Quam Pulse
INSTITUTIONAL RESEARCH: TRADING PLACES
DATE TUESDAY MAY 13, 2014
EQUITIES HONG KONG STRATEGY
QUAM PULSE China Mulls Amending Water Pollution Law (China Daily) – China has included an amendment to the Law on the Prevention and Control of Water Pollution in its future lawmaking plan, according to a senior legislative official. Promulgated in 1984, the law has already been amended twice in 1996 and 2008, but the law has weaknesses in areas which include inadequate efforts, high enforcement costs and insufficient sanctions for violations. In order to cope with the new tasks and requirements of water pollution control, the top legislature has listed amendments to the law in its work plan, and related research is underway. Our take: We expect the above legislative efforts to focus on ensuring a sound water environment and the safety of drinking water while reducing emissions from pollution sources. These are highly favorable to wastewater treatment plants, as authorities will raise their efforts on enforcement against illegal discharges. We expect industrial wastewater treatment plants are the key beneficiaries, such as CTEG (1363 HK) and Sound Global (967 HK).
CHINA TAKEAWAYS More New Firms Established in Last 2 Months - According to the State Administration for Industry and Commerce, around 367,200 companies were established in April, an increase of 20%MoM. The number of new firms had begun to rise in March due to the business registration reform. The reform scrapped the requirement for a minimum registered capital for some types of businesses, and yearly inspections were replaced by company annual reports. < http://www.chinadaily.com.cn/business/chinadata/2014-05/13/content_17502909.htm>
HSI TOP MOVERS Leaders Ticker TENCENT CHEUNG KONG HENDERSON LA WHARF HLDG HANG LUNG PR
Laggers % 5.26 4.13 4.06 3.33 3.14
Ticker CHINA RES EN SWIRE PACIFI LI & FUNG LT CHINA UNICOM CHINA MENGNI
% -0.68 -0.06 0.00 0.16 0.26
Close
1D Chg
1D % Chg
22261.61 9827.85 2180.05 8808.61 1964.94 3222.43 1866.08 23551.00 7014.25 1375.14 4913.00 6811.34 3644.57
398.62 143.27 46.14 -81.08 8.39 -29.70 -0.64 556.77 155.45 -2.23 14.86 -35.92 7.27
1.82 1.48 2.16 -0.91 0.43 -0.91 -0.03 2.42 2.27 -0.16 0.30 -0.52 0.20
Close
1D % Chg
YTD % Chg
100.54 108.69 4.49 292.53
0.55 0.74 -0.93 1.01
3.35 -0.74 9.12 0.00
315.05 1295.38 19.49 1439.76
2.19 0.50 1.67 0.72
-6.61 7.80 0.09 5.02
Corn Wheat Soybeans Coffee Sugar Cotton
503.75 709.50 1489.25 184.75 17.20 92.31
-0.74 -1.80 0.15 0.46 0.00 -0.05
15.27 15.04 17.77 60.51 2.81 9.92
Baltic Dry
997.00
-1.09
-56.21
Asia HSI HSCEI SHSZ300 TWSE KOSPI FSSTI KLCI SENSEX NIFTY SET JCI PCOMP ASX
COMMODITIES Energy
Online Finance Product Interest Rate Falls - According to Securities Times, the 7 days annualized return of Yu’ebao dropped to a record low of less than 5%. The rate reached its highest on January 2nd 2014 at 6.76%. Currently, the rate stands at 4.98%. The main attributable factor to the drop in interest rates is the declining interbank lending rates since early April. The drop in interest rate undercuts investors’ interest in these online finance products. < http://www.chinadaily.com.cn/business/2014-05/12/content_17502335.htm> Facebook to Open Sales Office in China – Facebook Inc plans to open a sales office in China to work with local advertisers, Bloomberg reported, citing people familiar with the matter. Facebook is in talks to lease space in the Fortune Financial Center in Beijing’s central business district, and could open an office in China within a year. PetroChina to Sell Pipeline Business to Accelerate Mixed Ownership – PetroChina announced yesterday that it will use part of its pipeline business to form a new company, which will then be sold as part of its mixed ownership drive. The new company will be based on assets and liabilities of the west-east gas pipeline managed by its pipeline subsidiary. All Shares will be transferred after its establishment. Total assets involved are estimated at ~82bn yuan, with total liabilities of ~53bn yuan and net assets of ~29bn yuan, according to the announcement.
WTI Brent Natural Gas Gasoline
Metals Copper Gold (Spot) Silver (Spot) Platinum (Spot)
Agriculture
China Market Rallies on New Reform Plans for the Capital Market – The China Market surged yesterday after the State Council unveiled guidelines for a capital market reform plan. The guidelines include encouraging listed companies to set up a market cap administration system, developing a share option motivation system, enlarging the investment scope and scale of social security funds, expanding the areas and investment quota of OFIIs and QDIIs, improving taxation policy of capital market, implementing registration system of share issue, developing an exit system, encouraging market-oriented mergers and restructuring and building a systematic risk early warning and assessment system. 1
2
QUAM INSTITUTIONAL BUSINESS UNIT RESEARCH
SALES
JENNIFER SO
+852 2971 5433
STANLEY NG
+852 2217 2857
ANDY CK WONG
+852 2971 5434
GUY STILLE
+852 2217 2853
CHRISTOPHER HO
+852 2971 5436
quam research@quam group.com 18/F China Building, 29 Queen's Road Central, Hong Kong
Disclaimer and Risk Statement This document is published by Quam Securities Company Limited (“Quam Securities”), a licensed corporation (central entity number AAC557) regulated by the Securities and Futures Commission in Hong Kong. This document is for distribution in Hong Kong only to persons who are “Professional Investors” as defined in Part 1 of Schedule 1 of Securities and Futures Ordinance (Cap 571) of Hong Kong and any rules made thereunder. This document is not intended for distribution to or use by, any person or entity who is a citizen or resident of any jurisdiction where such distribution or use would be contrary to applicable law or regulation within such jurisdiction. This document does not constitute an offer or a solicitation of an offer to buy or sell any securities. This document is circulated to addresses solely and may not be reproduced or redistributed to any other person or published, in whole or in part, for any purpose. The research is based on information obtained from sources believed to be reliable, but Quam Securities does not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without prior notice. Any recommendation does not have regard to specific investment objectives, financial situation and particular needs of any specific addressee. Quam Securities accepts no liability whatsoever for any direct or consequential loss arising from any use of this document. Quam Securities and its affiliates as well as persons associated with any of them from time to time may or may not have interests in the securities mentioned in this document. The prices of securities may move up or down, and past performance is not an indication of future performance. Investors shall consider seeking separate legal or financial advice before making investment decisions.
3
DATE TUESDAY MAY 13, 2014
EQUITIES HONG KONG STRATEGY
QUAM PULSE China Mulls Amending Water Pollution Law (China Daily) – China has included an amendment to the Law on the Prevention and Control of Water Pollution in its future lawmaking plan, according to a senior legislative official. Promulgated in 1984, the law has already been amended twice in 1996 and 2008, but the law has weaknesses in areas which include inadequate efforts, high enforcement costs and insufficient sanctions for violations. In order to cope with the new tasks and requirements of water pollution control, the top legislature has listed amendments to the law in its work plan, and related research is underway. Our take: We expect the above legislative efforts to focus on ensuring a sound water environment and the safety of drinking water while reducing emissions from pollution sources. These are highly favorable to wastewater treatment plants, as authorities will raise their efforts on enforcement against illegal discharges. We expect industrial wastewater treatment plants are the key beneficiaries, such as CTEG (1363 HK) and Sound Global (967 HK).
CHINA TAKEAWAYS More New Firms Established in Last 2 Months - According to the State Administration for Industry and Commerce, around 367,200 companies were established in April, an increase of 20%MoM. The number of new firms had begun to rise in March due to the business registration reform. The reform scrapped the requirement for a minimum registered capital for some types of businesses, and yearly inspections were replaced by company annual reports. < http://www.chinadaily.com.cn/business/chinadata/2014-05/13/content_17502909.htm>
HSI TOP MOVERS Leaders Ticker TENCENT CHEUNG KONG HENDERSON LA WHARF HLDG HANG LUNG PR
Laggers % 5.26 4.13 4.06 3.33 3.14
Ticker CHINA RES EN SWIRE PACIFI LI & FUNG LT CHINA UNICOM CHINA MENGNI
% -0.68 -0.06 0.00 0.16 0.26
Close
1D Chg
1D % Chg
22261.61 9827.85 2180.05 8808.61 1964.94 3222.43 1866.08 23551.00 7014.25 1375.14 4913.00 6811.34 3644.57
398.62 143.27 46.14 -81.08 8.39 -29.70 -0.64 556.77 155.45 -2.23 14.86 -35.92 7.27
1.82 1.48 2.16 -0.91 0.43 -0.91 -0.03 2.42 2.27 -0.16 0.30 -0.52 0.20
Close
1D % Chg
YTD % Chg
100.54 108.69 4.49 292.53
0.55 0.74 -0.93 1.01
3.35 -0.74 9.12 0.00
315.05 1295.38 19.49 1439.76
2.19 0.50 1.67 0.72
-6.61 7.80 0.09 5.02
Corn Wheat Soybeans Coffee Sugar Cotton
503.75 709.50 1489.25 184.75 17.20 92.31
-0.74 -1.80 0.15 0.46 0.00 -0.05
15.27 15.04 17.77 60.51 2.81 9.92
Baltic Dry
997.00
-1.09
-56.21
Asia HSI HSCEI SHSZ300 TWSE KOSPI FSSTI KLCI SENSEX NIFTY SET JCI PCOMP ASX
COMMODITIES Energy
Online Finance Product Interest Rate Falls - According to Securities Times, the 7 days annualized return of Yu’ebao dropped to a record low of less than 5%. The rate reached its highest on January 2nd 2014 at 6.76%. Currently, the rate stands at 4.98%. The main attributable factor to the drop in interest rates is the declining interbank lending rates since early April. The drop in interest rate undercuts investors’ interest in these online finance products. < http://www.chinadaily.com.cn/business/2014-05/12/content_17502335.htm> Facebook to Open Sales Office in China – Facebook Inc plans to open a sales office in China to work with local advertisers, Bloomberg reported, citing people familiar with the matter. Facebook is in talks to lease space in the Fortune Financial Center in Beijing’s central business district, and could open an office in China within a year. PetroChina to Sell Pipeline Business to Accelerate Mixed Ownership – PetroChina announced yesterday that it will use part of its pipeline business to form a new company, which will then be sold as part of its mixed ownership drive. The new company will be based on assets and liabilities of the west-east gas pipeline managed by its pipeline subsidiary. All Shares will be transferred after its establishment. Total assets involved are estimated at ~82bn yuan, with total liabilities of ~53bn yuan and net assets of ~29bn yuan, according to the announcement.
WTI Brent Natural Gas Gasoline
Metals Copper Gold (Spot) Silver (Spot) Platinum (Spot)
Agriculture
China Market Rallies on New Reform Plans for the Capital Market – The China Market surged yesterday after the State Council unveiled guidelines for a capital market reform plan. The guidelines include encouraging listed companies to set up a market cap administration system, developing a share option motivation system, enlarging the investment scope and scale of social security funds, expanding the areas and investment quota of OFIIs and QDIIs, improving taxation policy of capital market, implementing registration system of share issue, developing an exit system, encouraging market-oriented mergers and restructuring and building a systematic risk early warning and assessment system. 1
2
QUAM INSTITUTIONAL BUSINESS UNIT RESEARCH
SALES
JENNIFER SO
+852 2971 5433
STANLEY NG
+852 2217 2857
ANDY CK WONG
+852 2971 5434
GUY STILLE
+852 2217 2853
CHRISTOPHER HO
+852 2971 5436
quam research@quam group.com 18/F China Building, 29 Queen's Road Central, Hong Kong
Disclaimer and Risk Statement This document is published by Quam Securities Company Limited (“Quam Securities”), a licensed corporation (central entity number AAC557) regulated by the Securities and Futures Commission in Hong Kong. This document is for distribution in Hong Kong only to persons who are “Professional Investors” as defined in Part 1 of Schedule 1 of Securities and Futures Ordinance (Cap 571) of Hong Kong and any rules made thereunder. This document is not intended for distribution to or use by, any person or entity who is a citizen or resident of any jurisdiction where such distribution or use would be contrary to applicable law or regulation within such jurisdiction. This document does not constitute an offer or a solicitation of an offer to buy or sell any securities. This document is circulated to addresses solely and may not be reproduced or redistributed to any other person or published, in whole or in part, for any purpose. The research is based on information obtained from sources believed to be reliable, but Quam Securities does not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without prior notice. Any recommendation does not have regard to specific investment objectives, financial situation and particular needs of any specific addressee. Quam Securities accepts no liability whatsoever for any direct or consequential loss arising from any use of this document. Quam Securities and its affiliates as well as persons associated with any of them from time to time may or may not have interests in the securities mentioned in this document. The prices of securities may move up or down, and past performance is not an indication of future performance. Investors shall consider seeking separate legal or financial advice before making investment decisions.
3
