Zarathustra

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Chinese house prices rise

Official data from the National Bureau of Statistics show that new home prices in 35 of 70 cities rose in August, down from 49 in July. New home prices rose on a month-on-month basis in 35 cities, flat in 16 cities, and fell in 19 cities.  On a year-on-year basis, home prices fell in 53

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How will China deflate its credit bubble?

The chart below from Credit Suisse shows the explosion of domestic credit growth in China after the financial crisis, which pushed the credit-to-GDP ratio to 171% of GDP.  As it does not breakdown the debt by sector, I assume it is total credit, i.e. including all sectors. It did not usually end well when a similar thing

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Hogs devour Chinese easing

Despite having no inflationary pressure in non-food items owing to massive overcapacity, one can’t say the same thing for food prices in China. Food prices in China are volatile, and they are the main drivers for the overall headline inflation for most of the time.  In August’s CPI data, vegetables prices have increased very sharply on bad weather.  But for

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Property prices still always rise in China

Credit Suisse has a Chinese Whispers Index, which is derived pretty much like PMI (as a diffusion index).  They survey people across the country in 61 cities and ask them about things such as inflation expectations, expectation of property prices, and even food safety. One recent question asked participants whether they think property prices are going to

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Can Chinese stimulus projects find the money?

Courtesy of Also Sprach Analyst. By now, it should be widely known that the talk of stimulus in China is so far just that.  Governments, both central and local, do not have the money to fulfil all of the funding requirements without raising new funds from borrowing, and so far there are very few signs

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China’s August lending mixed

The People’s Bank of China yeste rday published the latest monetary statistics for August 2012 after publishing the aggregate financing numbers earlier. M2 money supply increased by 13.5% compared with a year ago, down from 13.9% yoy in July, and worse than expected growth of 14%.  M1 money supply increased by 4.5%, less than 4.7%

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The myths and reality of Chinese stimulus

Last week, some got really excited about China’s so-called RMB1 trillion stimulus.  Notably, Bank of America Merrill Lynch got out of bad to get a note out alerting everyone in the middle of the night. I remain unimpressed. So is Dong Tao of Credit Suisse.  Now UBS joins the skeptics with Tao Wang not impressed either. In fact,

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China’s August data dump

China’s August data dump arrived yesterday and, on the whole, disappointed again. Inflation in China accelerated slightly from July. China’s consumer price index (CPI) increased by 2.0% yoy in August, up from 1.8% yoy in July, but in-line with consensus estimates. The uptick in inflation was driven by food prices, as one would expect.  Food prices increased by

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China’s infrastructure approval spree continues

Following the approval of 25 urban rail transit projects, the National Development and Reform Commission (NDRC) projects approval spree continues. According to Sina, the NDRC is approving another 20 projects following yesterday’s approval of railway projects, including 13 highway projects with total length of more than 2000 km. On top of that we also see

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Chinese banks’ overdue loans spike

The market does not seem to like Chinese banks results.  There are concerns about future profitability, particularly as the structure of recent rate cuts by the PBOC reduced net interest margins going forward. And on top of reduction in margins, as well as slowing loan demand on a weaker economy (among other things), no one seems to

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China hard landing series: Over-investment

Courtesy of Also Sprach Analyst. One of the key arguments made against the idea that China can grow at high rates forever is that it has already been investing too much. In China’s national accounts, investment accounts for roughly half of total output, something almost unprecedented. The high rate of investment is not sustainable. And as investment is a large chunk

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Steel glut versus more trains

Steel industry in China is now known to be unprofitable.  Profit margins are close to nothing, while production capacity is high.  Meanwhile, banks have to roll over their debts, apparently, to keep them alive.  However, production has not really slowed down much despite clearly slowing demand.  Worse still, and interestingly (although not surprisingly), we learned yesterday that the steel

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PBOC withdraws liquidity

Yesterday the People’s Bank of China conducted a total of RMB95 billion of reverse repo, according to a central bank announcement. PBOC conducted RMB55 billion of 7-day reverse repurchase operation at 3.4%, and RMB40 billion of 14-day reverse repurchase operation at 3.5% interest rate.  The rate for 14-day reverse repo has been reduced from 3.55% of last

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China links

Courtesy of Sinocism. BUSINESS AND ECONOMY China Economy’s Deterioration Raises Risk of Wen Missing Target – Bloomberg – not how he wanted to go out// Manufacturing; value added (% of GDP) in China – PMI important but more to China’s economy than just that// The Manufacturing; value added (% of GDP) in China was last reported at 29.64 in 2010,

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China’s credit still weak in August

Open market operations by the People’s Bank of China (PBOC) have become routine over the last few months while more obvious tools like reductions of the reserve requirement ratio and interest rates were put on hold. The latest figures show that the PBOC has made RMB344 billion available to the banking system in the month of August.

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China’s official PMI falls

Courtesy of Also Sprach Analyst. Saturday’s official Chinese manufacturing PMI points to further weakening of China’s manufacturing sector falling below 50 for August to 49.2, a nine-month low, and below market estimate of 50. New orders fell slightly from 49 to 48.7, while new export orders remained unchanged at 46.6.  Finished goods inventory increased slightly from 48 to

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China rolling government and steel debt?

Chinese banks are selectively rolling over debts owed by local government financing vehicles (LGFVs), provided that these LGFVs have sustainable cash flow and good collateral, according to First Financial Daily. One source from Industrial and Commercial Bank (ICBC) said that the bank is effectively rolling over and restructuring some of the debts owed by LGFVs so

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China’s pork prices rising

The National Development and Reform Commission’s (NDRC) figures show that prices of pork in large and medium sized cities continue to rise according to Yicai.  Prices have risen by 1.31% for the weak ended 22 August compared with the prior weak according to NDRC. So it appears that the drought in the US, as well as

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China’s official leading indicator hits new low

Courtesy of Also Sprach Analyst. China National Bureau of Statistics has its own leading indicator. The latest reading of the leading indicator is still showing no sign of recovery.  July’s leading indicator has fallen from the revised 99.19 of June to 98.75, lowest reading since January 2009. The chart below shows the leading indicator plotted along

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Dud earnings drive China’s bear market

The on-going weakness in Chinese equities has been a recurring theme for me. Here is the latest bear market low: There is nothing particularly out of the ordinary regarding the poor performances of equities if one compared Chinese equities with other stock market bubbles. More to the point, corporate profits have been quite weak.  Profit warnings filed with the Hong

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China’s stimulus headaches

To this date, there remains a lot of confusion about the ability of People’s Bank of China (PBOC) to ease monetary policy. It has been constrained by what it appears to be a money outflow, which tightens liquidity within China automatically. The PBOC used to create money mainly as a result of foreign exchange intervention.  During the time when there

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China injects more liquidity

People’s Bank of China (PBOC) just conducted yet another round of liquidity injection through reverse repo. PBOC conducted open market operations yesterday, injecting RMB80 billion through 7-day reverse repo and RMB65 billion through 14-day reverse repo.  This brings the total injection through reverse repo this week to RMB365 billion. As previously noted, maturing repo, central bank bills

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More on China’s dud Flash

The HSBC/Markit China manufacturing PMI flash estimate for August drops to a 9-month low. The internals look weak as well.  New export orders slide to 44.7 from 46.7, while new orders slide from 48.7 to 46.6.  Both input and output prices components continue to point to further lack of inflationary pressure (or indeed, further deflationary pressure).  While

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Rich Chinese flee

Rich folks in China simply want to leave the country. That is not news. A survey did point this out more than a year ago, and survey after survey is pointing to the same conclusion. And they are going everywhere, sometimes to places that we have not heard of, like Prince Edward Island, not to

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Chinese eat at home

The economic slowdown in China is hitting more sectors.  The latest is food and beverages, restaurant operators, etc. Food & beverage businesses in China have been, like other parts of the economy, facing the problems of increasing wage and other costs.  And now, with the economic slowdown, revenues are down across different parts of the country.  First Financial Daily reports that 15%

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Zombie China

It is now quite well-known now that non-performing loans in China are surging, and loans at risk of turning non-performing are also on the rise. But we are always suspicious on these figures as they look artificially low.  And here is why. The Chinese banking sector is dominated by state-owned banks, and as I said in my guide

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China’s July electricity usage rises

China’s electricity output growth picked up in July from 0% yoy in June to 2.1% yoy.  However, the detailed figures published by the National Bureau of Statistics suggests that the pick-up in output growth was driven mainly by the increase of output from hydroelectric sources.  Thermal power output growth continued to slide in July from

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Chinese realty bounces in July

Courtesy of Also Sprach Analyst. Official data from the National Bureau of Statistics of China show that new home prices in 49 of 70 major cities rose in July. New home prices rose on a month-on-month basis in 49 cities, flat in 11 cities, and fell in 9 cities.  On a year-on-year basis, majority of cities (58)

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Chinese non-performing loans start rising

Courtesy of Also Sprach Analyst: The China Banking Regulatory Commission’s data released yesterday show that non-performing loans increased to RMB456.4 billion by the end of second quarter, while non-performing loans ratio remains unchanged at 0.9%. The total amount of NPLs has been falling over the past few years and hit the lowest point in the