Chinese markets were down again in overnight trading for the third day in a row and the last 5 of 7 days.
The Shanghai A shares were down .25%, and the B shares down .14%.
The price of copper, considered one of the leading indicators of industrial demand and the health of China’s manufacturing economy, fell to a 14 month low. Many believe this signals another global recession.
We’re going to need some economic numbers out of China suggesting the impending recession is not as bad as the market is pricing in, and the growing Chinese consumer can pick up any shortfall their export manufacturing might experience.
Here’s a few other news items out of China today:
Hedge fund manager and highly respected Bear and Short sell Jim Chanos estimates China’s debt to GDP ratio is close to 200%- worse than European countries. He says their debt crises will lead to 0% growth in 2012. He believe China will write of 7.5% to 10% of GDP to bad loans.
Resource investing news reports electric car demand is strong in Brazil, India, and China- price being the key sticking point.
In a move that many see as an “In Your Face” to the US Senate, China has frozen its currency at the current level. By a wide margin the US Senate recently passed a initiative to start crafting a bill that would allow the US to impose big tariffs on the imports of countries who do not allow their currencies to float. This is aimed directly at China. However, China observers point out- the last time China did this, it was three months out in front of a massive stimulus program.
That’s it for today. Perhaps better news tomorrow.
While October has been the “Bear Killer” most of the time since WWII, the China sector continues making new lows as speculation continues that the Chinese economy will go directly from overheated inflation to recession.
Not much news out of China over night. The Shanghai Markets were lower for a 3rd straight day and for 5 out of the last 7 trading sessions. The China markets are flirting with the lowest levels in 2 years.
In Wednesday’s trading, China’s Shanghai A shares were down .25%, and the B shares down .14%.
There’s a couple of news items out of China worth mentioning- Here you go:
Premier Wen Jiabao was out urging stronger financial support for China’s small businesses. He’s suggesting some bank credit support, preferential tax treatment, and a relaxing of the standards for non performing loans. Also, he wants banks to avoid “adminstrative intervention”. Now, there’s a concept we could use in the US.
China has officially become the world’s largest consumer of energy according to BP’s statistical review world energy. BP reports that in 2010, China used 20.3% of the world’s energy, while the US used 19%.
Llloyd Private Banking just completed a survey of private investors which concluded China has now become the most attractive market on balance of risk and return, with the UK, Brazil, and Russia coming in distantly behind. The Lloyds private banking customers noted they were mostly concerned about the Greek situation.
Sorry for the late post today. I was up too late last night to get an early start on the day. Here’s the news out of China.
In overnight trading, the major China indexes dropped a bit after Wall Street’s huge run up. The Shanghai A shares were off .51%- the Bs off .38% in lackluster trading.
BIDU was up about $10 in trading yesterday. Subscribers were able to sell calls against their position for the 3rd time after two profitable trades in the last two weeks. Subscribe if you want to learn about this.
Yesterday’s 300 point rally on Wall Street was fueled by perceptions there could be a “QE3″ coming out of the economic meeting in Jackson Hole this week. However, China also played a big part in fueling the rally. A manufacturing report out of China showed moderate slowing, but still enough manufacturing to maintain GDP growth in the 8% to 9% range.
Commodities were all higher on the news- oil and copper leading the way.
Yesterday it was widely reported China has now surpassed the US as the largest consumer of PCs in the world. 18.5 million PCs were sold in China in Q2 vs 17.7 million shipped to the US. China is expected to consume 85.1 million units next year compared to 76.6 million for the US.
Harvard Economist Martin Feldstein believes the Chinese will allow the RMB to rise more rapidly over the next 12 months than it has in the past 12. Feldstein believes this will mitigate the risks in China’s foreign investments, and reduce the costs of imports, thereby reducing inflation.
One final note- VP Joe Biden, who has been on a trip to China to reassure the Chinese our bonds are good, not surprisingly goofed up the numbers on our treasuries. In a speech, he claimed we had good reason to watch out for our bonds as the US owns 85% of them- this is simply wrong. We only own 69%. China holds 8%- he got that right. Way to go Joe.