According to a research report released by Citibank, the biggest change to take place in the first half of 21st century is the rise of Asia (ex Japan) and the fall of US and Europe in terms of GDP composition. According to the estimate done by Citibank’s economists, the weight of Emerging Asia countries’s GDP (added together) Read the rest of this entry »
Investment bankers used to be the focal point of jealousy in China, probably same as in any other part of the world. Starting from 2012, however, the wind seems to have changed course. As illustrated from the above table, China (A Share market)’s IPO volume peaked in 2010, when the stock exchange floated companies worth more than 450 billion yuan. Since then, however, the regulator has tightened the tap and it was getting more and more difficult to get floated in the domestic A share market Read the rest of this entry »
Is China’s equity cheap? A lot of people tend to ask this question. Of course this is not that an easy question to answer, as “cheap” is a highly relative and subjective concept, and has so many different interpretations from various perspectives. Here I compare some of the commonly used valuation (12 months forward PE, trailing PB and return on equity) across different regions (as of May 2013). Read the rest of this entry »
It seems that China is in the process of engineering a soft landing scenario successfully. The Industrial production in April 2013 posted a reasonable growth of 9.3%, while the fixed asset investment again was above 20% year on year. China has been relying heavily on the fixed asset investment for its growth profile and is likely to continue to depend heavily on this formula to generate further growth. Read the rest of this entry »
My first impression was that the town was really big. I did not count the number of houses there but I estimated that it could take us easily 20 – 30 minutes to go through the whole town, in cars. The style of the buildings was impressive, even to those who have lived in London before. Literally you can barely tell the difference between “Thames Town” and the true London. The whole town was constructed in such a high quality copy style that you feel like walking on those small streets full of pebbles that have gone through hundreds of years. From streets to streets, you can even see guards standing at the entrance of some villas in the traditional English style uniforms, with a yellow face though.
My next feeling was that the town was really empty. The only people who were active there were those young couples who were busy taking their wedding photos, and the property agents who were trying to sell houses there. I seldom saw any residents. To be fair, it is probably not an ideal place for people to live there. First it is in Song Jiang, a suburban area in Southwestern Shanghai. If you have a job in the down town or CBD, it is probably not that convenient for you to drive back and forth on a daily basis, which could easily take you one hour plus one way depending on the traffic. Read the rest of this entry »
China’s equity market has been a laggard for at least the past 3 years. For example, between 2011 and 2012, China H returned -8% for the investors, while S&P returned +16% for the same period. In 2013 at the time of writing (May 14), China H returned -2% while S&P returned another +16.5%. No wonder a lot of money managers, especially from the West, dislike China.
The common arguments to suggest a bearish view on China include the following:
1. China invested too much and consumed too little. Evidence includes the empty city (ie, Ordos) and shopping malls built in the country, and a massive property bubble (ie, 1000 times Dubai to quote Jim Chanos, one of a vocal China bears).
2. The shadow banking system in China, which is off the balance sheet of the banks. No one knows exactly the scale of the shadow banks but it feels big, especially given that Chinese authorities (ie, the central bank) continue to deny the potential bad loan from this sector (it kind of becomes a custom that the more Chinese authority denies something, the more credible it becomes). Read the rest of this entry »
以上一些问题日本常年有之，但似乎也未发生危机。其实这就是笔者之前提到的“定时炸弹”比喻的缘由，即“不是不爆，时候未到”。但是最近发生的几件事情，似乎加速了这个炸弹被引爆的风险。 Read the rest of this entry »
这个变化主要要从日本去年的地震海啸说起。由于地震引发海啸，并且导致福岛核电站的核泄漏，日本政府决定关闭全国所有的核电站。这样一来，全国的能源供应只能依靠传统的煤和天然气发电。日本由于自身自然资源的匮乏，只能依靠进口来获得这些能源原料。从核电站关闭的决定实施以来，日本每个月的天然气、煤和石油进口连续上升，导致原本的贸易顺差转变为当前的贸易逆差。对于以出口为导向的日本经济来说，这不啻为一个巨大的逆反。 Read the rest of this entry »
This article was originally published on Business Times
There seems little doubt that China is entering a period of slower growth. From the top line level, the headline GDP growth rate in Q1 has been reported to decrease to a new lower level of 8.1%, which is unseen since 2008. China’s premier Wen Jiabao also lowered the government’s economic growth target to 7.5% back in March, the first time in the last 8 years.
On more micro levels, different data series seem to confirm such a trend as well. For example, the HSBC China PMI has been indicating a slowdown in the manufacturing activity for at least the past six months. The national power consumption growth and the railway freight growth, both the closely watched indicators which arguably give a better gauge of Chinese economy’s real picture, also have been declining since the beginning of the year.
In addition, the pain is also felt on the local level. During a trip of mine to China last week, for example, I was told by a regional manager of an Internationally renowned luxury automobile company that they are seeing the sales of this year to plummet dramatically compared to last year and he was even instructed by his superior to lower their cost either via reducing their wage bills (for at least 20%) or cutting their overheads. Another law firm partner concurred by indicating that their advisory and consulting business to multinational companies in Shanghai and Beijing saw a drop of revenue for at least 30% this year compared to last year. Read the rest of this entry »
China used to be the most powerful country in the world, long time ago. The world dominance of China started to shrink in 1900s and the middle kingdom continued to weaken throughout the 20th century. However, it seems that the powerhouse is starting to fight back.
这样的分析看似有理，但却不一定完整。在笔者看来，这次欧债危机的最深层原因，可能不在于核心和边缘国的矛盾，而还在于其核心国，即德法两国之间的分歧。此话还要从历史上的德法关系说起。 Read the rest of this entry »
China is now way ahead in terms of world’s shipping volume. In 2010, among the world’s largest 10 container ports, 6 are out of China. Shanghai now is the World’s biggest container port, handling more containers per year than Singapore or Hong Kong. Another fact worth noting is that 9 out of world’s 10 busiest container ports are all in Asia – tells something about where the future is?
Recently the housing price in China seemed to have calmed down. However, it is probably still too high considering the price of the house to the income level of the local residents. It is estimated that Dalian and Hangzhou have the highest (housing) price to income ratio in China. Internationally the price to income ratio need to come down to below 8 for houses to become affordable – in China only Changsha and Dongguan seem to be affordable under this criteria.
China’s GDP growth is heavily dependent on the use of Steel, which has been growing steadily in the past 20 years. Such a fact showed how reliant China’s growth is on infrastructure building and property development in the past two decades.
During the last 10 years, China has become the de facto engine for world commodity demands. As of 2010, China accounted for 61.5% of world’s Iron Ore demand and 58.5% of World’s soybean demand. China is also one of the largest importer of other products such as coal and oil. It would be scary to imagine the impact on world commodity price if China slows down.
A very good video clip from Business Insider to talk about the difference between China and India. Democracy and Economic development, which comes first? It seems that the China way is winning the argument for the moment.
One of the key reasons for such confusion, I guess, is the pace of change that has taken place in the past twenty years. When I was growing up in shanghai, I was told that china was lead by a ruling party called the communists, who claimed themselves to represent the best interests of the working class, and who defined china as a socialist country. Yet after 1989, china opened up at an increasing pace and in many aspects showed more capitalistic color than any European country. Naturally the question is raised: so what is china really?
Maybe this is too big a question for me, and probably there is never a correct answer. But I find it helpful to try the following definition: china is at an infant stage of a capitalist society. The animal spirit has been unleashed, and the rule of fittest to survive has been widely accepted. Today’s china arguably resembles the period of industrial revolution of the great Britain: productivity is being largely improved accompanied by urbanization, while the benefit of growth is extremely unevenly distributed among the winners and the losers. Also due to the extremely fast pace of change, the development and implementation of social rules is too slow to catch up with the change.
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先来看“是”的部分。欧债危机的新旧阶段的分水岭，当划分在2011年11月1日，即欧洲央行新任总裁德拉吉（Mario Draghi）的上任时间。俗话说新官上任三把火，德拉吉上任以来还不到三个月，但却已经实施了一些大刀阔斧式、前任行长特里谢（Jean-Claude Trichet）没有施行的新政策，总结下来有以下几条。
首先德拉吉在他上任后的第一次和第二次央行会议上，分两次将欧元基准利率从 1.5%下调到目前的1%，间接否认了前任行长特里谢在2011年上半年升息的政策。要知道欧洲央行一向以对待通胀威胁的严谨态度著称，即使在2008年 金融危机的时候，其基准利率也没有低过1%。这也是为什么特里谢在2011年上半年全球经济似乎还没有明显企稳，但似乎又有通胀隐忧的情况下，先于其他央 行急急升息的重要原因之一。但是德拉吉上任伊始就毫不犹豫将前任偏紧的货币政策逆转，可见其应对危机的决心。 Read the rest of this entry »
IS China’s housing price expensive? Depends. Expensive is always a relative concept. This chart compares the housing price in a lot of Chinese cities to that of the United States, and it seems that the housing prices in two countries are quite similar.