Zarathustra

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China’s September trade jumps (except for Oz)

Courtesy of Also Sprach Analyst. China’s trade data for September showed some improvement in growth. Export growth picked up to 9.9% yoy in September, up from 2.7% yoy in August, and better than consensus estimate fo 5.5% yoy. Import growth picked up to 2.4% yoy, up from –2.6% yoy in August, matching consensus estimates. On

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China’s September electricity production weak

China’s State Electricity Regulatory Commission has published September data for electricity production. Total electricity output for September was 394.488 billion kwh, which is a 2.2% increase compared to the same month a year ago according to our own calculation, down from +2.7% yoy in August. Growth of electricity output remained at low level in September without

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China’s September lending data misses

China’s September bank loans are out and total aggregate financing for the month reached RMB1.65 trillion, up from RMB1.2407 trillion in August. Net new RMB loans amounted to RMB623.2 billion, down from RMB703.9 billion in August, and below estimates of RMB700 billion. While bank loan growth continues to appear weak, consistent with the overall trend

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PBOC still pumping out the cash

The People’s Bank of China continues to conduct the now routine reverse repurchasing operation to inject liquidity into the banking system. The latest round of open market operations included RMB12 billion 7-day reverse repo at 3.35%, and RMB47 billion 14-day reverse repo at 3.45%. There is no 28-day operation today. Rates on the latest operation remain unchanged

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More rifle-shot stimulus from China

The Chinese government seems to be ready to roll out some more support for the economy, which we can call fine-tuning. China may announce new round of subsidies programme on auto purchases in rural areas, China Securities Journal reported, citing sources, while subsidies on purchases of electrical appliances will be continued and enhanced. The auto purchases subsidies will expand

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China’s property bounce is unsustainable

Courtesy of Also Sprach Analyst. Standard Chartered put out a note last week, suggesting that the Chinese “residential housing sector is coming back”. Their view is based on the fact that sales volume growth has been back in positive territory on a year-on-year basis, and growth in floor area under construction is also bouncing back. The

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Fading realty tarnishes China’s “Golden Week”

The signals we’ve gotten during China’s Golden Week holiday have been mixed. On one hand, tourists attractions were full of people after the government waived highways fees and cut entry fees for some spots, and Hainan’s duty free shops are seeing tremendous sales growth. On the other hand, sales in Hong Kong’s luxury sector seems to

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China’s stimulus wish list won’t come true

Various local governments in China have announced some RMB20 trillion of investment plans over the past few months. Some see them as a stimulus programme, while we have been, on the whole, less than impressed. The main reason, as many others have also pointed out already, is that it is very unclear how all these

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The Chinese tourist rescues his economy

My indirect gauge of China’s economic growth, Macau casino revenue, increased by 12.3% in September compared to the same month a year ago to MOP23.866 billion, up from 5.5% yoy growth in August. Although the year-on-year growth recovered, it remains at relatively low level. Still, during the Golden Week holiday, naturally, people are travelling. Highways are

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A global rebalancing, of sorts

If the financial crisis of 2008/09 is thought to be in part a result of the build-up of global imbalances, then the aftermath is the rebalancing of the global economy, obviously. I talk a lot about the rebalancing of the Chinese economy. The reality, of course, is that this is just part of rebalancing the global economy. For

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China in a bog

Over-investment, along with many reasons, means that the private sector is not willing to invest because their businesses are becoming unprofitable in China. On top of that, the private sector is highly leveraged, which means that central banks may lower interest rates, but in the absence of profitable businesses and high debt, the private sector will not

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Comparing China’s PMIs

The official PMI and HSBC/Markit PMIs are known to have shown divergences, sometimes huge. The following two charts show some selected data points from the different PMIs. The first one is the headline PMI figures. The official PMI has been showing consistently better readings compared with HSBC/Markit for the best part of a year. In fact,

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China has no good options for growth

Courtesy of Also Sprach Analyst. Even now, after the Chinese economy has consistently disappointed, the impression from market participants is that it will all be fine in the end, because the Chinese government know what they are doing, and all they need is to let the floodgate of money open. Whenever a bad data point comes out,

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China’s leading indicator rises

China National Bureau of Statistics’ leading indicator improved from the post-crisis low in July (read more about China official leading indicator). The leading index rose from the post-crisis low of 98.75 in July to 99.63 in August, suggesting a possible improvements of economic activities in the months ahead. For the time being, however, while we believe that

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China’s liquidity blockage

The issues surrounding China’s foreign reserve accumulation, capital flow, and the liquidity of Chinese banking system has been one of the key themes that I have been following. It is only recently that we saw the first ever quarterly drop of foreign reserves (balance of payment basis, excluding foreign exchange revaluation) and, predictably, it was dismissed

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China’s September lending appears soft

Courtesy of Also Sprach Analyst. Chinese banks might have extended around RMB600 of new loans in September, with the most optimistic forecast of RMB750 billion, according to Shanghai Securities Journal. On top of that, some expect that the composition of new loans will improve, with larger proportion of loans going into medium- to long-term loans, which

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China’s mooted stimulus passes $3 trillion

I have lost count of how many projects and how much have been announced by local governments in China after the central government’s priority turned to growth stabilisation. First Financial Daily has a count for us: close to RMB20 trillion. These investments, if they are ever going to be implemented, will be spent in 4 or 5 years,

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China’s rail cargo volumes decline again

One of the preferred gauges of economic activity by our dear vice premier, Li Keqiang, continues to weaken. Rail cargo volume growth fell further from -8.2% yoy in July to -9.2% yoy in August, the worst since the financial crisis.  Cargo volume transported by the railways amounted to 304 million tonnes in August 2012, slightly below

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PBOC liquidity is not a fix

Despite the fact that People’s Bank of China has not eased policy in the traditional way since it last cut interest rates, it should be noted that the PBOC has tried a lot. The market has been hoping for a Reserve Ratio Requirement cut every weekend, only to be disappointed every week.  However, the PBOC has been trying

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China liquidity injections rocket

The People’s Bank of China provided massive liquidity today through another round of reverse repurchase operations. PBOC conducts a RMB50 billion of 14-day reverse repo at 3.45%, and RMB130 billion of 28-day reverse repo at 3.60%.  Rates are unchanged both operations compared with similar operations previously.  In total, PBOC provide RMB180 billion of liquidity today. For the

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Chinese banks hitting new lows in Shanghai

The Shanghai Composite dropped briefly below 2000 again today, a new post-crisis low, and the big four Chinese banks are leading the way.  While the H-shares in Hong Kong are holding up, their A-shares counterparts are already below or near the crisis lows. Bank of China, for example, is already well below the 2008 low.  ICBC and China Construction Bank

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China’s quantitative tightening

China’s short-term liquidity has eased.  The seven-day repo rate has come back down by 4%, while SHIBOR of maturities less than 1 month have come down significantly, but rates for 1-month and above remain more of less unchanged.  Liquidity has eased up to 2 weeks, but not longer. It is not usual practice for the

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The idiocy of extrapolating Chinese growth

For a long time, I have had huge issues with bullish arguments being made about China which are based on comparing it with some developed countries, like the US. They generally expect China to reach developed country levels of whatever-metric-they-are-talking-about in N years by extrapolating from the current growth rate. One of the favourite metrics would be X

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The short story of a loss-making Chinese steel firm

Remember Baosteel, which had a new steel project approved by the government, and the construction of the new plant started, then stopped? The reality that the steel industry has a little problem of overcapacity is no secret.  With absurdly low profit margins as the slowing economy combines with high financial leverage. A few years ago, Baosteel acquired a plant at Loujing

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More massive, mythical stimulus for China

The talk of stimulus continues in China.  Today, Sichuan Province announced a major investment projects plan, with 2242 projects and total investment of RMB3.67 trillion according to China Securities Journal. The provincial government wants to encourage private capital investment, very much like many other local governments (and indeed the central government). Total investment being announced by local

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Chinese property sales slowing?

September and October are traditionally the peak season for Chinese real estate market.  Last year, the peak season was not all that golden. This year, the real estate market came back to life in the past few months.  However, September does not seem to have had a great start.  Since the start of the month, transaction volumes in 54 cities

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Chinese “stimulus” evaporates

A few weeks ago, China’s projects approval spree triggered a lot of excitement. But we soon found out that it is uncommon for the NDRC to approve large numbers of projects within a period of a day or two. In fact, the spree happens every month. The chart below shows a more accurate picture of the pace of

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China is winning the race to print

Courtesy of Also Sprach Analyst. Many like to single out the Bernanke’s Fed’s monetary easing as reckless, irresponsible, or evil.  QEnfinity only adds to this impression of Helicopter Ben being willing to print money to the moon.  Not surprisingly, then, the US dollar suffers from the announcement of money printing. The reality, however, is that the Fed’s balance

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More on the China PMI

HSBC/Markit China manufacturing PMI flash estimate for September improved slightly from 47.6 in August to 47.8. Output contracted by most the in September, from 48.2 to 47.0.  Meanwhile, new orders and new exports orders recovered slightly.  Inventory build-up appears to be continuing, albeit at a slower pace.  That brings some improvement in the new orders minus inventory

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Chinese FDI stabilising?

Courtesy of Also Sprach Analyst. China’s inbound foreign direct investment (FDI) fell in August. The Ministry of Commerce latest data show that inbound FDI (capital utilised) fell 1.43% in August compared with a year ago, up from an 8.65% yoy fall in July.  For January-August, inbound FDI (capital utilised) fell by 3.40% to US$74.994 billion compared