China Research: Luxury Market Improving; Jan Gaming Strong; Mfg PMI

Transcription

1 China Research Thursday, February 1, Neo Wang, CFA Gin Wang China Research: Luxury Market Improving; Jan Gaming Strong; Mfg PMI 1

2 January 2018 PMIs NBS and Markit NBS Mfg PMI: Jan 51.3, vs. Dec Sep 52.4, the highest since Apr Markit Mfg PMI: Jan 51.5, vs. Dec NBS sample biased toward stateowned and bigger companies. NBS Non-mfg PMI, two components; Construction Index and Service Index. Approx weights, Services 78-85%. Construction 15-22%. NBS Non-mfg PMI: Jan 55.3, vs. Dec NBS Services PMI: Jan 54.4, the highest since May 2014, vs. Dec NBS Construction PMI: Jan 60.5, vs. Dec Markit Services PMI: Scheduled Feb 4 th, this Sunday, evening. Service sector -- growing in importance. Beijing wants more jobs here with capacity cuts, phase down in steel, coal, heavy industry. 2

3 China Manufacturing PMI NBS and Markit Components here comprise 100% of the headline PMI index (see weights). NBS and Markit Headline Mfg PMI, as reported and combined, was 51.4 in Jan. Other non-component series also are available. (Note. Ask us for details). 3

4 News Tracker February 1, 2018 Yuan per USD (On vs. Off in basis point) Rate CP Fixing On-shore Off-shore On vs. Off vs. Trump 7.6% 7.8% 7.8% vs. Brexit 4.3% 4.5% 4.5% vs. 8/10/15-3.0% -1.4% -1.4% 1D Ago D Ago D Ago D Ago D Ago M Ago M Ago M Ago Y Ago Y Ago Y Ago Y Ago Y Ago BANKS, BANKING & LOANS, DEBT CBRC is said to have told lenders in Shanghai to increase their scrutiny of loans for M&A to ensure the funds aren't use to buy land. --- BBG, Feb 1 ENERGY -- GENERAL Unipec senior official said Sinopec chartered a very large crude carrier (VLCC) in 2017 out of Asia, the first time a Chinese refiner has used a VLCC to ship diesel, China may use larger vessels for fuel exports BBG, Feb 1 ENERGY -- NATURAL GAS NDRC said natural gas consumption was +15.3% y/y to bln cubic meters in BBG, Feb 1 Lanzhou city, in northern China's Gansu province, will limit gas use for heating and industrial boilers on shortage. --- BBG, Xinhua, Feb 1 ENERGY -- OIL Oil product consumption was +5.9% y/y to mln tons in Gasoline consumption was +10.2% y/y and diesel consumption was +2.0% y/y in BBG, Feb 1 ENVIRONMENT -- AIR POLLUTION Top steelmaking province Hebei denied news reports that it will extend steel production curbs imposed for the winter season and said Hebei s provincial gov't and air pollution administrative bureau have never asked for the extension, and Hebei will strictly carry out the production restriction issued by central gov't. --- Reuters, Feb 1 FINANCIAL MARKET Tencent will start a trail credit scoring system and allow people with good credit to take out micro loans without interest or use Mobikes without paying a deposit. Service employs metrics including social networks, consumption behavior, wealth, and security to rate users. --- BBG, Feb 1 CSRC called for stepped up monitoring of risks in stock, bond and futures markets, called preventing major risks in capital markets "a tough battle," and vowed to clamp down on all kinds of violations in the market with intensified inspections. --- BBG, Feb 1 FISCAL, TAXATION & GOV'T FINANCE MoF said two LGFVs in Jiangsu province used land earmarked for public use as collaterals in bond sale and asked the two LGFVs to conduct self-inspection and will restrict their bond sale during the period. --- BBG, Feb 1 FOREIGN BUSINESSES IN CHINA MoCom said China will ease market access to more service sectors including children and elderly care, architecture design, accounting and e-commerce. --- BBG, Feb 1 FOREIGN RELATIONS May said golden era of bilateral ties was established in 2015 when Xi paid a very successful state visit to U.K., she is pleased with the people-to-people links in education and culture with China, and U.K. welcomes Chinese investment and growing trade links and will push forward global strategic partnership with China. --- BBG, Feb 1 MoCom said the U.K. and China will develop a "financetech city" in the Xiongan New Area near Beijing, will build innovation incubator in Qingdao, and will sign deals worth 9 bln pounds ($13 bln) on Belt and Road initiative, finance, agriculture and technology sectors during May's visit. --- BBG, Feb 1 MoCom responded to Trump's SOTU address, saying China still views U.S. a trade partner and hopes U.S. won't politicize trade issues and to give up "cold-war mindset". --- BBG, Feb 1 ONE BELT & ONE ROAD Standard Chartered signed $1.6 bln funding deal with China for corporate finance projects along the Belt and Road. --- Reuters, Feb 1 TAIWAN Taiwan said the dispute with China over its opening of new air routes near Taiwan will determine future relations between Taipei and Beijing. --- Reuters, Feb 1 4

5 January 2018 Macau Gaming Revenue Macau Gaming Revenue NSA, Monthly, % Y/Y % Y/Y M Avg. 48.2% Y/Y 12M Avg. -5.1% Y/Y Caution! Lunar New Year distorion Jan and Feb 06/14-05/16 Avg % Y/Y Latest Jan +36.4% Source: DataInsight, Bloomberg, EVRISI Calculations Jan was +36.4% y/y, quite likely distorted by the timing of Chinese Lunar New Year, and the 18 th y/y rise after 26 months of y/y declines. Dec was +14.6%, slowest growth since Jan+Feb 2017, Nov was +22.6%. Data highly seasonal = +19.1% = -3.3% = -34.3% = -2.6%. History. Macau , two negatives. One, cyclical slowdown. Two, Anticorruption campaign; begun Oct Focus on non-gaming by PM Li in Oct 2016 visit. Macau Development Plan on diversification/tourism, not gaming. Years required for transformation. 5

6 Dec Hotel Occupancy & Other Macau Data Hotel occupancy rate seasonal. New high Dec Visitor Arrivals (multiday stay) bigger spending than daytrippers. More families arriving -- for recreation vs. for gaming. Macau economy Gaming, tourism, construction Macau Beats Vegas Macau Beats Las Vegas Gaming Revenue USD Billions Macau (CAGR 00-16: 17%) Nevada - Clark County (64% from Strip) , USD bln Singapore 5.0, 5.4, 5.9, 6.1, 5.3, 4.8, 4.1 LV Strip 5.1, 5.2, 5.4, 5.6, 5.7, 5.8, 6.0 (2 Casinos in Singapore vs. 30+ on LV Strip) Source: IHS Global Insight, Nevada Gaming Control Board 6

7 Dec 2017 Hong Kong Luxury Retail Sales Hong Kong Luxury market lost out to Chinese overseas shopping -- in Japan, Korea, Macau, the US and Europe. Stabilized, hint of growth. Dec +6.3% y/y, vs. Nov +7.9%. SA, Dec +6.8% m/m. Peak Sales 12MMS -- Jan 2014, H$119.4 bln. Dec 2017, H$75.1 bln, +5.2% y/y, after 3 years of mid-teen declines. Note. Hong Kong compiles data, with no NBS Beijing involvement. Sales are driven by residents in Hong Kong, mainlanders and other overseas buyers. Ask us for complete data. Seasonality Month Jan % m/m -0.6 Feb Mar -9.2 Apr 6.5 May 1.9 Jun -0.4 Jul 5.6 Aug 0.9 Sep Oct 8.6 Nov 0.0 Dec

8 Equity Tracker Shanghai, Shenzhen Shanghai Composite Index Most Recent 30 Days Shanghai Composite Index Most Recent 2 Years /1/18 = Day = - 1.0% 30-Day = 2.9% YTD = 4.2% /1/18 = Day = - 1.0% 30-Day = 2.9% YTD = 4.2% /16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17 1/18 3/18 CSI Components 1-Day Performance of Industry Groups CSI Components 30-Day Performance of Industry Groups 1.0% 0.4% 15% 0.0% -1.0% -2.0% -3.0% -4.0% -1.3% -1.1% -0.3% -1.4% -1.2% -2.7% -1.3% -0.3% 10% 5% 0% -5% -10% -4.9% -1.2% 0.0% 0.2% 0.3% 4.4% 6.2% 8.4% 9.0% -5.0% -4.4% -15% -12.9% Date Feb 1 Jan 31 Jan 30 Jan 29 Jan 26 Jan 25 Close +/- % Positive News Negative News Index extended the loss to a fourth day, heading for -1.0% the worst week since 2016, led by IT stocks Large-caps recouped its early losses to close Index fell for a third day, as small caps dropped -0.2% higher, led by consumer shares and developers. the most in two weeks to erase the gains in Index extended the losses, led by real estate and -1.0% banking firms Index posted steepest decline in six weeks, as -1.0% large-caps index slumped most in 2 months Index rebounded and rose for a sixth week, 0.3% capping a weekly gain of 2.0% Index took a break after 7-day rally as small-cap -0.3% momentum lost steam. 8

9 Equity Tracker Hong Kong Hang Seng Index (Hong Kong) Most Recent 30 Days Hang Seng Index (Hong Kong) Most Recent 2 Years /1/18 = Day = - 0.7% 30-Day = 7.0% YTD = 9.1% /1/18 = Day = - 0.7% 30-Day = 7.0% YTD = 9.1% /12/16= /16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17 1/18 3/18 Hang Seng Industry Groups 1-Day Performance of Industry Groups Hang Seng Industry Groups 30-Day Performance of Industry Groups 0.4% 0.2% 0.0% -0.2% -0.4% -0.6% -0.8% -1.0% -1.2% 0.3% -0.4% -0.7% -1.0% Comm/Indus Financials Property Utilities 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 8.1% 6.8% 6.2% 1.2% Utilities Comm/Indus Property Financials Date Feb 1 Jan 31 Jan 30 Jan 29 Jan 26 Jan 25 Close +/- % Positive News Negative News Index slipped, after mainland stocks logged decline -0.8% and US Fed signaled more tightening Index rebounded, capping its best monthly gain 0.9% in nearly three years amid strong fund inflows Index was weighed down by extended declines for -1.1% mainland stocks Index retreated, tracking losses by mainland -0.6% stocks Index rose for a seventh consecutive week, above 1.5% for the first time on record Index snapped a 7-day rally as H-share index fell -0.9% on financials. 9

10 Equity Tracker Taipei Taiex Index (Taipei) Most Recent 30 Days Taiex Index (Taipei) Most Recent 2 Years /1/18 = Day = 0.5% /1/18 = Day = 0.5% 30-Day = 4.2% Day = 4.2% YTD = 4.9% YTD = 4.9% /16 3/16 5/16 7/16 9/16 11/16 1/17 3/17 5/17 7/17 9/17 11/17 1/18 3/18 Taiex Industry Groups 1-Day Performance of Industry Groups Taiex Industry Groups 30-Day Performance of Industry Groups 2.0% 12% 1.5% 1.0% 0.5% 0.0% -0.5% -1.0% 0.1% 0.2% -0.7% -0.2% 0.3% 0.0% 0.4% 0.3% 1.2% 0.3% 1.4% -0.2% 0.2% 0.3% 10% 8% 6% 4% 2% 0% -2% 0.7% -0.7% -0.5% -1.4% 1.6% 1.9% 2.1% 2.1% 3.3% 3.4% 4.3% 4.4% 7.9% 9.8% Date Feb 1 Jan 31 Jan 30 Jan 29 Jan 26 Jan 25 Close +/- % Positive News Negative News Index ended higher, boosted by tech stocks. 0.5% Index edged up, on the back of gains of large 0.2% caps in both electronic and financial sectors Index ended down, after a plunge on Wall Street -1.3% amid concerns over a possible US rate hike Index ended up, led by large-caps. 0.7% Index closed moderately lower, led by TSMC. -0.2% Index closed up as gains in the auto, plastic and 0.1% chemical sectors led shares higher. 10

11 DISCLOSURES General Disclosures This report is approved and/or distributed by International Strategy & Investment Group LLC ( ISI Group LLC ), a U.S. licensed broker-dealer regulated by the Financial Industry Regulatory Authority ( FINRA ) and by International Strategy & Investment Group (UK) Limited ( ISI UK ), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority. The institutional sales, trading and research businesses of Evercore Group and IDI UK collectively operate under the global marketing brand name (""). Both Evercore Group and ISI UK are subsidiaries of Evercore Partners Inc. ("Evercore Partners"). The trademarks, logos and service marks shown on this report are registered trademarks of Evercore Partners Inc. This report is provided for informational purposes only. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any financial instruments or to participate in any particular trading strategy in any jurisdiction. The information and opinions in this report were prepared by registered employees of. The information herein is believed by to be reliable and has been obtained from public sources believed to be reliable, but makes no representation as to the accuracy or completeness of such information. Opinions, estimates and projections in this report constitute the current judgment of the author as of the date of this report. They do not necessarily reflect the opinions of Evercore and are subject to change without notice. In addition, opinions, estimates and projections in this report may differ from or be contrary to those expressed by other business areas or groups of Evercore and its affiliates. has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate. Facts and views in research reports and notes have not been reviewed by, and may not reflect information known to, professionals in other Evercore affiliates or business areas, including investment banking personnel. does not provide individually tailored investment advice in research reports. This report has been prepared without regard to the particular investments and circumstances of the recipient. The financial instruments discussed in this report may not suitable for all investors and investors must make their own investment decisions using their own independent advisors as they believe necessary and based upon their specific financial situations and investment objectives. Securities and other financial instruments discussed in this report, or recommended or offered by, are not insured by the Federal Deposit Insurance Corporation and are not deposits of or other obligations of any insured depository institution. If a financial instrument is denominated in a currency other than an investor s currency, a change in exchange rates may adversely affect the price or value of, or the income derived from the financial instrument, and such investor effectively assumes such currency risk. In addition, income from an investment may fluctuate and the price or value of financial instruments described in this report, either directly or indirectly, may rise or fall. Estimates of future performance are based on assumptions that may not be realized. Furthermore, past performance is not necessarily indicative of future performance. salespeople, traders and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed in this research. Our asset management affiliates and investing businesses may make investment decisions that are inconsistent with the recommendations or views expressed in this research. Electronic research is simultaneously available to all clients. This report is provided to clients and may not be redistributed, retransmitted or disclosed, in whole or in part, or in any form or manner, without the express written consent of. Receipt and review of this research report constitutes your agreement not to redistribute, retransmit, or disclose to others the contents, opinions, conclusion or information contained in this report (including any investment recommendations, estimates or target prices) without first obtaining express permission from. This report is not intended for distribution to, or use by any person or entity in any jurisdiction or country where such distribution or use would be contrary to local law or regulation. For investors in the UK: In making this report available, Evercore makes no recommendation to buy, sell or otherwise deal in any securities or investments whatsoever and you should neither rely or act upon, directly or indirectly, any of the information contained in this report in respect of any such investment activity. This report is being directed at or distributed to, (a) persons who fall within the definition of Investment Professionals (set out in Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the Order )); (b) persons falling within the definition of high net worth companies, unincorporated associations, etc. (set out in Article 49(2) of the Order); (c) other persons to whom it may otherwise lawfully be communicated (all such persons together being referred to as relevant persons ). This report must not be acted on or relied on by persons who are not relevant persons. Applicable current disclosures regarding the subject companies covered in this report are available at the offices of, and can be obtained by writing to Evercore Group LLC, Attn. Compliance, 666 Fifth Avenue, 11th Floor, New York, NY In compliance with the European Securities and Markets Authority's Market Abuse Regulation, a list of all recommendations disseminated in the preceding 12 months for the subject companies herein, may be found at the following site: sellside/mar.action Evercore Group L.L.C. All rights reserved. 11