Generally a pretty slow news day, and things seem to be happening away from the financial media, if at all.
South China Morning Post had some information regarding the Fourth Plenum, largely identifying so far that the Chinese government won’t try ‘to meddle’ in the affairs of the judiciary. I guess that more will be revealed in due time, detailed policy decisions (if any) usually take one or two weeks to show up. The fact that here was one after only three business days following the Third was largely a signal by Xi as to how much importance his economic policy has, as well as another one of his symbolic callbacks to Deng Xiaoping. More as this develops.
Bloomberg is out reporting on IPO gains in China, following the state easing regulations allowing local companies going to market again at the start of the year. With valuations near a 48x P/E compared to a Shanghai Composite 8.4 it does surely look a little frisky, but the question is largely what type of companies and sectors have gone to market. If these are in growth sectors and represent smaller companies then a higher P/E valuation isn’t as egregious as a 6x index valuation implied, as the Haitong Securities analyst in the article mentions. The benefits of better checks and balances on these companies since they’ve gone through a lot of regulatory trouble to list is also worth noting. Would I invest in them beyond the first month? Probably not. but the HK-SH Stock Connect could add a lot of marginal liquidity for the overall market, and it should be positive for smaller market-cap stocks to a large extent to have a better liquidity environment.
On top of this, Bloomberg reports on more bad (good b’cuz stimulus?) data from China, this time from the housing market. Not a lot of news for the initiated, but more confirmation that China is waiting for something more before punching out policies that might move sticky parts of the economy. Worst-case, these parts might stick somewhere they really don’t belong, and thus targeted and temporary easing is the way to go, especially with positive low-inflation effects.
Now if you’ll excuse my madness, I have some more data entry and analysis to do this weekend to actually get the Hong Kong Monetary Authority data out the way and modeled.