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Archive for the ‘China’ Category

Can’t stop PRCs from making $

In China, Tourism on 09/12/2016 at 4:09 pm

Last year, Facebook fired an enterprising Chinese employee who played to the unmet demand* and charged one group of tourists $20 each to tour the campus and eat in the company’s cafeteria. Now, the only thing notable for tourists to see is its thumbs-up sign.

NYT

*Chinese tourists wanting to tour FB’s campus and other Silicon Valley tech campuses.

Don’t tell Trump but US is sua kee, China tua kee

In China on 04/12/2016 at 5:32 am

One country [China] consumes 40 to 50%  of the world’s commodities. As we saw in coal this year, when China changes policy, it can turn a market upside down,

says Ivan Glasenberg, the CEO of mining and trading house, Glencore.

I remember the time when the world’s commodity markets danced to the tune of the US economy. So should The Donald.

And how can the US be the number one economy in the world?

In 1980, China had 10 percent of America’s GDP as measured by purchasing power parity; 7 percent of its GDP at current U.S.-dollar exchange rates; and 6 percent of its exports. The foreign currency held by China, meanwhile, was just one-sixth the size of America’s reserves. The answers for the second column: By 2014, those figures were 101 percent of GDP; 60 percent at U.S.-dollar exchange rates; and 106 percent of exports. China’s reserves today are 28 times larger than America’s.

After all

China is number 1

  • Manufacturer:
  • Exporter:
  • Trading nation:
  • Saver:
  • Holder of U.S. debt:
  • Foreign-direct-investment destination:
  • Energy consumer:
  • Oil importer:
  • Carbon emitter:
  • Steel producer:
  • Auto market:
  • Smartphone market:
  • E-commerce market:
  • Luxury-goods market:
  • Internet user:
  • Fastest supercomputer:
  • Holder of foreign reserves:
  • Source of initial public offerings:
  • Primary engine of global growth:
  • Economy:

https://www.theatlantic.com/international/archive/2015/09/united-states-china-war-thucydides-trap/406756/

And

A study by the Rhodium Group last month found that Chinese investment into the US exceeded US investment into China for the first time in 2015.

FT

The US is the number one  economy because it’s the biggest importer using China’s and other countries money to buy their exports.

“The US is the number one economy in the world, and its political power and military power are based on its economy.

German industrialist quoted by FT

But Trump is happy because he can nuke China to the stone age before China can launch a single nuclear missle against the US. Now taz tua kee.

If this true, why are we still training in Taiwan?

In China on 01/12/2016 at 4:31 am

Singapore … has gradually reduced the number of Starlight personnel sent to Taiwan for training in recent years to as few as 3,000, but there are still at least three military bases in Taiwan for use by the project.

http://www.scmp.com/news/china/diplomacy-defence/article/2050097/singapores-refusal-halt-military-ties-taiwan-prompted

At one time, in any given year 20,000 S’poreans were training in Taiwan.

——————————————

Starlight Project dates back to early 1974, when LKY signed a secret deal with his Taiwanese counterpart Chiang Ching-kuo during a visit to Taiwan.

Based on that confidential agreement, Singapore has sent nearly 20,000 troops to Taiwan for training on a yearly basis. Joint military exercises went on even after Singapore shifted its formal diplomatic relations from Taiwan to mainland China in 1990.

SCMP

———————————————

The SCMP also says that according to Macau-based military expert Antony Wong Dong,
Beijing had years ago tried to convince Singapore to replace its military training bases in Taiwan with alternatives on Hainan.

“The mainland side promised to provide the Singaporean military with a closer and larger place in Hainan [than that used in Taiwan] for military exercises, but Singapore rejected the offer,” Wong said.

Macau-based military expert Antony Wong Dong says S’pore rejected the offer because of strong opposition from the US. The US was (and is) concerned because US military secrets could be leaked because S’pore uses American weapon systems.

If only 3,000 are sent to Taiwan a tear, why continue especially as we are now training in Oz in a big way. We are expansing the facilities there.

Auto-pilot at work isit, while millionaire minsters looking at their daily bank statements and monthly CPF statements?

Double standards: S’pore can change position, China cannot isit?

In China on 30/11/2016 at 4:33 am

(Or “Typical S’porean attitude: Actions have no consequences”)

China has made an official protest to Singapore over its military ties with Taiwan after nine Singaporean military vehicles were seized in Hong Kong. It’s very own ST, Global Times says “It is no longer reasonable for Singapore to continue … any kind of military exchange with Taiwan.”

Ordinary patriotic S’poreans (not juz PAP bootlickers) other than the China tua kees  are shouting that S’pore has always trained in Taiwan and China knows about it, so why the KPKBing by China.

Err why nationalistic S’poreans so cock? Don’t know this isit?

Singapore has strengthened its military ties with the US over the past year, agreeing to boost co-operation on humanitarian assistance and disaster relief missions as well as cyber-security. Singapore allowed US Poseidon surveillance aircraft to operate from the city-state last December.

And the US had based a naval vessel here that was specifically designed for operations in waters like the South China Sea. The vessel was withdrawn and not replaced.

And Ah Loong* has been pretty noisy about the need for the TPP and rule of law in the South China Sea. Both issues are important to S’pore but were used by the US to maintain US regional hegemony. The US defence secretary said that the TPP was worth to the US the addition of another US aircraft carrier to the US navy

——————

Rule of law what rule of law?

The US refuses to sign UNCLOS because it refuses to play by the rules of sua kes like the UN and PinoyLand. It reserves the right to do what it thinks is right (Usually this means “Might is right”).

But China did sign up and now refuses to abide by a decision of its highest tribunal. Why so stupid?

So if Ah Loong is genuine and consistent about wanting the rule of law in the South China Sea, he should say that the US is wrong to refuse to rarify UNCLOS.


S’pore has tilted towards the US, China has noticed it (see below) but China cannot change it’s mind isit?

So far I’ve not seem our MSM or social media tell us that the state-owned hawkish Global Times said in an editorial that S’pore was supposed to have suspended its military co-operation with Taiwan in 2012. “However, the recently detained vessel with its cargo of armoured vehicles reveals Singapore’s hypocrisy.”


My toes are laughing

“One thing in Chinese culture is you never forget your old friends … and surely in Chinese culture you appreciate this concept of loyalty to old friends”: Foreign Affairs Minister Vivian Balakrishnan.

Old friends surely don’t allow US Poseidon surveillance aircraft to operate from their homes?

——————————————

And really as someone who thinks US global hegemony, is the least bad option (OK, Ok, it’s actually a lot better than the alternatives), I can’t argue with Global Times when it says “For quite some time, Singapore has been pretending to seek a balance between China and the US, yet has been taking Washington’s side in reality.”

Err didn’t realise that China so cock not to realise this until now? That stupid meh?


*For every prime minister like Lee Hsien Loong of Singapore, who can provide off-the-cuff a detailed and sophisticated tour d’horizon of the Asia-Pacific region, there is a boorish novice like Philippine President Rodrigo Duterte.

Keeping power in a one-party state

In China, Political governance on 28/11/2016 at 10:26 am

(Or “Why CCP’s fears are PAP’s fears”)

More on why S’pore should be analysed from the perspective that it’s a one-party state like China and N Korea rather than as an authoritarian mutant version of a democratic state.

BBC’s Carrie Gracie( http://www.bbc.com/news/world-asia-china-37724839) wrote recently

China’s “consultative democracy” has one glaring challenge of its own: the paranoia of the ruling party.

It never ceases to amaze me how afraid the Chinese Communist Party is of its own people, and how fear clouds its judgment and skews its decision making.

Fear of street protest ties its hands in tackling pension reform or state-owned enterprises. Fear of a punishing assessment of its mistakes makes it manipulate history in a way that distorts not only the past but also the future. Fear of competing narratives makes it drive some of China’s brightest and best into exile or jail. Fear has become a huge overhead and a great brake on China’s progress.

While this is not quite true of S’pore in a literal sense

Fear of street protest ties its hands in tackling pension reform or state-owned enterprises.

because the sheep of Animal Farm S’poreans (Like BG Yeo’s Christians) don’t riot let alone protest, the PAP is kiasu of providing evidence that it’s not true that the “PAP is always right”. This ties its hands in radically reforming the CPF system, GLCs, immigration and in general the economy. After all it can’t blame another party for the problems.


Every decade, another restructuring master plan?

The PAP keeps saying the economy must be restructured.

In the 80s, one Lee Hsien Loong as trade and industry minister headed a committee to recommend changes in the economy. In the early noughties when DPM he headed another committee on the same issue.

 In 201o, one Tharman and his committee produced the 2010 Economic Strategies Committee (ESC).
Now in 2016 (to make up for no plan in the early noughties?)
Indeed, in updating the 2010 Economic Strategies Committee (ESC) report headed by Tharman), the 30-member CFE will have to take into account new global and domestic realities. Chaired by Finance Minister Heng Swee Keat, the panel has been tasked with developing economic strategies to keep Singapore competitive; it aims to complete its work by the end of 2016.
More on the latest plan anon.
————————————————————————–

Again, while not exactly true here “Fear of competing narratives makes it drive some of China’s brightest and best into exile or jail” the PAP’s fear of competing narratives has stifled society here largely thru self censorship and self blinkered minds.

Hence, this fear and the resulting self censorship and self blinkered minds have become a huge problem for S’pore’s economy and body politick. It can’t be the creative, open society that the PAP says it wants and it says is needed because there are limits to creativity and open society: BG Yeo’s infamous OB markers.

“Control of information and thinking and systems is central to the government, and they genuinely want to harvest the economic advantages provided by a populace that is creative and independently minded, but they want to do it without surrendering control. It is their dilemma,” said Michael Barr, associate professor of international relations at Flinders University in Adelaide.

FT. (Btw, Barr can be classified as anti-PAP. But he’s right on this point)

True, S’poreans enjoy Western-style consumption (fuelled by debt) and personal freedoms (tell that to the ang moh tua kees and their anti-PAP cybernut allies). But S’pore is also a complex place with contradictions (think the contradiction between 377A and the relaxed official and civil attitude towards the gay community), and inequalities (think Gini and the elderly poor). “It needs a pluralistic, flexible and modern political system.” (Economist view of Russia, which applies here.)

This modern system doesn’t look like happening any time soon. The PAP has imposed an archaic authoritarian political system (de-facto one party rule) softened by more welfare spending using S’poreans’ forced savings (CPF and btdger surpluses). These can temporarily suppress economic, social and political problems but are unable to resolve them.

The ongoing public transport problems is a good example of what can go wrong with the PAP’s way of doing things.

So as I wrote here: “[T]he level of authoritariansm  is so extreme that a good strong dose of liberal values would do the body politick, and economy no harm.” The problem is with the ang moh tua kees who prefer to ape Western liberals rather adapt liberalism to suit S’poreans. They want us to eat potatoes like them.

China the paper tiger

In Banks, China on 06/11/2016 at 2:41 pm

New York’s banking regulator fined the Agricultural Bank of China US$215 million for a series of money-laundering violations and attempts to “mask” suspicious transactions. The bank is not contesting the fine.

As the Agricultural Bank of China of is owned by the Chinese state, this is as insulting to tChina as sailing a foreign warship sailing within 12 miles of a Chinese rock in the South China Sea.

And it isn’t even a US Federal agency that the bank is kow towing to. It’s a state agency that is giving China the bird and making it grovel.

What has RedBean and other China supremacists have to say?

Duterte the talk cock sing song Peenoy president should note that even China kow tows to a state agency.

CWT update

In China, Logistics on 27/10/2016 at 4:11 pm

From NYT’s Dealbook

HNA Group Pauses After $34 Billion Global Acquisition Spree

The acquisitive Chinese conglomerate’s potential bid for the Singapore logistics operator CWT could be delayed until at least the end of the year, people with knowledge of the matter said. HNA is considering changes to the deal structure and still deciding which of its many entities will make the offer, the people said.

Sounds like PAP’s idea of democracy

In China, Political governance on 26/10/2016 at 6:05 am

Consultative Democracy

BBC reporter Carrie Gracie (husband’s an aging Chinese rock singer):

At a conference this month to deepen the Communist Party’s so called “dialogue with the world”, senior party members explained the benefits of the Party’s brand of consultative democracy.

Yang Rui for example, a well-known anchor on China’s state television, told me it was a mistake to use the ballot box to decide everything “because you have to suppose every voter is rational and reasonable”. He pointed to the American election campaign as an example of debased populism that threatens to entrench division and triviality.

“People seem to forget serious issues. They talk about sex, locker room conversation, men and lousy behaviour. Debates are getting nasty and that undermines the strength of Western democracy.” [Could PAP apologist Kishore talking.]

Fang Xinghai, another senior Party member and vice chair of the China Securities Regulatory Commission, said the strength of China’s consultative system is the intense deliberation which takes place behind closed doors inside the Party itself. [Could VivianB or Tharman talking.]

“This has allowed China forty years of uninterrupted growth within a stable system. Quiet deliberation is a more effective form of policy than a public shouting match, because policy making is complicated.” [Could LKY, GCT, PM or Tharman talking.]

These are people with enormous exposure to western political culture who believe China’s one party system can compete on the delivery of public goods.

In an echo of the mandarin class who ruled China for centuries through the imperial civil service, they defend the legitimacy of a policy making elite. And they don’t want for ambition.

http://www.bbc.com/news/world-asia-china-37724839

Note I’ll be posting extracts from the above BBC article that are relevant to S’pore. So stay tuned.

Duterte a real talk cock, sing song Peenoy?

In China on 20/10/2016 at 1:12 pm

Funny this despite Duterte telling the US to f-off

Joint naval patrols continue, as does co-operation in Mindanao; and America still has five bases on Philippine soil. The close working relationship with Filipino counterparts, the Americans insist, is as strong as ever. The Filipinos, for their part, report no change of orders from the new chief.

http://www.economist.com/news/asia/21708984-philippines-until-now-staunch-american-ally-falling-chinese-camp-rodrigo


This is what Duterte, president since June, has said recent weeks

He has branded Barack Obama a “son of a whore” for criticising his “kill them all” war on drug dealers and addicts, which has claimed thousands of lives, many of them innocent. He has demanded an end to joint naval patrols and to America’s assistance in the southern jungles of Mindanao, where American special forces advise Filipino troops fighting against Abu Sayyaf, a violent group linked to al-Qaeda. And he has questioned whether America would honour its treaty obligation to come to the Philippines’ aid if the archipelago were attacked.

——————————————————————————-

Why he has been brown-nosing China’s ass?

He wants to see mangoes to China.

The Philippines had been plucky in standing up to China. But it has paid a price. Now, the goodies that China is dangling look irresistible. Mr Duterte wants lots of infrastructure, particularly railways. China is offering cheap loans. He wants the country to export more. China is offering to reopen its markets to Philippine fruit. He wants help with the war on drugs. A Chinese businessman is building a big rehab centre. And he wants Filipino fishermen to be able to return to their traditional fishing grounds around the Scarborough Shoal. China has told Philippine officials that it is open to an accommodation.

And he wants China to let in Pinoy maids. There are about 154,000 Pinoy maids working in HK legally. It’s illegal for them to work in China but the FT reports that there are about 200,000 working illegally there. And that the Pinoy govt wants to get China to allow them in legally

Noble Bahru: an update

In China, Commodities on 11/10/2016 at 10:11 am

Taz it now

Circa 2008

Image result for alsagoff mansion

Still shares have cheonged in recent months from S$0.11 cents to S$0.20 (now at 0.19)

For the half yr to end Junereported negative operating cash flow of $570m and a net loss of $14m. Its adjusted net debt, which counts inventories of oil and coal as cash, ballooned to US$2.4bn, more than its mkt cap, though the proceeds (US$800m ++) the recent sale (a crown jewel) should reduce the real net debt (excluding the inventories) by around 20%.

And if its accounting is to believed its NTA is around S$0.60 versus a mkt price of S$0.20.

Still an avoid as Noble Bahru has nothing to do with the old biz model of the Noble House.

 

Chinese visited London 1,800 years ago

In China on 24/09/2016 at 4:34 am

Image result for Roman LondonAnd died there.

Not your average Roman Londoner

Finally, the Times carries news of an archaeological discovery relating to Roman London which could change our view of the history of Europe and Asia.

Analysis of remains found during a dig in a former cemetery site in Southwark discovered two skeletons, dated to between the 2nd and 4th Century, were probably ethnically Chinese.

There was trade between the Roman empire and Chinese but to date only one east Asian skeleton from the era has been found – and that was in Italy.

The new discovery, described in the journal of Archaeological Science, has been hailed as a “total surprise” by historians.

Rebecca Redfern from the Museum of London tells the Times: “In this cemetery they’re Mr Average Roman Londoner… We have no inscription evidence or anything to suggest people of this ancestry were present in Roman Britain.”

BBC Online

Image result for Roman London

China’s plans to rule tech & finance

In Banks, China on 22/09/2016 at 2:33 pm
“It is the goal of Chinese outbound industrial policy programs to replace foreign technology leaders in the medium term — not just in China but also in global export markets.”
— Sebastian Heilmann, president of the Mercator Institute for China Studies, a think tank based in Berlin, on China’s strategy of investment.

 

 

China’s Wealthy Help Bolster European Capital

Asia’s high net-worth individuals, whose wealth has surpassed counterparts in North America, have been major investors in regional bank bonds.

 

From NYT Dealbook

Failed: Obama’s Asian policy

In China on 15/09/2016 at 5:31 am

On the eve of Obama’s recent trip to Asia, the FT analysed his “Pivot to Asia” policy. It was not a flattering piece.

In the comments these (among money) appeared pouring more scorn on him and his Asian policy.

NCFOM

I hardly believe that anyone of substance will pay much attention to Mr. Obama and his seemingly thoughtful comments knowing fully well that he cannot deliver. Rhetorics like those of Mr. Obama usually falls flat in Asia amidst basic bread and butter issues. When you load polluted air and water into the equation, the place started to resemble cesspool of human existence. It is hardly a place to nod your head in agreement with in appropriate Pbama speech laced with lofty ideas. He never learned that and that’s why most of these leaders would be either resentful being in his company or laughing behind him. This is a tragedy of Greek proportion.

I feel bad for the guy but I cannot offer any sympathy for his gross leadership failure across the board. His ill-preparation and execution of the US presidency will go down as one of the worst. His cowardice is astounding. If I were him I would not speak about any pivot business. I would just attend some social and philanthropic functions.

He has become the ultimate symbol of unfulfilled promise.

Hear, hear.

 Hollow Man 

 
@NCFOM Nicely said! As someone who voted for him in 2008 (but stayed home in 2012) I’ve thought back to what made me do it. I’ve concluded it was just the brazen mendacity of the GWB Administration, nothing more. McCain, then still foaming in the mouth with war lust, was a variant of that.

But of Obama himself, I knew little. I have watched in disbelief as he moved gradually, incrementally, professorially, unimaginatively, unexceptionally, these last eight history-bending years. Even his “lofty”, “soaring” oratory is really cut-rate stuff, just curlicues in the air that dribble away no sooner than they have been uttered. (There isn’t a line from any of his speeches that can compare with the best from FDR, JFK,even  RR.) He has spent all of 2016 polishing his unmemorable legacy. And he leaves the country in a sourer, more mean-spirited mood than at any time I can remember.

Or this may be all I can expect from my adoptive country. I only have to remember the seventeen candidates who stood on the stage in the Republican primary debates…

But Obama poked China in the eye wuth this comment when China failed to give him VVIP treatment.

“We’ve got a lot of planes, a lot of helicopters, a lot of cars and a lot of guys,” he said. “If you are a host country, sometimes it may feel a bit much.”

http://www.economist.com/news/china/21706433-lows-and-highs-worlds-most-important-bilateral-relationship-g20-leaders-meet-china

This is interesting: http://www.bbc.com/news/world-asia-china-37269719

Temasek’s China banks perform better than ang moh counterparts

In Banks, China, Temasek on 10/09/2016 at 4:36 am

Temasek has meaningful stakes in China Construction Bank, Industrial and Commercial Bank (ICBC) and Bank of China  and they are doing well. Something the ant-PAppyists cybernuts don’t tell.

As they say an info graphic (esp from the FT) is worth a lot more than a A380 filled with BS.

Chinese banks

Since Feb’s lows, these three (and Agri Bank  have delivered a total return upwards of 40%)

And dividend yields are attractive, at over 5%.

But ant-PAppyists will always KPKB,.

Gd Cantonese description of our parliament?

In China, Hong Kong, Political governance on 06/09/2016 at 3:45 am

‘Rubbish Council’

rubbish

The word rubbish also sounds like legislative in Cantonese so obviously….

In HK, the Legislative Council (LegCo) is the body that passes and rejects laws, and approves the government’s budget. It’s HK’s parliament.

Some call it “Rubbish Council” (punning on how the words “legislative” and “rubbish” sound similar in Cantonese), arguing the legislators are all talk and no action. BBC Online

Like in S’pore, major constitutional changes, including changes to the voting system, need to be passed by a two-thirds majority in the council (parly here). Pro-Beijing parties always win more seats but the “democrat” lobby always have at least 24 seats so they can veto changes they disagree with. And they’ve used this power repeatedly

In the latest LegCo elections on Sunday, the “democrat” lobby retained its veto power. They now have 30 seats.

Here the PAP can suka suka change the constitution because it has more than two-thirds majority, courtesy of 60- 70% of the voters.

Even if LegCo is Rubbish Council, the “democrat” lobby has a veto on constitutional changes.

Funny Goh Meng Seng and Uncle Redbean don’t praise the Hongkies for being smart enough to ensure that the pro-Beijing parties and China can be thwarted.

FYI, going in for cataract surgery on the right eye later today. After the final post op check-up (left eye) on Monday was offered an op on Tuesday on the right.

US tech giants in war with EU and BIC

In China, India on 01/09/2016 at 3:48 pm

As Apple “rages” over its13bn euros tax demand from the European Commission, the US Treasury is warning that the ruling against Apple “could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the EU and US”.

Earlier this yr NYT Dealbook reported

Why the World Is Drawing Battle Lines Against American Tech Giants. European efforts to rein in the largest American tech companies are only a taste of what countries like Brazil, India and China are likely to do.

One country: two markets

In China on 25/08/2016 at 1:21 pm

Shenzhen, Shanghai comparedShanghai and Shenzhen stock exchanges

White gold turns to dust

In China, Commodities on 16/08/2016 at 3:00 pm

Milk was NZ’s white gold because of Chinese demand.

But now

Chart: milk data

Chart: milk data

Redbean thinks he’s Confucius, critics’ “insects”

In China on 11/08/2016 at 4:39 am

But first, this appeared in the letters page of the Economist.

Sovereign claims

The dispute over territory in the South China Sea, you say, constitutes a contest between “an American idea of rules-based international order and a Chinese one based on what it regards as ‘historic rights’ that trump any global law” (“Courting trouble”, July 16th). You note that America has not ratified the UN Convention on the Law of the Sea, but do not explain why. In 1982 the Reagan administration reasoned that the convention cannot take priority over domestic legislation that declares American sovereignty over the extended continental shelf. This is not entirely different from China’s claims of historic rights.

The Reagan administration was also uncomfortable with the compulsory dispute-resolution mechanism proposed by the convention, which is a similar argument to the one China put forward when it rebuffed the recent court ruling that rejected its claims in the South China Sea.

Therefore, the dispute is less a clash of “two world-views”, as you suggest, but simply China taking cues from America in attempting to demonstrate its own exceptionalism.

KARTHIK SIVARAM
Stanford, California

As I pointed out before, America was smart not to ratify the UN Convention on the Law of the Sea, although in a classic case of double talk, it has said it will abide by it. Why was China so dumb to ratify it? And then give it the two-finger salute?

Now to Uncle Redbean: he says he didn’t reply to critics like me because he was behaving like Confucius who refused to rebut a critic, preferring to ignore him*.

Good replies from TRE readers:

Bad Boy:

So he’s implying his words are the true gospel ?

Those who can’t, smoke.:

If you said “there are many kinds of truth depending on the subjective biases of the individual”, then Mr Redbean, as an individual, how do you even know you are not also a 3 seasons man*? just a different set of 3 seasons from the others?

Unless you really believed that anyone whom you cannot convince must be a grasshopper in disguised?

A Worm infested bean:

Why Redbean did not reply is because he don’t have the knowledge to argue his case. I only see him good at telling ‘crouching tiger and hidden dragon’ stories. OR covertly ‘curse’ or ‘belittle’ his adversaries. No standard.

PAP Contempt of Citizens:

Why Readbean now explain why he reply? …


* The answer, why redbean did not want to reply is the same as why Confucius did not want to explain but agree with a 3 season man that there is no winter. Confucius knew that he could not convince the 3 season man that there was really a season called winter that the 3 season man had not known.

A 3 season man is like some insects with lifespan of only 9 months, from spring to autumn. By autumn the insect would have outlived its life and be dead, never would it have a chance to experience and know what winter is like. To such an insect it is true that there is no winter. And the insect would be so convinced that he was right and would not want to understand or listen to people who lived long enough to tell him that there was winter. The discussion would be a waste of effort and time and it was better to agree with the 3 season man or let the 3 season man to believe he was right. Let the 3 season man be happy in his own truth …

Redbean

Black Country belongs to China

In China, Footie on 06/08/2016 at 6:43 am

Now the four main football clubs in the West Midlands — West Brom, Aston Villa, Birmingham City and Wolverhampton Wanderers — have Chinese owners. Only West Brom play in the EPL. The other three play in the Chapionship, ome tier down.

Mobile tech: China is cutting edge

In China on 04/08/2016 at 4:12 am
A cellphone user in Shenzhen, China. The country’s tech industry — particularly its mobile businesses — has in some ways pulled ahead of the United States.

China, Not Silicon Valley, Is Cutting Edge in Mobile Tech

American tech companies study Chinese users and apps as a smartphone revolution changes how people interact, buy products and manage their money.

NYT Dealbook

Uber: Lost Chiina war, spinning its way to victory

In China on 03/08/2016 at 3:42 pm

The battle for ride-sharing in China is over. Didi Chuxing plans to buy Uber China. After spending tens of millions of dollars every month fighting for market share, the two companies will combine into a new one worth about $35 billion.

“I’ve learned that being successful is about listening to your head as well as following your heart,” Travis Kalanick, Uber’s chief executive blogged, adding “Uber and Didi Chuxing are investing billions of dollars in China and both have yet to turn a profit there.”

Bloomberg, said that Uber had lost more than $2 billion in China.

Investors in Uber China will receive a 20% stake in the new company and Didi will make a US$1 billion investment in Uber Global.

After the deal Uber passengers were going on Weibo, China’s version of Twitter, to complain that the cost of regular routes previously taken had risen steeply. One said it had doubled as Uber discontinued its subsidies. FT had earlier this week reported that Didi had in the last month quietly raised fares.

The Uber victory spin is as follows:

[O]ne of Uber’s biggest investors and strategic advisers, Bradley Tusk, the chief executive of Tusk Ventures ,,,

 

Mr Tusk insists though that Uber got the best out of a bad situation. The American ride-hailing app was losing a billion dollars a year in China, and this new deal sees Uber owning a 20% stake in the merged company.

“Uber invested $2bn in China, and ended up with a $7bn stake in Didi,” says Mr Tusk. “That’s not a bad deal if you look at it like that.”

BBC

But is the valuation of Didi real? @0% of zero is zero.

But Americans are the master of BS.

Up to a point Uncle Redbean

In China on 30/07/2016 at 1:23 pm

In another anti-US rant, he said:

How many more dumb Asians, Arabs and Africans are parking their money and assets in the US waiting to be seized and forfeited? This is not the first time it happened. It has happened many many times and dumb Asians, Arabs and Africans, 3A ratings, continue to repeat this silly mistake. He was talking about Najob’s funds.

He has a point but he should ask himself why dumb Asians, Arabs and Africans don’t make a beeline for his beloved China and why the Chinese are taking their money out of China. The US is their preferred market. .

And why he’s still living in S’pore? He should emigrate to China, and free his CPF. At least fellow traveller Goh Meng Seng is resident in HK.

 

The truth about a China apologist

In China on 29/07/2016 at 6:17 am

“The truth about the South China Sea issue” is the title of an article written by Uncle Redbean that TRE republished.

A TRE reader, Bernard K (Any relation of TRE hero Chris K?) commented on how Uncle Redbean misquoted a UN spokesperson, and twisted facts. As Uncle Redbean has not responded so far (Waiting for Beijing ro tell him what to say?), I produce the comments below this box.


No historical maps

But Bernard K was not the only person to diss Uncle Redbean and not get a response.

“Dinners are just dinners”, another TRE reader, is absolutely right about the origins of the “dashes in the sea”: it only originated in 1947 by of all people the KMT. It’s not based on any ancient Chinese map, something Uncle Redbean implies. A few years ago I flipped through a book of essays by HK academics on China’s maritime boundaries from ancient times to the Late Sung dynasty. The conclusion of the essays was that China in the period in question never had territorial claims to the South China Sea.

And given the expansionist maritime policies of the Yuan (invaded Java and Japan) and Ming dynasties (Cheng Ho’s voyages), that followed, there are no maps from that period laying claim to the South China Sea.

Dinners are just dinners:
July 27, 2016 at 10:15 pm (Quote)
Redbean is plain wrong. He describes some Proclamations and Declarations as Treaties when they are not. Proclamations and Declarations do not carry the same weight under International Law as Treaties.

The Qing Dynasty never had the 9 Dash Line nor the 11 Dash Line, so what weight does the claim hold? It would be different if you can find a genuine Qing Dynasty map showing the 9 Dash Line or the 11 Dash Line and Qing Dynasty records on a claim to these waters, reefs and shoals. Many historians know the KMT came up with the 11 Dash Line and the CCP came up with the 9 Dash Line – these boundary claims are modern inventions. It does not mean that they are recognised internationally or by the various claimants.

If a country starts drawing dashes on maps and claiming reefs and shoals, does that mean that they automatically belong to that country. It is leads to success in territorial claims, every country will be producing maps with lots of Dash Lines to claim islands, reefs and shoals at the expense of their neighbouring countries.

What is telling is the land reclamation works. If the claim was so strong, there would not be the need to carry out such extensive land reclamation works. These works are deliberately designed to strengthen the claim. The correct position is that PRC’s claim is weak at best and the reclamation works are illegal. The original position should be restored as should the destroyed coral reefs.

China has just lost a lot of international goodwill over the issue and will likely lose more.

Die-hard supporters of China will just spout or parrot their foreign affairs spokesman. Just rubbish without proper consideration of international law. Who can ever trust Beijing? Look at their human rights record.

Rating: +3 (from 3 votes)

I too never did get a reply when I asked Uncle Redbean why China so cock or why US so subtle?

————————————————–

Bernard K:

July 25, 2016 at 7:02 pm (Quote)
Tsk tsk Redbean. Talk about stubborn. Again, picking the words of the UN spokesman out of context is disingenuous. You have deliberately left out the first part of his answer and left out the latter part of the second part (after I have already given u the link). Context and link.

Question: Thank you, Stéphane. As you know, the court… the Permanent Court of Arbitration in The Hague ruled against China in the China Philippines dispute on the Law of the Sea. Do you think it has implications for other parties to similar disputes in the South China Seas?

Spokesman: Well, you know, we’re obviously aware of the decision rendered by the Tribunal, WHICH WAS ESTABLISHED under Annex VII of the UN Convention on the Law of the Sea. The Secretary General has consistently called on all parties to resolve their disputes in the South China Sea in a peaceful and amicable manner through dialogue and in conformity with international law, including the UN Charter. It remains important to avoid actions that would provoke or exacerbate those tensions. Yes?

Question: Following up on the South China Sea. Are every concerned countries advised to abide by the decision by the Permanent Court of Arbitration in The Hague?

Spokesman: You know, the UN doesn’t have a position on the legal and procedural merits of the case or on the disputed claims. And, you know, as for the details concerning the settlements of disputes mechanism under the Convention of the Law of the Sea that are set forth in paragraph… in Part XV and relevant annexes to that treaty; thus, the Secretary General does not have anything to add in this regard. Mr. Lee?

http://www.un.org/press/en/2016/db160712.doc.htm

The last para taking into context means that the Sec-Gen has nothing to add but that the settlements are in Part XV & relevant annexes of UNCLOS. Meaning that UN has no legal and procedural merits except as stated in Part XV & relevant annexes of UNCLOS. If this was not a UN backed Tribunal, why would he even answer much less refer time and again to various Annex and mechanisms of UNCLOS?

You have UNCLOS procedures adhered to, you have ITLOS selecting the Tribunal, you have UN spokesman…..if it looks like a duck, walks liked one, quacks liked one, but oh no, to you it is a chicken.

Rating: -13 (from 19 votes)

Bernard K:
July 25, 2016 at 7:09 pm (Quote)
Secondly, if you notice, Xinhua the MSM of China, had at no time make the claim that the tribunal is not UN backed up to the verdict on 12 Jul, and about 5 to 6 days after that then they came out with this new angle precisely to target gullible readers. Before that Xinhua had multiple interviews with ‘experts’ that disagree with the Tribunal but never a claim that it was not UN backed.

Thirdly, UNCLOS Annex VII cases arbitrated under the auspices of the PCA is not that novel. There were/are 12 cases using PCA under UNCLOS. Including one bwt Singapore and Malaysia: Malaysia v. Singapore, instituted in July 2003 and terminated by an award on agreed terms rendered on September 1, 2005 – Land Reclamation by Singapore in and around the Straits of Johor (Malaysia v. Singapore).

And if this is a US/Japan vs China saga, then don’t victimize Asean members, why don’t China go build something nearer America liked in the Hawaii Islands? Or even do it to Japan? And why don’t China sue Philippines using ICJ? Why asking only for bilateral talks only?

 

Obama plays out Asian allies

In China on 28/07/2016 at 2:04 pm

From NYT Dealbook

Why Dropping the Trans-Pacific Partnership May Be a Bad Idea

The pact has few friends left in Washington, but America’s Asian allies may see backing off as a betrayal of Washington’s commitment to the region.

What’s TPP about other than containing China?

It involves 12 countries: the US, Japan, Malaysia, Vietnam, Singapore, Brunei, Australia, New Zealand, Canada, Mexico, Chile and Peru.

The pact aims to deepen economic ties between these nations, slashing tariffs and fostering trade to boost growth.

Member countries are also hoping to foster a closer relationship on economic policies and regulation.

The agreement could create a new single market something like that of the EU.

Which goods and services are affected?

Most goods and services are involved, but not all tariffs – which are taxes on imports – are going to be removed and some will take longer than others. In all, some 18,000 tariffs are affected.

For example, the signatories have said they will either eliminate or reduce tariffs and other restrictive policies from agricultural products and industrial goods.

Tariffs on US manufactured goods and almost all US farm products will go almost immediately once the deal is ratified.

On textiles and clothing, they will be removing all tariffs, but while the US Trade Representative says most tariffs will be removed immediately after the deal is ratified, “tariffs on some sensitive products will be eliminated over longer timeframes as agreed by the TPP Parties”.

On trade in services, they have agreed that free trade would be quite a good thing, and in some areas, they are going to liberalise trade.

The full text of the TPP agreement – which runs to 30 chapters – has now been published and you can read it all here.

http://www.bbc.com/news/business-32498715

 

Americans subtle, PRC leaders cock (cont’d)

In China on 19/07/2016 at 6:46 am

Here I pointed out that China is really dumb … Why did it sign UNCLOS in the first place if it thinks it’s a tua kee like the US?

The US refuses to sign UNCLOS because it refuses to play by the rules of sua kes like the UN and PinoyLand. It reserves the right to do what it thinks is right (Usually this means “Might is right”).

But China did sign up and now refuses to abide by a decision of its highest tribunal. Why so stupid?

Actually the US is even smarter than I tot. Successive US administrations have said that they will abide by UNCLOS despite the US not being a party to it. At the same time, because the US is not bound by it, it can legally, in International law, ignore any ruling it doesn’t like. And unlike China, it is not an outlaw.

How did the US this “Heads I win, tails you lose,” situation?

UNCLOS needs to be ratified by the US Senate for it to be binding on the US.  Treaty ratification requires 2/3 of the senate to vote for approval, and there are more than sufficient senators happy to block ratification because they say UNCLOS violates US hegemony (OK “sovereignty”).

Those who read James Clavell’s Asian Saga novels will know that the Chinese characters were always sneering that the ang mohs were stupid fools to be manipulated despite them lording over the Chinese because they, unlike, the Chinese had the technology to defeat the Chinese in battle, and were not afraid of using violence. Well I’m sure these Chinese characters will be ashamed that the PRC leaders got tricked by the ang mohs.

Btw, the Japanese characters were also sneering at the ang mohs. But the ang mohs have not outsmart them except in making the Japanese buy  in the 1980s US assets at inflated prices; assets bot back a few years later at fire-sale prices.

And looking at the Chinese buying of US assets, one wonders if the Chinese are the victims of another US scam.

.

 

Chinese with Pinoy Muslim blood

In China on 18/07/2016 at 5:13 am

Sulu King Paduka Batara visited China to pay tribute to the emperor in 1417. This was not uncommon for SE Asian rulers of the time. The first sultan of Malacca, a refugee FT from S’pore (He was originally from Sumatra, came here and killed the ruler before fleeing to Malacca), did the same.


Paying tribute in the Chinese tradition was different from that practiced by the Romans and other Westerners. In the West, the weaker side paid up big time.

In the Chinese tradition, tribute was more of an exchange of gifts. While the emperor’s “power” was acknowledged through tribute, in return the emperor gave lavish gifts to show his power. For the Romans and other Westerners, the acceptance of tribute meant that the givers were not going to subject to pillage and plunder. That was the return gift.

Still think Chinese smarter than ang mohs? More civilised certainly.

—————————–

He treated the trip as a holiday, bringing along both his wives.

Paduka died on his way home — in Dezhou City in Shandong province. The emperor gave the king a burial “as formal as for a Chinese king”: no other foreign king were given such an honour. The path to the king’s tomb is marked with the same features as those for Chinese royalty with stone tablets, royal monuments and sculptures. The tomb is preserved as a national historical monument.

Paduka’s two sons – Wenhali and Antulu –remained behind to tend to their father’s tomb. They married Chinese women.

Today, there are descendants of these two Filipino princes in China, with the family names Wen and An. 200 of them live in Dezhou City and close to 4,000 are scattered all over China.

Source: http://www.filipiknow.net/paduka-pahala-ancient-sulu-king-buried-in-china/

Uber raises money to subsidide users

In China, Financial competency, India on 15/07/2016 at 1:28 pm

NYT Dealbook explains Uber’s biz model of sunsidising the rides of Chinese and Indian customers to starve its competitors of biz:

WHY UBER KEEPS RAISING MILLIONS It feels like almost every other week there is a new headline about Uber raising more money, Andrew Ross Sorkin writes in the DealBook column.

If you add up all the money the company has raised since it started in 2009,it is on its way to amassing $15 billion and has a valuation of $68 billion – all while remaining a private company.

When Amazon went public in 1997, it had raised $54 million and was valued at $438 million.

Uber has to finance its efforts to grab market share in China and India, butit is also trying to mark its territory. Every time Uber raises another $1 billion, investors find it less attractive to back one of Uber’s rivals: Didi Chuxing, Lyft, Gett, Halo, Juno. It is a war of attrition, to starve the competition of cash.

Uber’s efforts seem to have had the opposite effect so far, spawning a long list of rivals, but as the smaller competitors run out of cash, venture capitalists should be less inclined to put up more money.

This arms race comes against the backdrop of falling valuations and there is a rush to take the money while it is still available. Bill Gurley, a venture capitalist who has a stake in Uber and sits on its board, warned investors about unicorns seeking funds: “You are not being invited to a special dance, you are being approached because you are the lender of last resort.”

The question is whether investors will look at Uber’s balance sheet and throw up the white flag. It still has formidable competition from Didi, the market leader in China, which just raised $7 billion. And some of the same investors that have backed Uber are also backing Didi, including BlackRock and Tiger Global. (Some may be hoping that Uber might one day merge its Chinese operation with Didi.)

Uber’s most recent fund-raising effort – focused on the leveraged loan market – aims to avoid diluting the current base of shareholders and having to sell itself at an even higher valuation. It will have to pay up for the financing, but if its valuation continues to grow, it would be a bargain compared with the value of the equity. Uber is hoping to sell debt with a yield of 4 or 4.5 percent.

The question between now and the probable initial public offering in a few years is whether it will have starved all of its competitors along the way.

Dumb China, Smart US: Real significance of the ruling

In China on 14/07/2016 at 7:46 am

The UN tribunal in The Hague said there was “no legal basis” for China’s claim to most of the South China Sea laid out on maps by the “nine-dash line”.

Uncle Redbean and the other S’porean friends of China (think the nuts from TRELand) are screaming out their lungs at the unfairness of it. One major point of unhappiness is that the US has not ratified the Convention on the Law of the Sea (UNCLOS), so why should China be bound by it, as the US insists China should be? They got a point if “Might is not right” in international affairs.

The technical answer is that China and the Philippines (and the other countries that have disputes in the area with China) signed the convention and are bound by it because they signed it. The US has no dispute with China and is just being its usual kaypoh hegemonic self.

The snarky answer is that China is really dumb, something that its S’porean admirers refuse to even think about (“The sun shines from China’a ass”, as it does from the asses of Roy, s/o JBJ, Mad Dog Chee etc)). Why did it sign UNCLOS in the first place if it thinks it’s a tua kee like the US?

The US refuses to sign UNCLOS because it refuses to play by the rules of sua kes like the UN and PinoyLand. It reserves the right to do what it thinks is right (Usually this means “Might is right”).

But China did sign up and now refuses to abide by a decision of its highest tribunal. Why so stupid?

After the ruling the Chinese said  China respects “freedom of navigation and over flight enjoyed by all states under international law in the South China Sea” and that it stands ready to ensure “unimpeded access to international shipping lanes”.

This is meaningless because “The Chinese effectively say that freedom of navigation is guaranteed [in the South China Sea] because we grant it. Our position is that freedom of navigation is not for you to grant,” said Kurt Campbell, former assistant secretary of state for East Asia. (Extract from FT)

The tribunal ruled that China has no legal basis to grant anything because there was “no legal basis” for China’s claim to most of the South China Sea laid out on maps by the now-famous “nine-dash line”

Btw, the same is true of the air space in the area.

Map showing the South China Sea

It’s a crinimal under international law. And if it plays rough, the US navy is itching to beat up the Chinks. It has two carrier groups in the area.

The US may also seize the US treasury bonds that the Chinese hold if the navies start shooting at each other? Bonds that the chinese bot so that the US could afford to buy the products of Chinese factories.

Ang mohs supposed to be stupid, Chinese subtle. Looks line the exception is when the Chinese are the leaders from PRC.

But the good news for China is that Obama is a certified wimp as Assad proved. He does all he can to make America weak.

Update at 8.00am: http://www.economist.com/blogs/economist-explains/2016/07/economist-explains-12

 

Training bankers the Chinese way

In Banks, China on 07/07/2016 at 1:26 pm

Chinese Bank Staff Beaten for Poor Performance on Course A motivational trainer in China beat eight rural bank employees with a stick, shaved the heads of the men and cut the hair of the women after they performed poorly on a training weekend.

NYT Dealbook

Facebook: Today S’pore, tom China

In China on 07/07/2016 at 5:19 am

The usual ang moh tua kee suspects are blaming the PAP IB of manipulating Facebook’s algorithms to get anti-PAP stuff taken off Facebook.They could be right in their usual attitudes of blaming the PAP (“PAP is always wrong”)and absolving an ang moh company (“Ang mohs know best”) of blame.

But have they ever tot that Facebook is using S’pore to test software for the China market.

Mark Zuckerberg has made it clear that he’s prepared to kowtow to if they’ll let Facebook in. He says he read president Xi’s writings and has invited China’s chief censor to dinner in his home. He’s even run in Beijing without a face-mask. But all to no avail.

So maybe he’s using Spore to test censorship software? Software that can detect and remove criticism of the PAP here that can be modified to detect and remove criticism of Xi, the CCP and other PRC authorities. Surely such software will allow Facebook into China? The Chinese would want competition for their own internet players, lest they think they are more powerful than the CCP.

Mark Zuckerberg a running dog of Xi and the CCP? Now that would upset the ang moh tua kees here: only PAPies do things for money, not ang moh billionaires from Silicon Valley.

 

Yum gets greedy

In China, Temasek on 01/07/2016 at 10:41 am

Sale of Yum China Stake Said to Be Delayed Potential bidders held off submitting their bids and missed a deadline after Yum Brands sought to impose new terms on the investments, Bloomberg reports, citing people with knowledge of the matter.

Temasek is interested.

2047 financial problem in HK

In Banks, China, Hong Kong, Property on 21/06/2016 at 1:24 pm

From NYT Deal book

Expiration Date on China’s Promises Stokes Unease in Hong Kong Housing Most banks have yet to formulate mortgage policies beyond 2047, when an agreement guaranteeing the city a high degree of autonomy runs out.

I’m sure Uncle Redbean and Goh Meng Seng will scold the banks foer being afraid. They look forward to the day when Chinese “rule of law” prevails in HK.

 

Great collateral to hold

In China on 20/06/2016 at 1:34 pm

NYT Dealbook

To Secure Loans, Chinese Women Supply Perilous Collateral: Nude Photos Women are sending photos of themselves to peer-to-peer lenders, who then sometimes blackmail them when they cannot pay high interest rates, Chinese state news media reported.

China v S’pore: Abusing judicial process

In China on 12/06/2016 at 10:27 am

Here judges and AG only scold the lawyers: witness what happened to Ms Chong and Mr Dodwell. In China when a lawyer annoys the court

A photo showing Wu Liangshu in a ripped shirt and trousers

Mr Wu was allegedly assaulted by three officers inside a courtroom, in front of two judges who rejected his request to file a case in the district court of Nanning.

http://www.bbc.com/news/blogs-china-blog-36466485

This is what S’porean critics of the PAP here but fans of China want Hongkies to accept? They won’t accept this behaviour here (we all wouldn’t), but expect Hongkies to accept this kind of behaviour. Remember that Uncle Redbran and Goh Meng Seng etc advise Hongkies to accept Chinese rule, saying it’s benevolent, while decrying the PAP’s actions here.

IE, next squanderer of our money?

In China, S'pore Inc on 09/06/2016 at 1:27 pm

One Belt, One Road (OBOR) will cause massive losses for investors. According to the FT, Chinese officials privately admit they expect to lose 80 per cent of their investment in Pakistan, 50 per cent in Myanmar and 30 per cent in central Asia.

Well IE Singapore, the state-owned trade development board, has agreed to a partnership with China Construction Bank to finance OBOR projects, with about US$22bn in funding envisaged. The FT reports the US$22bn in funding, not CNA. Wonder why?

CNA reports:

To help Singapore companies tap infrastructure opportunities in China’s “One Belt, One Road” initiative, International Enterprise (IE) Singapore has signed a Memorandum of Understanding (MoU) with the Industrial and Commercial Bank of China (ICBC).

One Belt, One Road (OBOR) is an ambitious plan proposed by Chinese leader Xi Jinping to build land, sea and air routes reaching across the continent and beyond, with the aim of boosting China’s trade and carving out new export markets between Asia and Europe.

Under the agreement, signed at the 2nd RMB Internationalisation Summit on Tuesday (Jun 7), ICBC will provide financing services and look at project structuring to support Singapore companies in OBOR infrastructure projects across Asia.

ICBC will also set up a team in Singapore to provide project financing and related professional services required in OBOR infrastructure investments.

SGX washes dirty underwear in public

In China, Corporate governance on 31/05/2016 at 3:24 pm

SGX recently released a report detailing for the first time the number of listed-companies which have had their stocks suspended from trading for 12 months or more. This report will now be a yearly affair.

Of the 20 companies, 17 are S-chips (companies which have their operations in China but are listed on SGX), two are Indonesian companies listed here, and only one is a local company.

Surprising that SGX washes its dirty underwear in public.

In the late 90s and noughties, SGX became the place for PRC companies to be listed because SGX requirements were less stringent than those of the Hong Kong stock exchange.

Problems with S-chips soon surfaced which included loan defaults and fraud (missing cash, long-overdue receivables, or significant over-payments to suppliers only to have these amounts written-off later.) In 2009, the Singaporean authorities even appealed to their Chinese counterparts to maintain ‘stringent supervision’ over their companies that list on the SGX. I’m sure they were told to F-off: “SGX collects the fees, SGX’s problem”, I’m sure the S’porean authorities were told.

Retail investors lost serious money, something that even the constructive, nation-building media reported.

Yet despite continuing problems with S-chips (missing cash, long-overdue receivables, orsignificant over-payments to suppliers only to have these amounts written-off later still occur), and London’s nasty experience of Chinese listings on AIM (eg London-based directors not hearing from the China-based CEO, or the corporate “chop” going AWOL after the China-based CEO was sacked), SGX’s plans for the future include attracting  more S-chips.

WTF!

We need to attract more PRC visitors

In China, Economy, Tourism on 26/05/2016 at 2:28 pm

 

 

What are the biggest risks to financial markets?

In China, Commodities, Financial competency on 23/05/2016 at 10:52 am

Or “China kua kee”. See that deflation is also a major concern. Commodity price movements are “peanuts”

But notice was missing? Nothing on that gorilla in eoom? The Fed.

Heard this excuse from yr egg seller?

In China, Commodities on 06/05/2016 at 11:40 am

On why the price of eggs are up?

From NYT Dealbook

CHINA LENDING SENDS EGG FUTURES SOARING China has poured hundreds of billions of dollars into its economy in a bid to support growth and a lending deluge has sent money into some unexpected places,Neil Gough reports in DealBook.

At a financial market in Dalian, where investors can place bets on the future productivity of the country’s hens, egg futures have surged by as much as one-third since March. This might be justified if investors were expecting an end to China’s chicken flocks, but the market’s usual participants say the chickens are fine. Indeed, the actual price of eggs in the country’s markets has fallen from a year ago, according to government statistics.

China is the world’s biggest producer of eggs, but it is not clear whether the investment surge in eggs will have an impact on real-world prices, as futures prices can take months to trickle down to the real world. If it subsides, the price of eggs in local markets may not move.

Eggs are not the only commodity out of kilter – domestic prices and trading volumes for steel, garlic, cotton, iron ore and other items have soared despite demand being dampened by China’s economic slowdown.

Economists blame Beijing’s efforts to shore up the economy. China has a tendency to experience investment bubbles when the government steps up spending and lending – previous efforts to bolster growth have created unexplained rises and striking drops in the real estate and stock market.

Government officials increased lending by state-controlled banks and offered other support measures in the first few months of the year as economic growth slowed and longtime drivers like manufacturing and exports showed continued weakness.

In the short term, the lending may be good for global growth, but China risks adding to its already fast-growing pile of debt, which is nearly 300 percent of gross domestic product by some estimates.

It seems that policy makers have set aside their concerns about the debt burden for now, but by delaying a move to wean itself off cheap credit, China may be setting itself up for even more problems.

HoHoHo: Chinese banks

In Banks, China, Temasek on 05/05/2016 at 10:10 am

Mid-sized Industrial Bank reported some of the highest levels of investment receivables in its first-quarter results. The bank held Rmb2tn in investment receivables as of the end of March, 36 per cent of its total assets and equivalent to the size of Singapore’s gross domestic product last year.

(FT)

And remember we hold shares in  three out of the four biggest banks

The suspicion is that Chinese banks are owning up to just as much bad news as they can afford while keeping reported earnings stable. It’s not clear who they are trying to fool. Shares of the big five trade at between 70 and 80 percent of book value, suggesting investors wised up long ago. The latest trickery will only make them more cynical.

http://blogs.reuters.com/breakingviews/2016/04/29/chinese-banks-stealth-clean-up-fools-nobody/

No longer the Apple in Chinese eyes

In China on 04/05/2016 at 10:15 am

Apple iPhone, Once a Status Symbol in China, Loses Its Luster The company’s second-quarter earnings show how hard it can be to keep the attention of the country’s fickle and increasingly hard-to-impress consumers.

Carl Icahn Says He Has Sold Stake in Apple Mr. Icahn says he is concerned the Chinese government could make it difficult for Apple to do business in that country.

From NYT Dealbook

HK gives finger to Soros

In China, Hong Kong on 26/04/2016 at 11:00 am

NYT Dealbook

Stocks have been surging since February, helped by promising corporate earnings in the United States, the recovery of oil prices and indications of restraint on interest rate increases from the Federal Reserve.

There may be question marks over many parts of Hong Kong’s economy, but stocks there seemed to have shrugged all that off. The Hang Seng index rose 1.8 percent on Thursday, while the MSCI Hong Kong Index closed at its highest point since Nov. 24. Optimists say concerns over monetary tightening from the Federal Reserve and the weakening renminbi have eased, and the shares are too cheap to pass up, Bloomberg News reports.

But George Soros is warning markets that China’s financial system is at risk and the rise in credit will be the downfall for world’s second biggest economy.

Speaking at an Asia Society event in New York on Wednesday, Soros said the similarities between the credit markets in China “eerily resemble” to those of the United States in 2007 before the financial crisis.

Recent stimulus packages in China have seen sharp rises in asset prices – namely in the housing and construction sector, but Soros believes these have been fueled by excessive lending to underperforming industries.

“Most of the money that banks are supplying [in China] is needed to keep bad debts and loss-making enterprises alive,” Soros said.

Read more: George Soros Worried about China’s Financial System | Investopedia http://www.investopedia.com/articles/investing/042116/george-soros-worried-about-chinas-financial-system.asp#ixzz46i1T5WmU
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HoHoHo, Soros bearish on China

In Banks, China, Temasek on 25/04/2016 at 10:06 am

After StanChart, thetr are three other Chinese other monkees on Temasek’s back. Remember we have big stakes in three of China’s big 4 banks.

As China’s Growth Slows, Banks Feel the Strain of Bad Debt Chinese lenders feel rising pain from souring loans in troubled industries – even as they face pressure to keep local companies afloat.

NYT Dealbook

Soros bearish on China

George Soros is warning markets that China’s financial system is at risk and the rise in credit will be the downfall for world’s second biggest economy.

Speaking at an Asia Society event in New York on Wednesday, Soros said the similarities between the credit markets in China “eerily resemble” to those of the United States in 2007 before the financial crisis.

Recent stimulus packages in China have seen sharp rises in asset prices – namely in the housing and construction sector, but Soros believes these have been fueled by excessive lending to underperforming industries.

“Most of the money that banks are supplying [in China] is needed to keep bad debts and loss-making enterprises alive,” Soros said.

Read more: George Soros Worried about China’s Financial System | Investopedia http://www.investopedia.com/articles/investing/042116/george-soros-worried-about-chinas-financial-system.asp#ixzz46i1T5WmU
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Chinese are yum sanging again

In China on 23/04/2016 at 1:15 pm

with cognac.

HSBC: End in sight

In Banks, China, Hong Kong on 20/04/2016 at 10:23 am

HSBC Chief Said to Leave in Two Years Stuart Gulliver, HSBC’s chief executive, will step down in two years, and the bank has already started compiling a list of possible internal successors, The Sunday Times reports, citing senior sources.

NYT Dealbook

Naving him as CEO since 3011 is like us kanna Mah Bow Tan and Raymond Lim and Taacob at the same time.

Here’s an interesting tot from FT reader on executive salaries

“Chief executives are agents for owners, the shareholders. They should be treated the same way as football club managers. Your team performs badlly and you are promptly sacked. Preferably they should have only one or two year’s contracts, to be ended on expiry without compensation.”
By Brian Reading on Four ways to bring galactic executive pay back down to earth

 

China: That big meh?

In China on 02/04/2016 at 4:16 pm

Did you know?

The distance from Kashgar, an oasis city in Xinjiang near China’s central Asian frontier, to Berlin is only about 400 miles farther as the crow flies than the distance from Kashgar to Shanghai. (FT)

—  Chongqing covers an area the size of Scotland. Around 12m of its residents are villagers; another 18m live in the core city and other widely scattered towns. (Economist)

Not the new Berkshire

In China, Corporate governance on 01/04/2016 at 11:19 am

Anbang’s owner CV in managing money: he maeeied into Deng Xiaoping’s family, marrting a granddaughter. But he’s no Buffett

From NYT Dealbook:

THE UNSETTLING ACQUISITIVENESS OF ANBANG Anbang’s spending spree is a sign that deal-making has gone awry, Steven Davidoff Solomon writes in the Deal Professor column.

Strategic bidders typically triumph over financial bidders in takeover battles because the strategic buyer is an operating company and can almost always pay more. The strategic buyer can expect to earn more through cost savings. The last time financial buyers regularly beat strategic buyers was before the financial crisis as the credit bubble drove a huge feeding frenzy in private equity.

Anbang appears to be trying to build itself into a conglomerate along the lines of Berkshire Hathaway and, like Berkshire, is using insurance reserves to buy assets in businesses such as banking and real estate. It spent over $2 billion on insurers in Belgium and South Korea in 2015.

The funding comes from selling high-yield investment products to Chinese citizens. If this type of company existed in the United States, there would be an outcry, Mr. Davidoff Solomon writes. An insurance company that appears out of nowhere to become a giant after 10 years before buying noncore assets abundantly? We’ve seen this story before and it typically doesn’t end well.

And who would manage Starwood? None of the investors in Anbang’s consortium have much hotel experience. Anbang could keep on the Starwood team, but Anbang has already had trouble managing its new subsidiaries. The management team at its Belgian acquisition left after a few months amid complaints about Anbang’s management style.

Anbang may already have pushed too far. China’s insurance regulator is set to reject its takeover plans because the deals would break rules banning insurers from investing more than 15 percent of their assets abroad, according to the financial magazine Caixin. The Financial Timesreported that people close to the deal played down the report, saying that Anbang believes the regulator would only become involved if the hotel chain purchases were funded with insurance premiums.

Nonetheless, if Anbang were to pursue the deals, there remains the question of whether Anbang could capably run Starwood. There is too much risk here and the deal raises issues about takeovers and the responsibility to look out for the company itself.

Big China deal here

In China, Commodities on 30/03/2016 at 10:20 am

Sinochem Plans to Create World’s Largest Listed Rubber Company here in S’pore. In the latest example of China’s hunt for global commodities assets, the state-owned Sinochem International made an offer to buy Halcyon Agri that valued the Singapore-based company at 450 million Singapore dollars, or about US$328.4 million. NYT Dealbook

Reuters reports

Sinochem International Corp said late Sunday (March 27) that it has offered to acquire a 30.07 per cent stake in Halcyon Agri for S$0.75 a share. The all-cash deal will be worth at least S$240 million.

 Sinochem International will also make a mandatory general offer at the same price to all Halcyon shareholders.

Subsequently, Halcyon will make an offer for Singapore-based natural rubber producer GMG Global Ltd — in which Sinochem International has a 51 per cent stake — at an exchange ratio of 0.9333 Halcyon share for each GMG Global share.

Halcyon Agri will also buy Sinochem’s natural rubber processing assets in China and Malaysia and trading businesses, the companies said in a joint statement on Monday.

After the transactions are complete, Sinochem will become the majority shareholder of Halcyon Agri, which will be the holding company of the expanded group.

The deals are expected to be completed by the end of the third quarter of 2016.

The companies said the deal would create the world’s largest natural rubber supply chain manager with combined revenue exceeding US$2.3 billion (S$3.2 billion).

The companies said in January that they had been in talks over the potential deal.

Trading was halted in shares of Halcyon, which has a market value of US$320 million, and in GMG, valued at US$345 million.

Halcyon, which requested on Monday for the trading halt to lifted, last traded at S$0.73, while GMG was at S$0.615.

HoHoHo: Chinese banks have more problems

In Banks, China, Temasek on 16/03/2016 at 9:29 am

Funny that we don’t hear much in ST nowadays that Temasek has big, big stakes in Chinese banks. http://www.temasek.com.sg/portfolio/portfolio_highlights/majorportfoliocompanies.

Last yr, ST was boasting

http://www.straitstimes.com/business/companies-markets/temasek-raises-stake-in-chinese-bank-icbc

http://www.straitstimes.com/business/temasek-raises-stake-in-icbc-in-vote-of-confidence-after-rout

But maybe, ST’s cottoned on that Chinese banks have problems, big problems

NYT Dealbook reports

“CHINESE BANKS SWAP DEBT FOR EQUITY A new approach to managing China’s corporate debt burden offers temporary relief for banks, but spells difficulties for the country’s economy, Keith Bradsher reports in DealBook.

Deeply troubled companies are using stock to pay for overdue loans. On Thursday, a heavily indebted Chinese shipbuilder disclosed that it would issue equity to its creditors, instead of repaying $2.17 billion in bank loans.

Banks with stakes in indebted companies are likely to be even more reluctant to shut them down, leaving China with enormous overcapacity in sectors like shipbuilding, steel and cement, hampering growth for years to come.

The strategy has advantages – it would allow companies to cut their debt loads. This could help their credit profiles and keep their businesses running. Bank loan books will also appear healthier, since they can reduce the amount of past-due loans.

However, it could make problems more pernicious as the companies are putting off hard choices like laying off employees or closing operations.

It is still unclear how widespread the strategy has come. The shipbuilder, China Huarong Energy Company, had to disclose the move only because it is listed on the Hong Kong stock market. It is one of dozens of Chinese shipbuilders in financial distress as prices for new ships worldwide have halved in the last two years.”

And there’s another related problem

http://blogs.reuters.com/breakingviews/2016/03/11/china-debt-swap-could-leave-banks-in-capital-hole/

Relax World, All be be revealed on Sat

In China on 04/03/2016 at 6:31 am

The government is trying to use fiscal stimulus to bridge a gap in economic growth as China’s manufacturing and export sectors cool and consumer spending has not yet caught up to replace them. The big question about the stimulus program is whether it will involve building more steel mills and coal-fired power plants, which are already in surplus but are part of politically powerful industries, or whether the government will take steps to help consumer spending, like lowering value-added taxes. – Keith Bradsher

NYT Dealbook

Background

China’s annual work report and the finance ministry’s draft budget will be presented in Beijing. Prime Minister Li Keqiang of China is scheduled to present his government’s annual work report to the National People’s Congress in Beijing on Saturday. The report will be accompanied by a draft budget from the finance ministry. Zhu Guangyao, a vice minister of finance, said on Thursday that the budget would call for a widening of the deficit from 2.3 percent last year.

 

TOXIC LOANS WEIGH ON GLOBAL GROWTH

In China, Uncategorized on 01/03/2016 at 1:40 pm

Recently, I posted this on how S’poreans’ debt and leverage compared to their counterparts in region. All the countries look bad but Some look worse than others: S’pore falls into the latter sadly with the serious possibility of loans turning toxic i.e. bad.

Globally NYT’s Dealbook explains why toxic loans are bad news

Beneath the surface of the global financial system lurks a multitrillion-dollar problem that could sap the strength of economies for years to come, Peter Eavis reports in DealBook.

Bad debts have been a drag on economic activity since 2008, but the threat they pose has worsened in recent months. China is the biggest concern, with analysts estimating that its troubled credit could exceed $5 trillion – equivalent to half the country’s annual economic output.

If Chinese banks continue to pull back on lending, the economy may slow even more, further harming countries that have relied on China for growth.

Toxic debt also hangs over countries where governments and central banks have unleashed aggressive stimulus policies in recent years. In the United States, energy companies are struggling to pay off the cheap money that they borrowed to pile into the shale boom.

In Europe, analysts say bad loans total more than $1 trillion and banks are still burdened with defaulted loans. Bad loans are also on the rise at Brazil’s biggest banks.

The looming question for the global economy is how China might deal with its pool of bad debts. After a previous credit boom in the 1990s, the Chinese government provided financial support to help clean up the country’s banks, but the cost of a similar operation today would be dauntingly high.

“My sense is that the Chinese policy makers seem like deer in the headlights,” said Christopher Balding, an associate professor at the HSBC School of Business at Peking University. “They really don’t know what to do.”

More cracks in Noble Hse’s foundations

In China, Commodities, Corporate governance on 05/02/2016 at 3:23 pm

Look’s like the Yr of the Monkey (starting on Monday) is not going to be good for Noble. I had posted that Monkey, the trickster, could be gd news for the trader.

Two things just went wrong and the effects will be felt in the new year especially as it is trying to refinance almost US$2.2bn of debt bank with bankers concerned about more asset write-offs in the light of a US$300m write-off.

And these two events make it harder has to find a strategic investor to help srengthsn its balance sheet.

First, Nyrstar, the world’s largest producer of zinc, is ending its agreement to supply Noble Group one year early. This deals another a blow to the embattled commodities trader.

And S&P has downgraded fellow trader’s Glencore’s debt to one notch above junk. Noble followed Glencore into morphing from a trader to becoming a mining trader.

Double confirm” Noble Houses’s acoounting is ignoble

In China, Commodities, Corporate governance on 03/02/2016 at 6:20 am

The planned sale of Noble Agri to China National Cereals, Oils and Foodstuffs Corporation for US$750 million was backed by 90% of shareholders who voted at a special meeting in Singapore, last week.

But this means a U$500m writedown on the US$1.3bn valuation ascribed to the Noble Agri stake in Noble’s accounts: seemingly vindicating claims that its accounting is very aggresive. :

Well we’ll soon know what banks think about Noble’s accounting as it’s in talks about refinancing its credit lines. Banks have been pretty accomodative so far but this write-off is worrying them about other potential write-offs in asset values.

It’s online deractor says its claims of malpractice by Noble have been vindicated. Iceberg Research has claimed the company inflated asset values and booked profits on deals long before receiving any cash from the transactions. Mgt rubbished the claims, even getting an int’l accounting firm, PwC (I think) to say its latter practice was halal (kosher).

Bue bye Brics, Hello Tick

In China, India on 01/02/2016 at 4:36 pm

Tech-heavy Taiwan, India, China and Korea are the new darlings of the fund mgrs managing emerging mkts funds. Brazil, Russia and South Africa are history. They produce now unwanted commodities.

HOHONOHO: StanChart’s expected results

In Banks, China, Commodities, Emerging markets, Temasek on 26/01/2016 at 4:24 am

StanChart which suffered the biggest share price falls this year, will announce its results on February 23. Analysts expect it to report an 85%  fall in earnings per share, FT reports.

Last yr it was the second worse performer on FT100, down 47%, I think.

One analyst says there is debate that its business model is fundamentally broken. Another says that its strategic review released in Nov shows that it’s a collection of biz, none of whch cover their cost of capital.

Whatever China and other emerging mkts are in trouble and StanChart is an emerging markets bank. Until these mkts recover, StanChart can only cut costs (Sack more staff from Little India Marina Bay? Move jobs from London and S’pore?) and be more efficient.

HoHoNoHo

Updated at 5.00am

Chart: Troubled EM debt at record high

When Indians are silent, not triumphant

In China, Environment, India on 23/01/2016 at 5:05 am

India loves to blow its trumpet whenever it “beats” China. So it’s strange that it’s so silent when it trashes China.

 

 

China cold catches US?

In China on 22/01/2016 at 4:18 am

This appeared two weeks ago week, but still timely. From NYT’s Dealbbok

Some analysts and economists say they are less optimistic that the United States will remain unscathed by China’s struggles, Peter Eavis reports in DealBook. Although China’s official growth figures have long been questioned, investors are increasingly worried that the Chinese authorities’ handling of the country’s challenges could hurt other markets too.

Fears that the United States economy might sag could prompt investors to clamor for the Fed to hold off increasing interest rates, further stoking uncertainty.

And this from an Economist blog, explains how sentiment can affect reality

whether the market gyrations are rooted firmly in fundamentals or not, they could themselves be a source of economic instability. Falling asset prices could put a chill on investment or squeeze consumer spending, as households feel less wealthy. Falling currencies and rising bond yields in stressed economies increase the pressure on strained borrowers, raising the odds of some sort of destabilising credit event. Emerging economies might also face pressure to raise interest rates to slow currency depreciation. At the same time, rising currencies in safe-haven economies reduce the competitiveness of exporters and drain off demand. And anywhere and everywhere, a sense of economic foreboding could depress confidence. A recession, after all, is nothing more than a rut of self-ratifying pessimism.

Not every market swoon knocks an affected economy into that sort of rut. 

HoHoHo, PM must be proud

In Banks, China, Temasek on 19/01/2016 at 7:03 am

DBS, StanChart kanna mark by China for gaming the Chinese FX regome:

FT reported last week:

The latest tightening comes after the central bank temporarily suspended some foreign banks in China, including Standard Chartered, Deutsche Bank and Singapore’s DBS, from conducting certain foreign exchange transactions designed to arbitrage the gap between the onshore and offshore renminbi exchange rates.

HSBC is really an old friend of China. It may be the bank of choice for Chaqco and other Mexican drug lords, but it doesn’t game PRC regulations.

Size of DPP win in Taiwan, pictorially depicted

In China on 18/01/2016 at 6:32 am

Noble’s luck will turn in the Monkey yr?

In Accounting, China, Commodities, Corporate governance on 15/01/2016 at 5:11 am

The Noble House, already under pressure in a weak commodities market when blogger Iceberg Research alleged in Feb last yr that the company was inflating its assets by billions of dollars by not fairly representing the value of its commodity contracts. The company has rejected the claims. And gor PWC to bless its methodology forgetting that int’l accounting firms have reputations juz better (slightly) than tabloid journalists and second-hand car salesmen.

But until now, the bad news never stopped despite the effirts of the CEO and the share-buying chairman and founder. Fitch Ratings affirmed Noble Group’s BBB-minus rating with a stable outlook yesterday (Jan 14), remaining the only agency to assign this nvestment-grade rating on Asia’s biggest commodities trader.

Fitch said the decision followed Noble’s improved balance sheet and sufficient liquidity position following its stake sale in Noble Agri, its pledge to cut working capital needs for its metals unit, and continued cash flow generation from its operations,

Both S&P and Moody’s had cut Noble’s rating to junk, sending its bonds and stocks tumbling. Its stock is trading at the lowest since October 2008.

Its credit default swaps contracts trade on an upfront basis (Pay before you bet, credit not allowed) and its CDS curve is inverted, an indication investors consider it a stressed credit. All this makes its bankers keep their fingers on the recall button. For Noble, no credit, no play.

But new yr, new luck? And the yr of the Monkey is coming on 8 Feb. Should be a gd yr for traders.

Maybe by the end of the yr of the monkey the chairman who has been buying shares will have the last laugh. As will the CEO. But then in the Chinese paneheon of deities, the Monkey King is the trickster. So who knows? Ask Buddha, the only deity who can defeat him.

Nmm. I’ll go to the Chinese temple on Tembling Road on Feb 8 and toss the fortune stocks on whether to buy Noble.

Opdate at 6.45am: Maybe it should try to refinance its borrowings early. Glencore juz did this to show its banks are onboard.

A stock to watch.

S can fall 30% more?

In China, Currencies, Economy on 12/01/2016 at 4:41 am

chart: Asia currencies

From NYT’s Dealbook

China’s decision to push the value of its currency lower has opened a new front of worry for global investors: a potential wave of currency devaluations among the so-called Asian tigers — South Korea, Singapore and Taiwan.

Such an outcome, a number of foreign exchange specialists say, would put a further damper on global growth expectations, which already are being revised downward as China’s once-booming economy retrenches.

The dollar’s strong run recently — together with the plunge in the price of oil and other commodities — has damaged fragile emerging-market economies like Brazil, Turkey and South Africa; the dollar has risen 130 percent against the Brazilian real and the South African rand since mid-2011.

The currencies of fast-growing Asian countries, including India, have largely been insulated, thanks to their better-performing economies and their ability to stockpile large foreign currency reserve positions.

… countries have some of the most overvalued exchange rates on the planet,” said Julian Brigden of Macro Intelligence 2 Partners, an independent research firm based in Vail, Colo., that advises large money management firms on global investment themes.

When economies have high exchange rates, their exports tend to lose market share compared with countries with cheaper currencies. And when that happens, countries that depend on foreign trade will frequently take steps to push their currencies lower.

But having a strong currency at a time when manufacturing competitors like Japan and China have weaker currencies leads to a sharp fall in exports, which have been the economic lifeblood of these countries for decades.

Already, global money managers have begun to pull money out of some of these Asian markets.

The Korean won and the Singapore dollar are down 5 percent, while the Taiwan dollar has lost 7 percent over the last six months. Even in India, perhaps the most popular emerging market among global investors, the currency has given ground, about 7 percent, against the United States dollar.

..

“I expect these currencies to fall by another 20 or 30 percent,” said Raoul Pal, an independent financial analyst and the founder of Real Vision TV, a media venture where sophisticated investors discuss their views on the market. “These export figures are a big deal — it’s a huge shrinkage in the dollar-based economy, as not enough people are buying goods.”

For quite some time, Mr. Pal has been promoting an investment thesis that the relentless rise of the dollar — since mid-2011, the dollar is up 35 percent against a broad basket of currencies — will have a deflationary effect on the global economy as export-driven economies enter into a series of competitive devaluations to protect crucial export sectors.

“This is not just a commodity story,” he said. “It’s a global trade story.”

Exchange-rate volatility in this part of the world will not take the heat off other weak currencies. In addition to usual examples like Turkey, Brazil and South Africa, investors expect commodity exporters like Indonesia, Chile and Colombia to take a big hit, as the prices for their products continue to fall.

The final frontier in this respect would be the pegged currencies in the Middle East, especially the Saudi Arabian riyal, which is tightly linked to the dollar.

The other problem with downward trending currencies in South Korea, Taiwan and Singapore is that these countries, like just about all emerging market economies, have taken advantage of a rock-bottom interest rate environment to issue billions of dollars in dollar-denominated corporate debt to finance capital investments.

Foreign investors were attracted to the high yields and especially the stable currencies and bought them in huge quantities. Now, with the currencies starting to wobble, dollar-based investors have less incentive to hold on to them, and they will do what they have been doing with their Brazilian, Turkish and South African bonds — get rid of them as quickly as possible.

“There is a lot of underlying investor exposure in these markets,” said Mr. Brigden, the independent research analyst. “I think if things continue to get worse, we are going to move to liquidation stage.”

Soros is v. gloomy/ 2008 or 1998

In China, Financial competency on 09/01/2016 at 2:25 pm

George Soros is more gloomy, telling an economic forum in Sri Lanka:

“China has a major adjustment problem. I would say it amounts to a crisis. When I look at the financial markets there is a serious challenge which reminds me of the crisis we had in 2008.”

BBC Online

More like 1998 than 2008

If China devalues, then other Asian nations will come under pressure to follow suit, for fear of losing competitive position. That will trigger worries about those Asian companies that have borrowed in dollars. there could be banking issues in Asia.

This is a potentially worrying scenario. Whether 2008 is the right parallel is another matter. If the bearish case does come true, then it sounds more like 1998 when a round of Asian devaluations was triggered by the realisation that growth had been fuelled by speculation. Western economies did manage to overcome that crisis. The real worry is that emerging countries are a lot more important for the global economy than they were back then.

Economist’s Buttonwood

Take yr pick.

HoHoHo, StanChart’s a nightmare BUT don’t panic

In Banks, China, Temasek on 06/01/2016 at 1:09 pm

StanChart yesterday fell a further 1.7%, although it remained off the previous session’s intraday low.

In 2015, it was the second worst performer in the UK’s FT 100 index, falling 47%

From FT

Matthew Sutherland, investment director for Asian equities at Fidelity International said wild rides in regional stocks are likely to be the norm for 2016. “We’d better get used to it,” he said.

It’s important that investors don’t panic on weak days, but continue to take a disciplined and calm approach to investing. This is particularly true with regard to China. Yes, China’s growth is slowing, but the quality of that growth (in other words more consumption and less debt-fuelled investment) is far more important, and the difficulties are more than discounted in cheap valuations.

Accentuating the positive, he adds:

The really good thing is that the Chinese stock markets are very broad, which enables us to find lots of great bottom-up ideas irrespective of the macro environment.

Coming back to StanChart, on 15th Dec it led a London market rally on after JPMorgan Cazenove argued that the bank is at least 50 per cent undervalued versus peers.

Capital concerns have been addressed by StanChart’s $5.2bn rights issue, said JPMorgan, which was joint co-ordinator and underwriter to the cash call.

It forecast that, even if loan defaults return to the levels of the 1997 Asian crisis, StanChart’s capital buffer will remain within management’s target range.

Downside protection comes from StanChart’s new strategy to shrink risk-weighted assets by a third and move away from low-return business, with rising US interest rates providing a tailwind, JPMorgan said.

Yet the shares are trading at half their 2016 tangible net asset value and are on less than 10 times next year’s earnings, falling to just five times earnings in 2018, it forecast.

JPMorgan repeated an 870p target price on StanChart, which gained 6.4 per cent to 512.7p.

(FT)

 

Never a gd idea to try to play both sides

In China on 22/12/2015 at 12:48 pm

In the u/m story, the journalist implies that the authorities were wrong to investigate Citic for short-selling. Truth is that it’s never a good idea to Run with the hares, and hunt with the hounds”. Got to choose. Most probably senior mgt was clueless about what the sales team selling to ang mohs.

Citic Short-Selling Offer to Hedge Funds Led Police to Its DoorAn initial police investigation of Citic Securities focused on whether the firm was giving foreigners a way to short stocks on the so-called A-shares market in China at the same time that it was engaged in government-sponsored plans to prop up the market, Bloomberg News reports, citing a person familiar with the events.

(NYT Dealbook)

China’s newest, most exclusive club

In China on 14/12/2015 at 7:30 am

Being called by the police to assist investigations:

NYR Dealbook

CHAIRMAN OF FOSUN GROUP SAID TO BE MISSING The billionaire chairman at one of China’s biggest private conglomerates is reportedly missing as the authorities are intensifying their scrutiny of the finance sector, Michael Forsythe reports in DealBook.

The group’s listed arm, Fosun International, trades in Hong Kong and itsshares were suspended on Friday with no explanation or announcements from the company.

The billionaire, Guo Guangchang, often described as “China’s Warren Buffett,” may have been taken away by police, either under arrest or in custody for questioning, the financial magazine Caixin reported, citing people familiar with the matter.

Mr. Guo was allowed to make phone calls, but his personal freedom was restricted, The South China Morning Post reports, citing people familiar with the matter who also said the company was expected to make a statement after 6 a.m. Eastern time.

Fosun has been on a spending spree in the finance and insurance sectors in recent years and in September raised $1.5 billion to finance further acquisitions. It also owns the Club Med chain of resorts and a stake in Cirque du Soleil and bought Chase Manhattan Plaza in New York.

Mr. Guo’s disappearance is the latest in a series of mysterious episodes surrounding an anticorruption investigation into the financial industry, which came after a summer of volatility in Chinese markets.

A reporter confessed on national television to spreading rumors in an article about the stock market. Top executives at brokerage firms and several officials at the China’s securities regulator have been detained.

Last month, Yim Fung, the chairman of Guotai Junan International, the Hong Kong unit of one of China’s biggest brokerage firms, disappeared. On Sunday, Citic Securities, the biggest brokerage firm in China, said it was unable to get in touch with two top executives overseeing investment banking, Chen Jun and Yan Jianlin.

Several top executives at Citic Securities have been detained since August. The authorities are investigating company officers, including the president Cheng Boming, on suspicion of insider trading.

Li Yifei, the China chairwoman for the Man Group, one of the world’s biggest hedge funds, returned to work after meeting with the authorities. Xu Xiang, a hedge fund manager, was apprehended by the police after a car chase. The government said he was suspected of insider trading.

China will not be happy with S’pore

In China on 08/12/2015 at 2:03 pm

The United States has said it will deploy a US P-8 Poseidon spy plane to Singapore for the first time.

It is the latest in a series of US military actions seen as a response to China’s increasingly assertive claims over territory in the South China Sea.

The Boeing plane will be based in Singapore for a week.

American P-8s already operate from Japan and the Philippines, and surveillance flights have also taken off from nearby Malaysia.

http://www.bbc.com/news/world-asia-35036220

China’s ‘One Belt One Road’ good for S’pore

In China, Economy on 21/11/2015 at 1:12 pm

Others see a spurt of investment into regions that are already close trading partners with China. Singapore, the trading hub for Southeast Asia, could capture some of the flow.

“The country’s role as a major business, financial and trade hub for the Asia Pacific region will only be enhanced,” says Stuart Fuller of law firm King & Wood Mallesons.

(FT)

Related posts: Chinese pearls in Indonesia

S’pore’s balancing act

S’pore faces tricky Sino-US balancing act

In China, Malaysia on 13/11/2015 at 4:53 am

“Malaysia faces tricky Sino-US balancing act”* was the headline of an ST story on an inside last Friday.

Actually the headline should be changed to “S’pore” and put on the front page to commemorate president Xi’s visit.

After all, we are a forward base for the US navy in all but name what with “Two US Navy (USN) Littoral Combat Ships (LCSs) will be forward deployed to Singapore in 2016, a senior USN official has confirmed.” http://www.janes.com/article/50936/usn-confirms-2016-as-starting-point-for-deploying-two-littoral-combat-ships-to-singapore

And we know don’t we that the US navy intends to challenge China’s claims that the South China Sea is China’s?

And we know that both the US and China are big trading and investment partners od S’pore.

——————————-

*Text: As the United States and Japan tussled with China over the wording of a concluding statement at an Asian security meeting in Kuala Lumpur this week, caught in the middle was host Malaysia.

Plans for a joint statement were eventually dropped by the Malaysian government due to disagreements over the disputed South China Sea. US and Japanese officials wanted to address Beijing’s island- building. Chinese officials resisted.

The episode illustrates the thin line Malaysia and other smaller South-east Asian states must walk in balancing ties with China and the US, especially since a US warship last week challenged the territorial limits around one of China’s man-made islands in the Spratly archipelago.

Malaysia’s biggest trading partner is China, according to Malaysian government statistics and, in contrast to other countries with competing claims to the South China Sea, such as the Philippines and Vietnam, it has typically played down concerns over China’s expanding military reach.

Nevertheless, US defence officials say Malaysia, along with other states in the region, has sought a greater US military presence to counter Chinese assertiveness in the South China Sea.

“We see the increased demand… really across the board in the region,” said a senior US defence official. “Malaysia’s a good example.”

Yesterday, US Defence Secretary Ashton Carter visited the aircraft carrier USS Theodore Roosevelt in the South China Sea, accompanied by Malaysian Defence Minister Hishammuddin Hussein, as he wrapped up a three-day stay in Kuala Lumpur. Mr Carter called the ship’s presence “a sign of the critical role that US military power plays in what is a very consequential region for the American future”.

US Marines and their Malaysian counterparts will also hold a joint amphibious training exercise next week in eastern Malaysia.

Malaysia has a long-standing arrangement to service and supply US military ships and aircraft as they pass through the region, making them frequent visitors to its ports. The number of US ship visits has steadily risen, from a handful per year in the early 2000s to more than 30 visits in 2011, according to the Congressional Research Service.

Datuk Seri Hishammuddin this week highlighted the quandary for smaller states, saying he hoped nations outside the region would not raise tensions. “We will continue to engage China. We will continue to engage the US,” he said. “The fact that we are able to engage them and actually look at the reality… That is a clear message to the major powers out there.”

US and Western diplomats say they have been keen for several years for Malaysia to pay closer attention to mounting security challenges in the region, particularly from China. Chinese warships have staged regular patrols off James Shoal off the Malaysian state of Sarawak on the island of Borneo.

Diplomats and analysts who have viewed satellite images say Chinese coast guard ships now also maintain a semi-permanent presence at South Luconia Shoals, to the north of James Shoal.

“Malaysia’s role and importance in broader security issues, particularly the South China Sea, is only going to grow more strategic,” one Western diplomat said. “It is a matter of pushing and nudging them into doing the right thing, rather than expecting them to take a lead and confront China.”

REUTERS, AGENCE FRANCE-PRESSE

China really loves us! No BS!

In China, Economy on 07/11/2015 at 1:36 pm

It sends us its money. Money talks, BS walks.

As at end 2013, we were the third largest destination for China’s FDI.

Ah Loong must be doing something right, right?

Chart: China-UK M&A and FDI

 

Chinese pearls in Indonesia

In China, Indonesia, Infrastructure on 31/10/2015 at 5:06 am

China Communications Constructionis currently in the process of finalising a $2.5bn deal with the Indonesia Port Corporation to upgrade 30 ports in East Indonesia 70% financed by the China Dev Bank

 

Chinese slowdown? What slowdown?

In China, Temasek on 29/10/2015 at 1:46 pm

Still buying iPhones as if there’s no tomrrow. If only HoHoHo had bot apple instead of Chinese banks. (((((

Apple is becoming a tech company with Chinese characteristics. About 24 percent of the $51.5 billion of sales booked in its latest quarter – and two-thirds of revenue growth over the last year – came from China. Apple’s new iPhone installment plan could bump this up even further. Chief Executive Tim Cook’s bet on the Middle Kingdom is yielding impressive dividends, but carries existential political risks for the $675 billion company.

The iPhone now accounts for 63 percent of Apple sales, and a greater chunk of profit. Investors and observers will have to wait for next quarter to see exactly how well its newest wares are doing. They were only on the market for a slice of the quarter. But Apple’s figures do show its reliance on overseas sales, and in particular China. The company sold $12.5 billion worth of goods in the country, which is nearly double the amount it booked last year. Most of that demand was for its phones.

The number of iPhones it sells in China could grow over the next few years, thanks to a program Apple recently rolled out. Mobile operators in the United States and in some other markets have moved to selling phones through monthly installment plans. Apple has joined them. Customers pay over two years, but can upgrade after one year if they sign a new two-year contract and give their old phone back to Apple. Many of these devices will end up in China.

The country has long been a big market for refurbished phones. Around 40 million iPhones were already on China Mobile’s network before the operator agreed to sell them to users in 2013. Apple can now sell refurbished phones. They are perfect for China, which is a big market for cheaper smartphones.

http://blogs.reuters.com/breakingviews/2015/10/28/apple-a-tech-company-with-chinese-characteristics/

Related article

it’s fanciful to think that the performance of a handful of companies could serve as a reliable guide to the habits of 1.4 billion people. “Bellwether” originally described a sheep which leads the rest of the flock. That’s an image investors should probably avoid.

http://blogs.reuters.com/breakingviews/2015/10/28/searching-for-china-consumer-bellwethers-is-futile/

“Sity wonton, United nil.”

In China, Footie on 20/10/2015 at 7:59 am

The Sun on Sunday focuses on her husband, or at least his football preferences. The paper claims President Xi has had a “dream Manchester United trip thwarted” by council chiefs who’ve arranged a tour of local rivals Manchester City’s Etihad Stadium. “Council leader Sir Richard Leese is an avid City fan and lobbied Downing Street for the switch,” it reports, before adding that the visit will take in a redevelopment site around the stadium.

As the paper puts it, the score was “City wonton, United nil.”

(Think Stomp and New Paper when thinking of Sun on Sunday)

The FT reports that the real reason is that members of royal family of Abu Dhabi own City, so Xi favours them. btw, MU is owned by American Jews who are 100% behind Israel.

Chinese data is fuzzy

In China on 18/10/2015 at 2:38 pm

(Update on 19 Oct at 10,30am: China’s economy grew faster than expected in the third quarter at 6.9%, the slowest since 2009)

Tomorrow China will release its latest GDP data. China is predicting growth of “around” 7% for this year

FT reported that said last month a aspokesman for the Chinese Bureau of Statistics said that he believed growth as low as 6.5% could be considered as “around” 7%

Noble House looking for new sucker?

In China, Commodities on 14/10/2015 at 1:19 pm

FT reported gossip during LME Week* in London that Noble could be close to a deal with a strategic investor.

It’s controlling shareholder is a Chinese SOE

——

*The biggest annual gathering of the metals and mining industry

HoHoHo: Relying on mgt incompetence at StanChart

In Banks, China, Emerging markets, India, Temasek on 11/10/2015 at 6:22 am

Standard Chartered has to hope that a quarter of its top brass really aren’t very good at their jobs. That is the portion of the UK-listed emerging markets bank’s 4,000 most senior staff who will find themselves surplus to requirements, Reuters reported on Oct. 9. Although StanChart could gain from a big cull, it’s a risky move.

http://blogs.reuters.com/breakingviews/2015/10/09/stanchart-takes-bet-on-management-incompetence/

So should HoHoHo and us S’poreans.

Will ang mohs or Indians get terminated? Not many Chinese to sack despite 50% of revenues related to China business. (Related post: StanChart is Little India)

More for HoHoHo to ponder when she returns to work

StanChart’s shares have underperformed the European peer group by 30 percentage points this year. The bank’s 7.7 percent return on equity in 2014 was unacceptable, especially as it was earned on a relatively low 10.7 percent Basel III capital ratio.

— Some bearish analysts reckon Winters should completely cover the bank’s $8.7 billion of non-performing loans to better match Asian peers like DBS. That would cost $4 billion, more than StanChart’s expected $3.1 billion of forecast 2015 pre-tax profit.

HoHoHo: StanChart’s capital shortfall

In Banks, China, Emerging markets, Temasek on 09/10/2015 at 1:08 pm

FT reported earlier today:

Goldman Sachs analysts predicted on Thursday that StanChart would face an estimated capital shortfall of $4bn in the Bank of England’s stress tests, which measure how the lender would fare in an emerging markets crisis.
But Goldman estimated that StanChart could cover this shortfall by selling its stakes in several Asian lenders and exiting low-returning clients and businesses, such as its smaller retail branch networks.

Related post: Why Little India now includes Marina Bay

But let’s be fair: When emerging mkts and commodities (StanChart has high levels of lending to the crumbling commodities sector) were fashionable 9lucrative) it was the right bank to be invested in. FYI according to Nomura 50% of its revenue is related to China.

Given  the exposure to China by HoHo Ho and GIC, ttme for Ah Loong to call Xi and offer him advice on how to fix the Chinese economy? Can lend him Tharman who is lauded in int’l circles.

Noble House: Funny this

In China, Commodities, Corporate governance, Emerging markets on 08/10/2015 at 1:38 pm

Noble House is HQed in HK, and listed in S’pore. But its new head of internal audit is based in Stamford, Connecticut in the US: huh? Given all the problems it is facing especially concerns about its accounting practices, I find it strange that the chief internal auditor is not based in its HQ, but a long way away.

The guy has good credentials as an internal audit manager but given that he’s based a lo9ng way from HQ, how is he going to manage his team? If he is employed more for his analytical skills rather than as as a hands-on mgr, why not appoint him as an adviser to the audit committee and the CEO.

Background

Noble has appointed a new head of internal audit. In an email Noble Group CEO Yusuf Alireza said Mr Frank Russo will take charge with effect from Monday (Oct 5).

Mr Russo will be based in Stamford, Connecticut in the US and he will report directly to Mr Alireza and the audit committee.

Mr Russo was previously at GE Capital, where he served as managing director and head of audit for the Energy, Aviation and Insurance businesses. Prior to GE, he spent over eight years at Deloitte and Touche as a senior advisor for Governance, Regulatory and Risk Strategy.

Ang moh cowboy bets against PRC

In China, Currencies on 06/10/2015 at 4:01 pm

A hedgie from Texas is betting big time against the yuan Dealbook reported:

BETTING ON FURTHER DEVALUATION OF RENMINBI Mark L. Hart III, a hedge fund investor based in Texas, has made high-risk, high-return wagers that the United States housing market would collapse and that Greece would go bankrupt. His most audacious gamble to date might be his bet on a 50 percent currency implosion in China, Landon Thomas Jr. reports in DealBook.

He predicts that the extreme drop will come when foreign investors pull their money out of China, propelling a broader rout in emerging market currencies and bringing on a sustained global slump.

And he is not the only one. An increasing number of investors think thetrillions of dollars that went into risky investment opportunitiesin countries like China, Brazil and Turkey are quickly leaving. They think the pace will pick up when the Federal Reserve eventually raises interest rates, leading to plunges in currencies, corporate defaults and a global slowdown.

John H. Burbank III, a longtime emerging-market investor at Passport Capital, a $4 billion hedge fund in San Francisco, has earned stellar returns this year betting on weak commodities, and imploding emerging markets and currencies.

At the root of these investment strategies is the belief that China’s 3 percent currency devaluation was not a one-time event.

These investors think China is experiencing a run on the bank, similar to what happened to Asian countries in 1997 when their semi-pegged currencies collapsed. They also think the country’s $3.5 trillion of foreign exchange reserves will not be enough to prevent a large-scale rout.

In the first quarter of this year, $109 billion left Chinese banks for overseas institutions, according to the Bank for International Settlements, a clearinghouse for global central banks.

China has been at the forefront of the so-called carry trade, in which corporations and countries tap dollar-based lenders and invest the proceeds in higher-yielding assets denominated in local currencies, like real estate, commodities and large-scale investments. As long as interest rates in the United States remain low and emerging-market currencies remain strong, these trades have been highly profitable.

Mr. Hart calculates that the size of the Chinese carry trade is around $2 trillion and as he sees it, the dollars that have flowed into China must flow out again.

China’s foreign currency reserve ratio – in effect its net cash available to defend against speculators – is just a bit over 20 percent, putting it in the neighborhood of countries known to be vulnerable to capital outflows, like Brazil, Turkey and South Africa.

“If there is a run on the currency, everyone will want to turn their yuan into dollars,” said Jurgen Odenius, the chief economist of Prudential Fixed Income. Yuan is a shorthand reference to China’s currency, the renminbi. “And on that basis, China’s foreign exchange reserves do not rank among the stronger countries.”

Still, it is not certain that Mr. Hart’s bet will pay off. The Federal Reserve’s reluctance to increase interest rates could weaken the dollar and take the pressure off China and other emerging-market currencies.

Glencore: Why up the creek without a plan C

In China, Commodities on 05/10/2015 at 10:13 am

NYT Dealbook

GLENCORE HAS YET TO CONVINCE INVESTORS The panicked sell-off may have stopped, but Glencore, the Swiss mining and trading company, still needs to convince investors and analysts that it is out of the danger zone, Stanley Reed reports in The New York Times.

The problems that have sent the stock reeling this summer remain, from its heavy debt load to the slowing Chinese demand for commodities. And, as Bloomberg News reports, investors are nervous that the 29 percent plunge in its share price could happen again.

Analysts doubt that Glencore is unable to pay its debt, but it will remain under pressure until it can address investors concerns about it.

The company has moved to cut its debt*, but this may not be enough. Commodity prices may have farther to fall and Glencore is dependent on forces that it cannot control.

Many have also struggled to explain exactly why the company’s stock should have plunged so suddenly on Monday. The fear that the drop caused reminded people of the moment that Lehman collapsed, a trader told Bloomberg News.

The company is trying to get back to business as usual, but damage has been done. Sellers of default insurance on Glencore bonds are demanding more compensation for the risk than a month ago.

A failure to deliver about three million pounds of cotton owed to Noble Agri, a rival commodities trader, has also intensified the spotlight on Glencore, The Financial Times reports.

That happened in May before the recent turmoil, but Glencore may have to pay a financial penalty and the failure to deliver comes at a delicate moment. Glencore is trying to sell a minority stake in its agricultural business, which includes cotton trading, to help pay its debt.

——————-

*It sold stock and cancelled its dividend and closed mines.

Noble House: More empty rooms

In Accounting, China, Commodities on 04/10/2015 at 2:15 pm

Oct 2 Noble Group’s global head of M&A has resigned from the company, marking a string of recent senior level departures at the commodities trader as it battles weak prices of resources, people familiar with the matter said on Friday …

On Thursday, Reuters quoted sources as saying that two senior U.S.-based energy executives had left Noble in the past week.

Noble hit the spotlight in February when blogger Iceberg Research questioned its accounting practices. Noble defended its financials, and board-appointed consultant PricewaterhouseCoopers found no wrongdoing in a report published in August.

http://www.reuters.com/article/2015/10/02/noble-group-executives-departure-idUSL3N12217L20151002

Not a good day to be averaging down on Monday.

Wish HoHoHo had paid heed, not gone on sabbatical

In China, Temasek on 02/10/2015 at 12:37 pm

What with HoHOHO coming back from leave at the end of October, Temasek’s continuing to double down on China and all the carnage that worries about China are causing in global financial and commodity markets, I tot this NYT Dealbook piece from sometime back is timely.

A PRESCIENT WARNING ON CHINA Kenneth Rogoff, a professor of economics at Harvard University, accurately predicted the eurozone debt crisis and has long warned of a potential financial crisis in China. It’s starting to look like he’s right again, Andrew Ross Sorkin writes in the DealBook column.

Mr. Rogoff has made a career of studying financial crises and co-wrote “This Time Is Different,” a seminal book that examined eight centuries of financial crises. He and his co-author, Carmen M. Reinhart, contended that every financial crisis stems from the same problem: too much debt.

“China is the classic ‘This time is different’ story,” Mr. Rogoff said, rattling off all the different rationalizations for why the country convinced itself – and many others – that it could load up on debt but was somehow immune to the laws of economic gravity.

Mr. Rogoff is not the first to identify China as a risk. Henry M. Paulson Jr., the former Treasury secretary and a Sinophile, and the hedge fund manager James Chanos have also been sounding the alarm on China.

The country’s debt load rose from $7 trillion in 2007 to $28 trillion by mid-2014, according to a report by the consulting firm McKinsey & Company, China. “At 282 percent of G.D.P., China’s debt as a share of G.D.P., while manageable, is larger than that of the United States or Germany,” the firm said in a report. “Several factors are worrisome: Half of loans are linked directly or indirectly to China’s real estate market, unregulated shadow banking accounts for nearly half of new lending, and the debt of many local governments is likely unsustainable.”

The question now is how interconnected China is with the rest of the world economy. And in spite of the tumultuous state of the market, Mr. Rogoff says he believes that the recent weeks have raised the prospects of a meaningful crisis. But with China’s trillions of dollars in reserves, he thinks the country may have sufficient tools to prevent a calamity that spreads across the globe – at least for now.

“If you had to bet,” Mr. Rogoff said, “you’d still bet they’d pull it out.”

As a S’porean, I hope his last remark turns out to be correct.

StanChart: Did you know?/ Glencore: Sinking fast

In Banks, China, Commodities, GIC, Temasek on 29/09/2015 at 1:06 pm

It was reported last week in the FT that Standard Chartered awarded Bill Winters, its CEO, shares worth more than 6 million pounds, or about $9 million, to compensate the bank’s new CEO for income he forfeited by leaving the hedge fund he founded. The upfront payment comes as the shares have hit new six-year lows.

Meanwhile GIC must be ruing not selling out of Glencore because on Monday in London

Shares in commodity giant Glencore plunged 30% after analysts raised fears about lower metal prices.

The company’s shares dropped to a new record low of 69p on Monday, helping push the FTSE 100 down 2%.

Analysts warned slumping metal prices could leave Glencore shares almost worthless because of its heavy debts.

http://www.bbc.com/news/business-34380490

Why did everything go wrong for Glencore? 

Whatever both StanChart and Glencore are suffering from China’s slowdown. And HoHOHO is still betting big on China (see previous story)?

Temasek, DBS buying into Chinese PosBank?

In Banks, China, Temasek on 29/09/2015 at 4:32 am

China’s Postal Savings Bank Said to Be Near $6.5 Billion Sale. Postal Savings Bank of China, which has the most outlets of any lender in the nation, is nearing an agreement to raise more than $6.5 billion from investors including UBS Group and Temasek Holdings ahead of a planned initial public offering, Bloomberg News reports, citing people familiar with the matter.

(NYT Dealbook last Thursday)

The story also says that DBS will buy a stake.

HohoHo still bullish on China it seems and doubling her bets down. The problem for us is that these stakes cannot be divested completely without upsetting the Chinese. The ang moh banks were able to divest their cornerstone stakes in Chinese banks. They like Temasek got their stakes at “special” prices, but unlike them Temasek is stuck with these stakes, only able to add or decrease at the margins.

Meanwhile rights issues are expected necause of expected bad loans.

China really tua kee

In China, Commodities, Emerging markets, Energy, Hong Kong on 26/09/2015 at 7:20 am

China's imports

Related post: http://www.bbc.com/news/business-34344926

 

China Contrarians

In Banks, China, Private Equity, Property on 24/09/2015 at 3:20 pm

HSBC to Add 4,000 Jobs in 4 Years in China HSBC is planning a 30 percent increase from 13,000 employees in the Pearl River Delta in spite of the bank’s three-year plan to cut global headcount by 50,000 and reduce annual costs by up to $5 billion. (NYT Dealbook)

HSBC has been given permission to issue a Panda bond (a first foe a foreign bank). The greater ability  to access to local fundraising bodes well for the bank’s Pearl Delta plans.

What is most striking about George Osborne’s Chinese tour is he is doubling his political and economic bet on the world’s number two economy at a time when that economy is looking its most fragile for 30 years.

His calculation is that China’s economy will slow in a relatively contained way to a more sustainable rate – perhaps 4% or 5% a year compared with the official target of 7% – without a devastating crash that would damage a large number of client economies and engender social unrest in China itself (in employing the great Goldman bull of China Jim O’Neill as his commercial minister, Osborne could hardly wager otherwise).

The chancellor’s calculation is that the Chinese will remember who stuck by them when the going got tougher.

And he is also presuming that as the returns from investing in China itself diminish, Chinese institutions – many of them still loaded – will increasingly think owning a bit of Britain isn’t such a crazy idea after all.

http://www.bbc.com/news/business-34311675

Blackstone Hunts for Property Opportunities in China “Volatility can be your friend if you have a medium-to long-term perspective,” said Christopher Heady, head of the private equity firm’s Asia real-estate business.

(NYT Dealbook)

Fed is the real hegemon/ How Chinese problems impact the US

In China on 21/09/2015 at 1:07 pm

Officials in China and Indonesia criticised the Fed for keeping the world guessing about its next move after it delayed raising rates.

Fed juz showing China that it’s the world’s hegemon just before Xi visits the US:

NYT Dealbook reported that the Fed stressed that it needs a little more reassurance from the United States economy and “What we can’t know for sure is how much concerns about the global economic outlook are drivers of those developments,”

Janet L. Yellen, the Fed’s chairwoman, took care to point out that the Fed was not just responding to a few rough weeks for the stock market, Neil Irwin writes in The Upshot. It needs a little more reassurance from the United States economy. “What we can’t know for sure is how much concerns about the global economic outlook are drivers of those developments,” she said.

The challenge now is that 2015 may end without providing answers to the questions that the policy committee has. It can take many months for financial swings to ripple through the economy.

Stanley Fischer, the Fed vice chairman, said last month that if the Fed waits until it is absolutely certain it is time to raise rates, it will probably be too late. Fed officials will still have to make a decision based on their own forecasts, rather than hard evidence.

This is also from NYT Dealbook (some time) back explaining why problems in China affect the US.

FAULT LINES REACH THE U.S. ECONOMYAs investors scramble to make sense of these swings, financial experts said there have been signs of an equity crisis for more than a year now, Landon Thomas Jr. reports in DealBook. They argue that the United States would only be able to avoid for so long the deflationary forces that have taken root in China.

More and more analysts now see the problems in China and other markets as a real threat to the United States economy. The fears about the economy have some investors betting that the Federal Reserve will not raise rates this year, though that may well be premature, as Binyamin Appelbaum reports.

“The global G.D.P. pie is shrinking,” said Raoul Pal, who produces a monthly financial report catered to hedge funds and other sophisticated investors. The most crucial indicator, in his view, has been the surge of the dollar against emerging market currencies.

Historically, the party has ended when the dollar takes off against emerging market currencies, as it did in Latin American in the 1980s and Southeast Asia in the 1990s. Suddenly, loans in relatively cheap dollars that financed real estate and consumption booms were no longer available and theultimate result was always a growth slowdown.

Through the year ending on Aug. 19, some of the worst-performing investments in dollar terms were Brazilian equities, Russian bonds, Indonesian equities, and Turkish equities.

During the same period, United States equities returned 8.7 percent – the fourth best return delivered by any major class of assets. In effect,investors in the United States miscalculated, thinking that what happened in Russia, Turkey and Indonesia need not have any effect on stocks of companies based in the United States. The slowdown in China was driving weakness in these countries, as it bought less steel from Brazil, less mineral fuel and oil from Indonesia.

Albert Edwards, a strategist at Société Générale in London, said the government’s naked support of the stock market bubble was a clear sign for him. “One you encourage an equity bubble, it will collapse – and then you are really in trouble,” Mr. Edwards said. “This is utter madness.”

For Jeffrey Sherman, a portfolio manager at the bond investment firm DoubleLine, the correction in the high-yield corporate bond market was an alarm bell. In summer 2014, as stocks of United States companies continued to push upward, the yields on risky corporations started to spike. The fact that these bonds were entering their own bear market should have been seen by equity investors as a warning sign, Mr. Sherman said.

David A. Stockman, a former budget director under Ronald Reagan, has spent the last three years closely examining the excesses of the Chinese investment boom and warning of their consequences. He points out that in the late 1990s, China had the capacity to manufacture 100 million tons of steel. That figure today is 1.1 billion tons – almost twice the amount of annual demand for steel in China.

This steelmaking boom sent the price for iron ore shooting up. Like all commodity prices, it has fallen sharply, a correction that creates problems for iron ore-producing countries like Australia, which made huge investments to keep supplying these raw materials to China.

The bottom line though, is that investors in American stocks recognized too late in the game that a global contraction was sneaking up on them, Mr. Thomas writes.

HoHoHo: Temasek & GIC China plays

In Banks, China, Commodities, Emerging markets, GIC, Temasek on 14/09/2015 at 11:03 am

Reason for Glencore (GIC) and StanChart (HoHoHo back at work at Temasek soon) on the chart

Glencore

Even small changes in demand from China’s vast economy can have a knock-on effect on prices.

As Glencore has found out to its cost.

http://www.bbc.com/news/business-34208070

StanChart

FT reports that according to Nomura, half of StanChart’s Asian revenue in the first half of 2015. More https://atans1.wordpress.com/2015/09/10/hohoho-two-brokers-views-on-stanchart/

NYT Dealbook last Tuesday.

MORE SIGNS OF A SHARPER SLOWDOWN IN CHINA Once the world’s workshop, China’s exports are facing their most protracted declines since the global financial crisis, Neil Gough writes in The New York Times. China’s trade slump deepened in August – an indication of a sharper industrial slowdown at home and weaker demand from overseas. Exports fell 5.5 percent in August and 1.4 percent in dollar terms in the first eight months of the year.

The country’s manufacturing sector is losing competitiveness as labor costs rise and the renminbi remains relatively strong despite its devaluation, making Chinese goods more expensive for foreign buyers.

Imports are falling even more steeply. They fell for the 10th month in a row in August, recording a drop of 14 percent by value. Economists blame the rout in commodity prices, but imports have fallen in volume too. The falling imports of industrial raw materials point to weakening domestic demand, driven by a slump in manufacturing and new housing construction.

The weak trade data weighed on markets, with Japan’s main index, the Nikkei 225, closing 2.4 percent lower. In Shanghai, stocks initially fell when the trade figures were released, but heavy buying in the afternoon set off a rally. Shares closed 2.9 percent higher – a pattern seen often in recent weeks, as China’s government appears to continue its efforts to support the slumping stock markets.

China’s leadership made the surprise decision last month to devalue the currency by about 3 percent, the renminbi’s sharpest drop in two decades. But the central bank has since intervened in the markets on a massive scale, fighting pressure to weaken the currency further by selling dollars and buying renminbi.

As a result, China is burning through foreign exchange reserves at the fastest pace yet. Reserves fell by nearly $100 billion in August alone, though they are still huge at $3.56 trillion.

Still, analysts say that the recent devaluation was most likely too modest to give China’s exports much of a boost, and that the exchange rate is still stronger than China’s slowing economic growth would otherwise support.

HoHoHo: Two brokers’ views on StanChart

In China, Emerging markets, Temasek on 10/09/2015 at 12:48 pm

From today’s FT (apologies for lifting)

With StanChart shares down 40 per cent in a year, investors are pricing in a replay of the Asian financial crisis, said Sanford Bernstein. That looks too pessimistic, the broker said, arguing that, whereas the 1997 crisis arrived suddenly, StanChart has had three years’ warning to shrink its current loan book and protect capital.

A FTSE 100 rebound helped lift Standard Chartered away from its six-year low on Wednesday.

With StanChart shares down 40 per cent in a year, investors are pricing in a replay of the Asian financial crisis, said Sanford Bernstein. That looks too pessimistic, the broker said, arguing that, whereas the 1997 crisis arrived suddenly, StanChart has had three years’ warning to shrink its current loan book and protect capital.

“The faster you drive into a crisis, the more you will get hit,” Bernstein said. “The speed at which the bank is hitting turbulence is dramatically different between the last crisis and this one.”

Bernstein added that, while StanChart does not need to raise cash, new chief executive Bill Winters may want to top up capital buffers by $3bn-$4bn “to give it significant leverage when the cycle turns next year”.

StanChart rose 3.2 per cent to 744p as the wider market extended its rally into a third day.

Monday’s FT (Again apologies for lifting. Promise no more after this)

shares hit a six-year low on Monday as worries grew over the depth of restructuring required under new chief executive Bill Winters.

The Asia-focused lender slid 1.7 per cent to 701.4p on reports it may cut a quarter of senior banking roles as part of a new business plan expected within the next few months.

Funding a deep restructuring would put further pressure on StanChart’s cash flow and capital ratios, which already include $49bn of commodities exposure and a further $43bn of risky Chinese and Indian debt, said analysts.

StanChart might need to raise as much as $5bn to cover bad loans, in addition to between $3bn and $4bn to boost its capital buffer to peer levels, forecast Morgan Stanley.

While the broker did not assume StanChart will need to launch a cash call, it put a one-in-five chance on China causing an Asian slowdown economic equivalent to the 1997 crisis, under which it said the shares would be worth 410p.

 

 

China: Bull rides bear

In China on 02/09/2015 at 2:30 pm

Bull statue in Xiamen (25 Aug 2015)

A curious sculpture of a bull riding a bear in the southeastern port city of Xiamen has also struck a chord with Chinese netizens.

Bulls are considered the symbols of confident economy, the opposite totem – when the economy is retreating – being a bear.

Some have described the 3.4m-high (11ft), three-tonne statue, sitting outside an art museum, as an unofficial “symbol of hope”.

“Let’s hope this bull can bear the stock market pressure,” commented one Weibo user.

Another user said: “After all the turmoil, looking at it gives me strength.”

Visitors have also been flocking to Xiamen to catch a glimpse of the copper statue, with some even making offerings by placing joss sticks and food around its feet.

The owner of the statue also told Chinese state broadcaster CCTV News that it was indeed “related to the current stock market“.

BBC report

In S’pore the bull and the bear lie side by side (Re SGX sculptures). In the US 

 

The China Securities Regulatory Commission has asked 36 schools in one of the country’s richest provinces to teach upper primary school students “how to manage money and trade stocks”, according to the Southern Metropolis Daily newspaper. This will involve about 10,000 students in a pilot programme, beginning next month. If successful, the new curriculum will expand to the rest of the province, the paper says.

http://www.bbc.com/news/blogs-news-from-elsewhere-34107231

Sotong investors/ Some are moving on

In China, Emerging markets on 31/08/2015 at 1:43 pm

INVESTORS SEEK SIGNAL IN THE NOISE Asian markets continued to soar on Friday, on the back of a global rebound on Thursday. The fear was palpable just days ago, but by the end of Thursday, the gloom had dissipated, DealBook’s Peter Eavis reports. The Standard & Poor’s 500-stock index had climbed 6 percent from the low of Tuesday’s closeby the end of Thursday.

The positive trend continued during Asian trading on Friday. Stocks in Shanghai closed up 4.82 percent after another late-day surge, while the Nikkei 225 finished the day up about 3 percent.

Bystanders were left struggling to comprehend the gyrations. Even Wall Street pundits are seeing mixed messages.

At Tuesday’s low, a bear market – when stocks decline 20 percent or more – did not seem out of the question. But after Thursday’s performance, it seemed plausible that the six-year bull market that started in 2009 might resume.

There was, in fact, a string of positive economic data released this week. Spain’s economy is now growing at a rate of over 3 percent, while revised gross domestic product numbers showed that the United States economy grew at a 3.7 percent rate.

There are still plenty of problems that could drag down global growth. China’s leaders have intervened to shore up the stock market, promote bank lending and loosen monetary policy, but these moves could well stifle the role of market forces.

The pressure on emerging markets is unlikely to go away. Companies that have borrowed in dollars may find it harder to pay back debt as their currencies lose value against the dollar. The resulting slow growth in developing countries might squeeze demand for goods and services from the United States and Europe, dampening growth there too.

If this happened, central banks like the Federal Reserve could step in to stimulate economies. But their intervention can create uncertainty over the long term as investors wonder whether stock and bond prices are rising because of central bank stimulus and worry about what will happen once that support is pulled away. Analysts see problems in the underlying economy that they say central bank stimulus, or quantitative easing, cannot fix.

When nobody knows when the stimulus will end, markets move unpredictably, as investors find different ways to interpret pronouncements from central bankers.

The one reassurance is that in recent history, short-lived stock market corrections that have not turned into bear markets typically have not stopped businesses from investing and people from spending.

 

James B. Stewart: Top Money Managers Take Their Losses, and Move On Fund investors are looking for opportunities in global stock markets, where share prices have been battered in recent days.

Hedgies caught with their pants down

In China, Financial competency on 28/08/2015 at 1:03 pm

From NYT Dealbook

ROUGH AND TUMBLE FOR HEDGE FUNDS The fallout from the global sell-off has few limits. Many on Wall Street have been caught off guard and money managers at some of the biggest hedge funds in the United States have had their vacation plans interrupted, Alexandra Stevenson and Matthew Goldstein report in DealBook.

One adviser had to hop around on conference calls from his cabin in the woods. Another said investors had requested play-by-play commentary and performance figures. With the reason for the plunge so unclear, many have not been willing to stick their necks out and speak publicly.

It is clear, however, that August numbers are not looking good for them. Hedge funds went into the sell-off bullish, with $1.5 trillion in long positions – bets that stocks will rise in price – compared with $684 billion in short positions, bets that stocks will decline in price, according to an analysis of the industry by Goldman Sachs.

The 10 stocks that Goldman said were the most widely held by hedge funds – stocks like Apple, Citigroup, Facebook and Amazon – were down from 5 to 10 percent over the last three trading days.

Leon G. Cooperman, founder of the $9 billion hedge fund Omega Advisors and a longtime market bull, is emerging as a big loser in the chaos. As of Friday, his fund was said to have lost 11 percent this month, according to people briefed on the matter. The firm was hit hard by big declines in the share prices of Allergan, AerCap, Citigroup and the American International Group.

One hedge fund manager who invests mainly in United States stocks, speaking on the condition of anonymity, said he would not be surprised if the average fund lost from 3 to 7 percent in August. He said the last week had been brutal and the losses had come far faster than most would have anticipated.

Even the world’s biggest hedge fund, Bridgewater Associates, led by Ray Dalio, was not spared. The $162 billion firm told investors on Friday that its Pure Alpha fund was down 4.7 percent for the month. Going into August, the Pure Alpha portfolio had been up 11.8 percent for the year.

After six years of a bull market run, few hedge fund managers have been brave enough to short stocks with much conviction. To take a short position, a trader sells borrowed stock in a company that he or she thinks is overvalued in anticipation of buying it back at a cheap price. Those that have taken short positions have not been hit as hard by the sell-off.

Hedge funds that scoop up distressed assets at bottomed-out prices also began to eye opportunities. “What I have told investors is the economy is fine but now is a great time to be buying some things when they get hit,” said Marc Lasry, a co-founder of the $13.9 billion hedge fund Avenue Capital Group. “Other people may be having issues,” Mr. Lasry said. “For us, that is an opportunity as opposed to a problem.”

HoHoHo: StanChart has another problem

In Banks, China, Emerging markets, Temasek on 27/08/2015 at 1:42 pm

StanChart is expected to call for a rights issue by yr end. But mkt turmoil will make this difficult and expensive.

FT reports

“StanChart has been one of the hardest hit by the market turmoil. Shares in the bank, which is listed in London but specialises in Asia, the Middle East and Africa, have fallen a quarter this month and are down two-thirds in the past two years.

‘One investment banker said worries about slowing Asian growth and falling commodity prices risked creating “a perfect storm” for StanChart that would make it “much tougher to sell new shares” to investors.”

Note that FT reports that according to Nomura, half of StanChart’s Asian revenue in the first half of 2015 and less than 10% of HSBC’s came from China proper.

And that “from trading at more than double its tangible book value, its market value is now a third less than its assets, a discount even to big victims of the financial crisis, such as Royal Bank of Scotland.”

HoHoHo

What to do in falling markets?/ Negative-eight

In China, Financial competency on 26/08/2015 at 1:30 pm

How Emotion Hurts Stock Returns People feel losses more sharply than gains. So watch ESPN or do anything to avoid looking at your sinking portfolio.

Two consecutive days of 8% losses (Mon and Tues), the Chinese stockmarket’s biggest two-day plunge in nearly two decades

China Markets new

HSBC shareholders juz got lucky/ China blues

In Banks, China on 25/08/2015 at 1:42 pm

Bozo Gulliver earlier this yr decided to pivot towards the Pearl Delta estuary, cutting fat from other places to build muscle here. The collapse in July in the Chinese stock markets had him back-pedalling about becoming big in China.

Now with China in retreat, he’d be a real Bozo to put money into China.

We shareholders had a narrow escape. Thanks to luck rather than good management.

But we will still suffer

FT reports that according to Nomura, less than 10 per cent of HSBC’s came from China proper.

… could be in for a rough ride if the swing in China’s currency is the start of a prolonged devaluation

The most obvious effect of a weaker currency is valuation losses on banks’ loans and trading assets in China, which many have used as a bridgehead in the world’s second-largest economy. A lower currency could also spell trouble for customers in China who have borrowed US dollars or euros but are earning renminbi — the “classic FX mismatch,” in the words of Keith Pogson, senior partner of EY’s Asia-Pacific financial services team.

Western banks also face risks from domestic Chinese counterparts which have borrowed dollars to lend to their own clients. “Asian banks are extremely used to borrowing cheap dollars through interbank markets and then relending it,” said one London-based banker. “In the next couple of years there could be bigger problems if China’s going to carry on devaluing.”

And let’s hope the cash from Brazil will not be squandered by Bozo.

 

Commentary at http://www.economist.com/blogs/graphicdetail/2015/08/daily-chart-9

China: No reason to panic/ Think Taiwan

In China on 24/08/2015 at 1:38 pm

Another day, another big fall in China.

The services sector supplanted manufacturing a couple of years ago as the biggest part of China’s economy, and that trend has only accelerated this year. The alarm on Friday stemmed from an unexpected fall in the purchasing managers’ index (PMI) for manufacturing sponsored by Caixin, a respected Chinese financial magazine. That gauge has been lilting southward for a while. By contrast, Caixin’s PMI for the services sector jumped to an 11-month high in July.

http://www.economist.com/news/china/21661959-despite-financial-nervousness-rebalancing-continues-why-chinese-economic-worries-look-overdone

Taiwan is a place that could be more resilient to the EM gloom says a Fidelty fund mgr. Think high tech exports to the US. Think Apple also.

How US hedgies playing China

In China on 21/08/2015 at 1:38 pm

From NYT Dealbook

CHINA KEEPS INVESTORS GUESSING China continues to enchant Wall Street, despite its tumultuous and uncertain nature, Alexandra Stevenson writes in DealBook. “You could be dead right in the thesis and you won’t make money,” said Troy Gayeski, a senior portfolio manager at SkyBridge Capital, an investment firm that has $9.4 billion invested in hedge funds.

Some of Wall Street’s best-known investors were singing China’s praises at the beginning of the year. As the market soared, many hedge funds rode the bull run, raking in profits and posting double-digit returns.

The markets took a sharp turn in late June, with stocks 30 percent off their highs at one point. By the end of July, the capital devoted to Asia-focused hedge funds had dropped by $10 billion as investors ran for the exits, according to the research firm HFR.

Investors got blindsided by some of the government’s measures to stop the slide, including a ban on “malicious short-selling.” Stuck in limbo, hedge fund managers said they were unsure how they fared in the chaos.

The devaluation of the currency last week raised even more concerns about the economy. Yet China remains attractive for some. And investors ultimately know they cannot ignore China, given its size and influence.

The billionaire hedge fund manager Julian H. Robertson announced last week that he was putting money into Yulan Capital Management, a firm that focuses on companies in the greater China region. CDIB Capital International Corporation, the private equity arm of China Development Financial, recently raised $405 million for a fund focused on private equity in China and other Asian markets.

Wall Street investors are also finding new ways to play the turmoil. Penso Advisors, a hedge fund adviser, scoped out currencies that were affected by the renminbi devaluation in an attempt to profit from the shock waves.

But Chinese markets remain enigmatic, even to those who have seen opportunities in it. “People want to play China, but it’s much harder to play China because you don’t know the rules and they change all the time,” said Ari Bergmann, founder of Penso Advisors, referring to capital controls there.

Ray Dalio, the founder of the world’s biggest hedge fund, the $160 billion Bridgewater Associates, recently tempered his enthusiasm for China. “Even those who haven’t lost money in stocks will be affected psychologically by events, and those effects will have a depressive effect on economic activity,” Bridgewater said in its July note to investors.

Chinese stocks continued their volatility on Wednesday, falling 3 percent in morning trading in Shanghai before finishing the day more than 1 percent higher. The session “made little sense other than to highlight that investors have almost no faith in a monthlong government effort to stabilize them,”according to Reuters.

HoHoHo StanChart goes on a wild sled ride

In Banks, China, Currencies, Temasek on 18/08/2015 at 1:31 pm

FT reports that according to Nomura, half of StanChart’s Asian revenue in the first half of 2015 and less than 10 per cent of HSBC’s came from China proper.

Both “could be in for a rough ride if the swing in China’s currency is the start of a prolonged devaluation

The most obvious effect of a weaker currency is valuation losses on banks’ loans and trading assets in China, which many have used as a bridgehead in the world’s second-largest economy. A lower currency could also spell trouble for customers in China who have borrowed US dollars or euros but are earning renminbi — the “classic FX mismatch,” in the words of Keith Pogson, senior partner of EY’s Asia-Pacific financial services team.”

Western banks also face risks from domestic Chinese counterparts which have borrowed dollars to lend to their own clients. “Asian banks are extremely used to borrowing cheap dollars through interbank markets and then relending it,” said one London-based banker. “In the next couple of years there could be bigger problems if China’s going to carry on devaluing.”

A NEW GLOBAL CURRENCY WAR?/ “Good” news for some

In China, Currencies, Property on 17/08/2015 at 1:10 pm

But the good news for those of us who own Reits and good paying yield stocks is that the Fed may not raises rates in September. Good for those mortgaged to their eyeballs too. But TRE ranters will be upset that the coming collapse S’pore property prices will be again delayed once more. They want their fellow S’poreans to die for supporting the PAP. Ah well hope springs eternal.

China held firm on the value of its money for years, as other countries tried to secure an economic advantage by letting the value of their currencies slide on international markets. Some analysts see its jump into the fray as a new phase in a long-raging global currency war, Peter Eavis writes in DealBook. The plunge paused on Friday, but the renminbi was still down 4.4 percent against the dollar this week, a huge drop for China and the steepest drop since the country’s modern exchange system was set up, Neil Gough reports in The New York Times. The move could leave the United States exposed and undermine efforts to pull the world economy out of the doldrums.

The yen, the euro and several other major currencies have fallen in recent years against the dollar as the Federal Reserve has cut back its stimulus, but the countries that don’t join the devaluations can end up suffering if they export less and import more. A steep drop in the value of the renminbi could also intensify some of the forces that have caused the American economy to underperform.

Analysts also fear the currency tensions could worsen entrenched problems in the global economy, like its reliance on the dollar as a so-called reserve currency. This dependence means that the Fed’s actions can change economic conditions in other countries, and not always for the better.

The Fed now faces a problem. It is considering raising interest ratesfor the first time in more than nine years. A rate increase could drive the dollar up even more aainst other currencies, creating an obstacle to the American economy. It could also make life even harder for countries in the developing world, which could experience capital outflows. Companies in emerging markets that borrowed in dollars would have to spend more of their local currency to pay back their debts.

China, too, would struggle if there was an uncontrolled plunge in the renminbi. Chinese entities have borrowed more than $1.6 trillion in foreign currencies. “A sharp devaluation is not in China’s interest,” said Li-Gang Liu, a China economist at ANZ Research. “That could make corporates very panicky.”

Prolonged turbulence and economic pain may then force world leaders to think hard about whether the international system can be changed, Mr. Eavis writes. The easy money pumped out by the Fed over the last decade helped stoke booms in other countries that became unsustainable. As the Fed has pulled back, the adjustment has been jarring for huge economies, like Brazil and China.

“The system is coming back to bite us in the rear,” said David Beckworth, an associate economics professor at Western Kentucky University. “Maybe this experience teaches us that we are more interconnected than we ever were.”

NYT Dealbook

Great Currency Movement

In China, Currencies on 14/08/2015 at 12:43 pm

From Guardian

Kipper Williams cartoon 13 August 2015