aifmc macro & market weekly (qfii) · • after 4 weeks of small net investment, the pboc has...
TRANSCRIPT
2014.9.8-2014.9.14
AIFMC Macro & Market Weekly (QFII)
September 15, 2014
Macro Review and Outlook
• China CPI in August rose by 2.0% year-over-year, a 4-monthly low, as PPI dropped in its 30th consecutive month
by 1.2%. CPI in August fell short than the seasonal pattern, lower than the market expectation. PPI in August had larger
falls both year-over-year and from last month, similar to the Purchase Price Index in August, which shows a weak short-
term perspective for the business operations of industrial corporations.
• M2 in August grew by 12.8% year-over-year, with newly added RMB deposits of 108 billion yuan. The total
societal financing amount in August was 957.4 billion yuan, among which the newly added RMB loans were 702.5
billion yuan. Loan issuance in August was comparatively stable after the fluctuation in July and was a small drop year-
over-year. Due to a large base from the same period last year, there is a significant drop in total societal financing amount.
The slowdown in M2 growth in August may be due to the drop in corporate deposits, as off balance sheet financing
shrunk.
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Source: AIFMC
M2 Growth Fell Inflation Rate in August Lower Than Expectation
M2 Year-
Over-Year M2 Monthly
Change CPI-PPI
CPI Year-
Over-Year
PPI Year-
Over-Year
Macro Review and Outlook
• Industrial added value growth dropped below expectation in August. The industrial added value in August grew by
6.9% year-over-year, lower than the 9% in July. Combined with inflation rate and PMI, it reflects a weak overall market
demand.
• Investment growth continued to fall in August. The property investment growth in August dropped by 2.3% to 13.3%.
Many sub categories dropped in the second consecutive month, after a small rebound in June.
• No clear sign of improvement in consumption shows a weakening in catering revenues. The nominal growth in
social retail consumption dropped by 0.3% to 11.9% in August, while the real grow rose by 0.1% to 10.6%. The revenues
in catering companies narrowed in growth for the third consecutive month.
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Source: AIFMC
Investment Growth Slightly Slowed in August Industrial Added Value Growth Slowed in August
Property Investment Growth
(Year-Over-Year)
Property Investment Source
(Year-Over-Year)
Industrial Added Value
(Year-Over-Year) HSBC PMI Total Societal Financing
(Year-Over-Year)
Observation of Liquidity
• After 4 weeks of small net investment, the PBOC has net withdrew 5 billion yuan from the market.
• Interbank interest rate kept stable. Last week, the one-month SHIBOR stayed unchanged at 4.0%, while the 7-day
SHIBOR stayed at 3.2%. In terms of the exchange, the 7-day repo average rate rose by 19 basis point to 3.40%.
• Treasury yields slightly bounced back. Last week, all treasury yields slightly rose. The 3-month treasury yield rose by
7 basis points to 3.58%; the one-year treasury yield rose by 4 basis points to 3.82%; and the 10-year treasury yield
dropped by 1 basis point to 4.28%.
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Source: AIFMC
Treasury Yields Slightly Bounced Back Interbank Interest Rates Kept Stable
3-Month
Rate
One-Year
Rate
10-Year
Rate
Weekly Review of Bond Market
• Corporate bond yields slightly rose. Last week, corporate bond yields slightly rose; high-rate corporate
bonds’ average yield increased by 6 basis points. The credit spread between high-rate corporate bonds and
treasury bonds rose by 2 basis points, while the credit spread between low-rate and high-rate corporate
bonds rose by 2 basis points.
• Quasi-municipal bond yield fluctuated at a small scale. Quasi-municipal bond yields continuously
dropped from March to July, but stabilized in August and slightly rose this week. Last week, the high-rate
quasi-municipal bond yield rose by 2 basis points, and the low-rate bond yield rose by 2 basis points. The
credit spread between quasi-municipal bonds and treasury bonds stayed the same as the previous week.
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Quasi-municipal Bonds Yields Fluctuated At a Small Scale One-year Corporate Bond Yield Slightly Rose
Corporate Bond
AAA
Corporate
Bond B
Credit Spreads (Corporate
Bond AAA-Treasury Bond) Quasi-municipal
Bond AA
Quasi-
municipal
Bond A-
Credit Spreads (Quasi-
municipal Bond AA-
Treasury Bond)
Source: AIFMC
Weekly Review of A-shares
• Last week’s index rose by a small margin. Last week, the Shanghai Composite Index closed at 2331.95,
a rise of 0.23 %, as most industries rose. In terms of specific industries, only non-bank finance, food &
beverages and banking were in negative, while defense & ministry, textile & apparel and mechanics had
the biggest rallies. In terms of styles, growth stocks had the better performances, as finance stocks had
relatively small gains.
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Price Changes in a Week
Price Changes in a Week - Industries
CS
Co
mp
ute
rs
CS
Elec
tric
ity
&U
tilit
ies
CS
Def
ense
&
Min
istr
y
CS
Elec
tro
nic
s
CS
Pet
role
um
&
Pet
roch
emic
al
CS
Tele
com
CS
Agr
icu
ltu
re,
Fore
stry
& F
ish
ing
CS
Cat
erin
g &
Tou
rism
CS
Co
mm
erce
&
Ret
ail
CS
Ph
arm
aceu
tica
ls
CS
Ferr
ou
s M
etal
CS
No
n-b
ank
Fin
ance
CS
Elec
tric
Eq
uip
men
t
CS
Mec
han
ics
CS
Ligh
t M
anu
fact
uri
ng
CS
Au
tom
ob
ile
CS
Text
ile
&A
pp
arel
CS
Ho
use
ho
ld
Ap
plia
nce
s
CS
Co
al
CS
Stee
l
CS
Foo
d
&B
ever
ages
CS
Tran
spo
rtat
ion
CS
Co
nst
ruct
ion
CS
Bas
ic C
hem
istr
y
CS
Ban
kin
g
CS
Bu
ildin
g M
ater
ials
CS
Rea
l Est
ate
CSI
30
0
SME
Ind
ex
GEM
Ind
ex
Fin
ance
(st
yle)
Cyc
le (
styl
e)
Co
nsu
mp
tio
n
(sty
le)
Gro
wth
(st
yle)
CS
Med
ia
Stab
le (
styl
e)
Source: AIFMC
CS
Foo
d &
B
ever
ages
PE Of Traditional Cyclic Industries Held At The Bottom
• In terms of industry valuation, banking, construction, petroleum & petrochemical and coal are currently at
the bottom, while defense & ministry, computers and media are at relatively high levels. In terms of
historical records, banking, real estate, insurance, petroleum, coal, and construction & building materials
are currently at the bottom, while defense & ministry, computers and media are at historical high.
Compared to the valuation of the entire A-share market, banking, construction and electricity & utilities
are currently at discount. Defense & ministry, media and computers are in premium.
7
Industry PEs (dynamic)
Max. since 2011 Min. since 2011 -Latest
Source: AIFMC
For more information, please contact: James Shang, Vice President, International Business Department [email protected], +86-21-20398713, +86-186-2139-1100 Beiming Zhang, QFII Sales Associate, International Business Department [email protected], +86-21-20398968, +86-136-1173-2255
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