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KraneShares Advisors

October 15, 2019

China Last Night: October 15, 2019

Asian equities were predominantly up with Japan playing catch up after yesterday’s holiday while South Korea, Taiwan, India, Thailand and Indonesia were up. China, Malaysia and Singapore were down today while Hong Kong was basically flat despite China’s mainland media confirming trade talks had made “substantial progress”. Yesterday’s Bloomberg article on the lack of media mention was the latest negative spin on the positive steps taken by both sides.

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KraneShares Advisors

October 10, 2019

China Last Night: October 10, 2019

The latest round of trade negotiations begins today in Washington. It was a Jekyll & Hyde session as news flow swung from positive (US China FX deal, truce/not deal feasibility, US Huawei exemptions) to bad (little progress on Monday/Tuesday US China lower level trade dialogue, NBA, visas) back to positive leading to a mixed overnight session as Japan, HK and China gained while Korea and India were down on the day with Taiwan closed for holiday.

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KraneShares Advisors

October 3, 2019

Hong Kong Rally Unmasked, PayPal Enters the Thunderdome of China Mobile Payments

Asian equities followed the US equity market downwards in an ugly session as US unemployment underwhelmed following large downward revisions of August data and US tariffs on the EU following a WTO judgment citing European subsidies. Japan’s Nikkei 225 was off -2% while the region was generally down ~-1%. Hong Kong was an outlier reversing from a -0.9% loss in an afternoon rally driven by news of a proposed ban on wearing masks to gain +0.26%. Short covering was cited as one catalyst for the swing.

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KraneShares Advisors

October 1, 2019

China Last Night: October 1, 2019

Asian equities were mixed with Japan, Taiwan and South Korea gaining on increased enthusiasm for Apple’s latest iPhone 11 leading to a tech rally while India, Thailand and Indonesia were off. Mainland China and Hong Kong were closed for China’s 70th anniversary. It was a fairly quiet night as expected due to the China holiday.

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KraneShares Advisors

September 26, 2019

China Last Night: September 26, 2019

Asian markets were positive after President Trump’s press conference with Japanese Prime Minister Abe included positive comments on a China trade deal. The 180 from yesterday’s UN speech, which sent markets tumbling, had a positive effect today in Asia following the positive effect in the US yesterday. Mainland markets were outliers as retail investors sold recent winners especially media technology names, gold, and small caps.

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KraneShares Advisors

September 24, 2019

China Last Night: September 24, 2019

Asia was broadly up on small gains as Japan reopened after missing yesterday’s downdraft due to a holiday. The Hang Seng finally made a small gain while the mainland rose despite being off its highs as investors raised vacation cash pre-Golden Week in the afternoon session.

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KraneShares Advisors

September 18, 2019

China Last Night: September 18, 2019

Asia Waits on The Fed’s Decision, China Fiscal Spending Rises, FedEx’s Trade War Warning. Asian equities were mixed on light volumes as China, Korea, India and Taiwan managed small gains while Japan, Hong Kong and Malaysia were off slightly in advance of the Fed’s decision. The PBOC is widely expected to follow the Fed in lowering lending rates after today’s decision.

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KraneShares Advisors

September 17, 2019

China Last Night: September 17, 2019

Asian equities were mixed as Japan, Korea, Malaysia, Thailand and Indonesia managed small gains while China, HK and India were off. Positive news that a China trade delegation is headed to DC was overshadowed overnight. Mainland investors locked in profits after the PBOC didn’t roll over or increase the amount of maturing Medium-term Loan Facility (MLF), and they didn’t cut the interest rate on the newly issued MLF. $80B of Open Market Operations (OMO) were allowed to mature without any reissuance.

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KraneShares Advisors

September 10, 2019

China Last Night: September 10, 2019

It was a quiet night as volumes were light in advance of Thursday’s ECB and next week’s Fed decisions. Asian markets were mixed with mainland China seeing short term profit taking while Hong Kong was flat. Tencent has been actively buying back shares since August 28th in lots of 120k or 110k. Tuesday’s purchase of 110k shares was the 10th such purchase. Shanghai closed above the 3k level, which could provide support going forward.

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KraneShares Advisors

September 5, 2019

China Last Night: September 5, 2019

Trade talks are back on! The Ministry of Commerce announced the news following a phone call between Vice Premier Liu He and USTR Lighthizer and Sec of Treasury Mnuchin. No word if the US will implement October 1st step up in tariffs. The news hit the tape at the open, lifting Asian equities. Pre-market Premier Li give a not so subtle indication that China’s bank reserve requirement ratio will be cut soon following a State Council meeting yesterday.

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KraneShares Advisors

September 4, 2019

China Last Night: September 4, 2019

Rumors that Hong Kong’s leader Carrie Lam would officially drop the extradition bill that led to mass demonstrations caused a massive afternoon rally beginning around 1:40pm local time in advance of her post market/4pm close telecast. Brokers were so aligned that a massive short squeeze took place. The thirteen weeks of demonstrations have also weighed heavily on investor sentiment as HK stocks struggled with poor sentiment while the local economy has been hit hard.

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KraneShares Advisors

August 29, 2019

Trade Hope, Jack Ma & Elon’s Conversation at World AI Conference in Shanghai

Ministry of Commerce spokesperson Gao Feng’s comment that China would not raise tariffs in response to US tariffs, which are set to occur on Sunday September 1st, is sparking a rally this morning. The comments occurred at 3:27am after mainland China’s equity market had closed but in time to cause late day rallies in Hong Kong, Taiwan, Malaysia and Indonesia. The comments followed Treasury Secretary Mnuchin’s comments that talks between the US and China would continue without providing any specifics. HK continues to suffer from poor sentiment as demonstrations continue while the HK economy declines.

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KraneShares Advisors

July 23, 2019

China Last Night – PBOC: No Interest Rate Cut Coming, New Oriental Education Reports, STAR Board Slips in Day Two

Asian equities rebounded overnight though news flow and volumes were light. Positive trade talks helped the tech, 5G and telecom stocks while the PBOC stated they would not cut interest rates in response to a Fed move helped CNY appreciate slightly versus the dollar. A broad interest rate cut is a blunt tool while the policy makers have preferred more targeted policies to help specific industries that have been hurt by the trade war.

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KraneShares Advisors

June 26, 2019

China Last Night – Mnuchin’s Comments

Treasury Secretary Mnuchin’s comments after the Asia market close/5am EST that a trade deal was 90% done has sent futures higher. The comments are in stark contrast to the negative tone driven by the Washington Post article that three Chinese banks have violated US law by dealing with North Korea which sent HK and mainland financials lower on Tuesday.

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KraneShares Advisors

June 11, 2019

China Last Night – Multiple Catalysts as Mainland Volumes Surge

The State Council announced local governments will be allowed to issue bonds to fund infrastructure projects such as railway, highway and energy projects. This activity had been curtailed as tax cuts limited funds available. Infrastructure related names had a very strong day on the news as brokers estimate it could raise GDP by 20 to 50bps. Policy makers willingness to support the economy was broadly seen as a positive by the market as it should be!

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KraneShares Advisors

June 4, 2019

China Last Night – 5G Licenses Coming, Pharmaceutical Audit

The Ministry of Industry and Information Technology announced 5G licenses could be granted as soon as next week. China Tower managed a gain following a broker upgrade.The US weakness weighed on Asia combined with the lack of progress on the trade front has made investors hesitant to commit new capital.

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KraneShares Advisors

May 29, 2019

China Last Night – Quiet Night, Baozun/YY Earnings, the Power of Passive-notice BABA at Yesterday’s Close?

It was a fairly quiet night as insurance companies outperformed on an expansion of expenses eligible for tax deduction. US weakness led to a sea of red across Asian equity markets as global bonds are rallying while the lack of trade talks weighs on sentiment. The escalation of the trade war has had a negative impact on global equities in the last month as global bond markets are appearing to price in a global recession or worse.

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KraneShares Advisors

May 20, 2019

China Last Night – PBOC CNY Jawboning, Trade War Market Malaise, PDD Earnings

The Commerce Department’s Huawei decision marks an escalation in the trade war as both sides appear to be digging in as talks stall. The irony is that Huawei is a good client for numerous US chip and technology clients. We’ll have to see if equity market weakness leads to an olive branch as a break below 2,800 on the S&P 500 could trigger a policy reversal. PBOC Deputy Head Pan Gongsheng provided vocal support to CNY drawing a line in the sand at 7.

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KraneShares Advisors

May 14, 2019

China Last Night – MSCI Semi Annual Rebalance May Pro Forma, HK/Connect Play Catch Up (Down), Tencent Music Entertainment/BILI Earnings

China responded to US tariff increase from 10% to 25% on $200B of Chinese made goods by raising their tariff on 5,140 US made goods from 10% to 25%/20%/10% or 5% on $60B of US imports. The US has threatened imposing tariffs on the remaining $300B. Trump and Xi are expected to meet at the G-20 summit though that isn’t until the end of June.

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KraneShares Advisors

May 7, 2019

China Last Night

Mid-day news that Vice Premier Liu He will be joining China’s trade delegation led to a late day rally. He had been scheduled for a Wednesday to Saturday trip, which has been curtailed to just Thursday and Friday. Are investors calling Trump’s bluff after Lighthizer’s post-market close announcement of Friday night tariffs? To some degree it appears so. The final round of negotiations is usually the hardest as both sides are jockeying for position. It seems feasible. His trip is extended if talks go well on Friday though it is speculation on my part.

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KraneShares Advisors

April 30, 2019

China Last Night – Trade Talks Enter “Final Laps”, PMIs Expand Slower, Quiet Day Pre-Holiday

Key News Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer are back in Beijing. Mnuchin was quoted in the New York Times as saying negotiations are entering the “final laps”. Manufacturing PMI                                         50.1 versus estimate 50.5 and March’s 50.5  Non-manufacturing PMI                               54.3 versus estimate 54.9 and March’s 54.8  Caixin China PMI Manufacturing                50.2 … Continue reading China Last Night – Trade Talks Enter “Final Laps”, PMIs Expand Slower, Quiet Day Pre-Holiday

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KraneShares Advisors

April 26, 2019

China Last Night – President Xi Keynote Speech at Belt & Road Summit

President Xi delivered the keynote speech at the 2nd Belt and Road Forum in Beijing. The speech included several investor-friendly points, including a reference that the currency would remain “stable at a reasonable and balanced level”. This is addressing US acquisitions of currency manipulation. Xi reiterated that China would enforce protection of foreign intellectual property rights and prohibit the forced transfer of technology.

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