TGIF!

The Central Economic Work Conference (CEWC), a three day economic summit attended by top policy makers that shapes 2019 goals, concluded today with an emphasis on stimulating the economy. What should we expect? Tax cuts are front and center in addition to allowing credit to flow to the private sector and issuance of special purpose bonds to fund infrastructure. Job #1 is clearly to get the economy going.

The China Securities Journal reported quoted Central Propaganda Department official Feng Shixin “We are accelerating the process of issuing licenses for game titles.” An unspecified number of online games has been approved for the first time since March. Online gaming companies listed in HK and China had a very strong day as the ban on new games has weighed very heavily on the companies’ revenues and stock prices. Tencent gained +4.51% while many mainland listed companies jumped higher. US listed Netease is trading up +5.5% pre-market.

Hang Seng opened lower -0.43% and then powered higher +0.51% driven by one stock: Tencent +4.51% accounted for 118 index points while the index gained +129 points. Volumes jumped 33% day over day and almost reached the 52 week average though breadth was moderate with 20 advancers and 30 decliners. Tencent is the largest stock within the Hang Seng at 10%. HSBC and AIA jumped +1.57%/40 index points and +1.01%/24 index points. Tencent listed the Communications sector +3.19% while Apple suppliers weighed on the tech sector -2.09%. Real estate names were off -1.48% reversing the recent positive trend. Southbound Connect volumes increased in mixed trading. Tencent was the volume leader with buyers slightly outpacing sellers in one of the largest volume days for a single security.

Shanghai & Shenzhen slipped -0.79% and -0.96% on slightly higher day over day volume that is still well below the 52 week average accompanied by poor breadth. An onshore broker used the following adjectives in their market overview: sluggish, tragic, and deteriorating. That was just their opening sentence! Real estate and healthcare were off -2.92% and -2.13%. There is chatter that banks will be asked to shore up their balance sheets  which could curtail profit growth. Pharma just can’t shake the overhang of the drug pricing auction earlier this month. Northbound Connect volumes were moderately high with buyers outpacing sellers. Interestingly Ping An was the volume leader with 2 to 1 buyers.

Bloomberg reported that Bridgewater has raised $1B for their onshore China risk parity fund.

• CNY 6.90
• Yield curve steepened slightly on CEWC’s looser monetary tone
• Yield on 1 Day Chinese Gov’t Bond 1.61%
• Yield on 10 Year Chinese Gov’t Bond 3.33%
• Yield on 10 Year China Development Bank Bond 3.79% 

Commodities were mixed/lower on the Shanghai & Dalian