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’A Sino suit, and CDS
1) Sino-Forest gets a “bankruptcy credit event, yes or no” question asked about its CDS for the second time:
2) Sino-Forest, which has filed for bankruptcy protection, has also sued Muddy Waters,
Why you shouldn’t get *too* excited about that China PMI
That 53.1 number from the official March manufacturing PMIs isn’t all that, when you consider the official numbers have a big seasonal skew.
To illustrate how big that skew is, here’s a chart that Markit Economics’ Alex Hamilton sent to us a few months ago [we just got a newer one] when we were asking him about divergences between the official and the HSBC/Markit Economics PMIs.
Michael Pettis challenges The Economist, global economic bragging rights and sweet gig for Chinese band at stake
At the end of last year, The Economist predicted that Chinese GDP would surpass US GDP at market exchange rates in 2018. (Click table to enlarge)
There’s always a touch of frivolity in making predictions such as these.
China as the world’s (unreliable) importer
Here’s another facet of a Chinese slowdown: its role as an importer.
The longstanding notion of China as the world’s exporter is beginning to look a bit dated, argues Tao Wang, UBS’ China economist.
Steel demand is endless
A BHP executive’s comments about Chinese steel demand growth flattening have gone viral, with lots of market reports pointing to Ian Ashby’s words to explain European markets closing lower yesterday and falling Asian stocks today.
The supercycle is so over, iron ore edition
From Bloomberg:
BHP Billiton, the world’s biggest mining company, said China’s steel production is slowing as the world’s fastest-growing major economy starts to shift to focus more on consumers than large building projects.
Chinese property *alert*
Uh oh. This can’t be good.
From SocGen’s cross asset research team on Monday (our emphasis):
Chinese property sales and prices have made for dour reading recently. Property sales value contracted 20% year on year in the two months ending in February.
China equilibrium *alert*
All eyes are on the US Treasury bond sell-off (the longest drop since 2006 according to Bloomberg).
Given that, we thought it might make sense to throw this little development into the mixing bowl of the theories that are doing the rounds with respect to what’s driving it.
Don’t count on China lifting property restrictions any time soon
Among the generally slow Chinese economic data for January and February, there was a surprisingly strong showing for property-related investment.
Societe Generale’s Wei Yao writes that growth in fixed-asset investment for the property sector grew strongly in January-February.
Letting corporate bonds default, in China
Shandong Helon. Remember the name.
HSBC analysts have pointed out an interesting possible ‘first’ for China (H/T the FT’s Tracy Alloway):
The plight of a debt-laden fibre company in eastern China has
World’s changed, man! World’s changed! (China edition)
Not quite 24 hours since China took the tarpaulin off the lowest growth targets since 2004, with an emphasis on consumption etc and woah, Credit Suisse’s Dong Tao has come over all epochal:
We believe the golden age of infrastructure investment is behind us now.
And so to the 11th National People’s Congress…
Indepth China Daily coverage of the People’s Congress here, while the latest from the FT’s Jamil Anderlini is here.
A downTic in China’s holdings? Doesn’t matter
FT Alphaville has written plenty of “explainer”-type posts on the relative accuracy of the monthly Tics data — i.e. who holds US Treasuries — versus the annual revisions (listed below if you’re fantastically bored).
A little case of copper collateral double counting
A relatively important development in the Chinese copper collateral scheme via the Bloomberg wire on Tuesday (H/T Sean Corrigan):
Feb. 28 (Bloomberg) — Some Chinese banks have stopped approving loans to companies using warehouse receipts of copper as a pledge,
A fate worse than a hard landing for China
What IS a hard landing in China?
Well, BAML’s latest survey of fund managers defines it as less than 7 per cent growth. And incidentally, only 8 per cent of those surveyed believe it will happen, half the percentage of the November survey.
China gets some can-kicking practice
Just last week, Patrick Chovanec was warning about the looming need to roll over debt in China:
Chovanec tells Nouriel Roubini the conflict between driving growth through investment-directed credit,
China’s hard landing odds, updated
Remember Nomura last year estimated there was a 1-in-3 chance of a hard landing in China?
Anyway, they’ve updated the index on which it was based. Nomura’s chief Asia economist, Rob Subbaraman, says the 1-in-3 odds indicated by the China Stress Index remain,
China’s not so amazing PMIs
China’s official PMIs went to 50.5 for January, but European markets were not that impressed.
The HSBC/Markit Economics PMIs, meanwhile, were an uninspiring 48.8, compared to 48.7 in December.
Societe Generale’s Wei Yao says that,
Chinese New Year and the BDI
Should you be worried about the Baltic Dry Index’s recent sharp selloff? Or should you be more worried about developments in China?
We bring this up because there is apparently somewhat of an après-Chinese New Year effect when it comes to the Baltic Dry Index.
The PBoC’s “unofficial” rate policy
Bank of America Merrill Lynch’s global rates teams has interesting note out on Friday regarding Chinese repo rates.
As they point out, the seven-day rate currently implies something of a liquidity crunch in the market.
A picture tells a thousand words, Chinese steel edition
Presenting, just another Wednesday working afternoon at a Chinese 5,800 cubic metre blast furnace factory:
Note the empty car park.
That picture comes to us courtesy of Nicholas Zhu of ANZ Bank via Simon Hunt,
Don’t worry, it’s normal for China’s GDP to appear a little weird
Still confused by China’s better than expected GDP numbers? (Especially given stories like this, and this, and this?)
You’re not the only ones.
Standard Chartered’s Stephen Green and Lan Shen, however,
China’s GDP, through stimulus-tinted glasses
China’s fourth quarter GDP figures are having a bit of a Rashomon effect on pundits.
From Reuters:
The data released on Tuesday may not satisfy investors, who were looking for figures that were either weak enough to provide a clear-cut case for policy easing or strong enough to allay fears that the world’s second-biggest economy might unravel.
China’s foreign reserves not so hot
China’s first quarterly decline in its forex reserves since 1998 has been described as a result of “hot money” leaving China. But there are a few other reasons — probably bigger ones.
Firstly, though,
Is China secretly consuming more, or not?
The Barclays Capital note we discussed earlier this week, postulating that China had already begun to see a critical increase in its household consumption-to-GDP ratio, has generated a few questions over email.
China gets shorty
In his latest move to support the development of China’s capital markets, Guo Shuqing, the newly installed head of the China Securities Regulatory Commission, will oversee the creation of a new body to control facilitate short-selling.
Snap news
Breaking pre-market news on Wednesday,
- Unicredit prices capital increase at €1.943 per share — Reuters.
- Next maintains profit outlook but narrows guidance; “A number of factors have subdued sales in the final quarter” – statement.
Are western central banks having an existential crisis?
David Wessel over at the Wall Street Journal has followed up on a story FT Alphaville has been covering for a while. That the world economy is running out of super-safe financial assets, and that this is doing untold damage to central banks’ abilities to control interest rates (the last bit is our spin).
A heretical glimpse into the ghost of copper future
Simon Hunt Strategic Services — the eponymous market analysis vehicle of copper market veteran Simon Hunt – has just published its 2012 outlook.
Be warned, though, it carries the following disclaimer:
China’s iron ore imports mystery, solved…
Earlier this week we looked at the rebound (of sorts) in China’s iron ore imports pricing from $120/tonne to almost $140/tonne, when much of the data was pointing to a deceleration in demand. At the same time,