Dim Sum Express

A-Share Market

    Rail: 2016 FAI wrap-up at CRC work meeting; rail investment might remain weak in 2017

    No specific investment targets for 2017 were proposed at this meeting. Based on past experience, rail investment is typically used as a countermeasure to offset economic trends and has been conversely correlated to the property market cycle. As such, subdued rail investment since the start of 2016 is entirely comprehensible given improvements in midstream manufacturing industries. In view of ongoing changes in policy support and the upward pressure on the real interest rate, we do not rule out the possibility of rail investment remaining weak and relevant equipment & service demand remaining lower-than-expected during 2017.

    Environmental: New tax to benefit environmental monitoring industry; PPP asset securitization policy a surprise

    The NDRC and CSRC have recently issued a notice regarding the securitization of PPP project assets, asking each provincial DRC to recommend 1-3 PPP projects in the traditional infrastructure development field which are eligible for financing through securitization before 17 Feb 2017. This policy has come in as a surprise to the market. A large number of PPP projects will move into stable operation over the next two years, meaning a significant increase in infrastructure projects that can act as underlying assets for securitization.