Posted March 26, 2012 at 3:50 am
by Ken Fisher
Last year was a dismal year for Chinese stocks. The popular FTSE/Xinhua China 25 Index of blue chips fell nearly 18%. This year it has already gained 7.9%, and I think Chinese stocks will shine in 2012.
Readers may remember that a year ago I wasn’t very bullish. Now I am. China’s stars are in alignment right now. China frequently confounds stock market prognosticators because it has a penchant for straying markedly from other broad global indexes year-by-year over the decades—even from emerging markets. It’s hit or miss.
Nevertheless, I think I have discovered a neat way to forecast Chinese stock market cycles. China’s stock market is inextricably tied to politics. China’s powerful Communist Party leadership has a cultural history of trying to depress the economy (and hence stocks) in varying ways two years before elections, which occur every five years. Then they gun it as the election approaches.
Over the last 20 years China’s GDP growth has been [continue]….
Posted December 13, 2011 at 12:45 am
by Gary Gordon
In 2004, South Korea and Australia began exporting more to China than they did to the United States. By year-end 2008, Japan and Brazil exported more to China than to the U.S.
Not surprisingly, when the Chinese government expressed an intention to rein in rampant inflation through tighter fiscal and monetary policy (November 2010), many countries that depend on their exports to China began a year-long bearish retreat.
In fact, ETFs for resource-rich countries (e.g., Brazil, South Africa, Chile), as well as China itself, were hit the hardest.
Granted, the sovereign debt crisis in the Eurozone also played a large role in poor performance. Nevertheless, the fear that tightening in China would lead to lower demand for the world’s products, services and commodities played the largest role in damaging the emerging market growth story.
In my estimation, though, worry is being replaced by anticipation. Whereas double-digit GDP and rapidly rising consumer prices encouraged China to tighten, recent developments led to the first easing of bank reserve requirement in 3 years. Specifically, inflation had [continue]…
Posted November 17, 2011 at 2:22 am
by John Waggoner
You may have heard that China is the world’s largest steel producer. You may have heard that China’s economy is growing more than three times as fast as ours. And you may have invested in a China fund because of all the glowing reports you’ve heard about China.
Now you may be wondering what on earth you were thinking. The average China fund is down 21.1% this year. Will China snap back as a leading growth market?
Probably not soon. If you want to make a long-term investment in China, do so gradually — and hang on.
China’s growth has been nothing short of stupendous. Chinese gross domestic product was $357 billion in 1990, according to the World Bank; it was $5.9 trillion 2010. China’s GDP grew 9.1% the 12 months ended September, vs. 2.5% for the U.S.
Much of that growth has been in building infrastructure. Just one example: China’s national highway system now has 45,554 miles of road, about equal to the U.S. national highway total of 46,876, says Daniel Rohr in a thoughtful piece at Morningstar.com.
China’s spending binge, combined with robust exports, sent China funds rocketing. The average China fund gained 64.5% in 2009, according to Morningstar, and tacked on an additional 13% gain in 2010.
This year, however, China funds have been dismal.
Posted May 25, 2011 at 1:50 pm
by Jeff Macke
China’s growth is slowing. At this point even the Chinese are willing to confess to that, albeit to a muted degree.
Alas, first-hand accounts of what’s really going on behind the… ahem… Great Wall are harder to find. That’s why Breakout went to Simon Baker. The original Friend of Breakout is not only a snappy-dressing Brit, he’s also the head of Baker Avenue Asset Management. He is an insightful investor with a track record to prove it.
Baker is fresh back from China, and the message he’s bringing isn’t likely to comfort advocates of the Chinese growth story. Baker “visited 16 companies… Solar companies, chicken companies, cement companies across six provinces. It was consistently the same message:
We were lied to.
For the sake of clarity, the “we” in question consists of Baker and eight other officially “sophisticated” investors; the liars were Chinese companies and their management.
Posted May 3, 2011 at 9:23 pm
by Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors
International coal prices hit $124 per ton this week, the highest levels in five months, as strong demand from reconstruction projects in Japan and reduced supply from flood-ravaged Australia has made coal supply tight. The floods in Queensland, Australia cut the country’s output of coal by 15 percent and other big coal producers such as Indonesia, South Africa and Colombia are experiencing similar production cuts due to floods of their own.
At the end of March 31, coal prices were 33 percent higher than a year ago and earlier this month, mining giant Xstrata inked a one-year deal with a Japanese utility at $130 per ton, effectively setting a floor under coal prices in the near-term. That’s up from $98 per ton the company made in a similar deal a year ago.
Perhaps no country is more affected by this development than China. With its economy powering ahead with 9.7 percent GDP growth during the first quarter, Chinese electricity use was up 13.4 percent on a year-over-year basis over the same time period, according to China’s National Energy Association (NEA). China’s overall electricity consumption is now expected to rise 12 percent this year, up from the 9 percent growth the NEA forecasted in January.
China’s Electricity Council said the country may face power shortages of 30 million kilowatts during the summer so the government has moved quickly to put restrictions in place as the peak season approaches. Big industrial provinces such as Guangdong and Zhejiang are already scaling back power consumption. These reductions are likely to hinder aluminum, cement, zinc and steel output, according to Macquarie Commodities Research.
Posted April 26, 2011 at 11:44 am
by Ezra Fieser
After the tiny Caribbean island of Grenada severed diplomatic ties with Taiwan in 2005, it received a token of appreciation from the mainland Chinese government: a $55 million cricket stadium.
It was part of $132 million China doled out to Caribbean countries in aid and soft loans in the years leading up to the 2007 Cricket World Cup. At the time, the investment was seen as a not-so-subtle reward to countries that had broken off formal relations with Taipei in favor of Beijing.
Ever since, China has made that sum look like pittance.
The Beijing government and private Chinese corporations are spending billions in the Caribbean, building major tourism projects, financing roads and ports and buying companies — all of which are helping open new markets for Chinese products.
The onslaught has cash-strapped Caribbean governments simultaneously praising China as a welcome benefactor and questioning what the country wants in exchange.
“Nearly every island in the Caribbean, from the smallest on up, currently has a substantial investment from China,” said David Jessop, managing director of the Caribbean Council, a London-based consultancy that works with Caribbean governments. “It seems that what nobody knows is what is motivating China.”
The total investment is difficult to quantify. China’s Ministry of Commerce reported that foreign direct investment in Caribbean countries by Chinese firms totaled nearly $7 billion in 2009, a more than 300 percent increase from the 2004 foreign direct investment of $1.7 billion. Those figures are somewhat misleading because of Chinese use of Caribbean tax havens — such as the Cayman Islands, which received $5.3 billion in Chinese foreign direct investment in 2009.
That aside, Caribbean islands have clearly been the recipients of investment by both Chinese firms and the government of the People’s Republic of China, which is financing some of the Caribbean’s most notable, and largest, projects.
The boldest broke ground last month: The Chinese government’s Export-Import Bank is putting $2.4 billion toward the construction of a 3,800-room resort in the Bahamas that will boast the largest casino in the Caribbean. Roughly 5,000 Chinese workers will be brought in to construct the Baha Mar resort on Cable Beach.
Posted April 22, 2011 at 2:32 am
by Robert Powell
It used to be when E.F. Hutton spoke, we would listen. Now it’s PIMCO.
Yes, a world of investors seems to hang on every word spoken by Bill Gross or Mohamed A. El-Erian or just about any one of the many experts in the PIMCO stable. When PIMCO speaks, money moves and markets shift.
Case in point: Maria Gordon, who manages the newly launched PIMCO EqS Emerging Markets fund ( PEQAX ) , just said she has a “favorable view of the yuan” and is now “large overweight” on China. And that pronouncement has more than a few investors (not to mention yours truly) thinking about the ways to play China.
What’s good enough for PIMCO, should be good enough for the rest of us, yes?
Like Gordon, Philip Abbenhaus, the director of the Asian Equity Research Institute, is bullish on China, too. According to Abbenhaus, whose institute issues the China Business Conditions index, there are plenty of reasons for this opinion; China’s economy has grown 9.7% per year since 1978 and it’s now the second largest economy in the world; its 1.3 billion people are fast becoming consumers of goods and services; and its political environment is more stable in the wake of the recently concluded 2001 Central Government Economic Work Conference.
What’s more, the issuing of the first yuan-based real estate investment trust this week is promising as well, said Abbenhaus, whose institute gets its information on the Chinese market through Hexin Flush, a research firm based in Hangzhou, China. Read more about the yuan-based REIT.
Posted April 20, 2011 at 4:59 am
by William Pesek:
Timothy Geithner says borrowing more from China to finance tax cuts for the most affluent Americans would be irresponsible.
The Treasury secretary has it backward. The real question is whether Beijing is willing to double down on a nation whose balance sheet makes Italy look good. Holding $1.2 trillion of U.S. debt is a fast-growing risk to China.
Traders have a theory about why the euro is reasonably stable amid a broadening debt crisis: Asian central banks are converting proceeds from recent intervention moves into other currencies. “Asian central banks” has become a euphemism for China, whose reserves now exceed $3 trillion.
China is making deals with nations such as Brazil to conduct trade in yuan. It’s also making noises about the Federal Reserve’s zero interest-rate policies and Congress playing games with the debt limit. If you were managing China’s reserves, how many more dollars would you really want in this environment?
Heck, China is even loading up on Spanish debt these days. “China’s open admission of continual purchases of European debt shows it doesn’t consider the U.S. any safer,” says Simon Grose-Hodge, head of investment strategy for South Asia at LGT Group in Singapore.
America’s Sugar Daddy
The risk that America’s sugar daddy is getting fed up hasn’t escaped U.S. officials. It’s probably no coincidence that Fed officials are…
Posted December 27, 2010 at 10:50 am
by Alex Létourneau
Of Kitco News
Editor’s Note: Prices for many precious and base metals hit record highs in 2010, as economic uncertainty rattled around the globe. What does 2011 hold for gold, silver, platinum, palladium, copper and other metals? Kitco News reporters have prepared a series of stories which examine what is in store for 2011, not only for metals but for currencies, stocks and the overall economy. These stories will be posted on Kitco.com during the holiday period and also will be featured in a special section. Stay tuned for video highlights as well.
(Kitco News) – China’s dominance of global rare earths output will continue in 2011, yet at the same time other nations are starting to make preparations to pull more metal from the ground and reduce China’s stranglehold on the market in future years.
Until the last few months, the mention of rare earth metals likely would elicit a blank stare unless the conversation involved someone in a specific sector that uses the elements.
Rare earth metals, known as REEs, burst into the mainstream media limelight during the past several months, with articles in The New York Times, The Wall Street Journal, the Financial Times, on major wire services and televised segments on CNBC. The big exposure came with a flap that developed when China, which controls 95% to 97% of the current REE global output, stopped exporting to the Japanese.
Posted May 28, 2010 at 2:52 pm
by Bill Bonner:
05/28/10 Paris, France – Imagine the looks on their faces, when Deng Xiaoping sold them out.
The old commies in China had tried to make steel in backyard barbecues. They’d carried the fat Mao on a litter, on a long march to nowhere. They’d pretended his Little Red Book was more than drivel. They’d endured one absurdity after another…purges, starvation, and misery…all for the cause.
And now this…
“To get rich is glorious…” Xiaoping is alleged to have said.
Whether he said it or not, millions of Chinese took it to heart. They got richer, faster than any people ever had. The economy is now 10 times larger than it was then; it grew 300% just in the last 10 years. Incomes rose every year. There are now more millionaires in China than in France. Three times as many as in Britain. And more people are becoming millionaires there than anywhere else on earth.
Three decades ago, the world’s hinge creaked. Deng Xioaping opened a door in 1979. He announced a new oddity, a “socialist market economy.’’
We can imagine the looks on faces in Washington and London too. And why shouldn’t they gloat? They had won the Cold War; they had no idea that their victory would be fatal.
China took the capitalist road in 1979. Russia was…