The Canaries In The Chinese Coalmine [View article]
What is the evidence that the shadow banking system is like the subprime mortgage lending? Isn't the corporate high-yield debt market a better analogy? Plus, since the government backstops everything in China, isn't this basically a bet on the sovereign balance sheet of the Chinese government, and their large (if not infinite) firepower?
HAO is more mid-cap. ECNS is small-cap and includes some B-shares. Both are good -- most likely to rocket up if China does indeed turn the corner towards growth. ECNS has been hammered over the last 2 years.
Better options include index ETFs like HAO and ECNS -- diversified mid-cap and small-cap stocks. EWH is OK except that it has run up quite a bit recently and is more of a bet on Hong Kong (property).
Rather than buying individual Chinese stocks, you should be looking at broad-based ETFs like HAO, ECNS, GXC, TAO, PEK, CHIQ and so on. Also, talking about index price levels without talking about P/E, P/B or other valuation metrics is not quite right. In 2007, Chinese stocks were in a bubble with nosebleed valuations. Today, they trade at historically low valuations. If a hard landing occurs, and the stocks fall further, that would be the buy of the decade.
Volume declines first, price declines follow. The real fear is that nobody knows for sure how much of this speculation is leveraged, because of the shadow banking system, and the use of property as collateral for business loans. If business owners have to repay loans, they may have to resort to distress sales of real estate. So, a slowing global economy may worsen this real estate problem in China. That said, I would be surprised if there is a systemic meltdown like we saw in the U.S.
Use ETFs to Protect Yourself From Yuan Depreciation [View article]
There are many reports, including articles here in SA, from residents as well as visitors to China that have described things similar to what you saw in Mexico, not just empty apartments, but also empty malls and commercial buildings. So, Chanos is not alone.
However, I believe that empty apartments in China are not finished. Rather, they are mostly raw uninhabitable units mostly held for investment and flipping. Sort of like gold, they don't care about the rental yield. One of the key unknowns is whether these will ever get occupied in the near future.
Use ETFs to Protect Yourself From Yuan Depreciation [View article]
If this Chinese black swan event were to occur, gold's value as an alternative currency will increase. So, gold would go up. Buying gold is another way to hedge against this event. Thanks for the observation.
The reports I cited (for example, Bloomberg) have the numbers you seek. Also, note that these are low-cost vendor financing / export assistance loans from China Development Bank and China Export-Import Bank. These are for exporters, not for domestic Chinese companies.
Here are some excerpts from the first Bloomberg report which cite some numbers: A two-year grace period on payments and an interest rate of 2 percentage points over the London interbank offered rate created an unbeatable deal, Tele Norte Chief Financial Officer Alex Zornig, 52, says. The terms of Tele Norte Leste’s seven-year credit agreement give the company an interest rate of about 4 percent, Zornig said. Brazilian companies are paying an average borrowing cost for dollar debt of about 5.99 percent, according to JPMorgan Chase & Co.
Also, note that comparisons are between rates available through China's banks for Indian / Brazilian buyers versus the much higher rates those other emerging market buyers will have to pay in the international market. The second Bloomberg report has numbers with those comparisons. Here is an excerpt: “Reliance has to repay the debt and the China loans are an immediate solution because interest rates there are 1 to 3 percent cheaper India has the highest 10-year government bond yields among Asia’s major economies, and the nation’s companies face rising borrowing costs in rupees and dollars. China Development Bank sold one-year debt last month at a 2.61 percent coupon, letting it support the global expansion of Chinese companies.
Please read the Bloomberg and WSJ reports I have hyper-linked and cited in the article. I have cited three separate reports, and they have the facts and numbers you seek.
The growth is in developing countries where financing and price are more important than technology. Western markets are slow growth. That's not where the real battle is.
Nokia Oyj’s mobile-phone market share tumbled to its lowest ever as unbranded Chinese device makers gained ground on the low-end, while Apple Inc.’s iPhones advanced in smartphones, researcher Gartner Inc. said.
ZTE started operations in India in 1999, offering products for wireline, wireless and other services. It has a very wide product range in India, including fixed/wireless network, terminals and services. Products with technologies likes Dense wavelength division multiplexing (DWDM) and DSL broadband have 50 and 30 per cent market share in India.
Why Nouriel Roubini Is Wrong on China's Economy [View article]
"Roubini called the recession in America and is no lightweight economist." The media creates these celebrities but doesn't bother to verify the consistency of their predictions. Make one right call and you are set for life.
"More than 80 percent of the 18 million auto sales there last year were paid 100 percent up front." Why is this statement in the paragraph about credit cards? If anything, it proves that Chinese don't like using credit, and use the cash they saved.
Does anyone know if the real-estate bubble is widespread, or localized to prime areas in big cities? I am familiar with the real-estate market in India. The prices in prime big-city locations are sky-high. But the bubble is not widespread, and prices have stagnated in non-prime areas. Is it the same in China?
Why We See Gold Going Lower Long-Term [View article]
"we doubt that gold ETFs can continue to attract the tremendous amount of inflows over the long run, like they have done so far in their brief history. In fact, we've already seen net inflows into gold ETFs in 2010 (and so far in 2011) decline from their 2009 highs."
Net inflows into gold ETFs are still positive. Of course, the rate of increase will slow, due to the law of large numbers. If you are out making a contrarian call, you need a better argument backed by stronger facts, not sweeping statements.
The Canaries In The Chinese Coalmine [View article]
Our Picks For China Exposure [View article]
Our Picks For China Exposure [View article]
How To Play China Now [View article]
New 'China Is Slowing' Scare? [View article]
Is Chanos Finally Getting It Right On China? [View article]
Competitive Currency Devaluation (Part 1): The Feeding Frenzy [View article]
How did you arrive at this estimate?
Use ETFs to Protect Yourself From Yuan Depreciation [View article]
However, I believe that empty apartments in China are not finished. Rather, they are mostly raw uninhabitable units mostly held for investment and flipping. Sort of like gold, they don't care about the rental yield. One of the key unknowns is whether these will ever get occupied in the near future.
Use ETFs to Protect Yourself From Yuan Depreciation [View article]
Cheap Financing Favors China's Exporters [View article]
Cheap Financing Favors China's Exporters [View article]
Here are some excerpts from the first Bloomberg report which cite some numbers:
A two-year grace period on payments and an interest rate of 2 percentage points over the London interbank offered rate created an unbeatable deal, Tele Norte Chief Financial Officer Alex Zornig, 52, says.
The terms of Tele Norte Leste’s seven-year credit agreement give the company an interest rate of about 4 percent, Zornig said. Brazilian companies are paying an average borrowing cost for dollar debt of about 5.99 percent, according to JPMorgan Chase & Co.
Also, note that comparisons are between rates available through China's banks for Indian / Brazilian buyers versus the much higher rates those other emerging market buyers will have to pay in the international market. The second Bloomberg report has numbers with those comparisons. Here is an excerpt:
“Reliance has to repay the debt and the China loans are an immediate solution because interest rates there are 1 to 3 percent cheaper
India has the highest 10-year government bond yields among Asia’s major economies, and the nation’s companies face rising borrowing costs in rupees and dollars. China Development Bank sold one-year debt last month at a 2.61 percent coupon, letting it support the global expansion of Chinese companies.
Please read the Bloomberg and WSJ reports I have hyper-linked and cited in the article. I have cited three separate reports, and they have the facts and numbers you seek.
Cheap Financing Favors China's Exporters [View article]
Cheap Financing Favors China's Exporters [View article]
Nokia Oyj’s mobile-phone market share tumbled to its lowest ever as unbranded Chinese device makers gained ground on the low-end, while Apple Inc.’s iPhones advanced in smartphones, researcher Gartner Inc. said.
www.cn-c114.net/583/a5...
ZTE started operations in India in 1999, offering products for wireline, wireless and other services. It has a very wide product range in India, including fixed/wireless network, terminals and services. Products with technologies likes Dense wavelength division multiplexing (DWDM) and DSL broadband have 50 and 30 per cent market share in India.
Why Nouriel Roubini Is Wrong on China's Economy [View article]
"More than 80 percent of the 18 million auto sales there last year were paid 100 percent up front." Why is this statement in the paragraph about credit cards? If anything, it proves that Chinese don't like using credit, and use the cash they saved.
Does anyone know if the real-estate bubble is widespread, or localized to prime areas in big cities? I am familiar with the real-estate market in India. The prices in prime big-city locations are sky-high. But the bubble is not widespread, and prices have stagnated in non-prime areas. Is it the same in China?
Why We See Gold Going Lower Long-Term [View article]
www.bloomberg.com/news...
Net inflows into gold ETFs are still positive. Of course, the rate of increase will slow, due to the law of large numbers. If you are out making a contrarian call, you need a better argument backed by stronger facts, not sweeping statements.