The CSRC issued revised opinions on the confidentiality of overseas listing to remove obstacles to cross-border regulatory cooperation
The Omicron epidemic caused China’s PMI to fall into the contraction range in March
US employment data in March showed that the labor market maintained a strong momentum
New highlights: 1) audit and supervision of China concept shares: on April 2, 2022, the CSRC, together with the Ministry of finance, the state security administration and the state archives administration, revised the provisions on strengthening the confidentiality and archives management related to overseas securities issuance and listing (CSRC announcement [2009] No. 29), The regulations on strengthening the confidentiality and archives management related to overseas securities issuance and listing of domestic enterprises (Draft for comments) have been formed to solicit opinions from the public. The deadline for feedback is April 17. The CSRC said that the revision will help relevant regulatory authorities and overseas regulators to carry out cross-border regulatory cooperation activities, including joint inspection, safely and efficiently. The opinion draft deleted the expression in the original provisions that “on-site inspection shall be mainly conducted by Chinese regulators or rely on the inspection results of Chinese regulators”. In addition, the CSRC said that from the perspective of practice, it should be very rare for enterprises to provide documents and materials containing confidential or sensitive information to relevant securities companies and securities service institutions. This revision will guide enterprises to properly manage classified and sensitive information and fulfill the main responsibility of maintaining national information security. The CSRC said that the revision “aims at the new situations and problems related to overseas issuance and listing in recent years”, reflecting the consistent “open attitude” of China’s regulatory authorities towards cross-border audit and regulatory cooperation. 2) Ukrainian crisis: on March 31, Russian President Vladimir Putin signed a decree requiring foreign buyers to open accounts in Russian banks to settle Russian natural gas in rubles from April 1. Otherwise, it will be regarded as a breach of contract by Russia and the natural gas supply contract will be suspended. This requirement applies to 48 “non friendly countries” that impose sanctions on Russia. On March 31, US President Biden announced the release plan of the largest strategic oil reserve (SPR) in US history. In the next six months, an average of 1 million barrels of oil reserves will be added to the market every day. Biden said a total of about 180 million barrels of oil had been put in to deal with the “painful” surge in gasoline prices for American families.
Macroeconomic data: China: 1) the official manufacturing PMI in March was 49.5, lower than expected (February: 50.2); The official non manufacturing PMI was 48.4, lower than expected (February: 51.6). 2) In March, Caixin’s manufacturing PMI was 48.1, lower than expected (February: 50.4). Us: 1) the number of job vacancies in jolts in February was 11.266 million, higher than expected (January: 11.283 million). 2) Personal expenditure rose 0.2% month on month in February, lower than expected (January: 2.7%). Personal income rose 0.5% month on month, in line with expectations (January: 0.1%). PCE price index rose 0.6% month on month / 6.4% year-on-year, in line with expectations (January: 0.5% month on month / 6.0% year-on-year). The core PCE price index rose 0.4% month on month / 5.4% year-on-year, consistent with / lower than expectations (January: 0.5% month on month / 5.2% year-on-year). 3) The unemployment rate in March was 3.6%, lower than expected (February: 3.8%). The change of non-agricultural employment population was 431000, lower than expected (February: 750000). The labor force participation rate was 62.4%, in line with expectations (February: 62.3%). The average hourly salary increased by 0.4% month on month / 5.6% year-on-year, consistent with / higher than expectations (February: 0.1% month on month / 5.2% year-on-year). 4) The ISM manufacturing PMI in March was 57.1, lower than expected (February: 58.6).
Stock Market Overview: the Hang Seng, MSCI China and CSI 300 index rose 3.0%, 3.5% and 2.4% respectively in the past week. MSCI China Index: energy (+ 6.5%), optional consumption (+ 4.7%) outperformed the market, while information technology (- 0.8%) and healthcare (+ 0.7%) underperformed. The valuation of Hang Seng / MSCI China / CSI 300 index is 10.3 times / 11.1 times / 12.5 times forward-looking P / E ratio respectively (median value in the past three years: 11.2 times / 13.0 times / 13.8 times). In the short term, the market may fluctuate at the bottom for a period of time, with increased volatility. The aforementioned “exposure draft” issued by the CSRC is expected to become a positive catalyst for zhonggai shares, but it is too early to conclude that the delisting risk has been completely eliminated. We are concerned about the pressure of high inflation in the United States and the risk of accelerating the pace of interest rate hikes in the coming months. If the US stock market callback, it will have a spillover effect on the China concept stock market and Hong Kong stock market. Main risks and catalysts: 1) global epidemic; 2) The situation in Russia and Ukraine has further deteriorated, and the sanctions measures of western countries have exceeded expectations; 3) The accelerated pace of the Fed’s interest rate hike may lead to a correction in US stocks, which is difficult for the Hong Kong stock market to survive; 4) China’s economic recovery is weak, but the policy strength is less than expected; 5) Sino US relations continued to be tense and even deteriorated.
