Morgan Stanley China A Share Fund, Inc. (CAF)

All Comments on CAF

  • commenter
    Think-About-
    It
    Jul 13 03:03 PM
    China's Impending Financial Crisis [view article]
    Where is the long-term thinking?

    China is assendant and can continue increasing their standard of living and global competitiveness for decades. The RNM will follow right along as the government stays fiscally conservative. There are no risk-free investemnts but I just don't see much downside risk for a long-term investor that is long the RNB.

    Disclosure: long CYB     Reply
  • commenter
    johnthebear
    Jul 13 01:55 PM
    China's Impending Financial Crisis [view article]
    Makes you wonder why anyone would invest in China before the Olympics if they could reasonably conclude that the market will be down substantially in the months following the Recession? Correction: following the Olympics? Reply
  • commenter
    johnthebear
    Jul 13 01:53 PM
    China's Impending Financial Crisis [view article]
    It may be that the crisis will come this fall in China after the Olympics. The folks will look around and wonder.. all this sacrifice for what? The market (^ssec) is down 70% by the fall and Germany, England, Japan and US are in recession ... exports are falling dramatically ... so what did we gain by the Olympics, they ask the government?

    The American investors who have been talked into investing in FXI, (China 25 stock index) will then find their holding severely eroded, following the ^ssec and ^hsi indexes down. Poor things, they just don't have a good place to store their money in a bear market and the talking heads keep giving the wrong advise! A sad situation. Makes you wonder why anyone would invest in China before the Olympics if they could reasonably conclude that the market will be down substantially in the months following the Recession?     Reply
  • commenter
    Paul
    Denlinger
    Jul 13 12:56 PM
    My Website
    China's Impending Financial Crisis [view article]
    Everything points to the Chinese government not having acted fast/hard enough to stem the capital inflows, and the recent oil price rise and capital inflow restrictions almost seem like panic reactions.

    The picture I get is that there will be major steady rises in all commodities, especially food, and price stagnation in real estate. Already there is major pressure on RE developers in China, who are having to live with increasing interest rates and a public which is becoming more wary about investing in housing in the face of rising prices across the board.

    In the face of this, it may even become likely that the Chinese government will come down hard on "speculators"... who play the yuan rise. The purpose would be to make an example of them and discourage the practice.     Reply
  • commenter
    crowdofcheer
    leaders
    Jul 13 12:54 PM
    China's Impending Financial Crisis [view article]
    "As soon as Iran/Iraq situation is under control from the view of the US. **And the fed have printed enough money to make the financial system solvent again**, "

    can you explain how this sentence makes any sense whatsoever, plzthnx.     Reply
  • commenter
    steveballmer
    Jul 13 12:38 PM
    My Website
    China's Impending Financial Crisis [view article]
    Good article! Reply
  • commenter
    James V
    Jul 13 11:33 AM
    China's Impending Financial Crisis [view article]
    The RMB NDF Implied Rates can be very volatile and has no real estimative value looking out longer than one year. There is no way that the RMB will be sitting at 6.0-6.3 in 3 years. The world will not Stand for it especially as in real terms the Yuan has not been revalued at all against the USD in real terms yet. The Euro has strengthend more against the USD than the Yuan. So far we have seen dollar weakness not Yuan strength. Indicative by looking at the other rates against the Yuan.

    The RMB forwward market, FX swap markets are essentially closed and controlled by SAFE. SAFE have been closing access to the FX swap markets recently citing 'national security'. In other words they dont want the market pricing these instruments, the Government wants to be able to keep on manipulating the currency and its associated instruments.


    Lots of very likely sceanrios could effect the RMB rate very strongly, the forward market does not price in these scenarios as it is lagging due to it essentially being a closed system.

    For example it is becoming ever likely that the USD is going to start its next leg of weakness after consolidating for the past few months. We could see a 10% decline very quickly across the board. Especially with the solvency crisis hitting the USA financial institutions and the fact US interest rates are going nowhere this year.

    This will have a direct effect on the RMB rate, especially with the Europeans demanding that China takes some of the FX pain that they are taking with the falling of the USD. This will not show up in the forward market until it hits the spot market. Really the spot market is the pricing mechanism for the forward market. Thats the reality.

    The Chinese Central Bank is already very worried about high inflation, however I predict shortly that we are going to see a huge uptick in broad based inflation because now all producers are starting to raise their prices in line with the increase of their spiralling costs. Everything is going to go up. EVERYTHING


    They will then be left witht he reality that RMB rate is the only way they are going to be able to get inflation under control. The second all the powers at be in China believe that they have an advantage in faster RMB revaluation, the rate will move very quickly in the spot market. This shift in desire can not be predicted far into the future in looking at RMB forward rate. In fact the totally opposite, SAFE will drive the RMB down to flush out speculatiors before any major revaluing upwards. If you watch the market like I do, you will know this happens a lot.

    In terms of depreciation caused through otuflows, if the Chinese believe that Money Outflows will put the system at risk when the RMB hits an equilibrium rate. They will simply put in place measures to stop money going out of China. The Chinese really would not think twice about doing this. And believe me it will be a lot harder to get money out of China if they do this than getting it in.

    I very strongly believe that if the USA does not have near term plans to convert the USD into the Amero. That they will be looking at a rate of 5rmb - 1 USD in the next two years. Threatening trade embargos if they dont get what they want. Their stance will become ever harder especially as they now realise China is not a friend at the UN table. As soon as Iran/Iraq situation is under control from the view of the US. And the fed have printed enough money to make the financial system solvent again, the USA approach towards China will change drastically. This is the risk I see in the Chinese system going forward.

    Reply
  • commenter
    casey00001
    Jul 13 10:49 AM
    China's Impending Financial Crisis [view article]
    Would you please elaborate on the statement you made "and those investors solely within the country to take advantage of the appreciating currency will begin to pull back." Are you implying that people are living in China just so they can bring US currency in and out to make a profit? Or are you talking about somewhat shady "sham" businesses. Maybe we need to know just why you are in Hong Kong? Reply
  • commenter
    Ray Lopez
    Jul 13 09:32 AM
    China's Impending Financial Crisis [view article]
    Very interesting article. It implies 2 or 3 years from now the USA will still be in recession. It could happen, as happened in Japan in the 1990s. Reply
  • commenter
    Ray Lopez
    Jul 13 09:32 AM
    China's Impending Financial Crisis [view article]
    Very interesting article. It implies 2 or 3 years from now the USA will still be in recession. It could happen, as happened in Japan in the 1990s. Reply
  • commenter
    pldragon
    Jul 13 07:03 AM
    My Website
    Good Time to Buy Chinese Currency: Follow the 'Hot Money' [view article]
    Totally agree with you, rlirph
    in the East part of China, the Wenzhou underground "bankers" are among the most famous, and the most aggressive.
    Also, to reply to the last line of the author of the article, it is not just how to bring in your US$ or Can$ that you need worry about...
    For this, you could do like most Chinese and Overseas chinese do: use multiple benerficiaries accounts ...Since legally, each personal account is limited to us$ 50,000/ year...
    The most difficult part will be to take your money out, the day hot money will not be hot anymore..and when everybody will be fleeing for the escape door at the same time.     Reply
  • commenter
    rlirph
    Jul 11 10:29 AM
    Good Time to Buy Chinese Currency: Follow the 'Hot Money' [view article]
    Michael Pettis wrote earlier about where the "hot money" went. It could not go into the stock market because it was halved in seven months. The hot money could not go into local real estate market because housing prices everywhere in China except Shanghai has been going down for the past eight months. The inflow of money if calculated correctly went to the "underground finance companies" which loan out money at 5% per month.

    For those who live in China please check with your local business pals. I live in Guangzhou and their answers lead me to believe it is impossible for local small businesses to borrow from local banks. To obtain the funding they must borrow from "underground finance companies" which in the US would be called loan sharks.

    Who is to blame? Naturally the Chinese government who set up those ridiculous capital control mechanisms. While the government complains about the amount of inflow of foreign capital do you know that I can not wire out the "foreign capital"? Once the foreign capital arrives and even if the money moves to a CD it cannot be converted back into foreign currencies and to be wired out.

    Reply
  • commenter
    Arun N
    Jul 11 10:23 AM
    Good Time to Buy Chinese Currency: Follow the 'Hot Money' [view article]
    If there is a risk of stagflation, PBOC will look to raise interest rates and control it at the expense of growth. It will also cause the rate of funds inflow to slow as investors are usually scared off by the term stagflation... Things can turn around mighty fast as foreign investors get cold feet. Besides the pull out of funds willl be faster as is evidenced in India. Don't follow the hot money because it is very hot already. Reply
  • commenter
    Think-About-
    It
    Jul 11 10:23 AM
    Good Time to Buy Chinese Currency: Follow the 'Hot Money' [view article]
    James V, thanks for the explanation. Now I can easily see how the Chinese Governments balance sheet is affected by trade between private companies. Does trade between free market governments (say Canana & U.S.) work the same way?

    Also, does it work the same way in the Euro zone even though they use the same currency?
    Reply
  • commenter
    James V
    Jul 11 08:54 AM
    Good Time to Buy Chinese Currency: Follow the 'Hot Money' [view article]
    Think-About-It - all the USD/foreign currency that is sent to private corporations can not be taken out of the bank by the private corporations. Instead the government the government puts it in its pocket and prints RMB to give to the corporations.

    To keep RMB low the Chinese Government holds the USD.

    This is basic crude example. But it effects the closed currency system and gives an idea how they keep the yuan under control.
    Reply
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