Monthly Outlook December 2017 - Macro Picture

Shanggu Asset Management (Asia) Limited Monthly Outlook December 2017 Macro Picture US •              The US Senate passed the tax bill, cutting the corporate tax from 35% to 20%. •              Market expects three to four 25 bps each rate hikes in 2018 •              The latest quarter showed that 78% of reported earnings beat expectation. Europe •              Latest German political episode brings uncertainty.  Angela Merkel and Social Democratic leaders are in talk about re-running the coalition government. •              ECB extended QE by nine months at a reduced pace of EUR 30 billion per month, ending in September 2018. •              The latest data reflected that only 55% of reported earnings beat expectation. Japan •              The country's seventh straight quarter of GDP growth was much stronger than estimated.  Nominal GDP was revised up to an annualized 3.2% expansion Q/Q from an initial 2.5% gain. •              BOJ is unlikely to tighten the monetary policy soon after Abe's winning in the election. China •              PBOC uses macro-prudential policies to cool property market and contains leverage in the system. •              China's purchasing managers' index (PMI) for the manufacturing sector edged up to 51.8 in November from 51.6 in October. Asset Allocation - Equities US Equities The key factor underpinning US equities has been the resilience of its corporate earnings.  Almost 78% of companies’ earnings beat market expectation.  S&P 500 has risen by 17.7% YTD, trading at 22.21x PE. The corporate tax reform may have a significant impact on different sectors.  Most IT companies already pay lower average taxes under the current system.  However, the tax savings effect is much pronounced in the old economy stocks.  Therefore, industrials, energy and consumption sectors are likely to be benefitted.  Furthermore, The Feb chairman elect Powell indicated that the present regulations on banks are good enough, implying no further tightening on the way.  This is supportive to the banking sector. Europe Equities The Euro Stoxx 50 has risen by 9.5% so far this year with P/E at 18.77x.  After a relatively good year for European stocks, marked by a nice corporate profit revival, people expect further earnings growth for the region. That may help stocks withstand political risks as well as the negative impact from a potential rally in the EUR. Equity multiples do not look cheap in absolute terms, but relatively to both bonds and credit. Further volatility in 2018 is anticipated given QE withdrawal, bond yield spikes and peak macro data.  Overweight is assigned to construction, chemicals, financials; and underweight to utilities and food. Japan Equities The Japanese economy has grown for seven straight quarters, its longest expansion since comparable data back to the mid-1990s.  A nearly year-long recovery in exports is driving corpoarte profits and business investment.  Wage-inflation dynamics remain weak for the time being.  Inflation expectations are subdued.  A virtuous cycle of rising wages, demand, and prices is not yet clearly in sight. The economy's reliance on external demand continues to increase.  Therefore, exporters' stocks are preferred.  With the TOPIX up by 19.7% YTD, trading at a modest 16.35x P/E, we maintain a neutral weight for the Japanese stock market. China/HK Equities Overweight rating is given to HK/China equities.  The 19th Party Congress promotes the quality of growth and new areas of industry development while affirming the continuity of property tightening and corpoarte deleveraging process in 2018.  However, the economy is likely to keep a 6.5% YOY growth supported by the fair global economy, industrial restructuring and consumption upgrades. Thanks to the good momentum of China's economic growth, strong increase in Chinese corporate earnings, continued southbound net investment inflows and inexpensive valuation, HK market is still attractive. Investors may focus on five investment themes in the months to come, namely, supply-side structural reform, SOE reform, Belt & Road initiatives, consumption upgrade and mainland-HK stock links. Asset Allocation – Bonds Corporate Credits The year-end outlook is full of uncertainties: the unpredictable White House and fiscal agenda; and the Federal Reserves and European Central Bank that are unwinding or slowing down bond-buying programmes.  Growth is picking up, keeping a lid on corporate defaults and leverage.  On the other hand, we have warnings coming through from Chair Yellen and Mr. Powell about the level of debt, and there has been concerns about sustainability.  And in the US it is particularly referring to the sovereign debt. Fed seemed pretty determined to hike.  Quite a few other central banks have got the same idea about wanting to try to normalize at some point, that puts a floor under rates, yields.  However, some analysts doubt that the yield of 10-year US Treasuries can go beyond 2.6% level, which we saw earlier this year. Disclaimers & Important Notice Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable. However, we do not verify such information. We do not guarantee its accuracy or completeness, nor do we take responsibility for any loss occasioned by reliance placed upon the contents hereof. Any statements nonfactual in nature constitute only current opinions, which are subject to change. SG International Group Limited (or one of its affiliates) or their officers, directors, analysts, or employees may have positions in securities or commodities referred to herein, and may, as principal or agent, buy and sell such securities or commodities. An employee, analyst, officer, or a director of SG International Group Limited, or its affiliates, may serve as a director for companies mentioned in this report. Neither the information nor opinion expressed in this report shall constitute a solicitation to buy or sell any securities. There may be instances when fundamental, technical, and quantitative opinions may not be in concert. This firm (or one of its affiliates) may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any company mentioned in this report. There are risks inherent in international investments, which may make such investments unsuitable for certain clients. These include, for example, economic, political, currency exchange rate fluctuations, and limited availability of information on international securities. We recommend that you obtain the advice of your Financial Advisor regarding this or other investment in order to conform to your financial resources and risk preference

Monthly Outlook November 2017 - Macro Picture

Shanggu Asset Management (Asia) Limited Monthly Outlook November 2017 Macro Picture US President Trump named Powell as the next Fed Chairman.  The present monetary policy is likely to be continued. Fed is patient in rate hike. Europe ECB will cut its monthly bond purchase to EUR 30 billion per month from January and maintain its buying until the end of September 2018. As quantitative easing can still be extended in terms of size and duration, rate hike cycle is less likely before 2019. Japan Abe retained two-thirds of majority in the House of Representatives. Bank of Japan will maintain the easing monetary policy. China President Xi talked about the ’new era’ of Chinese power during the Chinese party congress. China’s GDP came in at 6.8%, in line with market expectation. PBOC imposes measures on the property market, and contains leverage in the system. Asset Allocation - Equities US Equities S&P 500 has risen by 15.7% YTD, trading at 21.87x PE.  However, caution should be taken due to: (a) The unwinding of “Trump Trade”, and (b) Valuation concerns. It is evident from the relative performance of global cyclicals over non-cyclicals that investors are unwinding their asset reflation trades, as the Trump Administration continues to flounder on its fiscal agenda. Without the economic/earnings kicker from fiscal stimulus, it is hard to justify the elevated valuation for US equities. The key factor underpinning US equities has been the resilience of its corporate earnings.  Almost 79% of companies’ earnings beat market expectation. Much of this robust momentum, however, was attributed to the technology sector (it registered the largest proportion of earnings surprises in recent quarters).  But with so many expectations embedded into this space, even slight earnings disappointments could trigger profit-taking in technology stocks, dragging the broader index lower. We, therefore, keep underweight in the US equities. Europe Equities We assign neutral rating in the European equities.  The sharp rally in the euro has been a cause for concern for European equities. Since the start of the year, the EUR/USD has increased 10.6% to 1.164 (as of 31 Oct). According to conventional wisdom, a strong euro is typically negative for European exporters as well as companies with large non-euro denominated revenue.  The relationship between the euro and European equities has historically been unstable, and it is therefore not possible to conclude with certainty that euro strength will necessarily translate into sustained weakness for domestic equities. While we believe that broad euro strength will not derail domestic equities, some sectors will perform better than others in Europe. We prefer domestic consumption plays over sectors with huge global exposures. Our preference is premised on two factors: (1) Correlations show that domestic consumption sectors like utilities, telecoms, and financials have a lower inverse relationship with the EUR/USD; and (2) Euro strength translates to disinflationary pressure domestically, prompting the European Central Bank (ECB) to maintain broad monetary accommodation. This is positive for domestic consumption plays. Japan Equities We maintain a neutral view on Japan, but two factors may be constructive: Firstly, the dollar index finally bottomed in September 2017, and then started weakening; Secondly, Prime Minister Shinzo Abe’s Liberal Democratic Party and its coalition partner Komeito scored a land-slide victory on 22 Oct 2017, making Abe the most powerful prime minister in post-war Japanese history.  The political stability means a continuation of ‘Abenomics’, which have already borne fruit.  As the TOPIX trades at 16.3x PE, we expect the index will stabilize around the current modest level. China Equities Overweight rating is given to HK/China equities.  As the Hang Seng Index trades at 13.8x PE, funds have been flowing into the HK stock market.  Banks and Insurance companies may get benefit from the buying spree.  I.T sector is likely another candidate in this round of repricing process. Asset Allocation – Bonds Emerging Markets (EM) Bonds A combination of several factors such as: i) US President Donald Trump’s inability (so far) to implement his policies, some of which were perceived to be positive for growth and inflation; ii) The absence of a pick-up in inflation in most markets; and iii) Rising geopolitical tension, which led to a pause in US Treasury rates, has supported a better-than-expected return for EM bond investors. It remains a challenge, however, for EM bond investors to find value. Yields have fallen further through the year. We believe there are still selective opportunities in the BBB/BB rating buckets, although investment at this point is more for coupon carry than meaningful price appreciation.  Any temporary correction will likely be seen as a buying opportunity, given the technical strength of the market. Disclaimers & Important Notice Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable. However, we do not verify such information. We do not guarantee its accuracy or completeness, nor do we take responsibility for any loss occasioned by reliance placed upon the contents hereof. Any statements nonfactual in nature constitute only current opinions, which are subject to change. SG International Group Limited (or one of its affiliates) or their officers, directors, analysts, or employees may have positions in securities or commodities referred to herein, and may, as principal or agent, buy and sell such securities or commodities. An employee, analyst, officer, or a director of SG International Group Limited, or its affiliates, may serve as a director for companies mentioned in this report. Neither the information nor opinion expressed in this report shall constitute a solicitation to buy or sell any securities. There may be instances when fundamental, technical, and quantitative opinions may not be in concert. This firm (or one of its affiliates) may from time to time perform investment banking or other services for, or solicit investment banking or other business from, any company mentioned in this report. There are risks inherent in international investments, which may make such investments unsuitable for certain clients. These include, for example, economic, political, currency exchange rate fluctuations, and limited availability of information on international securities. We recommend that you obtain the advice of your Financial Advisor regarding this or other investment to conform to your financial resources and risk preference

中国美元主权债券遭疯抢：超额10倍认购！

*本文来自华尔街见闻（微信ID：wallstreetcn），作者祁月。更多精彩资讯请登陆wallstreetcn.com，或下载华尔街见闻APP。*本文首发于14:10，更新于16:30，“五倍认购”更新为“十倍认购”。 周四，中国政府再次回归国际债券市场，尘封十三年的中国主权外币债券发行再度开启，受到资本市场的热烈追捧。 媒体称，中国美元主权债券认购订单金额已达200亿美元，为计划发行金额20亿美元的十倍。而在开放圈购后的一小时内，认购订单金额已超过100亿美元。花旗、汇丰、渣打、德意志银行等多家外资行纷纷参与其中。 “每个人都想拿到这个债券。息差很窄，但我们很有兴趣，因为在同样期限债券中，多次发行的风险很小，”媒体援引Aberdeen Standard Investments基金经理人Edmund Goh的话称。 中国此次重启主权外币债券发行并没有做第三方评级。一位不愿具名的国内评级公司高管对华尔街见闻表示，由于在香港发债没有强制评级规定，不评级是正常行为。 这次五年期及十年期各发行10亿美元。五年期债收益率较可比美国国债高出30-40个基点，在2.35%-2.45%区间；十年期债收益率较同期限美债高出40-50个基点，在2.83%-2.93%区间。 当前，美国五年期国债收益率交投于2.03%一线，十年期国债收益率交投于2.41%一线。 景顺资管驻香港亚洲固定收益部门投资总监Ken Hu此前表示，按照美国和其他大型主权发行人的标准衡量，中国此次发债规模不大，可能为这批美元债券创造稀缺价值，这将推动债券价格走高，收益率下降。 如果这批中国主权债券定价低于今年早些时候韩国发行的主权债，则将刷新亚洲债券发行记录。今年1月，韩国发行规模10亿美元的十年期美元主权债，票面利率2.75%，较同期美债高出0.55%。当时获得标普AA平均，较中国同期债券评级高出两档，与美债收益率之差是亚洲最低的。 新的里程碑 不采用国际评级机构评级

上古亚洲任泰州华信药业全球协调人 成功为其发行 363

泰州华信药业363天美元城投债定价4.5%

泰州市政府旗下城投平台——泰州华信药业投资有限公司（Taizhou Huaxin Pharmaceutical Investment Co., Ltd.，以下简称“泰州华信”）本周二定价一笔RegS、1.2亿美元、363天短期限（2017-10-24 ~ 2018-10-22）、高级无抵押、无评级美元债TZHuaxin 4.5 10/22/18，FPG 4.5% (the number)，发行价4.5%，现金发行价100。 债券由华信药业（香港）有限公司（Huaxin Pharmaceutical (Hong Kong) Co., Ltd.）发行，泰州华信担保，所筹款项用作营运资金及一般公司用途。 债券包含“控制权变更回售权”（CoC Put），回售价为面额的101%。 海通国际、Shanggu Asia担任联席全球协调人，海通国际、Shanggu Asia、胜利证券（Victory Securities）担任联席牵头经办人、联席簿记人。 泰州华信总部位于江苏省泰州市，截至2017年3月底，由泰州市政府控股71.1%并实际控制。此外，富安达资产管理（上海）有限公司持股28.15%，国开发展基金有限公司持股0.75%。 泰州华信的主营业务包括：泰州医药园区的基础设施及公共服务平台建设、园区土地开发、药品销售、租赁。

財經要聞--每日簡報2017-9-15

美國勞工部周四公布8月消費者物價指數（CPI）月增0.4％，高於市場預估的月增0.3％，創1月來最大月增幅。主要是哈維來襲令德州多家煉油廠停工，導致美國汽油價格因供應減少而急速上漲，加上從藥物到居住等價格均上漲而刺激CPI上升。 英倫銀行維持基準利率在0.25厘不變，符合市場預期，並一致同意維持國債購買目標在4350億英鎊及公司債購買目標在100億英鎊不變。不過，央行表示，對於通脹率高於目標水平的容忍度減弱，委員們一致認為利率可能以比市場預期更快的速度上升。英倫銀行表示，大部分貨幣政策委員會(MPC)委員認為如果經濟增長繼續，以及基礎物價壓力上升，則未來數月有可能撤出部分刺激措施。 中國固定資產投資、工業增加值、零售增速遜預期。國家統計局公布，今年首8個月，全國固定資產投資39.42萬億元(人民幣‧下同)，按年增長7.8%，遜於市場預期按年增8.2%。8月規模以上工業增加值按年增長6%，遜於市場預期增長6.6%，比7月份回落0.4個百分點。社會消費品零售總額3.03萬億元，按年名義增長10.1%，遜於市場預期增10.5%。