[Today’s Guide]
> Various measures to improve market liquidity, margin trading pressure to reduce
> Draft of cyber security law to solicit opinion, information security demands to burst out
> Leshi Internet Information & Technology and East Money Information on ChiNext Board resume trading with good news, San Bian Science & Technology bought to 5 pct limit
>Blue-chip shares covered by shareholding increase trend, Zhongguang Lightning Protection Technologies, etc. plan high share conversion
[XFA Focus]
○Various measures to improve market liquidity, margin trading pressure to reduce
------
The A-share market saw significant improvement in liquidity on July 8. Many companies plummeted by the daily limit of 10 percent were bought in and recorded a decline of less than the daily limit. The China Securities Regulatory Commission (CSRC) indicated before the trading hours that the China Securities Finance Co., Ltd. (CSF) would increase the purchasing of stocks with medium and small market value. The trading volume ranking list also shows that most stocks at on the list at the Shenzhen Stock Exchange are bought by several Beijing-based business branches of the CITIC Securities Company Limited (06030.HK; 600030.SH) with a total of over 40 billion yuan. The position ranking list of the China Financial Futures Exchange shows that CITIC Securities purchased 30,558 lots of IF1507 and 4,510 lots of IH1507, making the biggest bullish institutional seat for futures index.
On the same day, various ministries introduced measures to stabilize the stock market. The CSF offered 260 billion yuan of stock-secured credit for 21 securities companies. The Central Huijin Investment Ltd. will continue to purchase ETFs. The CSRC issued documents to encourage purchase and restrict sale, requiring that controlling shareholders, shareholders with more than 5 percent of shareholding, directors, supervisors and senior management shall not reduce their shareholding through the secondary market in the following six months. The China Insurance Regulatory Commission (CIRC) issued documents to increase the investment proportion of insurance assets in blue-chip stocks. The State-owned Assets Supervision and Administration Commission requires that central enterprises shall not reduce shareholding under abnormal fluctuations of the stock market and will further promote the reform and reorganization. The Ministry of Finance encourages state-owned financial enterprises to increase the shareholding when the stock price is below the appropriate value.
Comment: A series of policy portfolio have been introduced focused on the insufficient liquidity. The CITIC Securities bought not only blue chips with outstanding performance but also certain stocks with poor performance. Investors should not consider it as guarantees to pull up the stock price. Its main purpose may be to ease the pressure on margin trading. The balance of margin trading on the Shanghai and Shenzhen stock exchanges has fallen by approximately 600 billion yuan from the highest level to 1.63 trillion yuan and the deleveraging is speeding up in the market. Many stocks are bought in through the secondary market to the 5 percent limit, showing that more and more companies are within the range for being purchased by value investors.
[XFA Selection]
○ Chinese President Xi Jinping arrived in Ufa, Russia on July 8 to attend the BRICS summit and the Council of the Heads of State of the Shanghai Cooperation Organization Member States.
○ The executive meeting of the State Council convened on July 8 indicated that China is confident to achieve the economic target for the whole year. It will urge to speed up the construction of railway, roads in rural areas and major water conservancy projects.
○ Five state-owned enterprises in Chongqing will increase the shareholding in Chongqing Gas Group Corporation Ltd. (600917.SH), Chongqing Water Group Co., Ltd. (601158.SH), Chongqing Chuanyi Automation Co., Ltd. (603100.SH), Chongqing Sanxia Paints Co., Ltd. (000565.SZ) and Chongqing Gangjiu Co., Ltd. (600279.SH) from July 9.
○ The State-owned Assets Supervision and Administration Commission of the People’s Government of Guangdong Province requires that provincial enterprises shall not reduce the shareholding of stocks of listed companies under abnormal fluctuations of the stock market and shall increase the shareholding of stocks with prices below the value.
[Industry Information]
○Draft of cyber security law to solicit opinion, information security demands to burst out
------
The draft of the cyber security law was released on the website of the www.npc.gov.cn. It will solicit public opinions from July 6 to Aug. 5. The draft has seven chapters with 68 clauses, mainly covering safeguarding cyberspace sovereignty and strategic plans, guaranteeing the network products and the operation security and the security of network data and information.
Comment: The introduction of the cyber security law will play a supporting role in the development of the whole information security industry and the market size is expected to be 100 billion yuan. The information security is demonstrated in the independent controllability of software, hardware and systems. The independent controllability of software is shown in structure, which will use more cloud computation structure to replace the software facilities of overseas tycoons. In terms of hardware, it will replace overseas equipment in the chips, servers and network security equipment. As for the independent controllability of systems, it will invite confidentially qualified domestic enterprises to complete the systems used to be tendered by overseas companies.
[Announcement Interpretation]
○Leshi Internet Information & Technology and East Money Information on ChiNext Board resume trading with good news
------
Beijing Leshi Internet Information & Technology Corp. (300104.SZ) plans to jointly invest in Beijing Edooon Sibo Network Technology Company Limited with sports.letv.com. Leshi Internet Information & Technology will invest in 10 million yuan, while sports.letv.com will invest in 5 million yuan. Edooon is principally engaged in the development and promotion of Edooon GPS APP and the application is now available on Android, iOS and Windows Phone platforms. The main function of Edooon GPS APP aims to acquire location information through cellphone’s GPS module and then to acquire user’s exercise data and calculate heat consumption. This move is quite meaningful for the company’s arrangement in association O2O and sports & health areas.
East Money Information Co., Ltd. (300059.SZ) plans to invest 250 million yuan in Yizhen Network Technology Co., Ltd., an Internet financial platform, to acquire 27 percent equities of the company. Yizhen Network Technology fully controls Shanghai Baofoo Network Technology Company, a third-party payment enterprise which owns payment business permit and is principally engaged in the operation of Internet third-party payment platform.
○San Bian Science & Technology bought by Zhongke Huitong through secondary market acquisition to 5 pct limit
------
Zhongke Huitong (Shenzhen) Equity Investment Fund Company Limited, substantial shareholder of San Bian Science & Technology Co., Ltd. (002112.SZ), increased shareholding in the company by 8.24 million shares at an average price of 10.04 yuan per share on July 7, accounting for 4.09 percent of the company’s total share capital. The shareholding held by Zhongke Huitong records 5.01 percent upon completion of the shareholding increase, reaching the five percent limit of acquiring shares through secondary market acquisition. Zhongke Huitong, a fully-owned subsidiary of PE giant China Science & Merchants Investment Management Group (CSC), indicates that it is optimistic about the company’s business development mode and future prospect. It will hold the company’s shares in the long term and might continue the share increase in the future.
○Listed companies continue to increase shareholding, blue-chip stocks covered
------
More listed companies increased shareholding on July 8. Controlling shareholders of China Petroleum & Chemical Corporation (600028.SH; 00386.HK) and China Shenhua Energy Company Limited (601088.SH; 01088.HK) increased shareholding by 0.4 percent of the total share capitals in the companies, and they plan to totally increase shareholding in the companies by no more than 2 percent their total share capital in next 12 months; Beijing Capital Huaxin International Investment Company Limited, a wholly-owned subsidiary of Beijing Capital Group which is the controlling shareholder of Beijing Capital Co., Ltd. (600008.SH), increased shareholding in the company by 7.10 million shares, accounting for 0.3 percent of its total share capital. It plans to increase shareholding in the company by no more than 5 percent of the company’s total share capital at a price no more than 9.77 yuan per share by end-2015; actual controller of Tangshan Huizhong Instrumentation Co., Ltd. (300371.SZ) increased shareholding in the company by 0.55 percent of its total share capital; controlling shareholder of Beijing Cuiwei Tower Co., Ltd. (603123.SH) increased shareholding in the company by 0.4 percent of its total share capital; actual controller of Staidson (Beijing) Biopharmaceuticals Co., Ltd. (300204.SZ) increased shareholding in the company by 0.3 percent of the company’s total share capital at an average price of 25.37 yuan per share. In addition, substantial shareholders of China State Construction Engineering Corporation Limited (601668.SH), China Railway Construction Corporation Limited (601186.SH; 01186.HK), Chongqing Mas Sci. & Tech. Co., Ltd. (300275.SZ), Guangdong Biolight Meditech Co., Ltd. (300246.SZ), etc. also increased shareholding in the company.
More listed companies launch shareholding increase plan of increasing shareholding in the companies by no more than 2 percent of their total share capital in next six months, such as Beiqi Foton Motor Co., Ltd. (600166.SH), Baoji Titanium Industry Co., Ltd. (600456.SH), Shanghai Sinyang Semiconductor Materials Co., Ltd. (300236.SZ), Jiangsu Yabang Dyestuff Co., Ltd. (603188.SH), Guangdong Boxin Investing & Holdings Co., Ltd. (600083.SH), Jiangsu Hengshun Vinegar-industry Co., Ltd. (600305.SH), Henan Taloph Pharmaceutical Stock Co., Ltd. (600222.SZ), Guangdong Jiaying Pharmaceutical Co., Ltd. (002198.SZ), etc. Moreover, Chongqing Yufu Assets Management Group Co., Ltd. and Chongqing City Construction & Investment (Group) Company Limited, controlling shareholders of Southwest Securities Co., Ltd. (600369.SH), plan to increase shareholding in the company by no more than 1,116 million yuan. Guangzhou Automobile Industry Group Co., Ltd., controlling shareholder of Guangzhou Automobile Group Co., Ltd. (601238.SH; 02238.HK), plans to increase shareholding of the company’s A shares and H shares totally by no more than five percent of the company’s total share capital before December 31. Controlling shareholder of Shanghai Jielong Industry Group Corporation Limited (600836.SH) plans to increase shareholding in the company by no more than three percent of its total share capital in next six months and by no less than 30 million yuan.
[Financial Reports Express]
○Zhongguang Lightning Protection Technologies, etc. plan high share conversion
------
Sichuan Zhongguang Lightning Protection Technologies Co., Ltd. (300414.SZ) and Well Lead Medical Co., Ltd. (603309.SH) propose a 10-for-10 conversion of capital surplus into shares in their semiyearly distribution plans, respectively.
○Northeast Securities, etc. forecast great performance growth
------
Northeast Securities Co., Ltd. (000686.SZ) expects its performance to see a year-on-year growth of 451 percent in its semiyearly report; Changjiang Securities Company Limited (000783.SZ) forecasts a year-on-year growth of 270 percent in its semiyearly report; Guoyuan Securities Company Limited (000728.SZ) predicts a year-on-year growth of 212 percent in its semiyearly report; Qingdao Soda Ash Industrial Company Limited (600229.SH) expects its performance to grow by 177 percent from year on year in its semiyearly report.
> Various measures to improve market liquidity, margin trading pressure to reduce
> Draft of cyber security law to solicit opinion, information security demands to burst out
> Leshi Internet Information & Technology and East Money Information on ChiNext Board resume trading with good news, San Bian Science & Technology bought to 5 pct limit
>Blue-chip shares covered by shareholding increase trend, Zhongguang Lightning Protection Technologies, etc. plan high share conversion
[XFA Focus]
○Various measures to improve market liquidity, margin trading pressure to reduce
------
The A-share market saw significant improvement in liquidity on July 8. Many companies plummeted by the daily limit of 10 percent were bought in and recorded a decline of less than the daily limit. The China Securities Regulatory Commission (CSRC) indicated before the trading hours that the China Securities Finance Co., Ltd. (CSF) would increase the purchasing of stocks with medium and small market value. The trading volume ranking list also shows that most stocks at on the list at the Shenzhen Stock Exchange are bought by several Beijing-based business branches of the CITIC Securities Company Limited (06030.HK; 600030.SH) with a total of over 40 billion yuan. The position ranking list of the China Financial Futures Exchange shows that CITIC Securities purchased 30,558 lots of IF1507 and 4,510 lots of IH1507, making the biggest bullish institutional seat for futures index.
On the same day, various ministries introduced measures to stabilize the stock market. The CSF offered 260 billion yuan of stock-secured credit for 21 securities companies. The Central Huijin Investment Ltd. will continue to purchase ETFs. The CSRC issued documents to encourage purchase and restrict sale, requiring that controlling shareholders, shareholders with more than 5 percent of shareholding, directors, supervisors and senior management shall not reduce their shareholding through the secondary market in the following six months. The China Insurance Regulatory Commission (CIRC) issued documents to increase the investment proportion of insurance assets in blue-chip stocks. The State-owned Assets Supervision and Administration Commission requires that central enterprises shall not reduce shareholding under abnormal fluctuations of the stock market and will further promote the reform and reorganization. The Ministry of Finance encourages state-owned financial enterprises to increase the shareholding when the stock price is below the appropriate value.
Comment: A series of policy portfolio have been introduced focused on the insufficient liquidity. The CITIC Securities bought not only blue chips with outstanding performance but also certain stocks with poor performance. Investors should not consider it as guarantees to pull up the stock price. Its main purpose may be to ease the pressure on margin trading. The balance of margin trading on the Shanghai and Shenzhen stock exchanges has fallen by approximately 600 billion yuan from the highest level to 1.63 trillion yuan and the deleveraging is speeding up in the market. Many stocks are bought in through the secondary market to the 5 percent limit, showing that more and more companies are within the range for being purchased by value investors.
[XFA Selection]
○ Chinese President Xi Jinping arrived in Ufa, Russia on July 8 to attend the BRICS summit and the Council of the Heads of State of the Shanghai Cooperation Organization Member States.
○ The executive meeting of the State Council convened on July 8 indicated that China is confident to achieve the economic target for the whole year. It will urge to speed up the construction of railway, roads in rural areas and major water conservancy projects.
○ Five state-owned enterprises in Chongqing will increase the shareholding in Chongqing Gas Group Corporation Ltd. (600917.SH), Chongqing Water Group Co., Ltd. (601158.SH), Chongqing Chuanyi Automation Co., Ltd. (603100.SH), Chongqing Sanxia Paints Co., Ltd. (000565.SZ) and Chongqing Gangjiu Co., Ltd. (600279.SH) from July 9.
○ The State-owned Assets Supervision and Administration Commission of the People’s Government of Guangdong Province requires that provincial enterprises shall not reduce the shareholding of stocks of listed companies under abnormal fluctuations of the stock market and shall increase the shareholding of stocks with prices below the value.
[Industry Information]
○Draft of cyber security law to solicit opinion, information security demands to burst out
------
The draft of the cyber security law was released on the website of the www.npc.gov.cn. It will solicit public opinions from July 6 to Aug. 5. The draft has seven chapters with 68 clauses, mainly covering safeguarding cyberspace sovereignty and strategic plans, guaranteeing the network products and the operation security and the security of network data and information.
Comment: The introduction of the cyber security law will play a supporting role in the development of the whole information security industry and the market size is expected to be 100 billion yuan. The information security is demonstrated in the independent controllability of software, hardware and systems. The independent controllability of software is shown in structure, which will use more cloud computation structure to replace the software facilities of overseas tycoons. In terms of hardware, it will replace overseas equipment in the chips, servers and network security equipment. As for the independent controllability of systems, it will invite confidentially qualified domestic enterprises to complete the systems used to be tendered by overseas companies.
[Announcement Interpretation]
○Leshi Internet Information & Technology and East Money Information on ChiNext Board resume trading with good news
------
Beijing Leshi Internet Information & Technology Corp. (300104.SZ) plans to jointly invest in Beijing Edooon Sibo Network Technology Company Limited with sports.letv.com. Leshi Internet Information & Technology will invest in 10 million yuan, while sports.letv.com will invest in 5 million yuan. Edooon is principally engaged in the development and promotion of Edooon GPS APP and the application is now available on Android, iOS and Windows Phone platforms. The main function of Edooon GPS APP aims to acquire location information through cellphone’s GPS module and then to acquire user’s exercise data and calculate heat consumption. This move is quite meaningful for the company’s arrangement in association O2O and sports & health areas.
East Money Information Co., Ltd. (300059.SZ) plans to invest 250 million yuan in Yizhen Network Technology Co., Ltd., an Internet financial platform, to acquire 27 percent equities of the company. Yizhen Network Technology fully controls Shanghai Baofoo Network Technology Company, a third-party payment enterprise which owns payment business permit and is principally engaged in the operation of Internet third-party payment platform.
○San Bian Science & Technology bought by Zhongke Huitong through secondary market acquisition to 5 pct limit
------
Zhongke Huitong (Shenzhen) Equity Investment Fund Company Limited, substantial shareholder of San Bian Science & Technology Co., Ltd. (002112.SZ), increased shareholding in the company by 8.24 million shares at an average price of 10.04 yuan per share on July 7, accounting for 4.09 percent of the company’s total share capital. The shareholding held by Zhongke Huitong records 5.01 percent upon completion of the shareholding increase, reaching the five percent limit of acquiring shares through secondary market acquisition. Zhongke Huitong, a fully-owned subsidiary of PE giant China Science & Merchants Investment Management Group (CSC), indicates that it is optimistic about the company’s business development mode and future prospect. It will hold the company’s shares in the long term and might continue the share increase in the future.
○Listed companies continue to increase shareholding, blue-chip stocks covered
------
More listed companies increased shareholding on July 8. Controlling shareholders of China Petroleum & Chemical Corporation (600028.SH; 00386.HK) and China Shenhua Energy Company Limited (601088.SH; 01088.HK) increased shareholding by 0.4 percent of the total share capitals in the companies, and they plan to totally increase shareholding in the companies by no more than 2 percent their total share capital in next 12 months; Beijing Capital Huaxin International Investment Company Limited, a wholly-owned subsidiary of Beijing Capital Group which is the controlling shareholder of Beijing Capital Co., Ltd. (600008.SH), increased shareholding in the company by 7.10 million shares, accounting for 0.3 percent of its total share capital. It plans to increase shareholding in the company by no more than 5 percent of the company’s total share capital at a price no more than 9.77 yuan per share by end-2015; actual controller of Tangshan Huizhong Instrumentation Co., Ltd. (300371.SZ) increased shareholding in the company by 0.55 percent of its total share capital; controlling shareholder of Beijing Cuiwei Tower Co., Ltd. (603123.SH) increased shareholding in the company by 0.4 percent of its total share capital; actual controller of Staidson (Beijing) Biopharmaceuticals Co., Ltd. (300204.SZ) increased shareholding in the company by 0.3 percent of the company’s total share capital at an average price of 25.37 yuan per share. In addition, substantial shareholders of China State Construction Engineering Corporation Limited (601668.SH), China Railway Construction Corporation Limited (601186.SH; 01186.HK), Chongqing Mas Sci. & Tech. Co., Ltd. (300275.SZ), Guangdong Biolight Meditech Co., Ltd. (300246.SZ), etc. also increased shareholding in the company.
More listed companies launch shareholding increase plan of increasing shareholding in the companies by no more than 2 percent of their total share capital in next six months, such as Beiqi Foton Motor Co., Ltd. (600166.SH), Baoji Titanium Industry Co., Ltd. (600456.SH), Shanghai Sinyang Semiconductor Materials Co., Ltd. (300236.SZ), Jiangsu Yabang Dyestuff Co., Ltd. (603188.SH), Guangdong Boxin Investing & Holdings Co., Ltd. (600083.SH), Jiangsu Hengshun Vinegar-industry Co., Ltd. (600305.SH), Henan Taloph Pharmaceutical Stock Co., Ltd. (600222.SZ), Guangdong Jiaying Pharmaceutical Co., Ltd. (002198.SZ), etc. Moreover, Chongqing Yufu Assets Management Group Co., Ltd. and Chongqing City Construction & Investment (Group) Company Limited, controlling shareholders of Southwest Securities Co., Ltd. (600369.SH), plan to increase shareholding in the company by no more than 1,116 million yuan. Guangzhou Automobile Industry Group Co., Ltd., controlling shareholder of Guangzhou Automobile Group Co., Ltd. (601238.SH; 02238.HK), plans to increase shareholding of the company’s A shares and H shares totally by no more than five percent of the company’s total share capital before December 31. Controlling shareholder of Shanghai Jielong Industry Group Corporation Limited (600836.SH) plans to increase shareholding in the company by no more than three percent of its total share capital in next six months and by no less than 30 million yuan.
[Financial Reports Express]
○Zhongguang Lightning Protection Technologies, etc. plan high share conversion
------
Sichuan Zhongguang Lightning Protection Technologies Co., Ltd. (300414.SZ) and Well Lead Medical Co., Ltd. (603309.SH) propose a 10-for-10 conversion of capital surplus into shares in their semiyearly distribution plans, respectively.
○Northeast Securities, etc. forecast great performance growth
------
Northeast Securities Co., Ltd. (000686.SZ) expects its performance to see a year-on-year growth of 451 percent in its semiyearly report; Changjiang Securities Company Limited (000783.SZ) forecasts a year-on-year growth of 270 percent in its semiyearly report; Guoyuan Securities Company Limited (000728.SZ) predicts a year-on-year growth of 212 percent in its semiyearly report; Qingdao Soda Ash Industrial Company Limited (600229.SH) expects its performance to grow by 177 percent from year on year in its semiyearly report.
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