China - Market Strategy 05 (Jan 23 - Jun 24)

[winston]

CN Law Firms Reportedly Revising IPO Prospectuses to Wash Down CN Risk

Reuters, citing sources, reported that Chinese law firms are rushing to comply with new mainland guidance by revising the wording of some listing prospectuses already filed and those yet to submit applications, downplaying negative descriptions of China-related business risks in companies' offshore listing documents.

The move followed rumours that China's regulator ordered mainland law firms at a closed-door meeting last month to refrain from mentioning negative descriptions of China's policies or its business and legal environment in their prospectuses, or else the listings would not be approved.

It is learnt that the law firms are changing their wording from "Covid Lockdown" in the prospectuses to just "Covid Pandemic", and avoiding references to travel and business restrictions during the pandemic.

Chinese lawyers are also suggesting to stop referring to "foreign exchange control" in some of the IPO applications, and instead use more neutral wording such as "foreign exchange management".

At least two IPO applications are now revising their descriptions of how China is changing its policies, the sources said.

HKEX (00388.HK) has also previously amended its listing rules to remove the requirement for a chapter on China risk factors, which came into effect on 1 August.

HKEX responded on Tuesday (15 Aug) that all listing applicants from all jurisdictions are required under the listing rules to disclose all material risks, including jurisdictional risks, and claimed that this requirement has not changed.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[behappyalways]

Beijing Begs Funds Not To Sell Stocks As China Challenges Mount
https://www.zerohedge.com/markets/beiji ... nges-mount

[winston]

CHINA STRATEGY: DOMESTIC MACRO CHALLENGES WARRANT A COORDINATED EASING EFFORT

The domestic macro challenges have weighed on market sentiment and equity market performance.

On the back of the lacklustre July macro data, the People’s Bank of China (PBoC) cut the medium-term lending facility (MLF) and 7-day reverse repo rates on 15 August.

While we had anticipated policy rate cut, it came faster than expected.

Looking ahead, it is expected that the loan prime rate (LPR) will be cut by 15-20 basis points (bps) next week (21 August), with further cuts to the reserve requirement ratio (RRR).

We believe more coordinated easing measures, encompassing monetary, fiscal and industry (especially real estate) will be needed not only to support growth, but also to facilitate pass-through of policy support.

For the real estate sector, we expect more demand-side easing measures will be needed. Local media reported that several cities consider lowering the second home down payment requirement.

We expect the equities market is likely to stay range bound unless there are more coordinated policies rolling out.

We maintain our expectation that there will be no massive and big bang stimulus. Hence, macro data may take time to demonstrate that it is moving towards a recovering and expansionary direction.

While chances of potential default by Country Garden (CG; 2007 HK; Fair value: HKD0.62; ESG rating: B) and trust leading to a systemic risk for China banking sector is low, it does raise concerns about broader real estate sector exposure, further “national services” and ongoing net interest margin compression for Chinese banks. We believe it will drag Chinese banks’ valuation multiple and earnings expectation.

Despite Chinese banks offering relatively high dividend, we recommend switching to other quality defensive plays, such as Chinese Telecoms and selected Hong Kong international banks.

We maintain our preference for policy easing beneficiaries (autos and new energy vehicle (NEV) supply chain in the medium term despite near-term share price weakness on the back of intense price competition) and selective consumption plays that will benefit from peak season approaching (travel and tourism, beer).

Source: OCBC

[winston]

China unveils measures to revive stock market

The China Securities Regulatory Commission (CSRC) proposed steps including cutting trading costs, supporting share buybacks and encouraging long-term investment to support a stock market that has slid to nine-month lows.

Other measures laid out by the CSRC include boosting the development of equity funds, studying plans to extend trading hours, and improving the attractiveness of listed companies.

The CSRC said it would boost the development of equity funds by speeding up the registration of index funds and broadening funds' access to derivatives and encourage fund managers to make countercyclical investments.

Listed companies will be encouraged to buy back shares and offer investors steady streams of dividend payouts. The CSRC will also study measures to restrict financing activities by companies and sectors whose shares trade below net asset value or initial public offering prices.

Currently, investors can only sell stocks on the second day of purchase in China.

Source: Reuters

https://www.thestandard.com.hk/breaking ... rket%C2%A0

[winston]

China companies rush to unveil share buybacks on regulators' call

More than 30 companies including chipmaker Loongson Technology Corp and Xian Manareco New Materials Co have said since Friday (Aug 18) that their controlling shareholders had proposed buying back shares because of confidence in the companies' future development and value.

Other companies that have announced share buyback plans include Shenzhen Kiwi Instruments Co and Chengdu Screeen Micro Electronics Co.

Source: Reuters

https://theedgemalaysia.com/node/679364

[winston]

China Stock Rout Sparks $119 Million Buying Pledge by Funds

E-Fund Management Co. and China Asset Management Co. were among those promising 50 million yuan ($6.8 million) each.

The asset management unit of Guotai Junan Securities Co. committed 200 million yuan.

Investors say the market suffers from a lack of confidence, with no clear catalyst in sight.

Source: Bloomberg

https://finance.yahoo.com/news/chinese- ... 48769.html

[winston]

Global Funds Abandon China Blue Chips in $11 Billion Selloff

Overseas funds have been fleeing the mainland market, offloading the equivalent of $10.7 billion in a thirteen-day run of withdrawals through Wednesday, the longest since Bloomberg began tracking the data in 2016.

Emerging market funds have turned more bearish on Chinese stocks, deepening their average underweight position to almost 100 basis points as of the second quarter from 24 basis points three months earlier. They were overweight by 40 basis points as of end-2022.

Foreign funds own less than 4% of total A-shares outstanding.

Source: Bloomberg

https://finance.yahoo.com/news/global-f ... 13583.html

[behappyalways]

Beijing Unleashes 'National Team' To Rescue Chinese Stocks
https://www.zerohedge.com/markets/beiji ... ese-stocks

[behappyalways]

Hedge Funds Dump Record Amounts Of Chinese Stocks In Longest Selling Stretch On Record
https://www.zerohedge.com/markets/hedge ... tch-record

[behappyalways]

"Nothing's Working" - China's Latest 'Stimulus'-Driven-Rally Lasted Just 30 Mins
https://www.zerohedge.com/markets/nothi ... st-30-mins