China’s Retail Sales shows strong growth in October (See Article from China Daily). The total retail sales amounted to RMB 1170 Billion which is 16.2% up from that of last year. China’s Retail sale had a slow start in the beginning of the year. However, starting from May 09 the retail sale continues to surprise the media with super strong growth, including Auto Sales (See Graph from Chinatells). Read the rest of this entry »
Archive for November, 2009
China’s CPI dropped 0.5% in October, which is the slightest drop since the beginning of the year. I think such a reading confirms the market expectation of China’s inflation coming back to positive territory in the near future (See Article from Chinatells), even though it is still negative now. Read the rest of this entry »
China’s Trade surplus reached 24 Billion USD in Oct, making the total trade surplus from Jan to Oct reach 159.5 Billion USD. Based on such trend, a pro-rata annual trade surplus could be as much as 192 Billion, which is shy from that of 07 and 08 (See Graph from Chinatells), but still higher than 2006. Read the rest of this entry »
China’s vehicle sales reached 1.23 Million units in October based on total industrywide counts (See Article from Bloomberg). This is an increase of 72 percent from October last year. Also the passenger car sales reached 946,400 units, which is a jump of 76 percent from that of last year. Read the rest of this entry »
Is it all about RMB? Or, it is all about RMB, fool! It seems to make a lot of sense if we link the happenings recently in a chronicle way. The logic goes like this: There is a huge imbalance in world economy and trade, notably the dramatic trade surplus from China and trade deficit from USA. One of the top mandate of Obama administration is to address this imbalance, by bringing down the account surplus of China and account deficit of America. One of the key measures to make it happen, seems to lie in the exchange rate of RMB, according to some academics and media from the West (See article from NYT). It seems, however, that China government is resisting such a change. By continually sticking to the argument that RMB exchange rate is purely internal, China government refuses to appreciate RMB, which is estimated to be 20% undervalued at least. American government is not in a position to enforce the revaluation of RMB, however, what they can do, is to loosen their own monetary policy and flood the market with cheap money. Under such a scenario, international speculators and investors borrow USD cheaply and pour the hot capital into China with an appreciation expectation. Read the rest of this entry »
Dow Jones Index has been quoted as the world leading equity index for almost the last one hundred years. Most other financial markets take Dow as a leading indicator and follow suit when Dow goes up or down. As the saying goes, when Dow sneezes, world financial market catches a cold. However, such a pattern seems to be challenged by Shanghai A-share index (See Article from China Daily). Based on a study of two indice in the last 18 months, it seems that Shanghai Index is leading Dow in more scenarios than the opposite. As a supporting fact, Shanghai index peaked and bottomed a few months ahead of Dow, and Dow follows almost an exact pattern in terms of price development.
Does it mean that investors need to pay attention to Shanghai Index to guide their punting in Dow? Absolutely according to the chartist but I have my doubts. With the pace and depth of globalization, it is unavoidable that world’s financial market are more correlated with each other. Actually it is not only between Shanghai and Dow, but also applying to FTSE, Heng Seng and Nikkei. Read the rest of this entry »
China’s Auto market is probably the only and biggest shining star in the global auto industry. When most consumers in western countries are tightening their belt and cut spending on cars, Chinese consumers are doing exactly the opposite thanks to government incentive programs. Such a boom also encourages healthy growth in the software industry who supplies ERP programs to car makers (See Article from China Daily). It seems that most of the world’s leading software providers are seeing such an opportunity and expanding or having plan to invest in China for expansion. For the moment China’s ERP market share are split between poweful players such as SAP, DCMS and Oracle. It seems that the old saying ‘who controls China who controls market’ is well reflected in the reality of auto industry given the current situation.
In the recent China-Africa summit held in Beijing, Prime Minister Mr. Wen Jiabao announced that China will give loan with cheap interest to Africa countries for a worth of USD 10 Billion. 10 Billion seems nothing for today’s affluent China government, but is probably the largest fund Africa has ever received in the history since the inception of universe (See Article from Timeonline). I don’t think our African brothers would have any complaints but just to take it, happily. Critics from Western media point their finger hard at China government’s tolerance on Africa’s awful human right record, and also they are not happy with the fact that Africa’s bulk export to China focuses on energy and mining (See article from Chinatells). But without being too naive, however, what else do you expect, seriously? For the whole history of Africa, it is a sad history of being slaved, colonized and tortured. Read the rest of this entry »
Micky Mouse and Donald Duck are a must for kids all over the world, including those in China. No wonder that it is great news for the kids in Shanghai that Disney wonderland is approved to be built. While it is good news for the kids, it remains a challenge for Disney and the corp (See Article from Fortune). Outside USA, there are three disneylands worldwide: one in paris, one in Tokyo and one in Hong Kong. Unfortunately however, none shows any competitiveness even near to the one in Auckland. The Hong Kong Disneyland has been critisized as being too small, not localized enough on food and culture, and not friendly to the visitors. It clearly shows that the big name of Disney itself does not guarantee a success in oversea market such as China. In fact, a lot of theme parks start big with huge investment and heavy media coverage, but end in tears. Till today, Hong Kong government claims that their return on Disneyland is awful. Read the rest of this entry »
The debate on whether RMB shall appreciate to address the imbalance in global economy is getting attentions not only from industry but also from academy. A recent voice is from Mr. Lin Yifu, the first Chinese economist of World Bank. (See article from WSJ). According to Mr. Lin Yifu, the appreciation of RMB won’t help in re-balancing the world economy or walking the main economy out of recession. Such a comment is in sharp contrast to some of the views from Western Media and other economists (See Article from Chinatells). Based on the opinions from the opposite camp, the under valuation of RMB is the culprit of the current global economy imbalance and the rebalance won’t return until Yuan is revalued.
Australia government has approved a takeover proposal from China’s State owned Yanzhou Coal to invest $3.2 Billion in its coal mining company Felix (See Article from Telegraph). This is an encouraging piece of news to China’s State owned enterprises who have been eager to take stakes in Australia mining and resource companies. The dilemma for China’s big SOEs is that they find it difficult to acquire oversea resource companies even if they have the cash and are willing to buy (See Article from Chinatells). The takeover battle on Rio Tinto, for example, has aroused battling rounds of intention, rejection, re-intention and re-rejection. The takeover of Felix also went through two rounds of resubmission and comes with strict conditions, but at least it is a step forward despite the pace.
CIC’s stomach seems bottomless. In a latest annoucement following a series of merger and acquisition, CIC decides to invest USD 1.58 Billion in AES, which is a Virginia based Power Company (See Article from WSJ). In exchange CIC receives 15% of AES’s equity stake and one seat on the board. CIC’s main focus of investment in 2009 concentrates on commodity and energy (See Graph from Chinatells). Some of the big deals are worth above 1 Billion USD. CIC has a total of 200 Billion USD to play with, which is roughly 10% of China government’s foreign reserve.
By definition, pension fund is managed by the government and enforced on every citizen to contribute a certain amount of their salary and saved for the need after retirement. Personally I am not a big fan of such a concept. As a rational adult, I don’t need the government to manage my saving and plan my retirement. However, I take the point that there are people in the society who need to be enforced to save, otherwise they will spend beyond their means and go begging on the street. The problem with such an account, is the return. Obviously such a fund should not be allowed to speculate in equity or property market (USA is a good sample of Pension Fund being screwed big time by fund managers), but if only allowed in fixed deposit saving then most of the time the return is so bad that it can’t catch up with inflation. Therefore naturally there is a strong need from pension Fund managers (mainly the governments) to lift the ban on the channel that Pension Fund can go in (See Article from Caijing). Obviously such a need is echoed by support from financial industry: Brokers will see more trade flow and commission, banks can sell more of their research reports and traders can find more decently paid jobs. Read the rest of this entry »
China’s Import has a chane to return to positive terriory in Oct 2009 on a year-on-year basis. Total import in Sept grew a negative level of 3.5%. However it is the least negative growth in the last 11 months. Read the rest of this entry »
China’s Retail Sales increased by 16.6% y-o-y in Sept, amounting to 1091 Billion RMB, which is the highest in the last 12 months. China’s Retail Sales had some sort of hit in Q1 ’09, during when it grew mildly compared to that of last year. Read the rest of this entry »
China is among the group of countries that have lower level of leverage and exposure in terms of its debt ratio. China’s total government, corporate and individual debt is about 105% of its GDP, which is similar to other BRIC countries, but way lower than that of advanced economy. Read the rest of this entry »
Hong Kong property market almost recovered to the peak level before the financial crisis of 2008. However this time the reason is different. In normal circumstances property prices of cities such as HK or Singapore are propelled by expatriates or Western capital. This time mainly the capital from Mainland China dominates the luxury market (See Article from Economist). The rich people in Mainland China has not sufferd as much as their peer had in the West (See Article from Chinatells). On the contrary, their wealth almost doubled during the financial crisis (what crisis?). For those superrich, they don’t even need bank loan to knock up the HK housing price – all cash. Comparatively speaking, HK has good public order, international exposure and schooling system, clean environment and useful passport, therefore it is the most livable city in China. It is common for rich Chinese to buy a property, have a baby born, and get a passport in HK.
China’s top rich people more than doubled their wealth during the financial crisis, a sharp contrast compared to what happened in the West (See article from Chinadaily). According to the latest estimate, Wang Chuanfu continues to top the China Rich list, with a net worth of about 5.8 Billion USD (See Article HERE). Read the rest of this entry »
When things are going well, there is never short of flower and champaign. When things turn bad, fingers start to be pointed around. It seems that the latter is clearly happening at the moment during the middle of a worst economic recession after WWII. Unfortunately China has been one of the focus during the finger pointing game (See Article from TIME). First is the so called ‘imbalance’: Americans saves too little and spends too much, and Chinese on the opposite extreme. Funny enough, most world renowned economists and smart people seem to agree to this point: such an imbalance is the culprit of the current economic crisis. To save us out of the slow down, such an imbalance have to be addressed: in the way that American saves more and Chinese consumes more. Intuitively I am unclear on the logic of above argument: there are different people in the world: some likes to borrow and some likes to lend (that’s how borrow and lend happens by the way). Read the rest of this entry »
According to a report from China Construction Bank, China’s GDP is set to grow by more than 10% in Q4 (See article from China Daily). China government sets the target of GDP growth to be 8% for 2009. Such a target is in jeapody of being unfulfilled during Q1 and Q2 when the economy was hit by recession started from US. The Q3 however, rebounded strongly and grew at 8.9% (See Graph HERE). To make 8% growth for the year to happen, Q4 GDP will have to grow at least 10%. Maybe that is one of the reaons why CCB is so bullish on Q4 growth. At of now, it seems more or less certain that 10% will be achieved during Q4. Reason? Thanks to the government and determination of the leaders. However personally I am still not clear how any country (not only China, but also US, EU or others) can walk out a recession by borrowing and spending more. Is it a panacea for all the economic disease? When you see a sign of slow down, just write the check and the rest will be taken care by itself? Someone calls it Keynesism. But it is just so counterintuitive to me and I have a lot of doubts.
China imported about 129 Million Barrel of Crude oil in Sept 2009, which is about 4.3 Million Barrel per day. This is a big jump from Sept 2008 equivalent to an increase of 26.5% year on year. Read the rest of this entry »
Since July last year, RMB has been almost re-pegged to USD at a rate of 6.8 with limited flexibility. With USD continues to slide against most other trading currencies, RMB follows the down trend as well. Such a change benefits Chinese export sector but hurts other competition such as Germany, Japan and Asean exporters as all their currency strengthened against USD (See Article from FT). The question is: will such a trend be sustainable? One of the imbalance of world economy is the excessive surplus and saving in China and excessive borrowing and spending in USA. World leaders have met together trying to correct the imbalance. However it seems now that such an imbalance has been itensified instead of correctified. That is why RMB becomes the focus of discussion again.
Jim O’neil of Goldman Sachs coined the term ‘BRIC’ about 8 years ago and it became the fashion in the investment community. Today, the big C (China) in BRIC seems to have the greatest momentum of leading the emerging world to challenge the OECDs. According to Goldman Sachs, China’s economy could be as big as USA by 2027 (See Article from WSJ). Jim O’neil personally is very bullish on China and thinks China’s consuming power potential has great room to go up in the next decade. Whatever happens in the next decade, it seems that Goldman is capitalizing on their projection of China and enjoying the run.
根据高盛首席经济学家Jim O’neil预测，中国经济很可能在2027年之前超越美国，成为全球经济第一大强国。Jim O’neil八年前抛出金砖四国论，极度看好金砖四国的发展前景。该提法得到了很多同行的认可，并在投资界形成一股潮流。目前看来金砖四国特别是中国的表现相当抢眼，大有长江后浪推前浪之势。
Most people, including myself, have no idea where Guinea is. However, it does not stop them from becoming the headline of the newspaper. It is reported that China International Fund decides to invest USD 7 Billion in Guinea mainly trageting their resource of Bauxite, Cement and Diamonds (See Article from WSJ). China International Fund is owned by Dayuan Group, who is a HK registered private company. However there is strong speculation that CIF is closely related to China government and State owned enterprises and there might be government influence behind CIF’s move.