China - Economic Data & News 01 (May 08 - Oct 08)

[winston]

China stocks starved for state aid
Katherine Ng
Wednesday, July 02, 2008

Investor sentiment in the mainland may recover only slightly in the fourth quarter if Beijing introduces measures to boost the stock market, analysts said.

"The most complicated issues affecting the domestic market previously were mainly high rising commodity prices and the heavy supply of available shares. But both issues will have a limited impact in coming days because they should have reached their peaks," said Andrew Wong Wai-hong, associate director at One China Securities.

Wong believes commodity prices have been dealt with by the US and Chinese governments, and major shareholders of Chinese corporations have agreed not to sell their shares for at least two years. "The market will stabilize in the third quarter but we cannot predict when investors' confidence will come back," he added.

Shanghai stocks fell yesterday for the fourth session in a row. The benchmark Shanghai Composite Index dived 3.09 percent to a fresh 16-month closing low of 2,651 as rumors of an interest rate hike swept the market.

The approval of big share sales by five firms, including China South Locomotive & Rolling Stock Corporation and China Everbright Securities, to raise more than 30 billion yuan (HK$34 billion) added to the fears, analysts said.

The bearish sentiment during the first half-year has also driven away listing candidates in the Shanghai exchange, which last year was the world's top fundraiser.

"The stock market has not much downside now, but whether it rallies this year will depend on any measures Beijing will introduce to give it a boost," said one analyst.

[winston]

Taiwan raises trust fund investment limit in China stocks to 10 pct from 0.4pct

TAIPEI (XFN-ASIA) - Taiwan's cabinet, the Executive Yuan, has decided to let securities investment trust funds invest up to 10 pct of their net assets in China-listed stocks, raising the ceiling from 0.4 pct.

The ceiling will be raised further as cross-strait investment rules are relaxed, said a statement from the Government Information Office.

The cabinet also removed all limits on the trusts' investments in Hong Kong H shares and red chips.

Trusts were previously allowed to keep just 10 pct of their net assets in H shares and red chips.

The statement said the cabinet will revise regulations to alow implementation of the new rules as soon as possible.

[LenaHuat]

Beware. Things are becoming less rosy abt the Chinese economy. Did any1 read SCMP's yesterday's biz headline news ??

Yantian container traffic drops amid US downturn
Shenzhen port hurt by weaker economy and policy changes

Charlotte So in Shenzhen
Jul 05, 2008
For the first time in its history, container volume at Shenzhen's huge Yantian port has fallen, a sign that a slowing United States economy and mainland policy changes are cutting into exports.

[winston]

Wen stresses fast, steady economic growth
(Xinhua)
Updated: 2008-07-06 19:24

Chinese Premier Wen Jiabao has said the country will step up efforts to keep economic development fast and steady despite challenges from home and abroad this year.

Wen made the remarks during a three-day research trip to the eastern Jiangsu Province and Shanghai from Friday to Sunday, where he met with local officials, farmers and entrepreneurs.

Wen urged governments at all levels to further improve macroeconomic controls and optimize economic structure to avoid serious fluctuations in the country's economy.

Fighting inflation was still one of the major tasks, he said, and governments should try to make price increases "acceptable" for both industries and the public.

Wen also called for more efforts to protect arable land to ensure grain security and more efforts to create jobs for low-income families and college graduates.

He asked Jiangsu to coordinate development of the relatively backward northern part and the prosperous southern part of the province.

He asked Shanghai to boost growth of the service industry, with the focus on building an international financial center and an international shipping center.

[millionairemind]

Just TOL, if the furniture makers are indeed going back to the US, Koda, ManWah who manufacture in Asia (China and Vietnam) and sell to the US will be adversely affected..

Oil price shock means China is at risk of blowing up
By Ambrose Evans-Pritchard
Last Updated: 12:33am BST 07/07/2008


The great oil shock of 2008 is bad enough for us. It poses a mortal threat to the whole economic strategy of emerging Asia.

The manufacturing revolution of China and her satellites has been built on cheap transport over the past decade. At a stroke, the trade model looks obsolete.

No surprise that Shanghai's bourse is down 56pc since October, one of the world's most spectacular bear markets in half a century.

Asia's intra-trade model is a Ricardian network where goods are shipped in a criss-cross pattern to exploit comparative advantage. Profit margins are wafer-thin.

Products are sent to China for final assembly, then shipped again to Western markets. The snag is obvious. The cost of a 40ft container from Shanghai to Rotterdam has risen threefold since the price of oil exploded.

"The monumental energy price increases will be a 'game-changer' for Asia," said Stephen Jen, currency chief at Morgan Stanley. The region's trade model is about to be "stress-tested".

Energy subsidies have disguised the damage. China has held down electricity prices, though global coal costs have tripled since early 2007. Loss-making industries are being propped up. This merely delays trouble.

"The true impact of the shock will only be revealed over time, as subsidies are gradually rolled back," he said. Last week, China raised internal rail freight rates by 17pc.

BP 's Statistical Review says China's use of energy per unit of gross domestic product is three times that of the US, five times Japan's, and eight times Britain's.

China's factories "were not built with current energy levels in mind", said Mr Jen. The outcome will be "non-linear". My translation: China is at risk of blowing up.

Any low-tech product shipped in bulk - furniture, say, or shoes - is facing the ever-rising tariff of high freight costs. The Asian outsourcing game is over, says CIBC World Markets. "It's not just about labour costs any more: distance costs money," says chief economist Jeff Rubin.

Xinhua says that 2,331 shoe factories in Guangdong have shut down this year, half the total.

North Carolina's furniture industry is coming back from the dead as companies shut plant in China. "We're getting hit with increases up and down the system. It's changing the whole equation of where we produce," said Craftsmaster Furniture.

China is being crunched by the triple effects of commodity costs, 20pc wage inflation, and sagging import demand in the US, Canada, Britain, Spain, Italy, and France.

Critics warn that Beijing has repeated the errors of Tokyo in the 1980s by over-investing in marginal plant. A Communist Party banking system has let rip with cheap credit - steeply negative real interest rates - to buy political time for the regime.

Whether or not this is fair, it is clear that Beijing's mercantilist policy of holding down the yuan to boost exports share has now hit the buffers.

Foreign reserves have reached $1.8 trillion, playing havoc with the money supply. Declared inflation is just 7.7pc, but that does not begin to capture the scale of repressed prices, from fuel to fertilisers. "There is a lot more bottled-up inflation in this economy than meets they eye," says Stephen Green, from Standard Chartered.

Inflation merely steals growth from the future. It defers monetary tightening until matters get out of hand, which is where we are now. Vietnam has already blown up at 30pc. India is on the cusp at 11pc, so is Indonesia (11pc), the Philippines (11pc), Thailand (9pc) - leaving aside the double-digit Gulf.

Of course, oil prices may fall again. They plunged to $50 a barrel in early 2007 after the Saudis raised production. The scissor effect of slowing global growth and extra crude later this year from Brazil, Azerbaijan, Africa, and the Gulf of Mexico may chill the super-boom.

The US Commodities Futures Trading Commission is on an "emergency" footing, under orders from the Democrats on Capitol Hill to smash speculators. If it is really true that investment funds have run amok, we will soon find out.

I suspect that the energy markets have fallen prey to their own version of the "shadow banking system" that so astonished regulators when the credit bubble burst.

I also suspect that Hank Paulson and his EU colleagues have a surprise up their sleeve for the late-cycle über-bulls. Those who claim that derivatives (crude futures) cannot drive spot prices have overlooked a key point. The Saudis and others use the IPE Brent Weighted Average of futures contracts as their pricing mechanism. Futures now set the spot price.

But even if oil comes down for a year or two, the mid-term outlook of the International Energy Agency warns that crude markets will be tighter than ever by 2012. Call it Peak Oil, or just Peak Non-Cooperation by the dictatorships that control most of the world's remaining 5 or 6 trillion barrels (Mankind has used one trillion so far).

Come what may, globalisation has passed its high-water mark. The pendulum will now swing back from China to America. The mercantilists will have to reinvent themselves.

[LenaHuat]

I'm a lover of German Steiffi bears. Steiffi is pulling out of China and going back to Germany for 3 main reasons:
(1) they had to keep re-training the Chinese who job-hop.
(2) the poor quality of workmanship. A glass eye, misplaced even by 1 mm, will make the bear's affable looks look like a cold stare.
(3) the high costs of transportation back to Germany plus 1-month lag.

Actually, I hve juz returned from S.China. There are serious hiccups in the Chinese economy.

[LenaHuat]

Chinese Xinhua news:

BEIJING, July 7 (Xinhua) -- China's inflation is to peak in 2009 and then fall, according to the Industrial and Commercial Bank of China (ICBC) in a report on Monday.

The report by China's largest lender said the assets prices would gradually rise in the next three years. However the stock markets would continue to suffer significant uncertainties, resulting in their seesawing during 2010 and 2011. After that prices would again rise.

During the 2009-2011 period, liquidity would remain abundant with the M2 supply rising rather rapidly, but the possibilities of temporary liquidity shortfalls would increase, said the report.

[winston]

BEIJING, July 7 (Xinhua)
However the stock markets would continue to suffer significant uncertainties, resulting in their seesawing during 2010 and 2011. After that prices would again rise.

Wah, ICBC is so smart to be able to predict stock prices in 2/3 years time, in 2010 and 2011

[winston]

China Banks Stung as Stock Market Rout Spurs Costlier Deposits
By Luo Jun

July 8 (Bloomberg) -- China's 146 million stock investors, burned by slumping prices, are pulling money out of equities and putting it into deposits. That's not necessarily a good thing for banks.

As the benchmark CSI 300 Index tumbled 46 percent this year, investors shifted cash from low-yielding ``demand'' deposits to so-called time deposits that pay interest that's at least four times as much, according to Credit Suisse Group AG. During the two-year stock market rally that ended in October, households were doing the opposite, reducing costs for the banks.

With the government now restricting loans to combat inflation, Chinese banks face narrower profit margins as they're unable to compensate for higher deposit costs by accelerating lending. The stock market drop also is curtailing mutual fund sales, hampering efforts by banks to increase earnings from outside their mainstay lending business.

``The situation will get worse unless there's a turnabout in market sentiment, which seems unlikely anytime soon,'' said Leo Gao, who helps oversee the equivalent of $2.3 billion at APS Asset Management Ltd. in Shanghai. The shift to time deposits ``will take a toll on banks' profitability,'' he said.

Chinese lenders offer 3.33 percent annual interest on three- month time deposits, compared with 0.72 percent for demand deposits, which can be drawn upon at any time. Deposit rates are set by the central bank.

Loan Margin Impact

The ratio of time deposits relative to China's $2.8 trillion household bank savings market climbed every month this year, reaching a one-year high of 63 percent in May, according to the central bank.

``If we do see a significant reversal in deposit structure, the magnitude of deposit cost increase is likely to be greater than the market expects,'' Credit Suisse analysts Sherry Lin and Steven Zhang wrote in a July 2 note.

Assuming the proportion of demand deposits falls another 5.5 percentage points to 2006 levels, net interest margins would drop about 16 basis points at the six Chinese banks with shares that trade in Hong Kong, Singapore-based DBS Bank Ltd. said in a report last month. A basis point is 0.01 percentage point.

Industrial & Commercial Bank of China Ltd., Bank of China Ltd., Bank of Communications Ltd., China Construction Bank Corp., China Merchants Bank Co. and China Citic Bank Co. had average loan margins of 2.97 percent in 2007. Shares of the companies slumped by an average 43 percent in Shanghai this year and 13 percent in Hong Kong, erasing almost $300 billion of market value.

Preferred Savings Method

The investment shift shows few signs of ending. In the central bank's latest household survey published June 25, 38 percent of respondents said they plan to save more in bank deposits. That's up from 35 percent three months earlier and 25 percent in last year's third quarter.

Earnings at Bank of China, the nation's third largest, have been hurt by costlier deposits and a decline in mutual fund sales, Vice President Zhu Min said at a June 19 shareholder meeting, without being more specific.

China, trying to combat inflation that reached a 12-year high of 8.5 percent in April, has capped the amount banks are allowed to lend this year at 3.6 trillion yuan, the same as in 2007. Some lenders, such as China Citic Bank, are subject to a monthly inspection by regulators to ensure they don't exceed their loan quota, said Zhang Qiang, assistant president of Beijing-based Citic Bank.

`Gloomy' Outlook

In addition, the central bank has raised the proportion of deposits banks must keep as reserves five times this year to a record 17.5 percent, freezing up more than 1 trillion yuan of funds. That's on top of 10 reserve ratio increases in 2007.

Every half-point increase in the reserve ratio requirement reduces profits at Chinese banks by as much as 1.5 percent, assuming they cut lending to comply with it, estimates CSC Securities HK Ltd. Chinese banks get almost two-thirds of earnings from making loans.

In a roundabout way, the stock market rout that eliminated about $1.9 trillion of market value this year and drove banks' deposit costs higher also may have contributed to the clampdown on lending.

The latest increase in the reserve ratio requirement in June was probably triggered by an acceleration of money supply growth caused by expansion of bank deposits, Morgan Stanley economists led by Denise Yam said June 12.

``The outlook is pretty gloomy now,'' said David Liao, a Shanghai-based bank analyst at HSBC Jintrust Fund Management Co., which manages $975 million. ``Economic uncertainty is hanging over the neck of the entire industry.''

[millionairemind]

新浪财经讯 7月9日，在国金证券(41.94,-1.82,-4.16%,吧)举行的中期策略报告会上，新浪网财经频道主持人权静独家对话国际著名投资大师吉姆-罗杰斯，就此前遭受的A股投资收益的质疑，罗杰斯特别做出了澄清，表示自己从未买入过A股。

　　新浪网主持人权静：上次采访您是今年四月在北京，当时您说不会卖出所持有的中国股票，可是从那时到现在A股又下跌了近1000点，现在想来那个时候您的说法是否有误？

　　罗杰斯：不是，我希望能在我有生之年都持有中国的股票。我有两个小女儿，我希望在我有生之年能把这些股票留给她们。我相信中国的未来，我不是一个短线交易者，我相信你们的国家将成为21世纪最伟大的国家。我没有频繁的买入卖出。但是权静，我想告诉你的是，我努力做到当资产便宜的时候，当人们没有注意到它的时候买入，然后持有很多年。这也是很多人在投资领域获得成功的方法。不断频繁买入卖出的人们长期来看他们的投资收益并不理想。有人擅长短线交易，但我并不擅长。我往往在大多数人失望得卖出时选择买入，而且我希望我永远都不会卖出这些股票。

　　新浪网主持人权静：您此前说您买了很多A股的股票？

　　罗杰斯：不，我从来没有说过我买过A股。我不知道为什么人们总是这么说，通过H股、S股、B股或者美国市场来买中国的股票可能更便宜。中国这一点很神奇，同一个公司什么东西都一样，但通过香港市场买却比在A股买更便宜。所以我买H股、B股、s股，这是更便宜的买入方法

　　新浪网主持人权静：那么，在您的投资组合当中哪部分的比重更大呢？

　　罗杰斯：我不是非常的清楚，应该说B股的比例更大一些，是我投资组合当中做大的部分。但我也不是非常确定，因为买入之后我就从来不看他们。

　　新浪网主持人权静：据我们了解您管理的基金并不是QFII的成员。所以我们想知道您到底是如何投资中国股票的？

　　罗杰斯：我买B股H股S股美国市场的股票，其实投资中国有很多种方法。

　　新浪网主持人权静：那您又是何时买入中国股票的呢？

　　罗杰斯：我第一次买入中国股票是在1999年，并就此写了一整本书，你难道此前没有了解吗？我1999年开始买B股并且从来没有卖出过。当我2004年来到中国时我又买入了一些，但我劝人们不要再买了，因为市场即将下跌。到2005年和2006年我又告诉人们，我买入中国股票了。到2007年我认为中国股市已经出现了泡沫，大家需要非常小心。到了2008年的春天我又开始买入中国股票。

　　新浪网主持人权静：能讲一讲您都买了哪些股票吗？

　　罗杰斯：1999年我买入了浦东(可能是浦东金桥(11.13,-0.27,-2.37%,吧)B股)，我买入了制造玻璃的公司(可能是耀皮玻璃(6.72,-0.21,-3.03%,吧)B股)，买入了生产酒的公司，是张裕B(48.860,-0.09,-0.18%,吧)，另外的记不太清了。1999年我买入了很多中国股票，那是我第一次买入中国股票，并且我只买了B股，这些我的书里都写了，你没看过我的书吗？

　　新浪网主持人权静：那您的收益率如何呢？

　　罗杰斯：这些股票都翻了10倍。但是这都无关紧要，因为我希望能一直持有我的中国股票，虽然从1999年开始到现在它们翻了很多倍。我2005年买入的股票翻了不到10倍

　　新浪网主持人权静：所以您并不是太在意您买入的这些股票的收益率？

　　罗杰斯：我并不太在意，因为我打算未来20年都持有我的中国股票。我有两个小孩，我希望我的孩子将来持有这些股票，如果我买入了对的公司，我的孩子有一天将从中获利。我不会总是买入卖出，我只是在便宜的价格买入对的公司，然后持有很多年。

　　新浪网主持人权静：您觉得热钱将如何影响中国经济，尤其是中国股市？

　　罗杰斯：中国境内大部分的热钱都是中国自己的热钱。外国人想要投资中国是很难的。所以来自国外的热钱并不多 。去年我来中国时，如果你到营业厅去可以看到成百上千的人，这不是国外的热钱而是中国的热钱。学生离开学校，人们辞去工作，出租车司机卖了他们的出租车来投资股市，所以中国股市当中有大量中国的热钱。绝大多数外国人从来没有投资过中国的股票，因为对外国人来说投资中国股市是件很困难的事，你需要参与特别的QFII基金，这里面有很多的麻烦，绝大多数的外国人从来没有这么做。其中一些投资中国的，他们像我一样可能从新加坡从香港从B股或从美国市场买入中国的股票，从其他的渠道买入中国的股票会比A股更便宜，这也是我为什么不买入A股的原因，因为从其他的地方买会更便宜。

　　新浪网主持人权静：但是 据我们了解目前中国境内有数以万亿计美元的热钱来自海外。

　　罗杰斯：他们不可能卖出而且出不去。如果你买入QFII基金，这些钱就要留在中国国内，如果这些钱是留在中国的并且他们无法离开就不能称之为热钱。确实有100亿美元到200亿美元左右的热钱，中国有很多QFII基金，200亿美元是个很大的数字，但是相比中国经济的总量来说，这算不上什么。中国有1.3万亿的外汇储备，因此20亿还不到2%，相比中国经济的总量而言，这根本算不上什么。