This daily digest focuses on market sentiment, new developments in China’s foreign exchange policy, changes in financial market regulations, and broader economic coverage in order to keep the DailyFX audience up-to-date on news typically covered only in Chinese-language sources.

-Chinese media continues to strike a mixed tone on the outlook for Chinese equities.

- QDII funds come under the spotlight as Chinese investors seek new opportunities elsewhere.

- The household registration system that controls labor migration is revised after 65 years.

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Market Sentiment

Sina News: China’s most important online media source, similar as CNN in the US. Also owns a Chinese version of Twitter, called Weibo, with around 200 million active usersmonthly

Comments on the Stock Market:

  • Positive tone (on performance& outlook): 4 headlines, 7 general pieces.
  • Neutral tone (facts & discussion): 0 headline, 6 general pieces.
  • Negative tone (on the performance & outlook): 0 headline, 3 general pieces.

Overall tone: Positive

Hexun News: Chinese leading online media of financial news

Comments on the Stock Market:

  • Positive tone (on performance & outlook): 2 headlines, 3 general pieces.
  • Neutral tone (facts & discussion): 2 headlines, 5 general pieces.
  • Negative tone (on the performance & outlook): 2 headlines, 6 general pieces.

Overall tone: Mixed

Sohu News: Chinese top three online media

Comments on the Stock Market:

  • Positive tone (on performance & outlook): 2 headlines, 4 general pieces.
  • Neutral tone (facts & discussion): 2 headlines, 5 general pieces.
  • Negative tone (on the performance & outlook): 3 headlines, 2 general pieces.

Overall tone: Mixed

Headline News

Hexun News:

- Chinese investors are looking for alternative products, as Chinese A-share stocks (yuan-denominated stocks) have dropped sharply and the yuan has continued to lose value against the US dollar. The QDII funds are becoming a favored product for this purpose. QDII is short for Qualified Domestic Institutional Investors, who are institutions approved by the central bank and allowed to invest in securities, bonds and other approved products in offshore markets. This provides a channel for capital to flow out of China under the current controlled policy. Thus, the overall performance of QDII funds has changed from negative to positive of recent, and some of the funds have even been sold out.

Sina News

- As of the session end on January 14, 104 Chinese companies listing on the Shenzhen Stock Exchange have issued official statements saying their big shareholders would not reduce their holdings. Specifically, there are 8 companies on the main board, 46 on Small & Medium (SME) board and 50 on the ChiNext board. Also, 10 companies said that they are preparing to increase their holdings with an estimated total amount of 2.05 billion yuan.

- China makes major changes on its household registration system (called hukou in Chinese), which could bring significant impact to labor force migration. Without a legal status registered at the hukou system, an individual will have limited access to health care, education and social benefits in the city where he or she lives. In the revised policy, eight types of people will now be given legal status. This marks a major step in population reform, which gives the labor force more freedom to migrate based on market demands.

- China’s Ministry of Commerce issued a report yesterday that the amount of Chinese foreign investment was 781.35 billion yuan in 2015, increased by 6.4% year on year. Foreign-invested enterprises are playing big roles in China: They contributed approximately 1/2 of China’s total international trade, 1/4th of the industrial production, 1/7th of the job postings and 1/5th of the tax income.

Written by Renee Mu, DailyFX Research Team

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