption style is emerging amid consumption upgrades and the trend of online spending. According to data from NetsUnion Clearing Corporation, ...

09-10-2020

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Past Data Suggesting a Decent Probability of HSI Rebound with a Cautious Mind to Uncertainties

Statistically, HSI has rallied 8 out of 10 times in October with the average monthly return 5.1%. In addition, rebounds in the following October were stronger if the preceding quarter experienced a deeper decline: HSI tumbled over 20% in 3Q 2011 and 2015 but rallied 12.9% and 8.6% respectively in the following months. From the historical data, there is a decent probability of HSI going up after 8.6% down in 3Q this year. However, uncertainties remain in this month, including the unfavorable outlook towards the US-China trade talk and the forthcoming potential no-deal Brexit. ...

02-10-2019

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Acceleration of Local Projects Shoring up the Demand for Cement

In responding to the mounting downward pressure on the economy, Chinese authorities have requested to accelerate the issuance of special-purpose local government bonds and complete the annual bond quota by the end of September and put it in place by the end of October. Moreover, part of the special bonds quota for the next year will be allocated in advance. The shoring up of local projects is expected to boost the demands for cement. In fact, cement prices in China have entered into a traditional peak season with upward trend since September. ...

25-09-2019

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Allocation to Highways Operators to Balance Portfolio Risk and Reward as Economic Slowdown Accelerated, Evidenced by Lower-than-Expected Data Releases

China’s economic slowdown is further evidenced by the lower-than-expected consumption and investment data in August, within which, the growth rate of real estate investment continued its decline for the fourth month in a row, reflecting higher economic pressure in China. Among the data releases, industrial production was the worst with 4.4% growth on a yearly basis, representing the lowest level since Feb 2002...

18-09-2019

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Reduction in RRR by PBOC Exceeded Expectations and Brokerages Momentum Fueled by Rate Cuts Ahead

The People’s Bank of China (PBOC) has decided to lower the required reserve ratio (RRR) for financial institutions broadly by 50 bps and offer additional cuts in October and November, totaling about 100bps, for eligible rural commercial banks in order to support lending to small enterprises...

11-09-2019

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Positive Outlooks for Sportswear Industry amid Domestic Spending by Consumption Upgrade

With the rise of middle class and the consumption upgrade, consumers in China seek for higher living standard as the Chinese government proactively boosts domestic consumption and promotes tax reform for individual citizens. Along with forthcoming major sporting events, such as 2020 Olympic Games in Tokyo and 2022 Winter Olympic Games in Beijing, and the awareness on healthy lifestyles, the outlook of sportswear industry remains positive. Due to the sportswear industry over-expansion, after 2008 Olympic Games in Beijing, there was excess production capacity, resulting in a large amount of unsold inventories...

04-09-2019

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Allocation to Debt Securities amid Increasing Risk of Recession

Trade tensions over the last few months have worried the markets. Global manufacturing is deteriorating due to the trade war tension: the US manufacturing PMI has been going down for four months, China and Euro zone manufacturing activities have been contracting for several months. The US 10-year Treasury yield drops to the three-year low, lower than the 2-year yield again since 2007...

28-08-2019

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Potential Risk Eased and Positive Outlook for Gas Sales

The Chinese government promoted a series of environmental protection policies for air pollution. According to the 13th Five-Year Plan for energy development, the proportion of natural gas consumption in primary energy consumption shall reach 10%; therefore, the government consistently promotes the coal-to-gas conversion strategy. As city gas consumption accounts for the largest share of total consumption...

23-08-2019

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The Lending Rate Reform Eases Funding Costs with a Focus on Chinese Developers with Exposure in Greater Bay Area

The State Council of the PRC unveiled a plan and support Shenzhen to reform and demonstrate socialism with Chinese characteristics. The areas of reform, which include the financial sectors and the technology sectors, aim to encourage more international organizations to set up branches and headquarters in the city, making it one of the most competitive...

21-08-2019

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Intensified Risk-off Sentiment and Rate Cut Expectations Support Gold Price Momentum

Global recession risk has increased, with VIX up to 25 and hovering around 20 recently. The US 10-year bond yield once fell below 1.6%, reflecting worries about the economy outlook and increasing risk-averse sentiment. Funds generally flow into gold to counter the depreciating of other risky assets. In the meanwhile, global interest rate cuts make the gold more attractive under the expectation of monetary easing...

14-08-2019

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High Currency Risk Exposure Sectors are Underweighted amid the Inflated Possibility of Currency War

Last Friday, President Donald Trump announced unexpectedly that the US will, starting from 1 September , impose a 10% tariff on USD 300 billion worth of Chinese goods that were free of tariff previously. Officials from the People’s Bank of China (PBOC) blamed the US for such unleash of new tariffs and unilateral trade protectionism...

07-08-2019

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Property Management Companies Providing Defensive and Growth Nature amid the Risk of Economic Slowdown

China property management companies provide management services to property owners, residents and property developers. The business model is least affected and less correlated to the economic downturn. Apart from the traditional property management services, including security and repair and maintenance services, they extended the service to new areas covering community value-added services...

01-08-2019

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Relatively Stable Earning Prospect of CN Insurers with Attractive Valuations

CN Insurers outweighed amid recovery of premium income growth, optimization of product mix and premium structure and the A shares climb year-to-date. According to the China Insurance Regulatory Commission (CIRC), the total premium income nationwide for the first five months up 14% year-on-year, compared to the 4% year-on-year change for the whole year 2018...

24-07-2019

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Milder-than-Expected Impact under the New Drug Procurement Plan with Less Policy Risk Facing Innovative Drugs

The Chinese authority announced on last December the implementation of a pilot scheme of a procurement of drugs with target quantity in 11 cities, namely, Beijing, Shanghai and Tianjin etc. The procurement stipulated the tender-wining drug maker guaranteed the purchase quantity for the generic drugs for use in public hospitals in 8 to 15 months. The tender list included 25 drugs, with the average price cut at 50% or above...

17-07-2019

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Private Compulsory Schools may Hurt under the New Education Tightening While Higher and Vocational Educations have Little Impact

The State Council issued a new guideline tightening the regulation over compulsory education, covering public and private schools providing compulsory education services from preschool to grade 12 middle school education (K-12 education). The new guideline will tighten the regulation on the use of teaching materials as well as the student admissions...

10-07-2019

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Attractive Valuation of Macau Gaming Sector with Stabilizing Gaming Revenue Growth

The increase in the downside risks of the global economy, coupled with the impact of the trade war, placed negative impact on consumer sentiment. Although the retail consumption growth in the Mainland rebounded to 8.6% in May, it was the historical low for the past 19 years, reflecting that consumption is still weak. The decline in consumer sentiment has also indirectly dragged Macau's gaming revenue...

03-07-2019

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Overweighting Defensive Stocks to Guard Against Uncertainties on the US-China Trade Talk

The technology war between US and China triggered by the telecom equipment giant Huawei has not yet subsided while the US-China trade talk has not yet showing a positive sign. In addition, the increasing US-Iran tension following the shooting down of a US drone led to worries about the escalating geopolitical condition...

26-06-2019

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Auto Sector is still under pressure despite the attractive valuation but undetermined impact from the stimulus

The sales of automobiles in China fell 16.4% year-on-year to 1.912 million in May, and the sales of passenger cars down 17.4% year-on-year to 1.561 million for the same period, declining for eleven months, figures released by the China Association of Automobile Manufacturers. On the other hand, the China auto inventory index reported 1.65 as of the end of May...

19-06-2019

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China Telecom Infrastructure service providers and network equipment vendors could directly benefited from the early rollout of 5G commercial licenses

China’s Ministry of Industry and Information Technology (MIIT) on 6 June granted 5G licenses for commercial use to the mainland telecom operators and the China Broadcasting network Corporation (CBN), earlier than the market expectation in the second half of this year. Before the commercial licenses...

12-06-2019

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US Fed Rate Cut and Slowing Domestic Mortgage May Pressure on Net Interest Margin

The Fed chair said on a speech that they are closely monitoring the development of US-China trade talk and will act as appropriate to sustain the expansion as the trade tension escalated. The comment signals a possibility of rate cut and the probability of such rate cut in September increased to 92% from 58% according to the Fed Fund futures...

05-06-2019

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Avoid the sectors highly correlated to the RMB exchange rate fluctuation amid the depreciation risk

The offshore and onshore RMB devaluated 3.2% and 2.7%, respectively, to its recent low since the uplift of tariffs by the US and both dropped to RMB 6.9/USD on May 13th and 17th. Chinese officials verbally support the currency to the public due to the recent fluctuation of the currency...

29-05-2019

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Infrastructure Sector is Expected to Recover and Catch Up amid the Boost of Investment Growth by the PRC Government and Attractive Valuation

The National Development and Reform Commission held a press conference last week reiterating that, to ensure the economic growth with an allowable band, the PRC government will uphold the six economic support measures and promptly implement countermeasures in a timely manner to boost consumptions and support investments...

22-05-2019

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Allocation to Defensive Sectors against the Risk of Increasing Economic Recession Stemming from Trade War

The US officially increased the level of tariffs to 25% and mulled raising tariffs on essentially all remaining imports from China, which are valued at approximately $300 billion. China retaliated against the US with a tariff hike on $60 billion worth US goods...

15-05-2019

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Rental Properties Guard Against Market Downturn Amid the US-China Trade Talks

The value of retail sales in the first quarter contracted 1.2% year-on-year, but the figure lifted 3.6% compared to the previous quarter of last year. For March, the retail sales only decreased slightly by 0.2% year-on-year, while the figure improved dramatically from -10.2% for February...

08-05-2019

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Good performance in Q1 and promising further development of domestic insurance companies

The overall development of China's insurance industry has been in good shape since the beginning of this year. According to statistics from China Insurance Regulatory Commission, the original premium income of the insurance industry in Q1 increased by nearly 16%...

02-05-2019

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Market consolidations with monetary policy margin tightening

Last weekend, the central government made positive judgments on the economy in the first quarter. The overall situation was stable, better than expected, and the start was good. At the beginning of this week, the central government pointed out that it was necessary...

24-04-2019

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Remain bullish on Chinese higher education sector amid a series of supporting policies

The Implementation Plan of Reform on Vocational Education and the Modernization of China Education 2035 issued by the State Council in February has clearly presented a positive attitude towards higher education sector. The government work report published in March...

17-04-2019

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Potential rerating on consumption sector amid a tax rate cut on inbound consumer goods

The Customs Tariff Commission of the State Council recently announced that the tax rate on inbound consumer goods included on the No.1 taxable item list, which includes food, drinks, furniture etc. will be reduced to 13 percent from the previous 15 percent...

10-04-2019

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Long term bullish on Chinese gaming industry amid the resumption of games approval

Following the resumption of domestic games approval process three months ago, China's State Administration of Press, Publication, Radio, Film and Television (SAPPRFT) has recently resumed approval of imported games after a 14-month freeze ...

03-04-2019

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Rerate income stocks amid a slowing pace of U.S. rate hike

The FOMC statement released in March indicated that the U.S. economy is growing slower than expected amid the ongoing trade war, Europe’s weakening economy and the substantially fading positive impact from the fiscal stimulus in China...

27-03-2019

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China outlines tax cuts to stimulate economy, bullish on consumer discretionary sectors

China continues implementing tax cuts. Not only ensuring that the individual income tax reform and the general-benefit tax cut policies issued at the start of the year for small and micro businesses are put into effect, China also carried out a reduction ...

13-03-2019

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Further rerating expected amid explicit support from the Central Government

The State Council previously issued the Implementation Plan of Reform on Vocational Education and the Modernization of China Education 2035, which showed the government’s positive attitude towards private vocational education. Investors’ concern on future expansion business model...

06-03-2019

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Potential rerating on Huawei-related stocks amid turnaround of Huawei Incident

The U.S. government was trying to persuade allied countries to avoid telecommunications equipment from Huawei, which is accused of spying for the Chinese government, allegations the company has repeatedly denied. Huawei-related stocks therefore plunged significantly...

27-02-2019

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China’s railway FAI expected to reach new high, remain bullish on China’s railway sector

China’s fixed asset investment (FAI) in railways is expected to reach a historical high of 850bn yuan in 2019. Also, China Railway Corporation recently raised the target for newly added operating mileages to 6,800km in 2019, an increase of 45% compared with previous year...

20-02-2019

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Rerate higher education sector amid an amendment to the foreign investment policy

Stock prices in Chinese education companies have plunged after the central government issued a draft proposal that would tighten regulations. However, the Ministry of Education has recently issued “Notice on Higher Education Institution Setting”...

13-02-2019

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Long term bullish on Chinese pharmaceutical distribution industry amid medical reform

The Central Government has fully rolled out the two invoice system in 2018, which requires pharmaceutical products to be processed by only one distributor from manufacturer to hospital. Since the two invoice policy has taken into effect, the growth of Chinese...

30-01-2019

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Expect potential profit-taking amid the extradition of Huawei CFO

China’s National Bureau of Statistics reported that China’s GDP grew at 6.6 percent in 2018, lower than 6.8% in 2017. Although China achieved its goal of 6.5 percent GDP growth set for 2018, its GDP grew at its slowest pace in 28 years...

23-01-2019

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Investment in infrastructure to step up growth, remain long term bullish on construction-related sectors

China’s PPI and CPI rose weaker-than-expected in December, raising fears of deflation in the market. Also, both China’s exports and imports had plunged into negative territory in December, highlighting the continued slowdown of the total domestic demand...

16-01-2019

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Rerate local property sector amid a slowing pace of U.S rate hike

According to the minutes of the Federal Reserve’s December meeting, most participants expressed the view that, especially in the environment of muted inflation pressures, the FOMC could afford to be patient about further policy firming...

10-01-2019

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The market is waiting for a breakthrough of trade war and further stimulating economic measures amid weakening Chinese economy

The partial shutdown of the U.S. Government began on Dec 22, due to the failure of passing the appropriations legislation funding federal government operations and agencies. President Trump and the Democratic Party have not reached a consensus regarding...

02-01-2019

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More investors are anticipated to step out of the volatile market amid a lack of specific stimulus measures

The annual Central Economic Work Conference (CEWC) had come to an end. The conference statement said that China will strengthen counter-cyclical adjustments in its macro policy, continue to implement a proactive fiscal policy and a prudent monetary policy...

27-12-2018

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Investment opportunities may arise amid the forthcoming Fed rate announcement and CEWC

The Fed will be announcing its latest rate decision on Thursday Hong Kong time, coupled with the ongoing Central Economic Work Conference (CEWC) which takes place from Wednesday till Friday, investment opportunities may be presented for investors...

19-12-2018

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Rerating of local property investment companies amid a slower pace of U.S. rate hike

The U.S. economy is expected to grow at a slower pace amid the negative impacts led by trade war and fading fiscal stimulus. Considering Fed officials’ comment and meeting notes, investors start believing that the Fed will pencil in fewer rate hikes in 2019...

12-12-2018

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Cost reduced from low oil prices and weak U.S. dollar, remain long term bullish on China aviation industry

China’s tourism market is growing steadily. According to a report released by the China Tourism Academy, the number of domestic travelers have reached over 2.8 billion in the first half of 2018, up 11.4 percent year-on-year...

05-12-2018

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Market direction yet to be confirmed as Trump-Xi meeting awaited

US President Donald Trump, who is due to meet Chinese President on the sidelines of a G20 summit this week, exerts tariffs pressure on China again ahead of the high-stakes meeting. He said he expected to move ahead with raising tariffs on $200 billion in Chinese...

28-11-2018

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Reduce market exposure amid trade dispute contagion risk

The US-China trade war is now escalating to an export ban of technology from imposing tariffs. The Department of Commerce’s Bureau of Industry and Security (BIS) is examining the possibility of controlling the export of 14 categories of advanced...

21-11-2018

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Rerate Chinese securities sector amid a reduced risk of forcing liquidation of pledged shares

The Chinese securities firms are struggling in a slowing global economy, coupled with the risk of forcing liquidation of pledged shares, which resulted in a significant plunge of their stock prices. However, the People’s Bank of China rolled out...

14-11-2018

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Long term prospect of China aviation industry remains positive amid ongoing industrial reform

Civil Aviation Administration of China (CAAC) released the flight schedule for the winter season of 2018 recently in an attempt to increase airports’ capacity and on-time departure rate. The move will help improve Chinese carriers’ efficiency ...

07-11-2018

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New procurement measures should have little impact on innovative drugs, recommend to accumulate for long-term investment

The Bureau of National Medical Insurance held a symposium in regard to bulk procurement in Shanghai on September 11, introducing the key points and details of joint procurement and announcing the first batch of selected 33 drugs...

31-10-2018

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Long term bullish on Chinese insurance industry amid personal income tax deduction reform

The State Administration of Taxation unveiled a draft version of new rule for personal income tax deduction. The draft included a deduction against tax of 1,000 yuan per month respectively for child education and mortgage interests for the first home ...

24-10-2018

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Chinese leading telecommunication network operator to benefit from 5G and IoT being the future key drivers sustaining industry revenue growth

China’s 4G market is approaching saturation. According to the financial reports of China’s three major telecommunication network operators, the growth rate of 4G users is decelerating. Nonetheless...

18-10-2018

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Overreaction to the removal of natural gas installation fee, remain long-term positive on gas sector

The Chongqing government proposed to abolish installation fees, which triggered market concerns on a significant cut of connection fees amid tightening policy, resulting in a plunge in gas sector. However, we believe that the share is oversold ...

10-10-2018

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Bullish on oil-related sector amid surging crude oil price

Oil prices have been surging in 2018, which live up to our expectation in the April report. The international crude oil supply remains relatively tight currently. Although the U.S and OPEC have been boosting their oil production...

03-10-2018

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Long term positive catalyst for China and Hong Kong stock markets as MSCI considers lifting China A-Share index weighting

MSCI is considering lifting the weight of China A shares in its Emerging Markets Index, by lifting the free-float-adjusted market value to 20% from 5% for mainland stocks. The inclusion would occur in two stages in 2019 ...

26-09-2018

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Short term catalyst for infrastructure related sectors under the expectation of increasing infrastructure investment by the Central Government

As the China-US trade war heats up again, the Central Government strived to implement fiscal policy to increase investment in social infrastructure in order to reduce economic downside risks ...

19-09-2018

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Capital outflow causes Emerging Markets Index & Hong Kong stocks continue to be under pressure

Currency crisis continues to spread amid emerging markets and trigger capital outflows. The MSCI Emerging Markets Index has fallen 21% since January. With Hong Kong listed companies weight nearly 23 percent of the index ...

12-09-2018

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Defensive play amid emerging market contagion risk

Currency crisis has been spreading through emerging markets. The Argentine peso slumped to a record low after the Turkish lira’s plunge. Although Argentina’s foreign exchange reserves hit record high on January ...

05-09-2018

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Long term prospect of China insurance sector remains intact amid speeding up industry transformation

The China Insurance Regulatory Commission (CIRC) has issued “Document 134” last year which banned life insurers from selling universal life insurance as an add-on to regular life policies from October onward ...

29-08-2018

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Higher generic drugs market concentration rate and revenue expected with efficacy reassessment deadline approaching

China has always been known as one of the leading country for manufacturing generic drugs, with the fastest growing pharmaceutical market in the world. 95 percent of the nation's 189,000 drugs registered are generics. However ...

22-08-2018

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Employ defensive investment strategy amid the break out of Turkey's economic crisis

Turkey has encountered an economic crisis recently which led to a plunge in Lira. The US tariff sanction is only the trigger point for the crisis. The main reason is that Turkey's financial position is fragile, with high national debt and relatively low foreign exchange reserve ...

15-08-2018

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Widening net interest margins should boost local bank's revenue

The United States has entered a rising rates cycle, along with decent economic indicators providing room for further interest rate hike. The Fed also reiterated a gradual rate hikes during the latest Federal Open Market Committee meeting ...

08-08-2018

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Rerate local retail industry amid strong growth of local consumer market

The local consumer market has been growing strongly. The value of total retail sales in May rose 12.9% year-over-year, increased by 15 consecutive months. Both consumer discretionary and consumer staple industry had recorded double-digit growth ...

01-08-2018

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The release of easing monetary policy is expected to ease the financial constraints in China

The Chinese government has been shrinking the sprawling shadow-banking system and implementing de-leveraging since last year. Investors were becoming concerned that the tighter asset management rules released in April would lead to a shortage of capital in the market due to over-deleveraging ...

25-07-2018

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Capital inflow on quality stocks amid Yuan depreciation and escalating trade war concern

Amid the escalating trade war, tariffs between China and the United States have led to uncertainties in China’s export market and overall economic growth. Both domestic and external demand have been decreasing and therefore slow down China's economic growth ...

18-07-2018

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Macau’s GGR is expected to pick up after the end of the World Cup

Considering May and June have always been the off season for Macau’s gaming sector historically together with the negative headwind from the World Cup in Russia, Macau’s gross gambling revenue (GGR) rose by 12.5% year-on-year in June to MOP22.5 billion which is below consensus ...

11-07-2018

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Revenue of property investment player boosted by strong retail sales, Defensive play amid global trade tensions

Hong Kong's retail sales are thriving while financial markets are being buffeted by global trade tensions and rising borrowing costs. The value of total retail sales in May rose 12.9% over the same month in 2017, which is also its 15th month of expansion ...

04-07-2018

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Markets volatile amid trade war fears, further reduce exposure if market rebound

Along with the intensifying and spreading trade confrontation between China and the United States, trade war fears continue to roil global stock markets. The People’s Bank of China also cut some banks’ reserve requirements to boost lending. However, among the released liquidity of 700 billion yuan ...

27-06-2018

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Reduce market exposure amid intensifying US-China trade war

The U.S announcement of a 25 percent tariff on up to $50 billion of Chinese products intensified the US-China trade war. It prompts China’s Commerce Ministry to respond with a 25 percent tariff on $50 billion of U.S. goods ...

20-06-2018

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The new upward cycle for construction machinery amid solid demand growth

In 2018, with the continuous momentum from increasing export demand and ongoing innovation of products, construction machines’ sales keep going strong. The main products had a double-digit growth in the first five months of 2018 which exceeds expectation. Construction machines have an average life expectancy of around 10 years ...

13-06-2018

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Strong demand of beer expected with World Cup approaching

All the World Cup related sectors are gaining significant momentum with the Russia World Cup approaching. Amid all the World Cup related sectors, beer industry appears to be a more mature and seasonal industry. Studying the past 20 years statistics ...

06-06-2018

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Potential re-rating expected amid continuing gas industry reform

China’s government continue to implement coal to gas switching policy, which leads to an increase in the demand of natural gas. In order to prevent gas shortage from happening again, The NDRC recently released some policies to boost the development of the natural gas industry ...

30-05-2018

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Lower than expected import tariffs cut on vehicle provide chances for revaluation of domestically produced luxury car manufacturers

China’s Finance Ministry said that it will cut import tariffs on vehicles to 15 percent, down from 25 percent, starting 1 July 2018. The magnitude of vehicle import tariff cut is lower than previous market expectation at 5-10%, thus less impact on the domestically produced luxury car manufacturers ...

23-05-2018

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Higher paper prices amid sharp drop in imported waste paper volume, accumulate industry leaders and get ready for the peak season

The Chinese government has imposed much stricter quality restrictions on imported cardboard, started at beginning of March this year. Under this new restriction, import cardboard will only be accepted with contamination rates below 0.5%, rather than the 1.5% previously applied ...

16-05-2018

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Bullish on sporting goods industry amid consumption upgrade and supportive policies

One of the key messages released from China’s 19th National Congress about the target of future China’s economic growth is the structural reform from quantity growth-focused to quality growth-focused. With rising per-capita income, the consumption style of Chinese consumer has changed and they are spending more to improve their living quality ...

09-05-2018

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Higher dividend payout ratio amid slowing down 5G development, a chance of industry revaluation

We see the impact of the implementation of further tariff reduction and completely remove roaming charges directed by the Chinese government are marginal to the telecom sector. While investors keep tracking the impact of the new measures ...

02-05-2018

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Bullish on oil sector amid solid global demand in crude oil

A global recovery story drives stronger demand for crude oil worldwide. According to OPEC, world oil demand grew by 1.73% to 97.07 million barrels per day in 2017, with China and emerging European countries recorded 3-4% solid demand growth last year. We expect oil demand remains solid in 2018 ...

25-04-2018

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Further reduce equity position amid heightening market risks

Equity markets remain volatile amid heightening political risks. Investors are getting more nervous to every headline, including President Donald Trump threated to impose $100 billion of additional tariffs against China ...

18-04-2018

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China auto dealers backed by attractive valuation with solid fundamentals and supportive policies

Chinese President announced plans on lowering tariffs for autos at the Boas Forum for Asia. The plan should be positive to China’s auto dealers, who are still enjoying the earnings upcycle, by spurring demands for import autos as we expect retail prices of import autos would decline by the approximately same amount to reflect the decrease in tariffs ...

11-04-2018

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Great opportunities in environmental protection sector amid supportive long-term environmental protection policy

According to the Chinese Government’s 13th five-year plan, the market value of wastewater treatment in China may reach thousand billion RMB over the next five years. While there is still a huge demand in the development of wastewater treatment in China ...

04-04-2018

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Trim positions in blue chips for better risk management amid unstable global market conditions

US stocks tumble after Trump proposed tariffs on $50 billion worth of Chinese exports to the United States. While fear of a trade war weighed on sentiment, there are several bad news from US technology further weighed down market, including the Facebook and Cambridge Analytica data scandal ...

28-03-2018

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Chinese leading telecommunication equipment manufacturer to benefit from accelerating pace of 5G development

Coverage of fourth-generation wireless (4G) networking services continues to expand across China. The annual Government Work Report delivered by China’s State Council earlier this month stated that the government will push the development of the fifth generation wireless (5G) ...

21-03-2018

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Deepening of supply-side reform continues, more upside for cement producer stocks are expected

The demands of cement across China remain intact in 2017. A further decline in new cement capacity should support the cement prices to continue uptrend this year. The Chinese government has implemented a new environmental tax policy since the beginning of this year ...

14-03-2018

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Solid recovery in HK retail market amid RMB appreciation, rental revenue and percentage rent provisions likely to continue uptrend

HK retail industry recovery remains solid. The value of total retail sales in January 2018 increased by 4.1% year-over-year, recorded the 11th consecutive months of year-over-year growth, which signal a sign of recovery in consumer spending of inbound tourism. Besides ...

07-03-2018

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Revenue and dividend payout of Power Assets Holdings is expected to increase due to UK economic recovery

The Bank of England left its policy unchanged by keeping interest rates at 0.5% and maintain its quantitative easing stimulus at the BoE February meeting. At the same time, the central bank lifted its 2018 UK GDP growth forecast to 1.8% from 1.6% foreseen at the November inflation report ...

28-02-2018

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AAC Technologies: Long-term growth story remains intact, buy the dip

The share price of AAC has recorded a significant correction recently, as several analysts have lowered their estimates for iPhone X shipments in the past few weeks which had weighed on sentiments. However...

21-02-2018

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Accumulate after the Chinese New Year for mid-long term investment

The Fed will continue its hiking cycle this year and gradually reduce its balance sheet amid strong U.S. economic backdrop. The recent correction in U.S. equity market has triggered sell-offs in the global equity markets ...

14-02-2018

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Investor risk appetite wanes, prefer H-shares and large-cap private companies with great growth potential in long-run

The Chinese economy has been growing well over the past year. We see improving earnings in the region, especially those large-cap private companies have recorded rapid growth in terms of corporate earnings ...

07-02-2018

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Banks impose stricter measures on granting credit to property developers, integration progress in mainland property sector is set to accelerate

We see signs of the Chinese government to speed up its deleveraging progress. Recently, some commercial banks in China have stopped granting credit to the real estate developers and ...

31-01-2018

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Gas companies with LNG storage facilities are set to benefit from natural gas supply shortage in China

In 2017, the Chinese Government has made a strong push for its "coal to gas" conversion policy in Beijing, Tianjin and Heibei with an aim to improve the smog pollution problem ...

24-01-2018

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China Banking Sector: Recovery pace is well on track

With improving net interest margin and stable loan growth, we believe the recovery of China banks sector continues to be well on track. Moreover, with improving earnings outlook of the Mainland enterprises ...

17-01-2018

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The key beneficiary of sustained strong HK stock market

We believe the Hong Kong Exchanges and Clearing Ltd. is well geared to benefit from the sustained strong Hong Kong stock market. Its latest acceptance of allowing the weighted voting rights structure for companies listed in HK is imminently a big plus ...

10-01-2018

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Surging yield of debt market contributed by the Central Government’s risk prevention measures is expected to stimulate investment income of China insurance players

The previous Central Economic Conference placed “Prevention and Mitigation of Major Risks” as one of the three major topics of the conference as well as the government policy focus of the next three years ...

03-01-2018

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China’s railway sector recovery in the pipeline, as government tenders accelerating

China has been stepping up the tenders for railway trains after the 19th Communist Party of China National Congress. The government made a tender of 75 and 100 sets of multiple units respectively on November 4 and 10, raising the number of tenders to 314 this year ...

27-12-2017

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Better-than-expected oil cut deal will continue to support oil price

OPEC agreed earlier to extend the oil cut deal to end of 2018, and would consider in June next year whether a further adjustment is needed. On the other hand, exempted countries including Libya and Nigeria have informed OPEC that the two countries targeted not to increase oil production next year. From the demand side ...

20-12-2017

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Mengniu: a solid dairy leader in the defensive staple sector

We continue to favour Mengniu (2319HK) in view of accelerating dairy demand growth in China, as well as being well-geared in the relatively defensive staple sector. Further, with its stringent sales and product upgrade strategy underpinned by proven execution, we believe Mengniu's brand competitiveness is set to enhance ...

13-12-2017

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Defensive play during Hong Kong stock tumble under profit-taking

The Hong Kong stock market made a strong gain thus far this year. This prompts rising investors to gradually start to lock in profits before the end of the year. This coupled with the Christmas holidays approaching, the market seems lacking of investment direction ...

06-12-2017

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Invest pharmaceutical companies with strong R&D capabilities on dip for long-term investment

As the population in China ages, demand for medicine is on the rise. In order to cope with rising medical costs, China has been actively reforming the entire medical system in recent years. Key reforms, including the “Two Invoices System” and the elimination of 15% drug mark-up policy in hospitals ...

29-11-2017

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Mobile specifications upgrade from Android players amid strong sales of Apple’s iPhone X

Apple’s iPhone X has recorded a strong sales number worldwide. Supply is abundant and there is no serious shortage issue as the market expected, breaking the rumors of low production yield rate and delay of key components earlier ...

22-11-2017

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China insurance sector: Relaxing foreign ownership; market development will further accelerate

China announced it will relax the foreign investment policy in the insurance industry by phase, allowing the foreign ownership in joint ventures to increase up to 51% in three years’ time and to fully relax to “wholly-owned” in five years’ time ...

15-11-2017

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Macau gaming sector: Better outlook ahead

Macau’s casino revenue in October climbed to the highest in three years as many high-stake bettors and recreational players visited Macau after the Golden Week holiday. Gross gaming receipts rose 22.1 percent to $3.3 billion US dollars last month, according to the latest data released by Macau’s Gaming Inspection and Coordination Bureau ...

08-11-2017

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Implementation of environmental measures benefit cement industry

Clinker and sand prices have more than doubled as a result of environmental measures, providing a profitable business extension for cement players. Large players with higher environmental standards are in a position to gain more market shares ...

01-11-2017

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Rising bond yield and sector structural improvement benefit insurance sector

China 10-year bond yield began to rebound since September last year, and has risen to 3.81% recently, reaching three-year high. The rise in Treasury Yield is favorable to life insurance companies in different aspects. Frist of all, as life insurance companies generally allocate more than 80% of their investment in fixed-income ...

25-10-2017

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Rising oil prices and restructuring concept benefit oil stocks

Oil stocks are the main beneficiaries of rising price of crude oil. Among different industry players, CNOOC Limited will benefit most as its profitability is most sensitive to changes in oil prices. The price of crude oil is increasing gradually, with the support of oil cut deal of OPEC ...

18-10-2017

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Breakthrough in land conversion in Qianhai releases value of companies’ land reserves

On December 7, 2012, Xi Jinping visited Qianhai on his first stop of site visit following the end of the Eighteenth National Congress, emphasizing the development of Qianhai was an new opportunity of the Shenzhen Special Economic Zone and the opening up of a new platform for the cooperation between Guangdong, Hong Kong and Shenzhen ...

11-10-2017

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Market leaders well geared to benefit from accelerating recovery in China’s dairy sector

Pace of recovery in the China dairy sector has been stepping up. While the market competition remains fierce, the market leaders have seen a rising market share gain; and the industry sales growth has been improving well (to 6-7% in the second quarter of 2017) ...

04-10-2017

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China’s electric car sector poised for further re-rating, as government plans to phase out traditional diesel/petrol vehicles

Following the announcement by the UK and France to ban production of diesel and petrol engine vehicles by 2040, the Chinese Ministry of Industry and Commerce also said that China is currently proactively to schedule a timetable to phase out the traditional diesel and petrol vehicle production ...

27-09-2017

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The effective of new Education Act is expected to increase profitability of high-quality private schools

The seriously inadequate investment in public education, coupled with the rapid rise in the number of middle class families, stimulate the demand of high-quality private schools ...

20-09-2017

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Hong Kong property stocks benefit from potential “speed-up” of agricultural land development

Regarding the proposed local first-time homebuyers scheme by the Hong Kong Government, some industry participants suggest that developers can make good use of the agricultural lands they own through a land premium concession ...

13-09-2017

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Is the hike of policy rate by the PBOC a tightening signal?

The People’ Bank of China (“PBOC”) raised interest rate of various lending facilities in open market recently, not only raising interest rate on Medium-Term Lending Facility (“MLF”) by 10 basis points historically before Chinese New Year ...

13-02-2017

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Investment Strategy under Trump’s Executive Order

Donald Trump continues to be the spotlight of the world after he was sworn in as President of the United State on Jan 20. Within two weeks after taking the office, Trump has already signed several executive orders ...

06-02-2017

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Rental growth for non-core commercial districts in HK

Central is a prime location for commercial space. It has always been the focal point for multinational financial groups and local traditional enterprises. In recent years, however, these large enterprises have gradually narrowed the office space in Central ...

01-02-2017

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How do Trump’s policies influence economy and stock market?

2017 has just started, with the market continuing to focus on Donald Trump’s presidency on 20 January. Investors are trying to look for clues from Trump’s manifesto and post-election public speeches to develop their future investment strategies ...

09-01-2017

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Where is Hong Kong’s Property Market Heading?

Since May 2016, Hong Kong’s home prices have been rising rapidly. In November 2016, the government raised the stamp duty on residential purchases again to 15%, except for first time buyers, in an attempt to curb investment demands and tame the overheating property market ...

03-01-2017

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The Opportunities brought by PPP

The central Chinese government continues to tighten control on the real estate market, which has weakened the contribution made by property investments to the economy. To mitigate this, China is encouraging the development of infrastructure instead of property as the source of economic growth, and promoting the Public-Private-Partnership (PPP) model ...

12-12-2016

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Strategies for Shenzhen-Hong Kong Stock Connect

The long-awaited Shenzhen-Hong Kong Stock Connect has finally debuted, but the excitement and passion of the market that was last year, when Shanghai-Hong Kong was launched, has long gone ...

28-11-2016

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Rebalancing for the Trump Era

Trump’s victory of the US president election has shocked the financial market. As the surprise subsides, investors are now looking for clues of investment opportunities in his policy proposals ...

14-11-2016

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