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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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