Brief China: January Headline Data for China and more

In this briefing:

1. January Headline Data for China
2. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)
3. Baking in a Trade Deal and China Fade the Fact Levels
4. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)
5. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO

1. January Headline Data for China

Sometimes at Balding’s World we explore worm holes of Chinese data. Yes, granular data is awesome, but the global economic calendar should not be overlooked nor headline data taken for granted. To that end today we take a look at some key figures to recently emerge.

2. China Housing In The Guangdong – Hong Kong – Macau Greater Bay Area (GBA)

The long-awaited outline of the development plans for the Guangdong – Hong Kong – Macau Greater Bay Area (GBA) was announced Monday evening local time. In this note, we look at the China housing market dynamics in the key 8-9 cities on the mainland and the land acquisition activity by the major developers.

3. Baking in a Trade Deal and China Fade the Fact Levels

Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.

Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.

H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.

Tencent is exhibiting upside momentum deterioration amid divergence.

We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.

Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.

4. HK Connect Discovery Weekly: China Tower, Geely, COFCO Meat (2019-02-15)

In our Discover HK Connect series, we aim to help our investors understand the flow of southbound trades via the Hong Kong Connect, as analyzed by our proprietary data engine. We will discuss the stocks that experienced the most inflow and outflow by mainland investors in the past seven days.

We split the stocks eligible for the Hong Kong Connect trade into three groups: component stocks in the HSCEI index, stocks with a market capitalization between USD 1 billion and USD 5 billion, and stocks with a market capitalization between USD 500 million and USD 1 billion.

In this week’s HK Connect Discovery, we highlight the continuous inflow to China Tower prior to lock-up expiry,  positive news development for automobile stocks, and the pork cycle beneficiary. 

5. Last Week in GER Research: API/Sigma, M1, Eclipx/Mcmillan and Hansoh IPO

In this version of the GER weekly research wrap, we assess the bump prospects in the Australian Pharma Industries (API AU) / Sigma Healthcare (SIG AU) potential merger. Arun updates on M1 Ltd (M1 SP) which could be delisted following an unconditional offer. In addition, we dig into the trading update for Eclipx (ECX AU) and assess the risks that Mcmillan Shakespeare (MMS AU) could walk away from the deal. Finally, we initiate on the IPO of Hansoh Pharmaceutical (HANSOH HK). A calendar of upcoming catalysts is also attached. 

More details can be found below. 

Best of luck for the new week – Rickin, Venkat and Arun