[Today’s Guide]
○ Keep rational in widely expected surging market
○ Regulatory authorities may study entering of bank capitals
○ Output of lithium battery separator to see rapid surge, import might replaced
○ Super-capacitor project of Jianghai Capacitor to see massive production soon
[XFA View]
Despite increasingly intraday volatility, the stock index maintained the strong momentum recently and is widely expected to reach 5,000 points by a majority of market participants. It should be admitted that under the background of the favorable capital conditions to the stock market and the reallocation of residents’ investment, the dominant role of the economic fundamentals should be replaced by the OTC capitals. However, it never means that investors can relax vigilance. They are advised to keep rational while embracing bubbles as the bullish market dependent on the supporting of capitals may lose its toughness.
Statistics show that sellers have been generally bullish about the market. However, study shows that their logic has slightly changed. Bullish investors used to emphasize economic bottoming, the downward risk-free interest rate and the effects of reform. But they prefer to mention the entering of new capital and the improvement in investors’ risk preference. The change in the supporting evidence to the bullish market shows that the signals from certain real economies cannot help the booming market.
The improved economic conditions and the reform benefits can support the bullish market. The entering of capitals can also boost the bullish market. In terms of the actual results of the surging index, they have no differences. However, to the mentality of investors and regulatory authorities, the latter is not very reliable. The bullish market supported by capitals may lose its toughness. A private fund tycoon joked that current OTC investors are just like audience watching movies at night. They are reluctant to leave earlier but want to sit beside the exit to catch the last metro.
The market conditions driven by wide expectation is fragile to the change in wide expectation. The seemingly sudden change is actually an accumulation of pressures. Under the accumulation of pressures, investors should focus on the risk-reward ratio other than rewards. For investors with certain float profits accumulated in particular, it is more important to keep the rewards than participating in gaming. (Hong Yi)
[Institutions’ Movement]
Insurance companies: bullish and bearish differences may slow down surging
------
According to the latest research on insurance companies in Beijing and Shanghai by XFA, there is divergence over the bullish and bearish market. Certain prudent insurance companies have reduced their positions. The assets management of Taikang Life interviewed indicated that the interpretation on the economy and capital by official media should be analyzed carefully by the market. There are fewer chances for further easing policies in future, but it cannot exclude that some institutes may exit and slow down the surging of the market.
[Authoritative Voice]
Regulatory authorities may study entering of bank capitals
------
It is reported that regulatory authorities recently required banks reporting the entering of capitals into the stock market, including capital financing. Insiders interviewed believe that the move is to learn about the conditions, but it is difficult to make corresponding statistics. At the beginning of this month, the China Banking Regulatory Commission (CBRC) conducted field inspections on strengthening internal control and risks management and curbing criminal activities and irregular operations, including the inspection on irregular entering of capitals into the market. Many bank branches confirm that they have received notices for inspections.
It takes time to adopt RMB into SDR
------
The IMF will deliberate the basket currency for the Special Drawing Rights (SDRs) in September, which is conducted every five years. It is widely expected on whether RMB will be adopted. Authorities indicated in an interview that with the increasing proportion of RMB in global trade and the active promotion by the monetary authorities in China, it is a trend to adopt RMB into the SDRs.
However, there are still barriers for the adoption of RMB into the SDRs and it still takes time to solve. The IMF has its own internal procedures for the selection of SDR currencies basket. Logically, it shall achieve the convertibility of capital accounts. RMB cannot meet the above criteria currently. As a result, China should promote the integration of domestic and overseas financial markets depending on the international liquidity and the cross-border capital flow in China.
[Hotspot Investigation]
Zhejiang Province proposes multi measures to build trillions-of-yuan finance industry with regional characteristics
------
During the “Twelfth Five-Year Plan”, Zhejiang Province proactively made planning in local finance industry development. New financial forms keep emerging. Ant Financial Group has become a benchmark enterprise in domestic Internet finance area. XFA recently goes to Zhejiang Province for field investigation and the situation learnt is provided as follows to investors for your reference.
◆ Trillions-of-yuan finance industry under creation
At present, the social financing scale of Zhejiang Province has speeded down from rapid growth and indirect financing accounts for less than 80 percent. The integration between industrial capital including Zhejiang Materials Industry Group Corporation, Alibaba Group as well as CHINT Electrics Co., Ltd. and finance is deepening constantly. According to the regional planning of building local finance industry into a trillions-of-yuan industry, Zhejiang Province is focusing on building Zhejiang business financial headquarter, promoting the Bank of Hangzhou and Bank of Ningbo to step onto an asset scale of trillions of yuan and further pushing local securities and futures industries in Zhejiang Province to expand.
◆ Continue to support the development of Internet finance
In recent days, Zhejiang Provincial Finance Office, together with “the People’s Bank of China (Hangzhou Central Sub-branch), Zhejiang Banking Regulatory Commission, Zhejiang Securities Regulatory Commission and Zhejiang Insurance Regulatory Commission”, releases interim procedures promoting healthy development of Internet finance. It plans to construct an Internet finance accumulation zone, build new financial forms represented by Alipay and Zhejiang Wangshang Bank. Zhejiang Equity Trading Center also has launched equity crowd-funding platform.
◆ Development mode highlighting regional financial characteristics
Build Hangyong financial core area targeting wealth management center and shipping financial center; deepen existing Wenzhou financial reform, Yiwu international commerce financial reform, Lishui rural area financial reform and Taizhou small and micro businesses financial reform. Moreover, Zhejiang will build a batch of characteristic towns like Yuhuangshan South privately-offered fund town, Jiaxing Southern Lake fund town, Ningbo Meishan privately-offered fund town, Hangzhou Xixigu Internet financial town, Yinzhou Shounan quantitative trading financial town, etc. according to the mode of “governmental guidance + market operation”.
[XFA Viewpoint]
Output of lithium battery separator to see rapid surge, import might replaced
------
As China’s new energy car industry sees rapid growth, raw material industries of lithium battery also grows rapidly, among which, the output of separator industry grows the fastest and it might replace import. Latest data from China Battery Industry Association shows that the output of separator in Jan-April period reached 98.50 million square meters, indicating a year-on-year growth of 40.7 percent. At the meantime, the dependency degree of separator market on high-end products decreases from previous 80 percent to around 50~60 percent. From next year, the market share of domestic brand products might stand above 50 percent. It is learnt that separator product capacity of listed companies including Cangzhou Mingzhu Plastic Co., Ltd. (002108.SZ), Zhejiang Nanyang Technology Co., Ltd. (002389.SZ), and etc. expands rapidly.
Cangzhou MingZhu Plastic Co., Ltd. (002108.SZ) will have 20-million-square-meters new capacity of lithium battery separator put into production this year. The company plans to totally sell 38 million square meters of separator this year. 28 million square meters of separator was sold last year. The separator business of Cangzhou MingZhu Plastic is seeing rapid growth and it has entered high-end supply chain.
The lithium battery separator production line with annual production of 15 million square meters of Zhejiang Nanyang Technology Co., Ltd. (002389.SZ) is currently under trial production and the production line might be officially put into production in June. It will be the world first new industrial high-end separator production line and bring new performance growth point to the company.
[Information Radar]
Super-capacitor project of Jianghai Capacitor to see massive production soon
------
The super-capacitor project of Nantong Jianghai Capacitor Co., Ltd. (002484.SZ) might officially see massive production in August this year. Moreover, the company’s car super-capacitor product is under trial use in manufacturers and the progress is sound. Securities companies’ research reports predict that the company will draw an income of 10~20 million yuan from lithium-ion super-capacitor this year and this number will hit hundreds of millions of yuan next year.
As for thin-film capacitor business, due to the capacity expansion of downstream enterprises and diversified demand, the number of thin-film capacitor production lines of Jianghai Capacitor will be further expanded to 7 within the year. Institutions estimate that the company’s income on thin-film capacitor will reach 50~70 million yuan this year and its income from this part of business in 2014 recorded around 15 million yuan. Moreover, along with capacity expansion, the company also improves its overall gross profit rate by introducing German equipment and actively expanding industrial chain.
○ Keep rational in widely expected surging market
○ Regulatory authorities may study entering of bank capitals
○ Output of lithium battery separator to see rapid surge, import might replaced
○ Super-capacitor project of Jianghai Capacitor to see massive production soon
[XFA View]
Despite increasingly intraday volatility, the stock index maintained the strong momentum recently and is widely expected to reach 5,000 points by a majority of market participants. It should be admitted that under the background of the favorable capital conditions to the stock market and the reallocation of residents’ investment, the dominant role of the economic fundamentals should be replaced by the OTC capitals. However, it never means that investors can relax vigilance. They are advised to keep rational while embracing bubbles as the bullish market dependent on the supporting of capitals may lose its toughness.
Statistics show that sellers have been generally bullish about the market. However, study shows that their logic has slightly changed. Bullish investors used to emphasize economic bottoming, the downward risk-free interest rate and the effects of reform. But they prefer to mention the entering of new capital and the improvement in investors’ risk preference. The change in the supporting evidence to the bullish market shows that the signals from certain real economies cannot help the booming market.
The improved economic conditions and the reform benefits can support the bullish market. The entering of capitals can also boost the bullish market. In terms of the actual results of the surging index, they have no differences. However, to the mentality of investors and regulatory authorities, the latter is not very reliable. The bullish market supported by capitals may lose its toughness. A private fund tycoon joked that current OTC investors are just like audience watching movies at night. They are reluctant to leave earlier but want to sit beside the exit to catch the last metro.
The market conditions driven by wide expectation is fragile to the change in wide expectation. The seemingly sudden change is actually an accumulation of pressures. Under the accumulation of pressures, investors should focus on the risk-reward ratio other than rewards. For investors with certain float profits accumulated in particular, it is more important to keep the rewards than participating in gaming. (Hong Yi)
[Institutions’ Movement]
Insurance companies: bullish and bearish differences may slow down surging
------
According to the latest research on insurance companies in Beijing and Shanghai by XFA, there is divergence over the bullish and bearish market. Certain prudent insurance companies have reduced their positions. The assets management of Taikang Life interviewed indicated that the interpretation on the economy and capital by official media should be analyzed carefully by the market. There are fewer chances for further easing policies in future, but it cannot exclude that some institutes may exit and slow down the surging of the market.
[Authoritative Voice]
Regulatory authorities may study entering of bank capitals
------
It is reported that regulatory authorities recently required banks reporting the entering of capitals into the stock market, including capital financing. Insiders interviewed believe that the move is to learn about the conditions, but it is difficult to make corresponding statistics. At the beginning of this month, the China Banking Regulatory Commission (CBRC) conducted field inspections on strengthening internal control and risks management and curbing criminal activities and irregular operations, including the inspection on irregular entering of capitals into the market. Many bank branches confirm that they have received notices for inspections.
It takes time to adopt RMB into SDR
------
The IMF will deliberate the basket currency for the Special Drawing Rights (SDRs) in September, which is conducted every five years. It is widely expected on whether RMB will be adopted. Authorities indicated in an interview that with the increasing proportion of RMB in global trade and the active promotion by the monetary authorities in China, it is a trend to adopt RMB into the SDRs.
However, there are still barriers for the adoption of RMB into the SDRs and it still takes time to solve. The IMF has its own internal procedures for the selection of SDR currencies basket. Logically, it shall achieve the convertibility of capital accounts. RMB cannot meet the above criteria currently. As a result, China should promote the integration of domestic and overseas financial markets depending on the international liquidity and the cross-border capital flow in China.
[Hotspot Investigation]
Zhejiang Province proposes multi measures to build trillions-of-yuan finance industry with regional characteristics
------
During the “Twelfth Five-Year Plan”, Zhejiang Province proactively made planning in local finance industry development. New financial forms keep emerging. Ant Financial Group has become a benchmark enterprise in domestic Internet finance area. XFA recently goes to Zhejiang Province for field investigation and the situation learnt is provided as follows to investors for your reference.
◆ Trillions-of-yuan finance industry under creation
At present, the social financing scale of Zhejiang Province has speeded down from rapid growth and indirect financing accounts for less than 80 percent. The integration between industrial capital including Zhejiang Materials Industry Group Corporation, Alibaba Group as well as CHINT Electrics Co., Ltd. and finance is deepening constantly. According to the regional planning of building local finance industry into a trillions-of-yuan industry, Zhejiang Province is focusing on building Zhejiang business financial headquarter, promoting the Bank of Hangzhou and Bank of Ningbo to step onto an asset scale of trillions of yuan and further pushing local securities and futures industries in Zhejiang Province to expand.
◆ Continue to support the development of Internet finance
In recent days, Zhejiang Provincial Finance Office, together with “the People’s Bank of China (Hangzhou Central Sub-branch), Zhejiang Banking Regulatory Commission, Zhejiang Securities Regulatory Commission and Zhejiang Insurance Regulatory Commission”, releases interim procedures promoting healthy development of Internet finance. It plans to construct an Internet finance accumulation zone, build new financial forms represented by Alipay and Zhejiang Wangshang Bank. Zhejiang Equity Trading Center also has launched equity crowd-funding platform.
◆ Development mode highlighting regional financial characteristics
Build Hangyong financial core area targeting wealth management center and shipping financial center; deepen existing Wenzhou financial reform, Yiwu international commerce financial reform, Lishui rural area financial reform and Taizhou small and micro businesses financial reform. Moreover, Zhejiang will build a batch of characteristic towns like Yuhuangshan South privately-offered fund town, Jiaxing Southern Lake fund town, Ningbo Meishan privately-offered fund town, Hangzhou Xixigu Internet financial town, Yinzhou Shounan quantitative trading financial town, etc. according to the mode of “governmental guidance + market operation”.
[XFA Viewpoint]
Output of lithium battery separator to see rapid surge, import might replaced
------
As China’s new energy car industry sees rapid growth, raw material industries of lithium battery also grows rapidly, among which, the output of separator industry grows the fastest and it might replace import. Latest data from China Battery Industry Association shows that the output of separator in Jan-April period reached 98.50 million square meters, indicating a year-on-year growth of 40.7 percent. At the meantime, the dependency degree of separator market on high-end products decreases from previous 80 percent to around 50~60 percent. From next year, the market share of domestic brand products might stand above 50 percent. It is learnt that separator product capacity of listed companies including Cangzhou Mingzhu Plastic Co., Ltd. (002108.SZ), Zhejiang Nanyang Technology Co., Ltd. (002389.SZ), and etc. expands rapidly.
Cangzhou MingZhu Plastic Co., Ltd. (002108.SZ) will have 20-million-square-meters new capacity of lithium battery separator put into production this year. The company plans to totally sell 38 million square meters of separator this year. 28 million square meters of separator was sold last year. The separator business of Cangzhou MingZhu Plastic is seeing rapid growth and it has entered high-end supply chain.
The lithium battery separator production line with annual production of 15 million square meters of Zhejiang Nanyang Technology Co., Ltd. (002389.SZ) is currently under trial production and the production line might be officially put into production in June. It will be the world first new industrial high-end separator production line and bring new performance growth point to the company.
[Information Radar]
Super-capacitor project of Jianghai Capacitor to see massive production soon
------
The super-capacitor project of Nantong Jianghai Capacitor Co., Ltd. (002484.SZ) might officially see massive production in August this year. Moreover, the company’s car super-capacitor product is under trial use in manufacturers and the progress is sound. Securities companies’ research reports predict that the company will draw an income of 10~20 million yuan from lithium-ion super-capacitor this year and this number will hit hundreds of millions of yuan next year.
As for thin-film capacitor business, due to the capacity expansion of downstream enterprises and diversified demand, the number of thin-film capacitor production lines of Jianghai Capacitor will be further expanded to 7 within the year. Institutions estimate that the company’s income on thin-film capacitor will reach 50~70 million yuan this year and its income from this part of business in 2014 recorded around 15 million yuan. Moreover, along with capacity expansion, the company also improves its overall gross profit rate by introducing German equipment and actively expanding industrial chain.
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