This website uses cookies to collect usage information in order to offer a better browsing experience. By browsing this site or by clicking on the "ACCEPT COOKIES" button you accept our Cookie Policy.

China Last Night: October 15, 2019


Chief Investment Officer

Live From Beijing Day 2: New Loans & Aggregate Financing (The Good), CPI/PPI (The Bad), and Money Supply (The Unchanged)

Key News

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. Despite the fact that yesterday’s piece was proven factually inaccurate, Bloomberg has another negative piece out this morning that China wants tariffs lifted before buying more agriculture based on unnamed sources (again). Didn’t the USDA already report increased China agriculture purchases yesterday? The half-empty types I suppose…. Tech lead the mainland China markets lower, though volumes on Hong Kong and China were anemic as profit taking ruled the day.  

We have spoken to the issue of affordable housing in Hong Kong as one of the underlying issues for continued discontent. Carrie Lam confirmed in a press conference that housing will be a key topic in her upcoming annual speech.

Great fall weather here in Beijing. Even better meetings, having met with an economist, internet/e-commerce analyst and other experts. I’ll provide more color over the next several days as tomorrow headed to see several companies including Didi.

Kweichow Moutai reported Q3 earnings after the China close today. Net income grew 17% year over year to 10.5B ($1.483B) while Q3 revenue 21.4B ($3.022B).

September Data Year over Year – Released After Yesterday’s Close

CPI3% versus estimate 2.9% and August’s 2.8%
PPI-1.2% versus estimate -1.2% and August’s -0.8%

Takeaway: The CPI’s strength was driven by the 11.2% YoY rise of food prices while non-food prices rose a mere 1% YoY. The African swine flu has had a material effect on pork prices as China’s hog herd has been culled by 1/3 year over year and apt to reach a fall of 50% in the next several months according to a local expert. Pork prices rose nearly 70% year over year and nearly 20% month over month. PPI was pulled lower for the third month in a row as raw materials (-4.8%) and manufacturing (-1.2%) declined though matched the market’s weak expectations.

September Data Year over Year – Released After Last Night’s Close

1.690 trillion versus estimate 1.360 trillion and
August’s 1.21 trillion
2.270 trillion versus estimate 1.9 trillion
and August’s 1.980 trillion
M28.4% versus estimate 8.2% and August’s 8.2%

Takeaway: Wow! The new loans is a big surprise jumping 12% year over year. It is too bad this data came out prior to the market’s close as it should have a positive effect on sentiment. The market has been concerned about tight liquidity curtailing private companies’ access to capital. The positive reading could be a green shoot that China’s stimulus is making its way to the real economy. Premier Li reiterated the need for continued “counter cyclical adjustment policy tools”, cutting “taxes, fees, and reduce financing costs” at a symposium he chaired yesterday. Doesn’t sounds like the foot is coming off the gas pedal though it isn’t floored.

H-Share Update

The Hang Seng opened higher but eased to a loss of -0.06%/-15 index points to close at 26,506 as volumes declined -24% day over day/well off the 1 year average on mixed breadth of 24 advancers and 26 decliners. CCB gained +0.8%/+16.58, China Mobile -0.98%/-12 index points and Geely Auto -2.78%/-6.1 index points. Wharf Real Estate +2.09%/+3.39% while China Unicom -3.13%/-4.8 index points. The Hong Kong stocks within the MSCI China All Shares declined -0.09% as discretionary gained +0.99% despite auto weakness, staples -0.35%, and financials +0.19% while materials -1.11%, energy -0.84%, industrials -0.82%, tech -0.66% and real estate -0.38%. Southbound Connect volumes were moderate/higher as buyers were active. Volume leader CCB had 1.5 buyers to sellers while CM Bank was heavily sold and Tencent had modest buying.

A-Share Update

The Shanghai & Shenzhen declined -0.56% and -1.11% as volumes declined 14% day over day/well off the 1-year average as yesterday’s massive positive breadth (only 500 declining stocks) swung the other way with only 903 advancers and 2,725 decliners. Like breadth, yesterday’s trend reversed as mega caps managed a positive day while small and mid-caps declined more than 1%. The mainland stocks within the MSCI China All Shares declined -0.67% as staples gained 1.15% as the only positive sector led by liquor stocks. Yesterday’s leading sector tech lost -2.76%, materials -1.47%, utilities -1.22%, communication -1.2%, energy -1.1%, discretionary -1.06% and industrials -1.02%. Northbound Connect volumes were moderate with buyers active on both the Shanghai and Shenzhen.  Volumes on the Shenzhen exceeded the Shanghai by a small margin though foreign buyers were more active on the Shanghai. Foreign investors purchased $518mm of mainland stocks today.

A broker noted that Budweiser Brewery Co APAC (1876 HK) will be added to MSCI indices on October 15th.

Last Night’s Stats

  • USD/CNY 7.07 versus 7.06 yesterday
  • Euro/CNY 7.79 versus 7.79 yesterday
  • Yield on 1-Day Government Bond 1.69% versus 1.69% yesterday
  • Yield on 10-Year Government Bond 3.14% versus 3.15% yesterday
  • Yield on 10-Year China Development Bank Bond 3.74% versus 3.74% yesterday
  • Commodities were lower on the Shanghai & Dalian Exchanges with Dr. Copper -0.17% .

Originally Posted on October 15, 2019 – Live From Beijing Day 2: New Loans & Aggregate Financing (The Good), CPI/PPI (The Bad), and Money Supply (The Unchanged)

Disclosure: KraneShares Advisors LLC

Content on China Last Night is for informational purposes only and should not be construed as investment advice. This material represents an assessment of the market environment at a specific time and is not intended to be a forecast of future events or a guarantee of future results; material is as of the dates noted and is subject to change without notice. This information should not be relied upon by the reader as research or investment advice regarding the funds or any security in particular.

This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities. Investing involves risk, including possible loss of principal.

This material contains general information only and does not take into account an individual’s financial circumstances. This information should not be relied upon as a primary basis for an investment decision. Rather, an assessment should be made as to whether the information is appropriate in individual circumstances and consideration should be given to talking to a financial advisor before making an investment decision.

Forward-looking statements (including Krane’s opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results) contained in this presentation are based on a variety of estimates and assumptions by Krane. These statements generally are identified by words such as “believes,” “expects,” “predicts,” “intends,” “projects,” “plans,” “estimates,” “aims,” “foresees,” “anticipates,” “targets,” “should,” “likely,” and similar expressions. These also include statements about the future, including what “will” happen, which reflect Krane’s current beliefs. These estimates and assumptions are inherently uncertain and are subject to numerous business, industry, market, regulatory, geo-political, competitive, and financial risks that are outside of Krane’s control. The inclusion of forward-looking statements herein should not be regarded as an indication that Krane considers forward-looking statements to be a reliable prediction of future events and forward-looking statements should not be relied upon as such. Neither Krane nor any of its representatives has made or makes any representation to any person regarding forward-looking statements and neither of them intends to update or otherwise revise such forward-looking statements to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions underlying such forward-looking statements are later shown to be in error. Any investment strategies discussed herein are as of the date of the writing of this presentation and may be changed, modified, or exited at any time without notice.

Disclosure: Interactive Brokers

Information posted on IBKR Traders’ Insight that is provided by third-parties and not by Interactive Brokers does NOT constitute a recommendation by Interactive Brokers that you should contract for the services of that third party. Third-party participants who contribute to IBKR Traders’ Insight are independent of Interactive Brokers and Interactive Brokers does not make any representations or warranties concerning the services offered, their past or future performance, or the accuracy of the information provided by the third party. Past performance is no guarantee of future results.

This material is from KraneShares Advisors LLC and is being posted with permission from KraneShares Advisors LLC. The views expressed in this material are solely those of the author and/or KraneShares Advisors LLC and IBKR is not endorsing or recommending any investment or trading discussed in the material. This material is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation to buy, sell or hold such security. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

Disclosure: Forex

There is a substantial risk of loss in foreign exchange trading. The settlement date of foreign exchange trades can vary due to time zone differences and bank holidays. When trading across foreign exchange markets, this may necessitate borrowing funds to settle foreign exchange trades. The interest rate on borrowed funds must be considered when computing the cost of trades across multiple markets.

Disclosure: Futures Trading

Futures are not suitable for all investors. The amount you may lose may be greater than your initial investment. Before trading futures, please read the CFTC Risk Disclosure. A copy and additional information are available at

trading top