In this briefing:
- Maoyan Entertainment (猫眼娱乐) IPO: Lackluster Demand but CNY Blockbusters Could Be a Catalyst
- Big Flows in China Bonds as Bloomberg Barclays Global Aggregate Index Adds
- Huawei/Trade Talks/ Foreign Investment/Profit Warnings/QFII & RQFII
1. Maoyan Entertainment (猫眼娱乐) IPO: Lackluster Demand but CNY Blockbusters Could Be a Catalyst
Maoyan Entertainment was priced at HKD 14.8/share and will start trading today. We summarize the latest information with updates on our valuation in this short note, prior to the trading debut. Our recent studies on the movies slotted to launch during the Chinese New Year period suggest that the box office during the CNY period could be a positive catalyst to Maoyan, which lists right before the CNY.
Our previous coverage on Maoyan Entertainment
2. Big Flows in China Bonds as Bloomberg Barclays Global Aggregate Index Adds
On 31 January 2019, Bloomberg confirmed that local Chinese RMB bonds would be included in the Bloomberg Barclays Global Aggregate Index (methodology) (and the Global Treasury Index and EM Local Currency Government Bond Index), which covers roughly US$54 trillion of outstanding bonds. RMB would become the fourth largest weighted currency in the index after USD, euro, and JPY with a pro-forma 6.03% weighting as measured a week ago against a total basket of elibible securities of roughly US$3.26trln.
The inclusion will start in April 2019 and will take 20 months, as described in the original March 2018 press release. At that time, there was still work to be done to improve the infrastructure, including implementation of delivery vs. payment settlement, ability to allocate block trades across portfolios, and clarification on tax collection policies.
The phase-in period will include a scaling factor of 5% to be implemented incrementally over the 20 months trough December 2020.
Bloomberg will create ex-China versions of all three indices starting in April for investors who wish to continue without China exposure in the benchmark.
This creates flows. And I like to look at flows.
The basic flows are easy enough to calculate. But those flows aren’t the only flows to consider. Flows beget flows, and the universe of bonds is not static.
Are you prepared for US$30bn a month of foreign inflows by end 2020?
3. Huawei/Trade Talks/ Foreign Investment/Profit Warnings/QFII & RQFII
China News That Matters
- Caught red-handed? US charges Huawei
- DC talks await leaders’ summit
- Still lovin’ it? Beijing serves new law for foreign investors
- Slowdown sparks profit warnings
- Luring foreign lolly with combined schemes
In my weekly digest China News That Matters, I will give you selected summaries, sourced from a variety of local Chinese-language and international news outlets, and highlight why I think the news is significant. These posts are meant to neither be bullish nor bearish, but help you separate the signal from the noise.
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