Good morning on a frigid morning!

PBOC announced the launch of a bank lending program called the Targeted Medium-term Lending Facility (TMLF) to assist private companies access to credit. Banks will provide loans at a rate of 3.15% for one year with the option to roll for two further one year terms. Private companies, often referred to as small medium enterprises (SMEs), have had difficulty gaining access to credit while SOEs have had unfettered access to credit. The program is another stimulus measure to support the economy.

Hang Seng, like all of Asia, traded lower -0.94% following Fed chair Powell indicating more US interest rate increases in 2019. Volumes were higher day over day though still well below the 52 week average with only 4 stocks advancing and 43 declining. Ping An and HSBC were off -2.19% and -0.86% worth -26 and -21 index points as the Hang Seng fell -241 index points. Semiconductor manufacturer Micron’s disappointing guidance weighed on semi related names across Asia.  Within the MSCI China All Shares’ HK stocks, real estate was the only sector in the green +0.37% on speculation of property development curbs despite the headwind of higher rates. Healthcare had another rough day -2.25% though it had company with materials off -1.82%, tech -1.57%, fin’ls -1.13% and energy -1.07%. Southbound Connect volumes were light though buyers outpaced sellers. ICBC saw outsized buying activity as the volume leader 5 to 1 buyers to sellers. Tencent saw 2 to 1 sellers to buyers.

Shanghai & Shenzhen diverged -0.52% and +0.2% on higher day over day volumes though light broadly speaking on positive breadth as advancers outnumbered sellers on both exchanges. Small caps and private companies (non-SOE) outpaced large caps on the PBOC TMLF announcement. Not surprisingly within the MSCI China All Shares’ mainland stocks, tech and communications were up +0.42% and +0.32% while financials and industrials were off -1.11% and -1.06%. Industrials were dragged lower as construction names experienced profit taking after recent outperformance. Not a bad considering the weakness in the US and across Asia. Northbound Connect volumes were moderate as sellers outpaced buyers.

HK listed pharmaceutical maker 3SBIO rose overnight as the company spent $32.9mm buying back 3.36mm shares. The stock is off 50% from its June high.

Live video streaming website Bilibili, best known for users ability to stream anime, and Taobao, Alibaba’s e-commerce platform, announced “business collaboration in E-commerce”. Taobao will utilize Bilibili’s content to drive sales on their website. Bilibili is popular among Generation Z. Bilibili is trading up ~5% pre-market.

A research firm noted that two more cities are allowing specific property development to occur while another firm noted mortgage rate cuts in two different cities.

The Hong Kong Monetary Authority followed the Fed by raising interest rates from 2.5% to 2.75%.

• CNY 6.88; actually appreciated the dollar overnight.

The FX market appears to approve of Powell.Bonds rallied driving yields lower.

• Yield on 1 Day Chinese Gov’t Bond 1.69%
• Yield on 10 Year Chinese Gov’t Bond 3.32%
• Yield on 10 Year China Development Bank Bond 3.78%

Commodities mixed/higher on the Shanghai & Dalian