23-08-2019

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, the growth from city gas consumption plays an important role in the accomplishment of the 13th Five-Year Plan. In fact, the gas sales volume has weakened due to the slowdown of economic activities: sales volume was up 10.8% year-on-year in 1H 2019, slower than the 11.6% and 18.1% growth rate for the 1Q 2019 and 2018, respectively. However, the growth prospect of gas distribution business remains intact thanks to the ongoing coal-to-gas conversion strategy and the development of urbanization. Moreover, gas connection business accounts for the second largest source of revenue apart from the distribution business. The policy risk for the connection business is minimal as the state council announced a milder-than-expected connection fee cap at 10%. In addition, gas distribution business provides a steady and stable income, allowing companies to have dividend payout growth. Hence, it is recommended to focus on shares with high penetration in city gas business and high initiative in adding new customers for both urban and rural areas.

Reference:
Bloomberg, National Development and Reform Commission

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Market Analysis


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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