Tag Archives: brief news from China

Europe Still All the Market Cares About

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From time to time, markets become obsessed. Right now, the only news that’s driving markets up and down is news on what’s happening regarding both the European banks and the state of European Sovereign debt.

The market goes through periods of time when the news flow is laser focused on issues that become magnified beyond their true importance. If Greece defaults on its bonds, does that really effect in any major way most US companies, or companies serving the ever growing consumer in China? I think not. Yet- it effects the market in a dramatic way each and every day – this month.

Fortunately, next month the focus will be earnings, and hopefully the out of Europe will have quieter voice in October- the month that has traditionally been the Bear Killer.

Today, the ECB moved to remove doubts about the ability of European banks to borrow dollars by providing new lines of credit for longer periods of time.

Markets globally were up strong on the news.

There isn’t a big news flow out of China, but here’s some items I picked up on:

  • The Chinese markets were down slightly in overnight trading- the Shanghai A shares were down .2%, and the B shares down .12%. The news out of Europe should help these stocks perform better in tonight’s trading.
  • Premier Wen Jiabo is using the European crisis to lobby for trade changes. The European Union has classified China as a “non market” economy- meaning they pursue unfair trade practices. In a speech, Wen “suggested” China would be more amenable to helping with the a European bail out if Europe would re designate China as a “market economy”, thereby allowing China to export to Europe without tariffs. European markets liked the idea, and rebounded on his comments.
  • A study recently released by KPMG suggests China is losing its edge as the world’s greatest manufacturer. According to the report, the minimum wage in China is now 4 times that of other South East Asia countries. Indonesia and Bangladesh are benefiting from this trend. Rising wages in China is a positive with the inflation picture, and a reason China will accelerate to have its GDP growth more domestically focused.
  • Baidu owns travel site Qunar.com. It was announced today Baidu plans to spin out Qunar into a separate division for an US IPO next year.

That’s it for today. Let’s hope for smoother sailing ahead.

Another Sleepy August Day in China – Part II

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Not much new out of China to go over today. It’s another sleepy day August day as US traders move to square up positions for month end and the US consumer confidence numbers fall to 45- the lowest since early ’09 and absolutely abysmal. The muted response in the market suggests this consumer confidence number was already priced in.

Here’s some brief news from China overnight: 

  • The Shanghai A shares were down .38%, the Bs down .02% in light trading.
  • JP Morgan get in line with all the other major IB firms and lowers its target for China growth this year. Jing Ulrich, a fairly big name in China investing at JP Morgan, puts China growth to 8.5%.
  • A report out on China Apparel spending notes spending on China apparel domestically has tripled in the last decade. Apparel manufacturers are focusing in on these areas: more spending on apparel by younger generations, by women, and more heavy spenders in lower-tier cities – that will help companies to adapt their strategies in response to new consumer demands over the coming decade.
  • The LA Times carried an article yesterday featuring China activist and critic Ai Weiwei – a Chinese artist who is very vocal and highly critical of Beijing’s uncontrolled growth. He is also highly critical of the judicial system in China.
  • The Economic Times reports China is once again out stating it is unlikely it will meet inflation targets this year. High commodity prices and an influx of global money into the country continues to put pressure on food prices.
  • On a final note- it turns out the Chinese Communist party is not a big fan of Lady Gaga. The government blacklisted 100 current pop culture songs last week, and Lady Gaga led the pack with 6 songs blacklisted from her latest album. I’m sure she’s very proud.