Daily Posts

PPI/CPI, Foreign Bond Holdings Increased in Sept, SOE Profits Increase

Hope all is well on a cool fall day.

Hang Seng opened up +0.55% but eased to a James Bond +0.07% in choppy afternoon trading. HK Turnover was off 6% day over day, well below the 52 week average with 29 advancers and 19 decliners as the Hang Seng’s P/E now stands under 10 at 9.72. China Mobile’s gain of +1.44% and CNOOC’s gain of +2.33% were worth 20 and 19 of the indice’s 17 poinnt gain while AIA’s -1.52% loss/-34 index points. Within the MSCI China All Shares’ HK stocks, utilities and energy gained 1.65% and 1.45% as Saudi/oil uncertainty helped the defensive oriented sectors. Real estate experienced a bounce of 0.71%. Tencent opened higher 0.4%, was down -3.39% and rallied into the close to end -0.5% though the volume was light. Tencent was highest volume stock in Southbound Connect with sellers outpacing buyers 3 to 2. Southbound volumes were light as mainland investors were net sellers of HK stocks.

Shanghai & Shenzhen lost -0.81% and -1.93% in another light volume day with poor breadth. Small caps and technology underperformed as the Chinext lost -2.63% and the Tech Sector within the MSCI China All Shares mainland stocks’ lost -2.91%. Tech has the most overseas revenue exposure as the trade war continues to weigh on the markets. Bloombeg has an article that tech companies are having loans guaranteed by their stock are being called. I’m not seeing this mentioned elsewhere as most attributed mainland tech weakness to global tech’s weakness. Small caps and tech are higher beta so when the market falls they fall more. Financials gained +0.72% on strength from security brokers. Northbound Connect was closed in advance of tomorrow’s HK market holiday.

Sept PPI YoY       3.6% versus estimate 3.5% and 4.1%
Sept CPI YoY       2.5% versus estimate 2.5% and 2.3%

Takeaway: Food prices increased 3.6% from Aug’s 1.7% primarily driven by a swine flu which has led to increased pork prices. PPI was flat. GDP, Retail Sales and Industrial Production will be released Thursday.

The negative media reports has reached a crescendo though time will tell if this is an indication of a bottom. CSRC chairman Liu said that the “winter” taking place in China’s stock market was coming to and end with “spring” approaching. I’ll hold him to it.

The State-owned Assets Supervision and Administration Commission (SASAC) reported the revenues of 100 central SOEs increased 11% to $3.05 trillion in the Jan to Sept time period. Debt to asset ratio fell 0.5% to 66%.

Bloomberg reported that foreign holdings of Chinese mainland bonds increased RMB 5.1B in September to a total of RMB 1.689 trillion.

  • CNY 6.91
  • 10 Year Chinese Gov’t Bond Yield 3.58%
  • Commodities were largely off on both exchanges