Daily Posts

Caixin Services PMI Rises

Happy Chinese New Year’s! China Overnight will go on a hiatus the remainder of the week until post-Chinese New Year’s.

  • January Caixin China PMI Composite    50.9 versus Dec’s 52.2
  • January Caixin China PMI Services 53.6 versus estimate 53.4 and Dec’s 53.9


Takeaway: The IHS Markit Caixin press release summed it nicely “growth continued to be driven by the service sector…manufacturing companies signaled a relatively subdued trend”.  The Tale of Two China’s thesis is alive and well driven by the divergence between manufacturers and services across multiple data sets such as employment, new orders and exports.  The press release does note “the government has refrained from taking policies of strong stimulus”. The “shock & awe” stimulus experienced in 2009 has not occurred. Last Friday I was invited to a lunch with Beijing based economist who shared a similar view that a coordinated stimulus policy has yet to occur. I find it hard to imagine that the hammer isn’t about to drop on a coordinated policy adjustment.

Hang Seng gained +0.21%/59 index points in the half day Monday session on very light volume and mixed breadth with 23 advancers and 25 decliners. Most Asian markets are closed and will remain closed for Chinese New Year’s this week. AIA gained +3.65%/97 index points after they were given further access to the mainland market. Within the MSCI China All Shares’ HK stocks, discretionary gained +0.78%, staples +0.74% and industrials +0.49% while healthcare -0.65% and financials -0.26%. Stock Connect was closed.

Shanghai & Shenzhen were closed and will remain so for the next week.

Education stocks will have a good day as the Ministry of Education reaffirmed private companies will continue to run kindergarten. Several US listed stocks are apt to do well.

Maoyan Entertainment (1896 HK, mobile movie ticketing platform, went public today on the Hong Kong Stock Exchange raising $250mm that values the company $2.1B. Very strange timing on their IPO which led to a rather unsurprising lackluster result.

Markets Closed – Data as of Friday

  • CNY 6.74
  • Yield on 1 Day Chinese Gov’t Bond 1.65%
  • Yield on 10 Year Chinese Gov’t Bond 3.10%
  • Yield on 10 Year China Development Bank Bond 3.71%

 


Shanghai & Dalian futures exchanges are closed